News and published articles in 2018 to 2016
Monday, 2 July, 2018Close Article
Consequences of the 2018 NSW Budget for Hunter businesses and households are mixed. That is according to analysis by Dr Anthea Bill, the HRF Centre’s lead economist. Dr Bill presented at a recent Hunter Business Chamber event, responding to an overview of the budget provided by the NSW Treasurer, the Hon. Dominic Perrottet.
Perrottet and Bill discussed budget measures to lift the payroll tax exemption threshold from $750,000 to $1 million by 2021-22.
The Government estimates that 40,000 businesses in NSW will have their payroll bill reduced. It predicts that 5,000 businesses will eventually pay no payroll tax at all.
“Tax relief measures will likely work to reduce costs for businesses. In turn, the hope is that these will allow businesses to increase employment, lift wages and/or reinvest,” Bill stated.
Businesses in regional NSW are likely to benefit from the payroll tax relief as they generally sit closer to the $750,000 - $1 million threshold range.
Jobs NSW has found that high-growth small and medium enterprises (SMEs) have been the “silent engine room” of the state’s jobs growth. Between 2008 and 2014, over one million jobs came from just six per cent of businesses, new or growing SMEs. In this context, where incentives encourage small businesses to grow employment, tax-relief makes sense, Dr Bill explained.
Noting that local media had commented that the budget was ‘light on’ when it came to dedicated infrastructure commitment for the Hunter, Dr Bill stated: “The state’s infrastructure spend overall is reportedly its largest ever. They have promised $87 billion over four years. The big winner is Western Sydney. It is seen as the growth engine of the Sydney economy.”
“The Government has reserved $3 billion for the high-speed West Metro rail line. That is planned to run underground from Parramatta to Sydney’s CBD. Sydney is a major market and supplier for many Hunter businesses. Improving connectivity within Sydney, such as between Sydney CBD and Parramatta, may actually benefit the Hunter.”
Metropolitan vs regional
Newcastle has been redefined as ‘metropolitan’ rather than ‘regional’ under the latest budget papers. That raises questions about how Newcastle accesses and competes for funding allocations, Dr Bill said.
“Treasury says that Newcastle is metropolitan, consistent with Australian Bureau of Statistics’ ‘major urban’ classification, meaning that it has more than 100,000 people. While the change in the funding classification is a measure of Newcastle’s success, we are dwarfed by Sydney’s size and employment. In the last Census, Sydney’s population was 4.5 million, seven times the 623,000 in the Hunter as we define it.
“There have been questions raised in local media over whether the re-classification of Newcastle as metropolitan would mean that we miss out on getting our ‘fair share’ of funding. The Hunter Business Chamber is advocating for a mid-tier classification for funding”. The NSW Business Chamber contends that the regional economic centres of the Hunter and the Illawarra offer businesses a lower cost base and productivity benefits.
Regional centres provide a solution to ‘big Australia’, Dr Bill explained. She cited research from the Regional Australia Institute offering sound reasons for regional devolution. “They estimate that for every 100,000 people who choose small cities instead of big cities, $50 billion is released into the economy through avoided congestion and mortgage costs in the capital cities.”
Cities like Geelong are pursuing a “second cities agenda” bringing together community, stakeholders, government and global leaders to promote development outside of capital cities.
“The competitive advantages of these centres need to be harnessed to provide the next wave of investment and jobs growth,” Dr Bill said.
Education and training
Dr Bill supported the budget’s promised investment of $42.1 million in capital works funding for preschools. That is expected to deliver 4,800 extra community preschool places in growth areas. The Hunter’s disadvantaged communities would also benefit from funding that would create free pre-school places for three year olds.
“2016 Census data shows that many of the Hunter’s disadvantaged locations have a high proportion of children under 4. This commitment should assist children and families in these communities. So will the continuing Start Strong investments subsidising preschool fees in the year before school.”
Increased funding for vocational education and training (VET) initiatives will benefit the region, Dr Bill noted. Budget allocations fund 100,000 fee-free apprenticeship places. Dr Bill welcomed the investment, explaining that numbers of apprentices in-training had fallen significantly from 2012 to 2017, as they had across the state.
The Hunter - excluding Newcastle and Lake Macquarie - has the highest proportion in the state of 25-34 year olds with a ‘certificate’ qualification. VET provides an important conduit for Hunter young people not pursuing university-based education options.
“It supports our construction and manufacturing sectors,” Dr Bill explained. “The NSW Government’s expenditure is aimed at creating a pipeline of skilled workers needed to meet future demand.”
The budget funded TAFE Connected Learning Centres at Scone and Singleton. These digitally-enabled learning environments offer regional students better access to TAFE NSW courses.
Another significant budget item is $8 billion over four years allocated to hospital upgrades. There is also extra money for 950 nurses and midwives, 300 doctors and 120 allied health workers. Health and social services is the Hunter’s leading employment sector.
“This commitment provides two-pronged benefits. Firstly, there is an economic uplift as the construction of hospital upgrades has a flow-on effect. Local construction workers spend their income in the region. Secondly, improved health services can help to attract and support greater population growth in the future.”
Health expenditure supports the Hunter’s ageing population, as well, Dr Bill noted. “The population of NSW is ageing, but it is more prominent in the Hunter.”
Tourism is a significant and growing part of the Hunter economy. More than 10 million visitors - overnight and daytrip - spent $2.7 billion in the region in the year to December 2017.
In the last year, the Hunter has out-paced the state in its growth in tourism expenditure, a rise of 13 per cent compared to 9 per cent. It is starting to see some welcome growth in overnight stays, expenditure on which grew 17 per cent compared to 11 per cent for NSW.
Budget allocations for regional tourism facilities include:
•$7.1 million over four years for Tomaree coastal walk,
•$3 million for Port Stephens Koala Hospital and tourism facility, and
•$6.3 million for a war-plane tourist centre at Scone Regional Airport.
The budget offers support for small businesses, with particular benefits for regional Australia.
The Hunter did not receive a significant amount of infrastructure spending in this budget. Committed expenditure on key projects is continuing, though. Such continuity creates certainty for investors.
“It would be wonderful for the budget to bolster such certainty in the future for the Hunter region’s economy and residents,” Dr Bill concluded.
NSW Government commitments for the Hunter region in 2018-19
Funding for school upgrades, including:
- Newcastle East Public School
- Hunter School of Performing Arts
- Hunter Sports High School
Funding for TAFE Connected Learning Centres at Scone and Singleton
Funding for health, including:
- Planning for future works at John Hunter Hospital
- Continued investment in Maitland Hospital and Manning Base Hospital
- Funding for rural health infrastructure upgrades including at Scone and Gloucester
Transport infrastructure, including:
- $110.2 million for Newcastle Light Rail Project
- $38 million for New England Highway Scone Bypass
- $48.1 million for heavy vehicle safety and productivity, and flood alleviation works on Golden Highway
- $16.3 million to continue upgrading intersection of M1 Motorway and John Renshaw Drive and Weakleys Drive
- $14.5 million to complete planning and continue preconstruction for Stage 5 of the Newcastle Inner City Bypass
- $8.3 million for upgrades to Nelson Bay road and plan for future improvements.
Tuesday, 19 June, 2018Close Article
The NSW budget will raise once again the question of whether the Hunter is receiving its ‘fair share’ of state government investment. How fair is it to have multi-billion dollar investments in roads, tunnels, stadiums, and the like in the Sydney metropolitan area without similar investment here? That question ties into multi-layered historical and political arguments as well as economic assessments. These factors all point to the important question about what constitutes an appropriate amount to invest to see long-term benefits in the Hunter region, and in the state.
To take part in this debate, it is useful to assess the economic horsepower of the Hunter. The region is touted as having the largest regional economy in Australia, ‘regional’ meaning – outside a capital city’s metropolitan area. A common measure of the economy of a region is the year’s gross regional product (GRP). That is an estimated market value of all ‘final’ goods and services. The GRP does not count the value of goods that are being produced for resale. So, a finished railroad car counts, but not the wheels for that rail car, if they are produced here. The GRP figures employed here are public, estimated from government statistics by the commercial firm, REMPLAN.
The Hunter’s GRP is estimated to be $48 billion, more than three times the size of Wollongong’s $13 billion. However, it is only 35 per cent of the GRP of Greater Western Sydney, which is $139 billion.
The Hunter’s GRP is less than half of the City of Sydney’s $116 billion. The Hunter GRP constitutes less than 10 per cent of the NSW gross state product (GSP), estimated at $560 billion.
So, with 10 per cent of the state’s economy, should we expect 10 per cent of the state’s infrastructure investment? Should the Hunter receive one-third of the amount invested in Greater Western Sydney? Should the Hunter also land 10 per cent of the state’s social welfare spending and 10 per cent of its drought support for agriculture? Clearly, no.
Economic output is not the only statistic that needs to be considered. An area with a relatively small economic output per person may be ideal for retirees. An area with a high economic output per person may have localities facing entrenched economic disadvantage, such as long-term unemployment. Such localities could be seen as more worthy of government investment.
That leads to a question about what is meant by ‘fair’? Is ‘fair’ assessed in terms of need, the opportunity to avoid future costs, or the potential for economic growth? That is, to what extent is government investment stimulating benefits for portions of the population or economy identified as being a high priority in the near-term and long-term future? The identification of such priorities can be seen to be a question of values and aspirations, about opportunities and intergenerational wellbeing. It is not an issue of mere dollar figures of economic output.
Do we agree on what criteria to employ in setting such priorities? Do we know what criteria have been considered elsewhere, particularly in settings where strategic long term aims have been pursued effectively?
In assessing the NSW budget, let us avoid saying that it is not ‘fair’. Let us, instead, agree on criteria for prioritising long-term economic and social aspirations, which government investment could stimulate in the region.
In this way, we can pursue economic and social wellbeing here, and support its growth across the state.
OPINION PIECE, NEWCASTLE HERALD 19 JUNE 2018
Tuesday, 5 June, 2018Close Article
At the Hunter Research Foundation (HRF) Centre, we have been analysing the 2016 Australian Census and other data to better understand the dynamics of the Hunter.
The region is changing. When comparing the 2011 to 2016 Census period with the 2006 to 2011 period, our rate of economic growth slowed. Relative levels of disadvantage grew in many of our postcodes and suburbs. Population growth rates have also differed widely across the region.
One regional stand-out was Maitland local government area (LGA). It had a startling population growth trajectory between 2011 and 2016. Its population increased at a much higher rate (15%) than that of the State (8%) and even Greater Sydney (10%).
The age distribution suggests young families and retirees dominated the 2011 to 2016 population growth. What attracted them?
Housing affordability was important. Maitland’s annual house price growth rate (7%), as at June 2017, was much lower than Newcastle’s (15%). The median house price ($420,000) was also lower than Newcastle ($545,000), Lake Macquarie ($520,000) and Port Stephens ($488,000). Much of the growth is in new greenfield development sites.
Lifestyle was another factor. Development of Greenhills and the Maitland CBD offered new dining and shopping options.
Maitland’s geographical position has contributed. The opening of the Hunter Expressway in 2014 helped to reduce travel times and increase connectivity between the Upper Hunter, Newcastle and Sydney. The LGA enjoys high levels of economic diversity. Businesses are well placed to take advantage of proximity to a range of Hunter industries, as well as Newcastle and Sydney markets.
However, in common with other Hunter LGAs, Maitland still has pockets of disadvantage. This is particularly apparent in some suburbs in west and East Maitland. Business and government should seek opportunities to increase housing and employment opportunities in these areas.
Monday, 4 June, 2018Close Article
The topic of inequality was addressed by Hugh Mackay and Melinda Cilento at the May economic breakfast of the Hunter Research Foundation (HRF) Centre.
Not all Australians are getting a fair go in our modern society, stated Mackay, a social researcher and author of the new book, Reinventing Australia.
“We are the land of the fair go unless you are an asylum seeker, especially one who came by boat. Unless you are an Indigenous Australian, unless you are a woman hoping for true equality in the workplace, unless you are one of the millions of Australians who now find themselves on the wrong side of the income inequality gap.”
Cilento, CEO of CEDA (Committee for Economic Development of Australia) cited figures from their recently released report on inequality. They show that 13 per cent of Australia’s population are living below the poverty line. Cilento argued that growing inequality is an economic problem that Australia urgently needs to address. Cilento committed CEDA to research further these costs, and benefits, of economic growth.
The extent of inequality in the Hunter is evident in 2016 Census data, particularly in figures of the Index of Relative Socio-economic Disadvantage (IRSD). The index employs a range of indicators, including income, qualifications and skills. Regions and localities with a low score are experiencing greater disadvantage.
By this measure, many local government areas in the Hunter slipped down the national rankings between 2011 and 2016. Only Dungog LGA increased its Australian decile ranking. Some other Hunter localities now sit in the bottom 30 per cent of Australian LGAs.
The index shows a geographic divide between the Lower and Upper Hunter. LGAs in the Upper Hunter experienced an increase in relative disadvantage. The more urban LGAs, Newcastle and Lake Macquarie, stayed steady and in the top (least disadvantaged) 30 per cent nationally.
Even the less disadvantaged Hunter LGAs show evidence of inequality at suburb and postcode level. Pockets of disadvantage exist in every LGA, areas where Hunter residents suffer from a disproportionate number of barriers to achieving a fair go.
Not surprisingly, HRF Centre research shows that inequality affects wellbeing. In 2016, Hunter residents experienced lower scores in the Centre’s wellbeing index when they faced unemployment, financial stress, job insecurity, low levels of housing affordability and reduced community connectedness.
However, the full effects of inequality on the region and the nation may not be felt until the future. Younger Hunter residents (18-29 year olds) face more challenges than those in other age groups, according to our data. They are more likely to be short on money, unable to afford day-to-day needs and to feel housing is unaffordable. They also face the global challenges presented to future workers by emerging technologies, which were discussed by Cilento.
The CEDA report, How Unequal? Insights on Inequality, recommends changes in housing policy and regulation, taxation, education and training, and data regulation.
These recommendations apply to the Hunter. According to the latest Census economic transition has seen nearly 9,000 regional manufacturing jobs lost between 2011 and 2016 across the Hunter. For housing market entrants, housing is at its most unaffordable level since the HRF Centre began its First Home Buyers Index in 1997. We lag the nation in our educational attainment levels.
Regional plans need to include policies that ensure that all Hunter residents, from every LGA and postcode, are able to share in future prosperity.
Friday, 25 May, 2018Close Article
Social researcher Hugh Mackay presented his vision for a kinder, more compassionate Australia to an audience of more than 350 people at a public lecture. The lecture was co-hosted by the HRF Centre and the Centre for 21st Century Humanities in Newcastle in May.
Mackay examined population and social trends while researching his 19th book, Australia Reimagined. He said that Australia is in the grip of an epidemic of anxiety. The anxiety is precipitated by social isolation, he argued, which is the result of a raft of changes in society.
Changes include shrinking households as more people live alone; 35 to 40 per cent of marriages ending in divorce; and the record low birth rate of about 1.7 babies per woman. Mackay contends that children are the social lubricant that precipitates social contact for many. Other culprits cited by Mackay in our increasing social fragmentation include increased mobility. Australians move on average once every six years. We also have virtually universal car ownership. We are all busy. We do not seem to have the time or the energy to devote to maintaining connections in our local neighbourhood. The final contributor he mentioned is the information revolution and Australian's addiction to our devices.
So what kind of Australia is Mackay reimagining?
"I am imagining a place where we do politics differently, where we do employment differently, gender differently, religion differently, education differently. But above all, I am imagining a place where compassion becomes our defining characteristic. Where kindness and respect are taken for granted as the best way to treat each other, especially those we disagree with."
Download the full transcript.
Article published in The Conversation
Tuesday, 24 April, 2018Close Article
The question of opening the Northern Territory and South Australia to fracking has re-ignited concerns about environmental and health impacts.
Receiving less attention are the social and economic changes affecting nearby rural communities from this natural gas development and the social stress that can result.
From 2012, I led a team analysing trends in key social and economic indicators over the past 15 years in Queensland’s largely agricultural Darling Downs, where over A$20 billion has been invested in coal seam gas (CSG) development since 2011. We also interviewed and talked with over 200 residents and business owners. Social stress emerged as the most visible health impact of this coal seam gas development.
Staff in both government and the gas industry agree that stress is an important impact. Our findings are reinforced by studies in the Darling Downs by numerous researchers and research students as well as extensive work in North America on resource boomtowns.
One resident said that the region had been “hit by three significant events – extended drought, local government amalgamation, and coal seam gas development”.
Residents in community meetings expressed concern about potential effects of coal seam gas development on the amount and quality of groundwater and about possible health impacts.
Their concerns were compounded by low levels of trust in the oil and gas industry and a mix of distrust and trust in the government regulator’s ability to manage the industry. This lack of confidence can contribute to psycho-social stress.
The coal seam gas construction phase in the Darling Downs brought migration and an increased pace of work. That made informal emotional support harder to find as “social capital” had declined.
We were told of older, stalwart residents selling their homes at the premium prices brought by the development boom. Grandparents who had provided temporary childcare left as more women entered the workforce. At the same time, the number of childcare staff fell when the Commonwealth government boosted the required qualifications.
Population turnover increased, according to ABS statistics, from 10-15% per year before the CSG boom to 15-20% per year during the boom. The number of nonresident workers peaked in 2014 at over 9,000 for the Western Downs local government area, which has 30,000 residents.
Arguments about whether the CSG development was good or bad for the community exacerbated a decline in the number and strength of bonds among residents. Interviews suggest that these arguments – both in the gasfield towns and within Aboriginal groups along the gas pipeline route – split neighbours and families.
Business and employment opportunities with the resource industry reduced financial stress for some but increased it for others. Tax statistics show that net business income in Chinchilla outside the agricultural sector grew from A$5.8 million in 2011-2012 to A$29 million in 2012-2013. Wage and salary earnings for the town’s 7,000-plus residents rose from A$132 million in 2010-2011 to A$213 million in 2012-2013.
Many business owners faced longer opening hours, a need to pay higher wages, greater turnover among staff and uncertainties about whether to invest in more capacity.
Resource sector incomes were seen to be significantly higher than those in agriculture, education, police, health and social services. There is a two-speed economy here, residents noted. Studies in organisations suggest that this sort of sense of unfairness contributes to psycho-social stress.
The construction phase for coal seam gas development resulted in a surge in housing costs. Rents rose dramatically in Chinchilla, where 20-30% of residents live in rental housing. Median rent on a three-bedroom house went from A$280 per week in 2011 to A$400 per week in 2013. That is despite most industry staff and tier-one contractors living in camps outside the town. Lower-income families moved away.
The rate of construction of new housing climbed. Chinchilla had 106 residential building approvals in 2011. That more than doubled to 252 in 2014, just as the CSG construction phase ended.
Overbuilding caused rents to plummet. Median rent on a three-bedroom house fell below where the historic trend said it should be, to A$200 per week in 2016. Low rents attracted families on government support. Their numbers increased 65% in a two-year period, according to Centrelink statistics.
Drug arrests had bottomed out at 4.3 per thousand population in 2012 during the coal seam gas construction boom. By 2016, this figure climbed to 35 arrests per 1,000, well above the Queensland trend. The number of police on the street heightened concern among Chinchilla’s residents, interviews revealed.
So, one can see a distribution of economic benefits but also a distribution of social stresses accompanying development of this resource infrastructure. Psycho-social stress can accumulate when changes cause a drop in “social capital”, reducing informal support, and when there is less access to, or use of, mental health services. Prolonged stress can contribute to cardiovascular disease and decreased immune function.
Further investigation can identify how best to provide the needed duty of care for rural communities near such resource development.