Coffs Coast Business

Slow growth in regional Australia since GFC stokes dissent.

Matt Wade
By Matt Wade

First published at The Sydney Morning Herald. See:

Economic growth in regional Australia has been much slower in the decade since the global financial crisis than during the decade and a half before it, new research shows.

The report’s author, economist Terry Rawnsley, says the extended slowdown in regional areas helps explain widespread voter dissatisfaction in country electorates.

In the 15 years prior to the GFC the average annual economic expansion in regional Australia was 3.4 per cent. But since the crisis that average has fallen to 2.3 per cent, Mr Rawnsley’s analysis shows.

Economic growth in regional Australia has been much slower since the GFC.
Economic growth in regional Australia has been much slower since the GFC.Credit:Louise Kennerley

In many regions the post-GFC average annual growth rate has halved. Areas which don’t benefit from mining activity have been hardest hit.

Economic growth in regional Australia has also lagged the major cities where average annual growth since the GFC has been 2.8 per cent.

“The prosperity those in regional Australia have experienced during the past 10 years varies a lot from what they were used to in the 15 years before the GFC,” said Mr Rawnsley who is an economist with the consultancy SGS Economics and Planning.

“No doubt this is feeding into the rise of the minor parties in regional Australia.”

Smaller parties and independents are expected to poll strongly in many regional electorates in Saturday’s election.

The threat to the major parties was underscored at the NSW election in March when two seats in the far west long-held by the Nationals – Murray and Barwon – were won by the Shooters, Fishers and Farmers Party.

On Saturday National Party MPs are expected to come under pressure from independents in the regional NSW federal electorates of Cowper and Farrar.

“Many regional voters seem to be unhappy with how the economy is being managed and they are looking for alternatives,” Mr Rawnsley said.

Australia’s regional economy has become much more dependant on mining in the decade since the GFC. Mining as a share of output in regional Australia jumped from 9 per cent in 2008 to almost 21 per cent in 2018, the report says.

However, during that decade the economic share of manufacturing has slumped. In 2008 manufacturing accounted for almost 10 per cent of economic output in regional Australia but by 2018 that had fallen to around 6 per cent.

Even so, Mr Rawnsley estimates annual economic output in regional Australia is worth almost $600 billion.

“If treated as a separate country, regional Australia would be in the top 30 global economies,” he said.

The contribution from the healthcare sector has risen strongly and now accounts for a bigger share of regional economic output than manufacturing.

Australia’s regional population is on average 2.5 years older than in the major cities. A decade ago that gap was 1.2 years.

Published Thursday 16 May 2019.

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