Submission to: Regional Business Development Analysis "Help us help you build a stronger regional business environment" Submitted by:
30 Marine Terrace, Burnie, Tasmania PO Box 338, Burnie, Tasmania 7320 Telephone: (03) 6431 6285 Facsimile: (03) 6431 7014 October 2002 Prepared for the Cradle Coast Authority by Thirza Cottage, 27 Kirksway Place, Battery Point, Tasmania Telephone: (03) 6223 3333 Facsimile: (03) 6223 2299
Table of Contents Executive Summary ...............................................................................3 Introduction ............................................................................................5 Who we are ....................................................................................................................5 The Region Covered by the Cradle Coast Authority ..................................................6
Regional Australia and Regional Development Assistance ................7 The Consequences of change......................................................................................7 Regional Policy ..............................................................................................................8 The regional policy tools that are available to governments......................................9
What affects the performance of regional economies? .....................11 Regional policy - what should be done...............................................15 Striking the right balance ............................................................................................ 15 What are the Impediments to encouraging regional development?........................ 16 Government services .................................................................................................. 17 A long-term approach.................................................................................................. 18 A national regional policy framework......................................................................... 20 Regional Policy â€“ government responsibility? .......................................................... 20 A role for regional development bodies..................................................................... 21 Attracting investment................................................................................................... 23
Education .............................................................................................25 Why would business locate in a regional area ...................................27 Other Issues .........................................................................................31 Infrastructure â€“ telecommunications.......................................................................... 31 Enterprise Zones ......................................................................................................... 31 Population..................................................................................................................... 32 Competition .................................................................................................................. 33
Recommendations ...............................................................................34 Conclusion ...........................................................................................37
Executive Summary The Regional Business Development Analysis represents the most comprehensive inquiry into factors affecting regional business ever undertaken in this country. The Cradle Coast Authority, which represents the most regional areas of, arguably, Australia’s most regional state, considers this inquiry to be a significant opportunity in helping to forge a positive and prosperous future for Australia’s many regional communities. The Authority’s submission, whilst certainly not a comprehensive analysis of all factors affecting regional development, contains a brief consideration of many of these factors and includes a set of sixteen recommendations that the Authority considers important in achieving the development of sustainable regional business. The Authority would appreciate the opportunity to provide more detail on the matters discussed in this submission when it meets with the Panel, including more information on practical applications of many of its recommendations. The Authority considers that there are a number of very good reasons justifying government intervention at various levels to assist regional development. However, to achieve results through government intervention, regional policy should not be developed and implemented in a ‘one size fits all’ manner. Although many of Australia’s regions have economic disadvantage in common, the underlying reasons for their problems vary enormously – as do the potential solutions to those problems. The complexity of factors affecting regional development is high and any serious approach to dealing with those factors must be both flexible and able to be implemented in a manner that responds appropriately at regional levels. The high level of complexity also suggests that there are benefits to policy makers in making use of the regional knowledge and understanding of regional development bodies. Some regions are now developing their own capacity to make policy decisions based on their own assessments. The Authority argues that regional policy should enable and encourage this trend. It is the Authority’s position that for there to be a realistic level of local ownership of regional development policies, regions must be encouraged to develop their own visions and strategic blueprints for their future.
This could be done as part of the development of a national policy framework that enables and supports regions to undertake audits of their strengths and weaknesses, identify their needs, plan for their future and receive program support in areas where such assistance will lead to long-term sustainable economic development. Similarly, partnerships between regional development bodies and governments at all levels present the best opportunity to ensure that sustainable regional business can be developed. Such bodies are best placed to identify their own region’s vision and future strategies, expectations and capacities and should be resourced and enabled to partner other levels of government. In an overall sense, the Authority believes that regional policy should focus on assisting regions to become more economically efficient and to create conditions where an enterprise culture can flourish. Such policies should focus on improving the ability of regional communities and economies to adapt to and embrace change in a positive manner. Despite this, the Authority strongly argues that a role exists for government to implement measures to address economic and social damage imposed by change. The manner in which government services in general and, more particularly, regional development policies are delivered, is also a matter deserving of considerable attention by the Panel. The Authority considers that all levels of government are currently open to some criticism that their planning and program delivery is less than ideally coordinated. This is probably more so when considering the linkages between different levels of government and between departments. The Authority considers that scope exists to considerably improve this aspect of government involvement in regional Australia. One example of a model worth exploring further is the delivery of government services in regional areas through partnerships with regional development bodies. The concept of ‘Enterprise Zones’ has been raised in an Australian context by various bodies in recent times. The Authority considers that such initiatives have the potential to be a very effective tool in assisting long term sustainable development in Australia’s regions and encourages the Panel to incorporate their exploration into its Action Plan.
Introduction Who we are The Cradle Coast Authority is a joint authority created to coordinate and drive economic development across the nine local government areas of northwest and western Tasmania. The Authority’s primary role is to identify regional priorities for economic development and to broker partnerships between levels of government, industry and community groups to address them. The Authority’s member Councils contribute to its core operating budget, with all regional development activities funded through partnerships and funding agreements with other bodies. The Authority is currently engaged in 26 regional development initiatives including major infrastructure, regional tourism, natural resource management and education projects, based on partnerships with all levels of government, educational institutions and community-based bodies. The Cradle Coast Authority is in a unique position to coordinate regional involvement in State and Federal Government initiatives and regional delivery of government programs. The Authority would welcome any opportunity to address the issues raised in this paper on a partnership basis with other levels of government. In February 2002, the NW and Western regions received $12 million funding under the Federal Government’s Sustainable Regions Program – CCA will take a central role as the nucleus of the Sustainable Regions Advisory Committee to advise the Federal Government on priorities for funding under the Sustainable Regions Initiative. The CCA has entered an agreement with the State Government. This Partnership Agreement includes issues such as economic development and tourism and development of specific sites
The Region Covered by the Cradle Coast Authority The Cradle Coast region includes the municipal areas of the Latrobe, Devonport City, Kentish, Central Coast, Burnie City, Waratah-Wynyard, West Coast, Circular Head and King Island Councils of northwest and western Tasmania. The region is typical of rural and regional areas across Australia. Accepted challenges of physical isolation have been compounded over recent years by the departure of major industrial employers and continuing rationalisation of government and corporate services. Employment has traditionally been based on farming, forestry, retail and trade skills and most families have no direct experience of higher education. University participation rates are among the lowest in the country. Young people leave school early to seek employment, education and training opportunities in larger centres of Tasmania or interstate and the majority do not return to work in the region. Trends include rising unemployment , a declining, ageing population and a growing itinerant professional workforce without established links in local communities. The August 2002 ABS labour force statistics indicate that the Mersey-Lyell region of Tasmania (which includes most of the Cradle Coast region) continues to perform poorly in the employment stakes. 1 At 10.9%, the Mersey-Lyell region now has the second highest level of unemployment in the nation. Only the Wide Bay-Burnett region in Queensland performed worse, with a slightly higher 11.0%. 10.9% is also around 2% above the next lowest Tasmanian region, Greater Hobart (8.7%) and the Tasmanian average of 8.8%.
Australian Bureau of Statistics, 6202.0 Labour Force, Australia, Preliminary, Aug 2002
Regional Australia and Regional Development Assistance The Consequences of change Changes in the way the world economy works, and Australia’s part in it, have created immense pressures for change at both institutional and business levels over the past 30 or so years. These pressures have created a compelling need for re-adjustment at all levels of our economy. And as attractive as it is for some to long for ‘the good old days’, as many residents in rural and regional areas do, the fact is that they no longer exist. It is those parts of our economy that realise this and meet these pressures with appropriate change that are succeeding. For a whole host of reasons, including the general lack of employment alternatives and a more inherent level of conservatism in rural and regional communities, regional Australia has, as a whole, not embraced change as quickly or as successfully as metropolitan Australia. There is little doubt that businesses in rural and regional Australia – and the communities that depend on them – face challenges due to economies of scale, size and proximity to markets and their general location that are not faced by their urban counterparts. These factors and others have led to imbalances in development between regional and metropolitan areas and the need for policies to be developed and implemented to address these imbalances. The Authority is firmly of the view that it is appropriate and equitable for governments at all levels to intervene to redress these imbalances. It would be inequitable to leave the owners of land, labour and capital that is no longer competitive in the marketplace, to bear the full burden of institutional and global change – particularly in a nation as collectively wealthy and civic minded as Australia. The Authority is firmly of the view that it is appropriate and equitable for governments at all levels to intervene to redress the imbalances in development between regional and metropolitan areas.
If the outcomes of change and the pressures for change were simply left to the market to determine, the ad hoc and widespread adjustment costs would place a huge burden on the taxpayers of Australia in other ways, such as social security, consequences of crime, health costs and so on. The Authority argues that it would be far better to spend these funds in a coordinated, strategic fashion to assist regions to adapt to change by improving their competitiveness and their comparative advantages. Regional Policy The questions that need to be answered, are how far should government go in developing and implementing regional policy to redress the imbalance and how should this be done. Regional policy is not a new concept. The Regional Business Development Analysis own Literature Review, conducted in June 2002, highlighted the vast array of different approaches and measures developed and implemented in the United States of America and Europe, in the name of regional policy. Many of these were less than successful, others showed promise. Regional Policy has been defined as: A policy, adopted by government, aimed at redressing uneven development within a country. The incentives for a government to tackle regional imbalance include: a desire to alleviate regional unrest, the wish to unite party representatives from poorer, as well as richer regions, a yearning for social justice, the need to check out-migration from disadvantaged regions, and the ambition to use fully the human resources and plant of a declining area. Measures include: improving the infrastructure; building new towns to move people away from poor housing stock and to stimulate the construction industry; and providing inducements to new industry to locate in the area in the form of tax incentives, grants and subsidies, and the provision of purposebuilt factories.
Recent thinking, however, has argued that disadvantaged regions will be regions of cheap labour which will ultimately attract investment without government intervention or expenditure, and there has been a shift in Britain from assistance at a regional level to assistance to smaller, welldefined units.2 The Authority considers this definition to be useful, but acknowledges that it is not exclusive and all-encompassing. In particular, the Authority would like to stress that it considers any consideration of regional policy, its development or application, should always have as its underlying objective the creation of employment and investment opportunities in regional areas.
The regional policy tools that are available to governments It is important to remember that it is much easier for governments to assist people through change processes in large communities as there are far more existing and readily accessible social and educational services and highly diversified job markets. Nonetheless, there are a whole host of tools available to governments at all levels that, subject to available resources and competing priorities, can be utilised as part of measures intended to redress regional economic development issues. Changes that effect the economy Australia-wide in areas such as industrial relations, taxation, employment and training and macroeconomic policy effects on inflation and interest rates, all have the potential to benefit regional areas. Continuing microeconomic reform involving the removal of impediments to change is an important aspect of governmentsâ€™ role in this regard. The serious addressing of the regulatory burden on small business also provides governments with an opportunity to assist regional businesses improve their levels of competitiveness.
A dictionary of Geography, Oxford University Press, ÂŠ Susan Mayhew 1997
There is an important role for governments to play in assisting communities to identify where they have excess capacity, or where capacity can be built and in disseminating information on opportunities in the wider Australian community. Governments may also take a role in facilitating the development of appropriate major infrastructure projects needed to improve the competitiveness of regions, by assisting to ‘kick start’ or ‘open doors’ to projects in a variety of ways. Other options available to governments include the use of community service obligations and/or cross subsidies to ensure that an agreed minimum standard of basic services is provided to regional Australians in areas such as education, telecommunications, health, transport and the provision of general government services. Governments have long financed industry restructuring schemes for primary producers to help less viable producers leave the industry. Similar schemes for residents and businesses in small and declining regional areas have only begun to be tried and could be explored further. More specifically, government can introduce measures that: • Encourage investment in research, commercialisation and entrepreneurial capacities, building regional networks to ensure that knowledge and technology transfer is maximised and innovation is widely adopted • Encourage investment in regional strengths and the promotion of regional specialisation in areas where competitive advantages may exist, or can be created • Encourage development of business relationships between urban and regional areas, to ensure that the potential mutual benefits obtainable from strategic interaction are maximised. • Provide marketing assistance to regions, to enable and foster the better selling of regional business strengths to existing and potential investors and developers. • Foster the establishment of public-private sector partnerships to jointly achieve agreed visions and blueprints • Encourage and reward a region’s capacity to identify its own needs and problems and for taking responsibility for them.
What affects the performance of regional economies? Despite the obvious and clear imbalance between development in rural and regional areas and Australia’s metropolitan areas, there are many instances where regional Australia is forging ahead. Regional Australia is dynamic as are the conditions faced by regional Australia. As noted by Professor Sorensen, ‘Rapid economic expansion in some places leads to acquisition of improved or higher level services. Others experience a pattern of circular cumulative decline as reductions in population and services interact in a downward spiral’.3 Consequently, the needs of regional Australia vary widely, with some areas easily attracting the attention of policy makers at all levels and others finding themselves continually ignored. Any examination of those regional areas doing well indicates that they are embracing change, that they have strong entrepreneurial leadership, are fully using the resources available to them and are developing strategic partnerships to help them put in place well thought out strategies. Governments must be prepared to take different approaches to different regions and be willing to provide varying levels and types of assistance in accordance with individual regions’ identified needs and capabilities. This diversity of cause and effect across Australia’s regions also suggests strongly that a highly tailored approach to developing and implementing regional policy will produce better results, than a generic approach. Sorensen argues that there are major groups of factors that create a large interlocking system of cause and effect that leads to the diversity of outcomes experienced by regional areas across Australia.4 These are: • Biophysical resource endowment • Geographical accessibility 3 4
Regional Development: Some Issues for Policy Makers, Professor Tony Sorensen, June 2000 Regional Development: Some Issues for Policy Makers, Professor Tony Sorensen, June 2000
• • • • • • • •
Human and social capital Demography Changing lifestyle preferences Space transforming technologies New production technologies Expenditure on public infrastructure Business management and development, and International events
Sorensen argues that some of these are more susceptible to policy actions than others: 5 Human and social capital includes knowledge, skills, understanding and the fermentation of ideas. It can also encompass regionally owned institutional capacity encapsulated by a region’s willingness to ‘get its act together’ and identify its own needs and capacities. This group of factors can ‘open up new horizons, create new industries, perform existing tasks better and more competitively, assist in personal and institutional adaptation to change situations and generally help individuals to anticipate change and fashion their lives accordingly.’ Sorensen believes that one problem of regional Australia might be its lower ability to jettison old social capital and replace it with newer forms because of innate conservatism or the narrowness of economic social bases, poor networks, small or thinly spread populations and lack of critical mass. He argues that policies aimed at increasing social capital in regional areas should be assessed largely according to their capacity to facilitate rapid adaptation to future opportunity. Demography is also argued as a leading factor handicapping economic growth in regional Australia. He states that low population size and density may impair the quality of leadership, entrepreneurs, networking, and trust or social capital, all of which he notes are important economic development ingredients. Sorensen also notes that developments in space transforming technologies, such as transport and telecommunications and related patterns of investment in these by public and private agencies are crucial to regional well-being. Ironically, he notes that regional residents set great store by better roads, faster railways, better air services, cheaper fuel and lower telecommunications costs, but that, inevitably,
Regional Development: Some Issues for Policy Makers, Professor Tony Sorensen, June 2000
these developments facilitate the domination of regional businesses by urban chains and the eradication of small town businesses. The potential damage to regional retailing as a result of Internet and mobile telephony is also immense as metropolitan e-commerce firms siphon off local trade. One of the most important questions for the future of regional Australia will be it ability to adopt and exploit these technologies to its own ends. However, Sorensen notes that new production technologies may assist regional Australia to compensate for the impact of telecommunications. These developments include genetic modification of plants and livestock, adoption and improvement of Australian plants and livestock, improvements in renewable energy resources, new methods for reducing salination and for handling materials, improved farm chemicals and material and machines, the use of telecommunications to improve service delivery in education, health, banking etc and improved mineral prospecting technologies. Sorensen considers that depending on the speed and incidence of their adoption, such technologies could rewrite the structure of production and employment across regional Australia. The Authority supports this view and believes that assistance in educating, acquiring and utilising new production technologies, as a tool for improving the competitiveness of the regions will greatly assist regional communities and businesses as they adjust to the changes and challenges they face. Expenditure on public infrastructure is traditionally considered to be one of the primary tools policy makers have to influence regional development and the Authority agrees with Sorensen that the level, kind and location of expenditure on public infrastructure by governments and/or private business can have important regional consequences. In any case, the difference between strategic and basic infrastructure needs to be noted. The former includes large one-off projects that aim to kick-start or accelerate the development of particular locations. The latter is usually allocated on a per capita or social needs basis across all regions. Business management and development issues include the availability and distribution of capital, entrepreneurship and adaptability, networking and trust, the
rate of invention and innovation, trends in business organisation (eg franchising), macroeconomic policy and its effects and even National Competition Policy. Sorensen concludes that at the end of the day, most regional communities will only survive through the efforts of entrepreneurial business people continuously making successful investment decisions. One of the major fears among small business operators in regional areas is the threat of big business. Depending on how small business operators approach this threat, this can provide opportunities. Each of these ten groups of factors, containing perhaps 50 variables, may reinforce or contradict each other, may vary from one region to another and certainly represent a â€˜moving feastâ€™ as technologies and conditions change and develop. As such, the processes at work in each region are immensely complicated and very diverse. The problem is compounded in the regional development arena because decisions made in almost all departments of government at all levels can impact on regional development and the ten groups of factors identified by Sorensen. Given the complexity of the factors affecting regional development and the development and implementation of regional development policies, decision makers must make use of regional knowledge, such as that collected and focussed through regional development bodies. Further, government needs to recognise that some regions are now developing the capacity to make their own policy decisions based on their own assessments and that regional policy should enable and encourage this trend.
Regional policy - what should be done It is very easy to argue that Australiaâ€™s regional and rural areas are deserving of assistance from government to provide a level of equality of opportunity and sustainable private sector investment. There are many regions in Australia where, without external intervention (by government), investment simply would not occur, or could not occur to the degree necessary to sustain local communities. In many of these regions, such external intervention will help create the momentum necessary to â€˜kick startâ€™ local economies. In such cases, intervention will assist communities to increase their collective capacity, improve levels of equity in service delivery, address market failures and help regions through periods of structural adjustment. In an overall sense, assistance should help local regions to become more economically efficient to create conditions where an enterprise culture can and will flourish. However, despite this primary purpose when developing regional development policy, there remains a need to ensure that scope exists to take measures to ameliorate the economic and social damage imposed by change on adaptive individuals and communities.
Striking the right balance In developing regional development policy, policy makers have to deal with the perpetual tension between unrealistic community demands for governments to protect their interests and lifestyles and the need to foster communities that embrace and adapt to change. These are important challenges as there is a mountain of evidence available, both from within Australia and internationally, that suggests regional development policies which do nothing more than prop up failing inefficient economies, do not solve problems or reverse decline.
On balance, it appears to the Authority that regional communities are best served through the development and application of policies that will facilitate change and ameliorate the negative effects of change. Similarly, a balance needs to be found between the objective of ensuring all Australians have an equitable level of access to opportunities for economic development and the undesirable outcome of artificially propping up industries, or regions that are in decline. Actions to address regional development need to be flexible in their approach and able to take account of a diverse range of circumstances and resources available to the different regions. In order for there to be a realistic level of regional and local ownership of actions, regions must be encouraged to develop their own visions and strategic blueprints for their future â€“within appropriate government policy frameworks. When developing these visions and blueprints, the local reach, networks and knowledge of regional bodies should be tapped into to ensure that the regions inherited and intrinsic assets, such as existing business capacity, educational facilities, regional leadership, geography, climate and entrepreneurial skills, are fully built in. What are the Impediments to encouraging regional development? In any examination of how to assist the development of regional Australia, consideration must be given to what is holding that development back. Respondents to the Authorityâ€™s survey of businesses and local community leaders (Annexure 1) identified a large number of factors holding back development in the region covered by the Cradle Coast Authority. These included; â€˘ Disincentive to investment because of difficulties in attracting suitably skilled employees
• A lack of awareness by potential investors, both in regional areas and otherwise, of opportunities that may exist for business development in the regions • A shortage of experienced business people, entrepreneurial risk takers, strategic leadership and external business networking • A lack of competitive infrastructure when compared to more urban areas • Perceptions of various shortcomings in the lifestyle of regional areas, whether sporting, cultural, personal or otherwise • A shortage of readily available and competitively priced investment capital • A poor take up of available government assistance (or a poor understanding of its availability) • Anti-development attitude, or at least, bureaucratic difficulties, placed before business and potential investors – particularly at local and state government levels • Lack of coordination between levels of government and within each level as it approaches issues relevant to economic development of regional areas • Low, slow growing population bases leading to lack of economies of scale and inability to meet threshold demand for some goods and services • Poor coordination between local and regional businesses, leading to a lack of partnership and joint venture opportunities and a failure to capitalise on potential economies of scale and increases in purchasing power • Isolation and lack of access to markets • Social conservatism • Poor provision of infrastructure and low availability of suitable correctly zones sites for industry • Lack of coordinated, planned marketing of business advantages, together with necessary information, from community profile data through to baseline site data (eg geo technical etc) • Lack of partnership/joint venture opportunities and appropriate business models that allow local and regional businesses to cooperate confidently • Poor access to ancillary services such as education and health Government services One of the major barriers identified by most if not all of the respondents to the Authority’s survey (Attachment 1) is the problem of governments’ approach to business.
Problems identified varied from ‘anti-development’ attitudes by local councils, through to State government taxes being too high, to a lack of assistance and encouragement by State economic development departments. However, over-riding all, was a general theme that government was failing to provide its services in a coordinated manner that made it easy to comply with legitimate requirements set down by government and to then get on with business. Even where governments set out specifically to assist regional development, it was considered that a lack of coordination existed between different levels of government and between departments of the one government. It is very important that the development and delivery of government policy and services is highly coordinated at all levels of government and that it is responsive and flexible enough to adapt to the different needs of different regions across Australia. To achieve this with any prospect of widespread success, government policies must be kept simple, clear and easy to implement and understand. One option for improving government service delivery would be to deliver regional government services through regional bodies– taking advantage of their high levels of familiarity with local needs and expectations and regional bodies’ capacity to manage and coordinate service delivery at a regional level. Government can then run one stream of funding/assistance into a region rather than manage the implementation of many such streams. The Authority argues that there is a duty on governments at all levels to ensure that they work together in planning and program delivery and provide greater flexibility in the delivery of their programs to ensure they best meet the needs of the communities they are intended to benefit, rather than the ease of the providers.
A long-term approach The Authority is firmly of the belief that the best way of promoting economic development in the regions is to create economic and social climates where barriers to competitiveness are sensitively and carefully removed as incentives are put in place to effectively encourage productive investment and the taking of entrepreneurial risk.
The Authority believes that this can be achieved by facilitating the drawing together of local businesses, education and local and regional leaders, to work towards common, well thought out, regionally developed long term goals. Any stimulus provided by government must consider not only the short-term effects and benefits, but also the long term potential to increase economic capacity. One concern of the Authority is the susceptibility of regional development programs and strategies to the vagaries of the electoral cycle. It is vital that long-term plans and strategies are set up in a manner that will endure beyond the term of governments. A partnership between government and regional bodies could help to establish the enduring nature of strategies, as regional bodies’ objectives and motivations tend not to be as affected by the electoral cycle. Investment in the fundamentals of regional competitiveness means that assistance must focus on: • fostering a stable business environment • setting an industrial relations climate that encourages employers to invest in a skilled labour force • highlighting quality of life advantages and ensuring that government services are delivered in a flexible and responsive manner • improving the capabilities of the workforce through education and training • strategic investment in infrastructure • regional planning and improved planning/land use/bureaucratic processes and • better, more flexible institutional frameworks and the fostering of a culture that supports enterprise and innovation. As has already been mentioned and as was noted by Sorensen6, considerable attention needs to be given to how to foster creative entrepreneurial and adaptive regional economies that are capable of continually renewing themselves. Governments have traditionally encouraged a range of business skills and a low inflation/low interest rate climate to facilitate investment. However, there has been a distinct lack of government programs seeking to develop entrepreneurial cultures or the adequate supply of risk capital.
Regional Development: Some Issues for Policy Makers, Professor Tony Sorensen, June 2000
Some regions have much better resources and infrastructure, strong social capital, effective leadership and a risk accepting culture and will, accordingly, respond better to government assistance. Other regions, that have a combination of poor adaptive skills and modest resources, will respond less well to market driven assistance. In the former, governmentâ€™s role can be limited to helping to create a positive business environment. In the latter, the government needs to try to encourage a cultural shift towards a more adaptive business community and the development of leadership and an entrepreneurial culture. A national regional policy framework The Authority would support the development of a national policy framework that enables and supports regions to undertake audits of their strengths and weaknesses, identify their needs, plan for their future and receive program support in areas where such assistance will help provide a long term sustainable local economy. This needs to be done by engaging regions at their own level. Organisations such as the Authority and similar organisations across the country are ideally placed to undertake audit processes and to implement their findings. This would encourage regional communities to take responsibility for their own welfare and their own future and tap into the direction and motivation of regional communities and provide a process for continual improvement. Above all, there is a strong need for consistent and enduring regional policy. The creation of entrepreneurial and adaptive communities has a long-term benefit, as does the related issues of environmental management, the establishment of venture capital funds, improvements to education delivery and infrastructure development. Regional Policy â€“ government responsibility? Regional policy at all levels of government can affect the well being of regional communities. Constitutionally, regional development is the responsibility of the States. Section 51 of the Constitution does not name it as a Commonwealth responsibility. However, in practice, the Commonwealth is the most influential level of government. Its control
over the national economy and over Australiaâ€™s trade relations is a decisive factor in the economic health of the regions. Additionally, Commonwealth responsibility for telecommunications, the environment, higher education and immigration add to its ability to influence regional development. In practice, it also has the best tools to influence research and development, innovation and supply of risk capital. As such, the Commonwealth effectively controls most of the key policy mechanisms, while the role of the States appears to have evolved into that of a service provider and environmental manager. In practice, the Commonwealth has a far greater potential to influence regional development than do the States. Local government has steadily assumed a greater role in regional development over recent years for the simple reason that community entrepreneurship and leadership are commonly exercised at this level. There is a growing expectation that local leadership can influence local outcomes. To an extent this is correct. However, the difficulty is that this increasing responsibility is not matched by the resources or power to make the changes required. One way that local communities are overcoming these problems is by the creation of regional development bodies, as the nine north west and west coast Tasmanian councils have done in creating the Cradle Coast Authority. By brokering the development of the Authority, the local government has bolstered its ability to engage other levels of government. A role for regional development bodies In view of the difficulties of the Commonwealth utilising its regional policy tools at a local or even a regional level and given the difficulties of implementing regional development policies at a local government level (lack of resources, fragmented approaches, coordination problems and diseconomies of scale) the Authority argues that the best balance is struck when assistance is provided through bodies that represent distinct identifiable regions. In some cases, this will be a local government body. In others, it could be a regional development body, such as the Cradle Coast Authority. Different models will suit different regions. By utilising regional development authorities, the responsibility for regional policy that now falls increasingly on local communities, can be leveraged through the application of the Commonwealth governmentâ€™s regional policy tools. That is, the Commonwealth can effectively apply its tools using the local leadership, networks and understanding of regional authorities.
The Authority maintains that regional community bodies such as itself are best placed to identify their regional requirements and should be resourced and enabled to partner other levels of government. Such arrangements would improve the prospects of the underlying causes of regional decline being addressed, rather than just the symptoms. The Authority’s position is backed up by the Australian Chamber of Commerce and Industry who have stated that ‘…in the main, regional development policy will be initiated at State and/or regional level.’7, The ACCI goes on to note in the same paper, ‘…at regional and community level, policies and strategies to achieve agreed economic, social and environmental objectives must be developed by the regions themselves and based on a cooperative approach by the community, business and government…’. It is also argued by the ACCI, that: ‘…single business entry points, which are best managed and operated by business associations, should be maintained. These should provide: • Information for regional businesses to access urban markets • Information for all businesses about infrastructure in existence and planned in regional locations • Information for larger organisations and government departments about supply conditions in regional areas.’ 8 The Authority strongly supports the ACCI’s argument on this point. Regional business development groups and authorities have evolved in response to regional demand for a body that is capable of drawing together local knowledge, skills and networks into a strong and capable regional organisation. Although it is likely that the ACCI was talking more about business representative groups than regional development groups, the Authority believes that their argument applies. The Authority’s survey results (Attachment 1) also strongly supported a key role for regional development boards, with the Authority being nominated (unprompted) as 7 8
Regional Development, Principles of Regional Development Policy, ACCI paper Regional Development, Principles of Regional Development Policy, ACCI paper
the body best able to undertake some of the tasks needed to promote regional development, by a number of the survey respondents. Comments like ‘The Cradle coast Authority is a better vehicle than local government and would get better results’, reflect the advantageous position a body representing and coordinating the efforts of a distinct regional economy is in. Local jobs can best be created through the application of local skills and knowledge. The incubation of new business can be achieved through measures such as clustering to achieve efficiencies and economies of scale not otherwise achievable in regional areas. Cooperative marketing, joint adoption of new technologies and pooled resources to attain improvements to local infrastructure all prove effective in improving job markets in regional areas. To achieve any of these measures, strong effective leadership and the full cooperation of local industry and government is required at a regional level. Regional development bodies have evolved to fill just this demand for a collaborative approach between industry, government and the community. Attracting investment A strong theme that was highly evident from responses to the Authority’s 2002 survey (Attachment 1) was the difficulty in attracting investment and venture capital into the region. The difficulty of solving this problem was acknowledged by most respondents, with comments like ‘’No solutions in sight’, made by some. However, some suggestions as to approaches that might address this issue were put forward. These included making more use of the Cradle Coast Authority (to market the region to potential investors), the creation of a local investment authority/local pooled investment fund, encouraging other pooled investment funds to invest in the region and the pursuit of joint venture/partnership relationships with business and industry. The Authority also notes that the problems of attracting and retaining capital investment into regional areas are exacerbated by the Superannuation Guarantee Charge. This has had the distinct effect of ‘sucking’ money out of the regions into the large super funds, which are unlikely to invest in regional Australia. This has
severely limited the capacity of regional businesses to invest in their own communities. Additionally, barriers to private sector investment and improvements to infrastructure need to continue to be addressed at a national and statewide level, through the removal or lowering of barriers to investment. The Authority recommends government consider how to redirect compulsory superannuation funds back into the regions, examines government imposed barriers to investment in regions and increases government incentives and programs to foster local development of local/regional investment pools.
Education Education is the key that underlines any economic development strategy seeking to engender long-term changes in regional communities. Major changes to any national or regional economy will always have the consequence that new skills are needed to replace old and this cannot happen without appropriate skills development through training, retraining and education. The many facets of education can assist to increase the ability of communities to accept and adapt to change, improve the likelihood of risk acceptance, strengthen human and social capital and generally lead to a more entrepreneurial, adaptive culture. Skills such as workforce and management skills, professional qualifications and continuous professional development, general interest courses, leadership training, education on new technologies and their business uses and so on all contribute to improved prospects for the regions. The Authorityâ€™s 2002 survey (Attachment 1) sought the opinion of respondents about the role that could be played by educational institutions in regional development. Most respondents were confident that positive developments were underway and working well in this area, but respondents also considered there was much more that could be done. For example, it was suggested that increased links between business and educational institutions to deliver tailored training to both increase workplace skills and foster expanded vision, flexibility and entrepreneurship, should be explored. It was suggested that educational institutions could supply the teachers and teaching resources and business supply the strategic direction, workplace facilities, time and funds (where needed over and above the taxpayer contribution). Examples were cited by survey respondents of successful partnerships, including the Rural Health Clinical School at the Burnie campus of the University of Tasmania and the Integrated Community Network project. The general theme that came through from respondents was the need for more consultation with industry to ensure that education and training leads to a skilled workforce that meets industry needs.
The shortage in meeting the educational skills needed to foster regional economic development and meet the demands of a changing economic climate, is exacerbated by unnecessary barriers that make it harder for businesses and industry in regional areas to access required skills. Of particular concern is the need to ensure that the opportunities for regional education and vocational training are consistent with regional employment patterns, which may have particularities not found as often in more urban areas. These might include a higher proportion of non-continuous employment and seasonal or part time employment. Better communication is also required to ensure that regional businesses are aware of vocational training opportunities and how their take up might benefit their business. As such, the Authority argues that changes to vocational education and training are required that would lead to improved availability of skilled labour in the regions, include better marketing and promotion of training to regional businesses, better attune the VET system to the training needs of regional Australia and introduce flexibilities into formalised training schemes (such as the New Apprentice Scheme) to make them work more effectively for regional industry.
Why would business locate in a regional area The Australian Chamber of Commerce and Industry conducted a survey that was published in the ACCI Review in October 2001. 9 This survey examined the reasons why a decision would be made to invest in regional areas and in doing so, sought answers to two key questions. First, why does a business choose to locate and operate in a regional setting? And, secondly, what impediments are there to the growth of businesses in regional locations? The Authority considers this survey an important addition to the body of evidence in this area, as, prior to this Inquiry, there appeared to be a paucity of available data that looks specifically at regional business performance and what influences regional business activity, particularly in terms of factors affecting decisions to locate. The ACCI survey found that for primary industry, proximity to resources is a critical factor in the decision to locate a business, but that for industries such as business services, construction and retail, these factors are not as acute. 10 The ACCI survey also concluded that lifestyle and family issues are a key factor. The results indicated that these are the top two factors influencing the decision to locate a business in regional Australia as nine out of ten respondents identified them as either important or very important. Almost 50% identified them as critical when considering where to locate their business. 11 Although of obvious interest, the Authority points out that this is a survey of businesses already operating in regional areas and suspects that if the question was asked of metropolitan businesses, additional factors might need to come into play to convince them to locate regionally. Respondents to the survey also identified quality of medical facilities, availability of jobs for children and quality of education for children as being among the top 10 concerns of businesses in regional Australia.
What Regional Business Needs – Results of Survey of Regionally-Based Firms, ACCI Review, October 2001 10 What Regional Business Needs – Results of Survey of Regionally-Based Firms, p 4 11 What Regional Business Needs – Results of Survey of Regionally-Based Firms, p4
Labour force stability and the availability of specialised skills were identified as important factors by around 70% of respondents. Survey respondents also indicated that costs of operating in regional Australia varied according to a number of factors. Of note, it was stated by around 30% of respondents that construction, land and transport costs had little influence on location decisions. However, a further 30% identified these factors as critical. The cost of finance was important to over 40% of respondents, but of no importance to around 35%. Good road infrastructure was found to be the fourth most important factor, with over 70% of respondents identifying it as a factor in their location decisions. It was considered to be of notably more importance than was access to rail or air transport. The Authority suspects that this finding would be slightly different for Tasmanian businesses. Access to markets for many Tasmanian businesses means good access to sea and air transport and this would no doubt be a major limiting factor for some mainland metropolitan businesses considering setting up in Tasmania. ACCI concluded that the activities of government can and do play an important role in the decision to locate a business. They concluded that activities that have the potential to influence these decisions include not only inducements to business but also the quality of government services, planning processes, leadership, entrepreneurship and understanding of the needs of business and an ability to work with business to improve productive capacity.12 These findings support the arguments put forward by the Authority elsewhere in this submission, that the primary role government can play to foster regional development is to assist the development of entrepreneurial, adaptive regional economies that are able to positively embrace change. Although ACCI further concluded that the decision to locate existing businesses had little to do with government incentives and far more to do with other factors, it should be noted that this survey did not include a direct controlled comparison of regions where incentives were available against one where they were not. As such, the Authority considers little store can be placed in ACCIâ€™s conclusion in this regard, however anecdotally interesting it might be.
What Regional Business Needs â€“ Results of Survey of Regionally-Based Firms, p6
However, of considerable interest to the Authority is ACCI’s finding that the quality of local government was an important or critical issue to over 50% of respondents. As is discussed elsewhere in this submission, there is a growing expectation that local government is responsible for producing a positive local business climate. The existence of this expectation is reinforced by the findings in the ACCI survey and backed up by comments in the Authority’s own survey. ACCI’s survey also found that the quality of and access to telecommunications remains as a major concern for the majority of regional businesses, with telecommunications issues (mobile phone reception/quality, telecommunications service, telecommunications cost) being ranked as the top three problems for their business. The Authority briefly considers telecommunications issues separately in this paper. However, the findings by the ACCI serve to reinforce the Authority’s position that the Commonwealth government has a lot more work to do to address the imbalance of cost and quality of telecommunications services in regional Australia vis a viz urban Australia. Despite ACCI’s conclusion that tax incentives were largely irrelevant as a factor in location decisions, its survey did clearly indicate that the lack of adequate incentives in the tax system is a critical issue – with 66% of respondents identifying it as critical. In our view, correctly, ACCI concluded on this basis that businesses really are looking for a tax system that is effective and efficient and that does not penalise achievement. Similarly, ACCI found that businesses are concerned about how the changing tax arrangements impact not only on their compliance obligations but also on the underlying structure and operation of their business and, that regional business considers the lower returns on capital in regional areas and the higher cost of doing business in certain circumstances, warrant recognition and compensation. 13 Local government planning regulations were also identified as an important or critical business issue by a very high 74% of respondents, again supported by the findings of the Authority’s 2002 survey. The ability to find and retain skilled staff is a clear problem for regional businesses, as clearly highlighted in the Authority’s 2002 survey and this was also reflected in the ACCI survey, with over 60% identifying it as either important or critical.
What Regional Business Needs – Results of Survey of Regionally-Based Firms, p8
The Authorityâ€™s 2002 survey also touched on the issue of business locations â€“ both from both the perspective of attracting investment into a region and, also, attracting staff. The findings of the Authorityâ€™s 2002 survey highlighted more reasons why businesses and staff would not locate in regional Australia than reasons why they would. However, most of the reasons so identified revolved around poor communication of the positive realities of life and conducting business in regional Australia, rather than substantive problems. For example, comments were made regarding the marketing of the lifestyle, the availability of the regions natural resources, producing factual community promotional data, better coordinated responses to business inquiries. Similar comments were made in terms of attracting staff, including the need to address perceptions of economic/social isolation and to market the positives of environment and lifestyle.
Other Issues Infrastructure â€“ telecommunications Given the changing nature and complexity of telecommunications services it is difficult for the Authority to describe the exact causes, nature and extent of inadequacies however it is clear that the services that are being provided are not adequate and that ageing technology and infrastructure is and will continue to deliver poor performance, with consequences for regional development. Services such as Internet, facsimile and phone which many people would today regard as essential business tools are in many cases unreliable and ineffective. If there is to be real access to reasonable, comparable and affordable services across Australia then the charge and call costs for a regional users whose only suitable means of providing a reasonable and reliable service connection is through an alternative technology ( Satellite, CDMA or whatever) must remain comparable for people who have access to a 56k connection via copper wire. Enterprise Zones Enterprise zones have been defined as: An area of declining or derelict land, usually within an inner city, which is chosen for rejuvenation. Private enterprise is attracted by such inducements as concessions on land development tax and local council tax, 100% capital allowances, a general speeding up of procedures, and a relaxation of planning regulations. Enterprise Zones were introduced in the 1980s in tandem with the British government's emphasis on small businesses, and these highly localized initiatives were designed to replace in part the much larger Development Area which had been part of British regional policy since the 1930s. 14 The concept of utilising enterprise zones as a regional development tool has been raised recently in Australia and has its supporters and its detractors.
A dictionary of Geography, Oxford University Press, ÂŠ Susan Mayhew 1997
The Authority considers that enterprise zones represent an opportunity worth exploring to assist targeted areas to attract investment. Essentially, the concept is that tax based and other incentives are used to promote regional development in specified geographical areas or ‘zones’. Their implementation could be tied to the development of regional development plans as a pre-requisite to receiving assistance. Incentives could then be provided to promote business investment and employment in the targeted regions. Alternatively, a simpler approach would be for targeted zones to be identified on the basis of statistical disadvantage and then a variable blanket approach applied to provide incentives for business to invest in those regions. Studies would need to be undertaken of the investment patterns and to determine how best to utilise incentives to best achieve results. The centrepiece of such zones would be financial incentives, particularly taxation, but the targeted areas would also be likely to receive increased priorities in other policy areas, such as infrastructure spending and education and training. Taxation incentives provide a powerful stimulus to investment, if targeted correctly and of sufficient effect to differentiate the targeted regions from other areas. The Authority recommends that the concept of enterprise zones be seriously considered to assist regions seriously disadvantaged by change.
Population Comments were made in the Authority’s 2002 survey regarding the need for Tasmania and the Cradle coast region to increase its population as a way of improving the region’s economic performance. The Authority is strongly supportive of moves to increase the region’s population, particularly with skilled professionals and tradespeople, as this would lead to greater economies of scale and increased demand for local goods and services.
It was suggested in the Authorityâ€™s survey that consideration needs to be given to encouraging skilled migrants to settle in the Cradle Coast region (the example of Canadian migrants receiving housing incentives in regional Canada was cited) and the Authority recommends that options for achieving this be explored fully.
Competition The Authority readily acknowledges that competition policy has brought significant benefits to the Australian economy as a whole. Further implementation of competition policy will no doubt foster further improvement in the competitiveness of the Australian economy and industry across Australia, with the net effect of further growth in business and improvements for Australian consumers. However, the Authority believes that many regional markets have not been in a position to substitute less efficient industries forced into decline by competition policy with new, more efficient industries created as a result of that same policy. In general, metropolitan areas have a greater capacity to generate new industry in these circumstances. Care needs to be taken to ensure that in regional areas, the cost of forcing change at an unsustainable pace does not outweigh the benefits. Accordingly, the Authority strongly supports calls for changes to the National Competition Policy public benefits test. In particular, the Authority would like to see, as a primary consideration in the test, a requirement that improvements in the efficiency and competitiveness of a regionâ€™s economy be in place before a region has to deal fully with the open market effects of competition policy induced change.
Recommendations 1. The Authority is firmly of the view that it is appropriate and equitable for governments at all levels to intervene to redress the imbalances in development between regional and metropolitan areas. 2. In particular, the Authority would like to stress that it considers any consideration of regional policy, its development or application, should always have as its underlying objective the creation of employment and investment opportunities in regional areas. 3. Governments must be prepared to take different approaches to different regions and be willing to provide varying levels and types of assistance in accordance with individual regionsâ€™ identified needs and capabilities. 4. Given the complexity of the factors affecting regional development and the development and implementation of regional development policies, decision makers must make use of regional knowledge, such as that collected and focussed through regional development bodies. Further, government needs to recognise that some regions are now developing the capacity to make their own policy decisions based on their own assessments and that regional policy should enable and encourage this trend. 5. In an overall sense, assistance should help local regions to become more
economically efficient to create conditions where an enterprise culture can and will flourish. However, despite this primary purpose when developing regional development policy, there remains a need to ensure that scope exists to take measures to ameliorate the economic and social damage imposed by change on adaptive individuals and communities. 6. On balance, it appears to the Authority that regional communities are best served
through the development and application of policies that will facilitate change and ameliorate the negative effects of change. Similarly, a balance needs to be found between the objective of ensuring all Australians have an equitable level of access to opportunities for economic development and the undesirable outcome of artificially propping up industries, or regions that are in decline.
7. In order for there to be a realistic level of regional and local ownership of actions,
regions must be encouraged to develop their own visions and strategic blueprints for their future â€“within appropriate government policy frameworks. 8. Governments at all levels must ensure that they work together in planning and
program delivery and provide greater flexibility in the delivery of their programs to ensure they best meet the needs of the communities they are intended to benefit, rather than the ease of the providers.
9. Governments have traditionally encouraged a range of business skills and a low
inflation/low interest rate climate to facilitate investment. Government also needs to implement programs seeking to develop entrepreneurial cultures and the adequate supply of risk capital. 10. The Authority would support the development of a national policy framework that
enables and supports regions to undertake audits of their strengths and weaknesses, identify their needs, plan for their future and receive program support in areas where such assistance will help provide a long term sustainable local economy. 11. Regional community bodies are best placed to identify their regional
requirements and should be resourced and enabled to partner other levels of government. Such arrangements would improve the prospects of the underlying causes of regional decline being addressed, rather than just the symptoms. 12. The Authority recommends government consider how to redirect compulsory
superannuation funds back into the regions, examines government imposed barriers to investment in regions and increases government incentives and programs to foster local development of local/regional investment pools.
13. The Authority argues that changes to vocational education and training are
required that would lead to improved availability of skilled labour in the regions, include better marketing and promotion of training to regional businesses, better attune the VET system to the training needs of regional Australia and introduce flexibilities into formalised training schemes (such as the New Apprentice Scheme) to make them work more effectively for regional industry.
14. The Authority recommends that the concept of enterprise zones be seriously
considered to assist regions seriously disadvantaged by change.
36 15. It was suggested in the Authorityâ€™s survey that consideration needs to be given to
encouraging skilled migrants to settle in the Cradle Coast region (the example of Canadian migrants receiving housing incentives in regional Canada was cited) and the Authority recommends that options for achieving this be explored fully.
16. The Authority strongly supports calls for changes to the National Competition
Policy public benefits test. In particular, the Authority would like to see, as a primary consideration in the test, a requirement that improvements in the efficiency and competitiveness of a regionâ€™s economy be in place before a region has to deal fully with the open market effects of competition policy induced change.
Conclusion The Authority looks forward to having the opportunity of perusing the results of the Regional Business Development Analysis once they become available. There is no doubt that regional Australia has not enjoyed many of the benefits of national and global economic change over the past 30 or so years. The reasons for this are many, however, it is vital that the opportunity presented by this Inquiry is taken up and an Action Plan developed that proposes effective measures to assist regional areas of Australia to adapt to the realities of the 21st century. This must involve assisting regional economies to become more economically efficient and to encourage conditions where an enterprise culture can flourish. As outlined in this submission, the Authority believes that it and other bodies like it could play an increasingly important role in achieving sustainable development of business in regional Australia. By utilising the local knowledge, vision, capacity and understanding of local conditions owned by regional development bodies, policy makers have available a direct link to what makes each region tick. This link can be used by government at all levels to effectively implement regional policy and deliver services in the regions. The Panel is strongly encouraged to consider in detail, those parts of the submission outlining the exciting role that regional bodies could play.
38 Cradle Coast Authority Survey Results 2002 To assist it in developing responses that accurately reflect the experiences faced across the north west and west coasts of Tasmania, the Authority has conducted a small survey of key businesses and local government leaders in the region. Although far more limited in scope, to an extent, the questions mirror those proposed in the Regional Business Development Analysis Questions Paper. The results are interesting and will no doubt largely reflect the experience of similar businesses and organisations across regional Australia. However, the Authority also suspects that some of the comments will reflect the particular conditions faced by businesses and local organisations in north west and western Tasmania. In the interests of presenting the Authority’s findings directly to the Inquiry without any added ‘spin’ most of the comments are set out below in full and as submitted. The Authority considers it interesting that most responses indicate a need for simple answers to simple problems – and a common theme coming from responses was the need for solutions to be developed and implemented at a regional level, through the Cradle Coast Authority.
39 Question: What restrictions or barriers currently exist to the attracting of new industries and businesses to our region? Responses: • Attitude of councils in the region are anti-development. • Planning processes and time and expense a huge hurdle. • No risk lending in the area of finance in the region is a huge problem. • We seem to be anti-progress. • Lack of threshold demand for a wide range of goods and services. • Lack of ancillary services • A paradigm of non-cooperation between local businesses • Fragmented approach to regional development. Regional development usually focuses on economic/development and excludes community and cultural development. There are vital development as well as equity reasons for including community and cultural development. • Tasmanians tend not to be enthusiastic or to have a ‘can do’ attitude – they let the past get them down • Very few new businesses in the state come from the outside – most are homegrown, re-grown businesses • Accessibility to markets is a huge problem – Bass Strait represents a physical and cost barrier • Small consignment consolidation issues often defeat people’s aspirations for sending their product out of Tasmania. Add extra costs of Bass Strait to that and it seems impossible to overcome. Sending large consignments is not really a problem as they just fill a container and send it across the Strait in a few hours. • Perception of isolation, social conservatism, poor self image. • Poor availability of suitable business sites and existing premises • Poor availability of correctly zoned properties and the required process to alter zonings • Provision of infrastructure services (water, sewer, drainage, wastewater treatment, waste disposal) • Provision of suitable road infrastructure • Availability of sufficient development, financial and other incentives • Lack of funding for promotion to attract/pursue industry and business at the regional level • Poor access to investment capital • Lack of a ‘one stop shop’ approach from inquiry through to final approval – across all levels of government. There are too many players in the current process – risk of duplication of effort, inconsistency and opportunity for ‘divide and conquer’ approach. • Lack of community profile data (socio-economic, demographic, lifestyle, amenities, facilities, housing etc) • Lack of a ‘Skills Audit’ and a ‘Skills Database’ • Lack of an economic development strategy • Lack of baseline site data (environmental, geo-technical, soil etc) • Lack of partnership/joint venture opportunities • Relatively low decentralised population base • Poor access to services such as hospitals, education facilities etc • Decline in population • Multi-national companies make it hard for small operators to exist ie costs, resale prices etc
• • • • • • • • • • • • • • • • • • • • • • •
How can we encourage new industries/businesses to set up here? Address the anti -development attitude of local government and some sections of the community. Educate Tasmanians on the realities faced by community and business elsewhere in the world. Identify goods and services that could be delivered locally that currently are not. Provide intensive assistance (currently provided peripherally) to identify local resources (human, physical) needed to attract new businesses both generically and on a case-by-case basis. Need to change the attitude of people and government to a more ‘can do’ approach (particularly the Department of State Development) State government needs to be more helpful in assisting to get things up and going Don’t need to throw money at people, just need to provide positive assistance to get businesses up and running – encouragement Market the lifestyle/economic mix Better utilise our natural resources – eg cool temperate agriculture, wind, ecotourism Government incentives – not a good way – can be very discriminatory to existing businesses Have a range of development site s ‘ready to go’ Have detailed profile data available re available sites Have factual community promotional data available Have access to investment capital Have a ‘one stop approach’ to all inquiries and follow up process to gain approvals Provide funding/people resources to actively pursue industry and business development opportunities Provide incentive funding (establishment, start up, employment positions, training & recruitment) Be proactive – harness and allocate appropriate resources (ie people and funding) to follow up industry and business opportunities (ie local, regional, statewide, national and international) Factually identify the regional ‘leaks’ that could translate into industry and business opportunities for the region and fix an action plan to ‘plug those leaks’ Up-skilling of potential workforce, in collaboration with local educational and training institutions Investigate strategies such as cluster developments Offer to facilitate partnership and joint venture proposals Increase the population
41 Question: What restrictions or barriers currently exist to the existing businesses in our region growing? • Most local businesses only look at their backyard and would rather seek work elsewhere in the state, nationally and internationally on their own and be unsuccessful, rather than enter joint ventures with local competitors and be successful • There are a lack of business models that allow local, competing firms to joint venture without risking loss of intellectual property, commercial-in-confidence information and allow equitable share of joint venture profit. (Models do exist however). • ‘can’t do’ attitude and lack of positive encouragement from state government • lack of vision, capital, skilled labour, entrepreneurs, risk lenders • Availability of new suitable sites (ie location, premises, zoning, infrastructure services, access) • Access to investment capital • Leakage to communities outside the region • Depressed economic climate, particularly in the rural and mining sectors • Environmental compliance • Business costs • Market limitations and fluctuations • Value of AUD$ • Value of world mineral prices • Board decisions made outside of the region • Political decisions • Knowledge of opportunities • Lack of commitment to research & development • Good quality tradesmen • Population • Awareness of what the region has to offer • • • • •
• • • •
How can our region help existing regional businesses to grow? Need attitudes to change in local and State government. Taxes are too high. A casual agricultural worker in Tasmania is paid more than in any other state. By major local manufacturers and service providers procuring as much as possible locally – even if it means assisting local producers to ‘get their act together’. By increasing the amount of assistance to businesses from business advisers. Most local accounting firms are not well positioned to provide the range of business services local firms need – in relation to local accounting firms, regardless of the type of business advice a local business seeks, they’ll be given tax advice. Many people with existing businesses are not confident enough to take chances that might lead to more business, but which appear risky at first Greater regional encouragement for local businesses, promotion of local and regional vision and challenge businesses to name their barriers to growth and then help them to overcome them Provide a range of appropriate development sites and as required, support with full planning, environment and building assessment studies Provide access to investment capital
42 • • • • • •
Provide assistance with recruitment, training and employment of new employees Provide cash funding for new permanent employment positions created Provide direct/active assistance to locate new market opportunities Facilitate/provide advice on matters such as firms working together to secure business contracts, both locally and external to the region Combined exposure of the area Promotion of attractions, natural resources of the area and so on
43 Question: What barriers exist to local businesses being able to attract skilled people, executives and professionals to available positions in our region? • Perceptions of Tasmania as being a backwater. • Young people leaving the State after gaining their education. • Globalisation is a big problem. • Most local firms do not realise the value skilled people and professionals can provide to their businesses. • Declining levels and range of basic services in Burnie does not assist. • Local businesses not being prepared to share professional services or pay market rates to obtain professional services. • Looking for managerial level people is difficult/impossible – even when advertising interstate • Barriers include isolation/remoteness added to lower salary/wage levels/ Miners in WA get packages that make up for isolation – Tassie can’t offer this • Great lifestyle isn’t enough to make up for these barriers. • Limitation of choice to educate children is also a barrier • From the point of view of an ‘immigrant’ – social isolation, fear of being viewed as out of the mainstream, poor perception of the positives • From the point of view of the employer – fear of being unable to keep the employee for a reasonable length of time, inability to successfully market the positives, salary expectations of outsiders higher than desired. • Incorrect perception of local lifestyle & work environment • Incorrect perception cost of living being higher? • Lower salaries on offer • Cost of travel higher (by car, by air) • Weather/climatic patterns an perceptions • Competition from other communities • Career advancement opportunities limited • Ability of local businesses to afford higher salary costs • Access to facilities valued by ‘middle class’ • The awareness of the diversity of the region • Unattractive to metropolitan people • Unattractive to some families, ie education and activities • • • • •
How can we attract skilled people, executives and professionals? Make an attractive offer to the right people. By at least maintaining the services we have already – including recreational, community and cultural services. We tend to forget that the Burnie region has to be attractive to the professional’s families as well as the professional. By local businesses and other service providers acting collectively and cooperatively to provide the amount of work required to provide a viable business or sufficient workload to make i t worthwhile for professionals to come to Burnie – even on a visiting basis. Not just money required to solve these problems State/Federal governments need to set up programs that welcome skilled migrants and provide incentives that Tassie can sustain. For example, in Canada, skilled migrants can apply for tax deductible housing loans as part of incentives to encourage workers into particular regions
44 • • • • • • • • •
Also, need government assistance with relocation, finding a home and so on. Address issues of social isolation, economic/professional isolation and market the positives of environment, lifestyle etc Ensure stability in employment through long term performance based Contracts Utilise salary packages with full salary sacrifice benefits Ensure challenging career a dvancement opportunities available Ensure continuing professional development and training opportunities are promoted – collaborative partnerships with TAFE and UTAS Promote lifestyle advantages of NW Region, particularly focusing on family lifestyle benefits and services Encourage educational and health industry institutions to take on expansion programs under Government funding to provide specialised programs and services (eg. Rural Health Clinical School, UTAS Burnie Campus) Please tell me so that I can attract some skilled professionals!!!!
45 Question: What barriers exist to local businesses and entrepreneurs being able to attract investment into our region? • Hard to attract high-risk finance in Tasmania and in agriculture. • A significant number of firms in the Burnie region are experiencing low profitability. Low profitability means returns on investment are low which means that attractiveness to investors is low. • Local businesses – even successful ones – often do not know what the most profitable parts of their businesses are because they don’t know how to gather and track the right data. Hence they tend to continue with loss making products/services subsidised by profitable products/services, resulting in low overall profitability. • Investors looking for larger and quicker returns than Tassie can yield. This is a huge problem, but not able to provide the answer. • Tassie is overcapitalised so needs high returns to stay afloat, but this does not happen in general. For example, average Victorian farm is 10 times the size of Tasmanian farms. Small landholdings make it nearly impossible for Tassie farms to compete as prices/costs reflect that 10 families are being supported as opposed to one Victorian family on its large farm. • We have good products, but Tassi e doesn’t represent a good investment • Bass Strait – economic isolation – investors perceive a loss of control over the water • Business returns are not attractive enough • Competition from other regions • Accessing investment capital • Lack of a local Investment Authority • Environmental compliance • Limitation on opportunities • Political decisions • Once again, improve the awareness of the diversity of the region • • • • • • • • •
How can we attract more investment? Cradle Coast Authority is a good vehicle. They do a good job, are out there doing what they can and a lot of work is going on up here. By focussing on the profitability of local businesses. By identifying how local businesses can become more profitable – in most businesses, this is not hard to do, but a number of local firms don’t realise the value of business assistance and therefore are not prepared to pay for it. By identifying what local businesses need to do in order to attract investors, especially venture capital. A large number of local firms put too much into the ‘back pocket’ and then complain when they can’t sell their business or attract investors due to low reported profitability. No solutions in sight! Address the issues of social and professional isolation and low returns for business Create a Local Investment Authority / Local Pooled Development Fund to encourage commercial investment by local investors, thus enabling local investment funds to be invested in local capital projects, (e.g. superannuation funds, trust funds, investments) Encourage other Investment Funds and Pooled Development Funds to invest in NW Region investments/projects Encourage interest of Venture Capitalists
46 • • •
Pursue Joint Venture / Partnership relationship with Industry / Business Actively pursue opportunities of securing funding through Federal & State Government funding programs (e.g. Burnie City Council $2M Networking the Nation IT&T initiatives) Increase the population
47 Question: Do you see any role for partnerships with educational institutions or regional bodies in any of the above? • Its already happening, everyone is proactive. We have the University of Tasmania, TAFE and other training like apprenticeships. • Partnerships with educational institutions and regional bodies are vital to all of the above points. A coordinated and cooperative approach is the only way the Burnie region can develop the economies of scale required to develop and promote the Burnie region. • Yes, very definitely • Education – yes. To ensure if unable to attract key personnel, to be able to train regionally to the skills required • • •
If so, please specify how such a partnership might work. Educational institutions can be a player with a regional body as is the case with the recent development of the Burnie Development Authority. Due to recent changes in the way educational institutions are funded (especially universities), educational institutions need the Burnie region just as much as the Burnie region needs the institution – educational institutions can no longer potter along in their ‘ivory towers’. Need to let go of need for ‘made in Tasmania’ labelling. Then can build partnerships where investors provide infrastructure for manufacturing in Tasmania while an international partner markets the goods. We can produce excellent quality goods to other people’s specifications and then let them sell them worldwide Links with educational institutions to deliver tailored training to both increase workplace skills and foster expanded vision, flexibility and entrepreneurship. Educational institutions can provide teaching and teaching resources, businesses can provide strategic direction, workplace facilities and time (where appropriate) and funds where needed over and above the normal taxpayer contribution Consortium / Joint Venture approach – each partner contributing to the overall project. Contributing a willingness and resources to work co-operatively together to achieve the business objective. Refer following recent examples :eg establishment of Rural Health Clinical School at UTAS Burnie Campus - UTAS combined with the NW Public Hospital, and with the support of Community Groups, obtained substantial Federal funding to establish the Rural Health Clinical School at Burnie- 1 of nine being established around Australia eg Burnie City Council obtained approx $1.4M under the Federal Networking the Nation Program to establish an ‘Integrated Community Network project , and has partnered with a private sector company to provide broadband community access to all sectors of the Burnie community.) eg The Burnie City Council combined with a Private Sector Company to purchase the Burnie Airport for $2.5M, and to undertake its operation as a joint venture business more consultation with industry to determine industry needs and wants
48 Question: What role does strategic/financial intervention have in any of this? • State government should drop its taxes – payroll tax is too high! • We should live in the circumstances we have and not swim against the tide. • A lot of local money paid to super funds and the like leaves the state and strategies need to be developed and implemented to keep it in Tasmania. • Establishing regional development priorities • Identifying gaps in regional capacity and capability • Funding to assist the closure of gaps – market intervention is needed because the economies of scale are too small to be able to rely on market forces to solve these issues • When necessary to secure a development(s), it can be a crucially important role on both counts, particularly for Government agencies/institutions, Councils, and private sector businesses • Resources required to pursue / obtain industry and business investment must be on hand and available when the particular call is made – opportunities seldom wait ‘until next year’s budget’ • Most opportunities ‘go elsewhere’ if the local region cannot respond to providing some level of financial assistance • Community regions throughout Australia are becoming increasingly competitive in providing substantial financial and other incentives to attract new industry and business developments – grants in the order of $50,000 to $75,000 per permanent job – and more in some special cases – are being offered to secure employment positions.
49 Question: What level(s) of government should be involved in developing business opportunities in regions? • Not the local councils! • We are over governed • The Cradle Coast Authority is a better vehicle than local government and would get better results. • Get rid of localised parochialism in Tasmania. • All levels: • Local government – assisting to identify local issues • State government – assisting to coordinate the addressing of local issues with state issues, provide some funding and to lobby the Federal government for additional funding • Federal government – assisting to coordinate the addressing of local issues with national issues and to provide significant funding for the development of regional areas • Is a major need for change at the State level with regard to the Department of State Development and its many incarnations. Over the past 20 years it hasn’t done much. Needs to be reviewed and revised. Has particularly been a disaster with regard to manufacturing • State and regional (eg the Cradle Coast Authority) should be involved • All three levels – Federal, State & Local plus the Cradle Coast Authority • All levels of State government – then to approach the Federal government for assistance on a regional basis • • •
• • • • •
How should government be involved? Take away all the restrictions that inhibit businesses like onerous planning laws. Funding for regional development should be based on: Needs identified by the region based on resources required to achieve the region’s strategic direction as identified by that region. The need also needs to be in line with the state and national priorities and directions – otherwise, funding will not be sustainable and will result in ‘one offs’ only. Government must be involved, but there needs to be a change of attitude first Cradle Coast Authority would make an excellent conduit for the State Department, but could not be a substitute for it. Need to get rid of parochial attitudes and this is where CCA could assist by rising above these attitudes and viewing things objectively. CCA could also gather information for the use of the State and Federal governments. Tasmania would really benefit from umbrella groups in four regions. This would filter opportunities and bring with it the support of large groups of people with similar interests. There are many benefits on offer through thinking regionally rather than locally, or individually. Educational support, financial resourcing assistance, and mentoring businesses The difficult issue for government is to enter the market on behalf of one participant without distorting the market for existing players. It is not often that government has the luxury of assisting a wind or pyrethrum company that operates in an environment of no competition Through the State Department of State Development, acting as the lead agency, to be the first point of contact, focal point for co-ordination and follow up, but actively involving the other levels of Government/CCA in a ‘team’ support role Creating a ‘one-stop-shop’ approach for developers
50 • • • •
Be the facilitator to establish ‘partnerships’, between the levels of Government to follow up development(s) As a provider of direct financial and other incentive assistance, and as a coordinator of packaging all other avenues of assistance that can be secured from the 3 levels of Government By being proactive and positive to encourage developments, as opposed to confronting developers with a ‘can’t do’ attitude and a bureaucratic maze Members of Parliament, Federal and State, Aldermen, and CCA Members, have a political support role to play on occasions to secure developments.
Published on Feb 24, 2009
Regional Australia and Regional Development Assistance ................7 What affects the performance of regional economies? .................