Wednesday, May 25, 2011

It's time to justify Guvmint spending in regional Australia?

That is the question proffered by the Grattan Institute in a new report.

"For nearly a hundred years, governments have spent a lot of money trying to promote economic growth in regional Australia. This year’s Federal Budget was no exception, with $4.3 billion worth of programs announced to help ``unlock the economic potential of our regions’’. But governments are already spending more than $2 billion a year on programs for regional Australia that fail to produce the economic growth they are explicitly designed to achieve.

Op-eds in the AFR and at The Conversation provide an overview which includes:

"The report, Investing in regions: Making a difference, shows that governments already spend more than $2 billion a year on programs that fail to achieve what they explicitly set out to do – make slow-growing regions grow faster. Local job-creation schemes, regional universities, small-scale road and major infrastructure programs are not only expensive, they do little or nothing to accelerate slow-growing regions."

"Building infrastructure does not produce economic growth unless there is already a skilled workforce and an expanding private sector to exploit it. Job creation schemes are expensive, require continuing support and tend to divert jobs from elsewhere rather than create new ones."

The contents includes sections such as: "Aiming for equal economic growth in regions is unproductive" and also includes some controversial analysis on the impact of a university on the growth of a regional centre.

The report divides regions into "bolters" and "lagging". Cairns, along with many Queensland regional coastal cities, is included as a bolter based on past population growth, despite the current recession and despair.

Further commentary at Queensland Economy Watch.

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