The nuanced story of regional inequality in Australia

by Danielle Wood, John Daley and Carmela Chivers

Submission to the Senate Economics References Committee, Wednesday 2 May

The idea that regional Australia has been ‘left behind’ by the big cities is widespread, and politically potent. There is some truth to the sentiment, but it’s important to recognise the nuance behind the concern, write Grattan Institute Program Director Danielle Wood, CEO John Daley and Associate Carmela Chivers in this submission to a Senate committee inquiry. Firstly the aggregate trends in economic growth don’t capture the significant population shifts that are occurring within regional Australia and between cities and the rest. For instance, even though total incomes have grown fastest in cities, average income per person has kept pace in the regions. Secondly, the division between regional and city Australia conceals significant variation between regions and within cities – as is the case for unemployment rates, which are very high in some regional areas but low in others. Policy makers should therefore focus on identifying the differing needs of city and regional communities. And they should recognise that regional inequity is driven primarily by population shifts which reflect large structural shifts to Australia’s economic geography. It is not possible to push economic water uphill, but there are things governments can do to ease the transition.