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Decentralisation could cure a range of ills

Mick Keogh - Tuesday, February 28, 2017

In a recent speech, former head of Treasury Ken Henry once again raised the concept of decentralisation as a means of addressing some of the challenges facing Australia's major cities - including congestion, high real estate prices and the struggle to provide adequate services and social support to the ever-expanding outer suburbs. The concept is not new and has considerable potential benefits, but Australian Governments don't have a good track record when it comes to implementation and the persistence needed to make these policies work.

In a speech that was mainly focused on the failure of political processes in Australia to deliver the long-term strategies needed to address major challenges, Ken Henry made the following observation;
"Based on official population projections our governments could be calling tenders for the design of a brand new city for two million people every five years, or a brand new city the size of Sydney or Melbourne every decade, or a brand new city the size of Newcastle or Canberra every year. Instead, they have decided that another 3 million people will be tacked on to Sydney and another 4 million on to Melbourne over the next 40 years. Already, both cities stand out in global assessments of housing affordability and traffic congestion. Have you ever heard a political leader addressing that question? Do you think anybody has a clue?"

Decentralisation has been an issue that has waxed and waned with monotonous regularity in Australian politics, and has never gained the necessary bi-partisan support needed to ensure it could actually result in any real change. As a consequence Australia is one of the most urbanised nations in the world, exceeded only by the city-states such as Singapore.

Perhaps the most focused effort was the regional growth centre program introduced by the Whitlam government in 1972, which had the objective of dramatically increasing populations in Albury-Wodonga and Bathurst-Orange through a range of different policy measures. The demise of the Whitlam government in 1975, and the related need to repair ballooning government debt resulted in these policies being abandoned, despite some acceleration in population growth in these centres.

There have been a range of policy measures adopted since that time which have attempted to resuscitate some of the efforts made during the early 1970s, but it is fair to say that these have been very limited in scope and have relied essentially on self-development by regions, rather than external intervention. The current network of Regional Development Australia (RDA) committees is the current manifestation of regional development or decentralisation policy, which is currently the subject of a review. The mainstay is the Building Better Regions Fund, which will provide $300 million over four years to fund infrastructure and community projects in regions outside of the major capital cities.

While there is no doubt this funding is welcomed by recipient regions, there is a risk it will result in piecemeal, uncoordinated projects and will raise concerns about the policy being used to pork-barrel marginal electorates, rather than being a concerted and strategically directed program to enhance non-capital city growth.

International experience with successful decentralisation policies highlights several lessons relevant to Australia. Whereas in the past the availability of manufacturing jobs was often seen as a key requirement in order to sustain a rapidly growing regional population, more recently it has been recognised that service sector employment is a key contributor to regional growth. Factors like the availability of employment opportunities in service sectors such as health and education are more likely to generate regional population growth, and the presence of strong tertiary education institutes in a region has also been identified as a key factor in successful long-term regional growth strategies. 

Research conducted by the Australian Farm Institute in 2011 also identified that successful regional development or decentralisation strategies require an "all levels of government" approach, because efforts by one level of government to stimulate regional growth (for example the relocation of a government agency to a regional centre) can be derailed if other levels of government do not ensure that necessary services, such as transport, education and health, are upgraded, or if the relevant local planning authorities do not move quickly enough to ensure an adequate stock of new housing is available.

There are multiple benefits available to the agriculture sector, to regional Australia and to Australia's overcrowded capital cities from the implementation of successful decentralisation policies, but these policies need to have a long-term focus, to be coordinated across multiple levels of government, and involve the simultaneous development of a range of infrastructure and services in order to be successful. Whether Australia's political system could ever sustain the bi-partisan and all-government effort required over perhaps two decades to achieve real progress is the billion dollar question. 

Such policies would also involve considerable additional (rather than redirected) expenditure by the Australian Government, something which would no doubt be fiercely resisted by the purse-keepers in Canberra. 

There is a rich irony in this, of course, in that Canberra is perhaps the one single example in Australia of a successful decentralisation policy implementation!
 
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