Ex-Sydneysider STUART PEARSON looks at Bathurst and its future from the perspective of a new resident.
It might sound like a dry topic, but getting a handle on economic development is crucial in determining if people in regional Australia get jobs, raise a family and live out a comfortable retirement.
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There is surprising agreement as to what the main "drivers" of regional economic growth are. However, there's disagreement about which order of importance these drivers should be ranked in.
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Most literature suggests there are broadly five ways to grow a regional economy. They are:
POPULATION - more people leads directly to more demand and the regional economy grows;
EDUCATION - every region wants to have a university or a TAFE in addition to their primary and secondary schools because these tertiary institutions significantly increase skills and drive economic demand,
INFRASTRUCTURE - this is the classic "build it and they will come" approach,
INNOVATION - bringing together researchers, businesses, financiers and entrepreneurs to generate new ideas and businesses,
GOVERNMENT INCENTIVES - subsidies, allowances and tax "holidays" to induce private businesses to start or relocate in the bush from elsewhere. This category includes governments forcing parts of its own public sector to move to regional locations (called decentralisation), such as the NSW Central Mapping Authority to Bathurst in 1976 and the Federal Regional Investment Corporation to Orange in 2018.
To emphasise the problem facing policy makers who try to determine which levers produce the best results, may I share the following.
Infrastructure and population are closely linked. If the population outstrips infrastructure, then we have congestion, frustration and significant loss of economic activity. Think Sydney over the past two decades, which added 1.2 million new residents but then fell behind on upgrading its roads, rail, ports and just about everything else!
Conversely, if infrastructure is built faster than it's needed, then we have empty freeways, underutilised rail and ports, leading to an enormous waste of taxpayers' money.
This situation occurred in the Kimberley region of Western Australia during the 1960s. A huge dam was built across the Ord River creating an immense irrigation system. Roads, rail, airports and an entire town (Kununurra) was established. But hardly anyone came.
To this day, the government has never recovered the $3 billion invested in establishing the scheme.
According to Nobel Laureate economist Paul Krugman, of all the elements that generate strong economic growth, the most important factor is, by far, education.
Formal training, and upskilling has the greatest impact on a region's prosperity. That is why having a university and a TAFE are vital to a city's long-term future.
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The second most-important driver is innovation. New products and processes lead directly to new jobs and businesses. Even new industries. As one academic paper succinctly put it: "Minds are more important than mines."
There is an obvious flow-on effect connecting education (learning) to innovation (applying ideas). Regions that have developed both aspects grow faster than regions that haven't.
Third in importance is population. Population increases will still make the region's economy grow, even if the first two elements above are lacking. But if education and innovation are already in place and working well, then the region becomes even more attractive for people to move to.
The region becomes exciting, stimulating with good job prospects in new and different businesses.
The next two elements - infrastructure and incentives - are essentially the domain of federal, state and local governments.
Most politicians seem to think regional economic development simply means offering incentives to people and firms to move or ordering government agencies to decentralise.
Unfortunately for them, studies have proven that these actions have less impact on the region's economy compared to education, innovation and population.
Don't get me wrong, Governments should continue to offer incentives and build infrastructure, but they shouldn't rely on these actions alone.
Governments need to firstly strengthen the regions' educational assets; then foster innovation in both the private and public sector and encourage people to move to the region. The real impact occurs when governments offer incentives and build infrastructure to support the first three factors.
If you evaluate the performance of the Bathurst region against the above criteria, it's done very well to date. Population growth is strong, and innovation is on the rise. On the downside, infrastructure is beginning to fall behind population growth and government Incentives have had a negligible effect recently.
However, the one area that needs immediate attention is education. It was and still is the major employer in the region but as a Centre of Educational Excellence, its light has dimmed over the past decade or so.
If schools, TAFE and especially Charles Sturt University reinvigorated its educational assets, then Bathurst's future would be even brighter and more brilliant than it already is.
