News and published articles in 2020 to 2017
Saturday, 11 April, 2020Close Article
As the COVID-19 crisis unfolds, the economic implications are deepening. Disturbing reports of rising unemployment have sadly become commonplace in recent weeks.
A recurring observation by economists and officials is that the COVID-19 crisis has different economic implications than the global financial crisis (GFC). But what does that really mean?
As many of us know, the GFC began with the collapse of the US housing market. As the crisis escalated, households attempted to bring down their own levels of debt. This decline in household spending saw US economic activity grind to a halt as demand for goods and overall spending by the community sharply declined. Remember: one person’s spending is another’s income.
What started as a ripple ultimately turned into a tsunami that rolled across the entire globe.
We are facing another global economic shock spurred by COVID-19 – but the nature of this crisis differs from the GFC in two important areas.
First, the global economy is absorbing this shock from a less than robust base because many countries and households are still recovering from the GFC hit in 2007-08. That includes Australia as evidenced through the country’s persistent underemployment, job insecurity, rising wealth inequality and stagnant household consumption. More startling is that many countries within the Eurozone, including in Greece, Spain, Portugal and Italy, have not recovered from the GFC at all.
The second point of difference is that, through COVID-19, the global economy is feeling the combined effects of shocks to both supply and demand. By contrast, the GFC was primarily a ‘demand’ shock. Households and industry pulled back on consumption, and the economy suffered as a result.
Under COVID-19, demand for some goods is thriving to the point where supply cannot keep pace – think medical supplies and basic household items (toilet paper, cleaning products, pasta, etc.). Compounding this supply shock is that production worldwide has slowed significantly as a result of lock-downs of whole regions and countries – the World Trade Organisation has estimated that global trade flows will contract by 32%. (Source)
Unsurprisingly, economic uncertainty means that most people are also holding back their spending on ‘non-essential’ items until we are in safer waters. So, on the flipside of the supply shock, we are facing a reduction in demand for many goods and services, and that demand is what keeps the economy strong. Notably, history tells us that austerity does not work as a response – failing both during the Great Depression and in the aftermath of the GFC. While an inclination to sharply pull in our belts is understandable, it spells a potential increase in the duration and intensity of economic pain.
The swing of the pendulum between these supply and demand shocks needs to be balanced as quickly as possible to recalibrate the continuum and minimise the economic hit. That is what governments are working feverishly to address. The challenge is to fill the gap in aggregate spending and generate confidence to encourage broader, more sustained economic activity.
Our saving grace will be for the Federal Government to spend, and spend big for a prolonged period.
The Federal Government’s recent stimulus packages are a strong step in that direction, but will it be enough? The Rudd government injected around $40 billion in its initial response to the GFC. Given the current state of the Australian economy – with 50% of Australian businesses already reporting adverse impacts during March (Source) – a direct fiscal response is imperative, and that is what we are seeing, including this week’s welcome instalment of a $130 billion wage subsidy.
In designing and implementing the stimulus, a first priority has been a sugar hit through large cash injections to households and tax relief for businesses. Although both are helpful, such measures will only be effective if these dollars are channelled back into the economy through spending rather than pocketed to safeguard against an uncertain future. Our economy will only thrive when firms are hiring staff and investing in new assets. But hiring and buying will not occur without direct, sustained cash flow support to households over the longer term, as it is household demand for goods and services that underpins strong economic activity.
Admittedly, we are only at the start of this economic crisis, and the playbook is unwritten. Balancing the budget as the prevailing mantra has been parked for now as the Government throws as much as possible toward keeping the economy moving.
Yes, the path ahead is unknown. One certainty is that the effects of prolonged lock-downs will continue to reverberate across every home and business for months – and possibly years – to come. This recast future compels governments and indeed all sectors to rethink their approaches to sustainable economic management and growth.
George Pantelopoulos, Researcher, HRF Centre
11 April 2020
Friday, 28 February, 2020Close Article
Businesses’ expectations for the Hunter economy for the next 12 months stayed optimistic on balance, and steady over 2019. This follows a sharp downward correction in levels of optimism in the second half of 2018. However, household confidence in the regional economy – both short and long term – weakened notably in the second half of 2019, the Hunter Research Foundation (HRF) Centre reports.
Households are now on average pessimistic about the fortunes of the Hunter economy in the next 3 and 12 months.
Dr Anthea Bill, HRF Centre’s Lead Economist, will present the latest national and regional economic update at the Hunter Economic breakfast at NEX Wests City on Friday, 28 February.
“Business performance partly rebounded between June and December last year,” Dr Bill said. “This was driven by improvements in profitability and trading. Business confidence, however, softened markedly. Consequently, capital expenditure intentions of business over the next 12 months weakened. Hiring intentions also remain below average.”
Hunter house prices declined by over 4 per cent for the year to September, although quarterly declines appear to be slowing. New house approvals also fell by 9 per cent in the region, led by a 30 per cent fall in Lake Macquarie. The value of the pipeline for residential and non-residential approvals in the region still stands at $2.9 billion, owing to an increase in the value of non-residential in late 2019.
Dr Bill said Hunter households’ spending for the last 3 months increased but remains below the December average for the last two years and well below pre-GFC values. Australian consumers continue to be cautious, choosing to reduce their discretionary spending in favour of saving and paying down debt, Dr Bill reports. Private sector wage growth remains weak.
“Ongoing weakness in the household sector may flow through to impact the region’s business confidence,” she said of the regional outlook. “On the upside, recovery in the housing market may bolster household spending in 2020, although wage growth is predicted to remain weak.”
Monday, 3 February, 2020Close Article
What will the region be like in 40 years – economically, socially and environmentally? How can we tell from current trends in technology, social and economic changes, and shifts in global markets?
To explore these questions at the national scale, the CSIRO employed data and modelling to produce - Australian National Outlook 2019: Securing our nation’s future prosperity (ANO). Their findings, and how they apply to the Hunter region, will be the focus of the Hunter Research Foundation (HRF) Centre's economic breakfast on 28 February. The event features CSIRO's leader for the effort, Dr Peter Mayfield.
Mayfield will describe what the study team found and how they found it. He will also outline what it might take to undertake a similar, collaborative effort for this region, a 'Hunter Outlook'.
The 2019 report builds on the Australian National Outlook 2015. That was CSIRO's first attempt to understand and analyse elements in the economy that would affect Australia decades into the future.
For the Australian National Outlook 2019, over 50 leaders from 22 non-government organisations met over two years. Involved were organisations ranging from the ASX and Australia Post to Lendlease, PwC, Shell and Uniting Care. They discussed the CSIRO’s analysis of scientific and economic data. The data modelling addressed the future of Australia’s natural resources and energy, productivity and services, and cities and infrastructure.
CSIRO’s role in ANO was to provide the underpinning science, through its integrated modelling and research capability, to analyse the issues identified by the industry, not-for-profit and education sector participants.
The resulting report outlines two future scenarios for Australia’s economy, environment and society. The first scenario sees the nation facing a ‘slow decline’ if it takes no action on six key economic, social and environmental challenges. The alternative scenario involves tackling those challenges to achieve a positive ‘Outlook Vision’ - an inclusive, resilient and prosperous Australian economy.
Achieving the Outlook Vision will require significant action and long-term thinking across a range of issues, according to the report. Five core shifts were identified as necessary, and you will hear more about them at the breakfast.
The ANO report was designed to help stimulate a national discussion about Australia’s future, and encourage action towards a more positive future, states Mayfield. It identifies some of the challenges that we face as a nation, including the rise of the Asia-Pacific as a key economic power; technological change and future workforce preparedness; climate change and the environment; population growth and ageing; and declining levels of trust and social cohesion.
The ANO report offers a roadmap to a future of inclusive communities, globally competitive industries, sustainable use of natural resources, a healthy environment and strong social capital.
“ANO does not prescribe a particular policy position but rather aims to trigger a national dialogue on the choices available to secure Australia’s future,” Dr Mayfield said. “As such the ANO aims to guide decision-makers – business, universities and other research institutions, community groups, and government – in developing actions today that will shape a strong and prosperous future for all Australians.”
Informing conversations and facilitating action by stakeholders on the region’s current challenges and future options is central to the HRF Centre’s mission. We are keen to see what appetite there is for development of a ‘Hunter Regional Outlook’ view into the future.
That would be timely given development in 2019 of the Committee for the Hunter, which the HRF Centre helped to facilitate. A future vision would also align with findings of the Smaller and Smarter Cities International Symposium and the impetus for collaboration, inclusion and experimentation in the region.
Such efforts could be aided by the recently announced appointment of Alice Thompson as the first CEO of the Committee for the Hunter. Thompson was a senior policy adviser to the Prime Minister during Malcolm Turnbull’s tenure. She has experience working for both state and federal government on infrastructure and regional development, such as the Western Sydney city deal. She has most recently been with the cities and regions team at KPMG. She takes up her new role in March.
For 2020, the HRF Centre will build on the research, analysis and engagement of the past year on workforce and energy futures, population growth and distribution, business innovation, gender equality and inclusivity.
This focus on the ANO in the first HRF Centre economic breakfast for 2020 is meant to progress discussion on the need to illuminate paths forward for Greater Newcastle and the Hunter region. The Hunter region economic update by Dr Anthea Bill will also be presented at the breakfast. It features recent unique survey data from the Centre’s Hunter Pulse.
The future of the Hunter is the focus of events in February and March, as well. Lake Macquarie’s economic strategy will be outlined at the ‘Hunter Briefing’ of UDIA’s NSW branch on 27 February. RDA Hunter’s 2020 Regional Development Summit on 26 March will examine the Hunter’s industrial landscape as well as national and global trends.
This opinion piece by Professor Will Rifkin - Director, HRF Centre - was published in the Newcastle Herald on Saturday, 1 February 2020
Tuesday, 10 December, 2019Close Article
What factors help Newcastle and the Hunter to realise our best future? How can we cultivate collective effort within the region and investment from outside the region?
Addressing these questions has been at the heart of the Hunter Research Foundation (HRF) Centre’s efforts in research and engagement. For example, our 2019 forums and events have enlisted numerous expert speakers to provide insight on leading practices nationally and globally. We have also shared research insights via this column and various, publicly released reports.
That includes contributions to Australian Community Media’s special publications including Hunter: Our Backyard and future Focus. There is the recently released Gateway Cities report, highlighting the economic potential of Newcastle, Geelong and Wollongong. That work resulted from collaborative research conducted by the HRF Centre in partnership with Deakin University and the University of Wollongong.
The report included a section on population growth as an important enabler of economic growth. The Hunter region has benefitted from trends in Australia’s internal migration, which were outlined by the HRF Centre’s Lead Economist, Dr Anthea Bill, at our November Hunter Economic breakfast. She explained that Newcastle and the Hunter are attracting an increasing share of out-migrants from Greater Sydney. Of the 97,000 residents who left Sydney in 2017-18, 7,000 went to Newcastle and Lake Macquarie, the biggest share moving to regional NSW. A further 5,000 went to the rest of the Hunter.
Dr Bill compared the Hunter’s rate of population growth to that of Geelong, now one of Australia’s fastest growing cities. ABS data show a 2.7 per cent rise in its population between 2017 and 2018, above the 2.5 per cent for Greater Melbourne. Melbourne is considered to be one of the fastest growing cities in the developed world.
“A number of government agencies have re-located to Geelong in recent years,” Dr Bill explained. “It has also developed transport infrastructure to improve its links to Melbourne and further. It has an active Committee for Geelong and secured a City Deal in March of this year. That virtuous cycle of investment and advocacy seems to be paying off for Geelong.”
Development of the Committee for the Hunter has been supported by the HRF Centre with research, advice, facilitation, and engagement over the past two years. The Committee now has 40 members, with commitments of more than $300,000 per year for membership. It is currently finalising selection of its first CEO.
The value of such bodies to foster collaboration was addressed by Lucy Turnbull AO at the Hunter economic breakfast in July. She is a former Chair of the Committee for Sydney and current Chair of the Greater Sydney Commission.
“Organisations like the Committee for Sydney, and the Committee for the Hunter, have a huge role to play in championing and articulating what is important for the city or the region,” she stated. “It is where everyone has a common purpose: to make their city, or their region, work as well as it can. Having that multiplicity of voices is really important.”
The unity of purpose, offered by the Committee for the Hunter and other representative groups including the Hunter Joint Organisation of Councils, has been shown to drive regional development. It has been a common element in the Australian regions awarded City Deals, according to research from Regional Australia Institute.
The need for a multiplicity of voices was reinforced by delegates at the Smaller & Smarter Cities International Symposium organised by the HRF Centre in Newcastle in October. It was one of three priority areas that they identified to strengthen Greater Newcastle and the Hunter as a place to live, work, invest and visit. An Outcomes Workshop at the conclusion of the Symposium identified needs to: experiment and innovate; offer everyone a role and a voice; and bring it all together with clarity about who is doing do what.
The Symposium drew 350 participants to hear from more than 35 speakers and panellists over 30+ sessions. The outcomes build on those from the inaugural Symposium in 2018, such as a need for a clearer identity and positioning of Greater Newcastle. This topic was the focus of workshops in March and November of this year. The effort engaged the HRF Centre with Enigma and Aurecon, with support from state government via the Hunter and Central Coast Development Corporation.
Identity and positioning for the region were taken up by four teams of young professionals in the HunterNet Future Leaders program. The HRF Centre supported the teams with data, connections and insight. The winner made a case for ‘HealthPort’, a regional health and innovation ecosystem emerging from redevelopment of the John Hunter Hospital precinct.
The HRF Centre has been informing conversations and facilitating action by stakeholders on the region’s current challenges and future options. In 2020, we will continue to support the Committee for the Hunter and other collective efforts, while collaborating on research to reveal paths forward for Greater Newcastle and the Hunter region.
This opinion piece by Professor Will Rifkin, HRF Centre Director, was published in the Newcastle Herald on 7 November, 2019
Monday, 25 November, 2019Close Article
Changing the narrative on Australia’s regions - in terms of jobs, the ability to absorb population growth and the affordability of housing - is the aim of new research from Regional Australia Institute (RAI), a Newcastle audience heard from Liz Ritchie.
Ritchie, co-CEO of RAI, was guest speaker at the HRF Centre’s Hunter Economic breakfast on 15 November. She said that the RAI are moving from a focus on research to greater regional engagement and ‘activation’, that is, stimulating action as a result of the research findings.
Part of the new focus is the Future of Jobs research released by RAI in August this year. Ritchie says this study aims to ‘bust myths’ about a lack of opportunities in regions. RAI have started a jobs campaign to highlight opportunities for employment in regions, highlighting the 48,000 current job vacancies. That figure should be doubled to give a more realistic assessment of jobs, Ritchie said.
“The dominant narrative had been that there are no regional opportunities,” Ritchie stated. “That is not the case. There is immense opportunity.”
The RAI has also examined the rapidly changing nature of work. Knowledge sector jobs in health and education are by far the fastest growing segments around Australia. Of the 13,000 jobs vacant in NSW, the highest number is in professions. This story is emulated across the country, Ritchie explained.
RAI has created a Regional Jobs Vacancy Map, an interactive online tool using publicly available data. The RAI tool shows nearly 3,700 jobs available in Newcastle and the Hunter region. The job numbers broadly correlate with population growth figures, Ritchie said. The impact of population changes on job vacancies have been more pronounced in inland and other regions than in the Hunter.
“The Hunter is ahead of curve,” Ritchie told the 260-strong breakfast audience. “You are quite unique in that the Hunter’s trend shift, from technical and trades to professional, occurred 10 years ago. This shift has put you in a better position, as you were able to pivot earlier and plan for some of the changes befalling the region.”
Other regions, for example Riverina/Murray, had seen the shift from labouring to professional employment occurring only in the last five years. It has been more difficult for them to transition their workforce capabilities and fill those jobs. Some regions are experiencing 10 to 20 per cent growth in vacancies while unemployment continues to rise. So, there is a mismatch between capabilities in the workforce and the skills required. Many regional localities are also experiencing population loss.
“Regional job vacancies are growing faster than metropolitan vacancies,” Ritchie stated. “There are distinct challenges in regional Australia that are not well understood. It is RAI’s role to help people understand those issues.”
Ritchie also discussed the RAI’s recently released report, Regional population growth, are we ready?
The report addresses predictions by the Australian Bureau of Statistics (ABS) that Australia’s population could increase by 75 per cent by 2056. The RAI had modelled different scenarios of settlement. Under their business as usual case – the ABS predictions currently relied upon by NSW Government and other planners – the majority of growth will occur in the outer suburbs of capital cities. Congestion in Sydney would increase by 60 per cent, Ritchie said. She invited the audience to consider the implications for liveability in Australia’s cities.
The RAI report offers alternative scenarios for population growth, with settlement distributed to regional Australia. They explored where the five-million people predicted to flood into Sydney’s west could reside in future if a significant percentage were dispersed to the regions. One scenario would see the Hunter’s population swell to 1.9 million.
The research modelled the impact on incomes, house prices, unemployment, and commute distances. House prices and commute distances would be better in Sydney using the distributed population model. For the regions, incomes would be slightly higher, and there would be a slight increase in house prices. This outcome scenario would retain regional advantage over the cities in terms of the ratio of house price to income.
“All in all, the economic impacts [of dispersal] are not too damaging,” Ritchie said. “From an economic perspective, the outer suburbs of our capital cities resemble regional centres. There are many similarities, and those similarities are not well understood.”
Average income levels are comparable, with a difference of less than 10 per cent between outer Sydney and the Hunter region, the research shows. Employment rates are identical, and there is only a small differential in productivity.
Employment is a compelling reason for people to move to regions, Ritchie stated. The reasons they stay, however, are quality of life and the cultural identity of regional Australia.
“There has never been a national campaign to promote the opportunities that exist in regional Australia,” she explained. “At the RAI, we want to create one. Think about that national campaign and the opportunity to change the narrative on regional Australia and why it is so important.”
Monday, 18 November, 2019Close Article
Australia is on track for substantial population growth in the coming decades. How much of that growth will be seen by Greater Newcastle and the Hunter region?
The country will add 19 million people by 2056, a 75 per cent increase in the population forecast by the Australian Bureau of Statistics. Current trends and current policy will turn the major capital cities into megacities, says the Regional Australia Institute (RAI) in their recently released, National Population Plan for Regional Australia.
There are options, though, according to the RAI’s co-CEO Liz Ritchie. She will be the guest speaker sharing results of RAI’s research at the HRF Centre’s Hunter Economic breakfast on 15 November.
Under the ‘business as usual’ scenario, the RAI estimates that an additional 270,000 people will call Greater Newcastle home by 2056. This figure is in line with the growth forecast seen in the NSW government’s Greater Newcastle Metropolitan Plan.
What is the ideal size for the city and the region? What if Greater Newcastle became home to two-million people - one scenario modelled in the RAI’s report?
The RAI’s national study examined alternative patterns of population growth in Sydney and NSW in terms of three scenarios:
- ‘Business as usual’ – a continuation of current policies and trends;
- Growth concentrated not just in Sydney but also in Greater Newcastle, Shoalhaven and Wollongong; and
- Growth dispersed across the regional centres of Greater Newcastle, Wollongong, Shoalhaven, Canberra, Port Macquarie-Hastings, Tamworth Regional, and Wagga Wagga.
Under the RAI’s business-as-usual base case, commute distances in outer Sydney – a proxy measure for urban congestion – will increase by about 60 per cent by 2056.
Those figures would rise by just 15 per cent under the ‘alternative distributed’ population scenario (option 2 above), where growth was distributed to Greater Newcastle, Wollongong and the Shoalhaven.
A compelling vision for a single economic powerhouse region – incorporating Wollongong, Sydney and Newcastle – is offered in the Committee for Sydney’s 2018 Sandstone Megaregion report. The report recommends a network of rail connections coupled with a coherent strategy that promotes complementary economic roles for each of the centres.
There is no significant economic penalty for such strategies that distribute population growth, according to the RAI analysis. Only small differences are forecast in the unemployment rate, income and house prices across the two alternative scenarios. However, policies to maximise education and employment opportunities in regions would be needed, the report explains.
That is due to a chicken-and-egg question in relation to population growth in a city or region. Which comes first, the higher population – which can provide a skilled workforce - or the jobs to attract people? Either way, education and training must assure that employees are suited to future market needs and modes of working.
Population growth was addressed in the recent Smaller & Smarter Cities: International Symposium, held in Newcastle in October. This second annual symposium was organisedby the HRF Centre with lead partners - the City of Newcastle, Hunter and Central Coast Development Corporation, Hunter Water and AECOM.
Regional development expert, the University of South Australia’s Professor Andrew Beer, shed light on the drivers of economic growth, based on research for the RAI. He found that economic diversification succeeded where it occurred within a region’s general areas of specialisation. For example, underlying strengths in steelmaking have enabled growth in Whyalla, South Australia, he noted. This success in specialisation was also highlighted in examples provided by Dr Stefan Hajkowicz, a specialist in megatrends and Director of CSIRO’s Data61.
In a symposium keynote, Hajkowicz described megatrends related to health, business, technology, and climate. He related a tale of two US cities – Pittsburgh and Detroit – that had very different outcomes in transitioning their economies from heavy industry bases.
Pittsburgh made what is recognised as a successful transition. Pittsburgh was supported by government programs and internal initiatives to shift from manufacturing and selling steel to selling steel know-how. Over a 20-year period, the city attracted two academic and eight corporate centres for steel-related research.
Detroit appeared to have no coherent Plan B beyond car manufacturing. Changing markets and international competition led to huge job losses. The City of Detroit filed for bankruptcy with a $US24 billion debt. Recovery of Detroit’s economy, now beginning, will be based in reinvention, Hajkowicz argued.
Areas of strength for the Hunter were identified by symposium participants. The list includes the natural environment, infrastructure, energy, technology, medical and health research, education and advanced manufacturing. In these areas, job clusters could stimulate and support the population growth that the RAI says is possible. Steps toward such growth or to pursue alternatives,the experts and international examples suggest, can be realised through collaboration and vision - the HRF Centre’s theme for 2019.
This opinion piece was published in the Newcastle Herald on 9 November, 2019.