The RBA does apparently take note of regional variance as well as broad averages and perceive the current 'patchwork' as normal or even less than expected. The response to whether some heat coming off the mining boom may reduce issues of a patchwork economy is rather vague.
I guess it means Cairns has just happened to find itself in the wrong patch in recent times. Some prominent business identities have previously suggested the RBA didn't give enough consideration to the problems of the Far North economy which would be like the tail wagging the dog so to speak.
Leigh was formerly a prominent economist before spiralling downwards into politics.
Dr Leigh: In terms of thinking about the labour market, I am always struck when I read the statements. I feel as though you place a little bit too much emphasis on averages and not enough on variance. I guess one of the things that naturally concern us is the variance in unemployment rather than simply the average rate. What do we know about it? The decline in the terms of trade should also reduce the patchwork economy issues, shouldn't it? It ought to bring down, say, the variance in unemployment over time.
Mr Stevens: Yes, I think it is fair to say that, to the extent that the impetus for growth shifts away a bit from where it has been to be more broadly focused, that is probably right: you might get some reduction in the so-called patchwork. In saying that, I think it is important to say as well that it is always a patchwork. It is not and never has been a seamless garment. There is always a patchwork nature. 'Patchwork' is a new word we have coined and it is a reasonable description, but it has always been there.
I am searching in this pack here for the figures on the variance of the unemployment rate. We do track the dispersion of the rate of unemployment. There are quite a large number of regions where you can get this. One of the datasets that you can get—you know this, I know. At the moment, on the basis of the figures I have here, about half the regions have unemployment at five per cent or less; 90 per cent of them have unemployment less than seven per cent as measured; and there are very few, if any, with double digits on the most recent data. Even those numbers are themselves averages within an area, but there are no figures more detailed than that. I suppose my conclusion is that there is regional variation. If anything, I would say I am very slightly surprised that it is not bigger than we presently see. That is not to say that it might not get bigger, though, as you say, some things are happening which could lessen that tendency. So I think it is always a patchwork. On the basis of the metrics we can come up with to measure this, it is not really more of a patchwork than is normal.