Report highlights regional economic development inefficiencies

Attempts by the Federal Government to generate regional economic development have largely been a waste of money according to a Productivity Commission report.

In a report published in December, the Productivity Commission has recommended the Regional Development Australia program should be axed, and other programs such as the Northern Australia Infrastructure Facility (NAIF) and the City Deals scheme “be subject to independent, rigorous and transparent evaluation”.

“Governments are spending billions of taxpayers’ money on regional programs and projects,” Commissioner Paul Lindwall said at the launch of the Transitioning Regions Report.

"And we have some serious reservations about their effectiveness in helping people and businesses adjust to new circumstances or their contribution to sustainable growth in regions.”

The report also found that decentralising public sector agencies “imposes costs and risks on governments, taxpayers and users of government services [and] in most cases simply redistributes economic activity across regions”.

The report recommends that “state and Territory governments, in consultation with local governments and communities, should develop a single consistent definition of Australia’s regions to be used to inform regional development planning and policy.

“Regions should be based on functional economic regions, so as to take into account the stronger linkages and interdependencies between neighbouring communities.

“State, territory and local governments should adopt these classifications for guiding regional policy and planning”.

The report looked at all regions across Australia, considering a “variety of adjustment pressures that affect the economic performance of regional communities. Though regions are constantly changing and evolving, the catalyst for this study is major disruptions to regions’ economic circumstances”.

One of the key elements to this approach, the report said, was to “create an index of the relative adaptive capacity of Australia’s regions. This index combines many attributes that are considered important in shaping the capacity of a region to adapt”.

The report is available here.

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