Looking beyond incentives to manage growth

by Sasha Lennon*

Out of Premier Anna Bligh’s Growth Management Summit held in Brisbane in March came the idea of a Regionalisation Strategy for Queensland.

Last month, the Queensland Government explored the idea further by holding regional forums with senior Government Ministers in Cairns, Townsville, Mackay, Toowoomba, Rockhampton, Gladstone, Bundaberg and Mount Isa.

The rationale for regionalisation, as put by the Queensland Premier, is that South East Queensland simply can’t cope with the hordes of interstate migrants who make the move to the Sunshine State at a rate of more than 2,000 people each week.

To address this issue, and to help boost the communities and economies of the regions, Premier Bligh has flagged the idea of offering incentives to incoming residents and businesses who might be persuaded to bypass the great south east and head to other regional centres instead.

According to the Queensland Government, incentives might include a boost to the first homeowner’s grant for people purchasing a new home in communities outside of South East Queensland. They could also include financial or inkind incentives, like taxation ‘holidays’ for example, to encourage businesses to relocate to or establish in places like Mackay or Rockhampton, rather than Brisbane.

If employed, such incentives will be bandaid solutions. By offering a quick fix to encourage more people to migrate to the regions instead of the Queensland capital, short term incentives will fail to address the more fundamental issue of South East Queensland’s and the regions’ dire need for critical infrastructure.

This includes efficient and effective public transport, well connected urban centres, hospitals, schools and other community facilities needed to support sustainable growth.

The Queensland Government’s South East Queensland Regional Plan 2009–2031 aims to reduce South East Queensland’s ecological footprint while enhancing its economy and its liveability. Similar plans are being rolled out for the regions.

According to the Regional Plan, South East Queensland’s growth will be accommodated in a more compact urban form, providing infrastructure and services in what it calls ‘smart growth’ to address, among other things, urban sprawl and climate change.

But the plan’s intent can only be realised through well resourced infrastructure spending.

The Victorian Government has a similar plan for Melbourne, characterised by transit oriented communities where people would enjoy much shorter journeys to work.

This is expected to deliver a three per cent boost to metropolitan Melbourne’s gross regional product (GRP).

There is no reason why South East Queensland could not deliver similar if not superior outcomes. A three per cent GRP boost in current terms translates to an estimated $4.4 billion annual injection to the South East Queensland economy.

This could raise across the board government tax receipts by up to $1.3 billion per annum, allowing the Government to direct new infrastructure investment where it is needed most – in the Queensland capital’s metropolitan transport system.

As far as regional incentives are concerned, there is plenty of evidence from overseas to suggest that, at best, such measures have only a marginal impact on economic development.

Financial or inkind incentives will do little to influence business location decision making.

What businesses do respond to is what a city or region can offer in terms of proximity to markets, suppliers and labour, infrastructure support, institutional support and, importantly, lifestyle attributes. These are what can be termed the ‘preconditions for prosperity’.

The Queensland Government has a role to play to encourage and promote these preconditions, as does Local Government.

Councils can and should continue to focus on what they can influence – local economic development activities, such as land use planning, infrastructure provision or business information and assistance programs. But they can now also adopt a broader regional view.

This is due to a renewed Commonwealth commitment to regional development through the Regional Development Australia Committees, better articulation of natural economic regions since amalgamation and Local Government areas now being large enough on their own to encompass many of the preconditions referred to above.

Businesses will respond positively to State Government agencies and councils that show a good knowledge of the region and its attributes, and can facilitate business establishment or expansion with as little delay as possible.

So if the Queensland Government wants to grow the regions, it needs to invest in the fundamentals: infrastructure, supportive investment environments and lifestyle. After all, it is Queensland’s lifestyle appeal that draws southern migrants there in the first place.

Importantly, the Bligh Government must embrace and work in partnership with the regional councils it has created.

If it makes a genuine commitment to investing in infrastructure that would steer South East Queensland away from a continuing pattern of low density and ultimately very expensive urban sprawl, to one that is more compact, liveable and prosperous, the need to dream up artificial attractors to the regions will diminish.

And if the regions are to be prosperous, the Queensland Government must declare a similar commitment to places like Rockhampton, Townsville, Gladstone and other regional centres.

It must put its money where its mouth is.

*Sasha Lennon is the Director of SGS Economics and Planning Pty Ltd. He can be contacted by email at sasha.lennon@sgsep.com.au