The Hon Simon Crean MP

The Hon Simon Crean MP

Minister for Regional Australia, Regional Development and Local Government

Minister for the Arts

17 February, 2010

“Driving economic development in regional Australia”

Keynote address to the Setting the Agenda for Regional Futures summit at the University of New England, Armidale

Thanks very much, Tony. I too acknowledge the traditional owners of the land on which we meet. I acknowledge their elders, past and present and thank Colin for his welcome to country.

Thank you, Tony, for that very generous introduction and Richard, who I've had the opportunity to deal with in terms of Evocities in particular - and I'll say a little bit about that later.

It's good to be back in Armidale. It's good to be back particularly at this great campus of University of New England.

I always believe that regional development gets much greater impetus when there's the presence of the tertiary education sector, particularly universities, but also the skills and vocational side of it because skills development is an enabler. It is what leads to greater productivity, it is what lifts individual empowerment.

It is the fact that those who are trained in the region tend to stay in the region. So if we are committed to the notion of strengthening our regions, education becomes a critical component.

It's a pleasure to be here at this great university. I might note that it also is the university that has the largest reach of people in distance education. And that is a great tribute to the university, because when I held the portfolio of Education, back in the Hawke-Keating days, the growth of distance education was really just beginning and there was a lot of competition around.

The University of Central Queensland, Deakin University, UNE, they were all in the mix. But the reach that UNE has developed is quite remarkable and importantly broadband is going to be a huge asset to extending that reach.

It's not just the pipeline or the fibre. It is the application of that fibre which is going to be critically important. So again, the university in terms of its input to the equation going forward is going to be terribly significant.

I'd like also to acknowledge a number of the RDAs that are here today, some five of them as I understand, the North Coast, the Central Coast, Hunter, Northern Rivers and Northern Inland RDAs. I'll talk about the role of the RDAs a bit later.

THE OPPORTUNITY FOR REGIONAL AUSTRALIA

I do want to say at the outset that there's never been a greater or a more important opportunity to advance the cause of regionalism. I think the conjunction that is here in this term of Parliament is two-fold.

First, it is the agreement we struck with the Independents. And I have got no doubt that the reason they chose to come with us was because in us they saw a greater commitment to regionalism than that of the other side. The test will be, of course, over the next three years. But I think that was not only a factor in the way in which the outcome of the Parliament was resolved post the election, but it is the great opportunity going forward.

The second aspect, if I could say so, because Tony has been kind enough to mention it, is I think it's fortunate you got me in charge of the portfolio because I do believe in it. And the one thing that I want to do out of this term is to entrench regionalism in the way in which this country governs itself. I am a passionate believer in the fact that localism actually works.

I saw it when I was the Employment Minister in the Hawke-Keating Governments and we developed the Area Consultative Committees. They were given an important but specific role and that was, in the context of an economy with high unemployment everywhere, an economy coming out of recession, how did we get a better mix between skills demanded and skills supplied in a way that reflected the local needs? That's what the Area Consultative Committees were set up for and they were successful. In the first six months alone, they were responsible for placing 30,000 jobs in this economy.

We engaged local communities, the Chambers of Commerce, the businesses, because we wanted to know from them what are the skills that you need to develop your vision, to strengthen your base, to help the diversification of your community. We had the resources of government that were notionally allocated to areas based on the proportion of people that were in unemployment, particularly those in long-term unemployment. We knew what the resource was available for a particular region. What we needed to make sure is that that resource was used in the most effective and responsible way.

So if I might say so, I think that's the reason there's the greater opportunity, the belief, the arrangements with the Independents and a strategy that we - as a Government - actually not just believe in and are committed to, we have to deliver upon.

The reason why I think it's more important these days comes down to a number of factors. One is the need to lift the nation's productivity. If we're really going to solve the pressing fiscal problems going forward, one way to do that is to make sure we grow more productively and more efficiently.

My argument in terms of regionalism and localism is that if we can tap the local input to be coming up with creative solutions that stack up, not wish lists, but those that have been subjected to the rigour, the creativity that understands the needs here and says, we know potentially the resources that are available to us. We can spend it in a more efficient way and deliver better services or deliver better outcomes.

BOOSTING PRODUCTIVITY

It's not just good for the region, it's good for the nation because it is a more efficient utilisation of the nation's resource base. And if it's driving economic diversity, if it's underpinning your vision of the growth, then it also lifts national productivity.

It's interesting because when we were in Government last time it was the structural reforms of the '80s and '90s that enabled the nation, for the first time in its history, to lift national productivity almost twice above the long-term national average. Why? Because we did invest in education, we did invest in skills. We invested in infrastructure. We invested in innovation. We understood the importance of those to the drivers of economic growth.

We've got to translate that equation - and bear in mind we have committed substantial resources to infrastructure, to schools, to universities, you name it - the reason it can work better at the regional level is if we've got that local input identifying the better use, we can give that productivity drive another lift.

The other significant factor is the technology, because we made the big jump in productivity into the '90s and early 2000s without the tech boom.

The US was the only other country in that period that lifted productivity as much as us, but they did it off the tech boom which then collapsed. Australia has still to embrace, as fully as the US did in the late '90s and early 2000s, the implications of technology, the application of it. And that's why the investment in the National Broadband Network is so crucial.

So we have a whole lot of parts in the macro sense that can drive the productivity, can drive efficiency, can drive productivity. The challenge for regions is to embrace that argument and demonstrate that regionalism isn't on the margin, it isn't about helping struggling regions, but it is about contributing to greater economic efficiency and productivity.

A second reason that reflects the economic reality of the country is that we do have very much a two speed economy, from the resources boom. But I've always argued the point that resources aren't just what you dig out of the ground. That's one's comparative advantage. It's how efficiently you extract them and distribute them, which is the competitive advantage. And that's what Australia is good at, not only in mining, but in agriculture.

So for a region such as this that is so traditionally strong in agriculture, think of the manufacturing dimension of agriculture, value-adding, think of the services dimension of agriculture, the more efficient and effective utilisation of the land.

It's the services sector, again, driving off our traditional strengths.

Why is the services sector most important? Because that's what employs most in our economy. And that's why, when I was Trade Minister in the last term, I was so committed to opening up the opportunities in services trade, not just product markets. But areas such as this need to understand their inherent strength in the services economy.

The patchwork economy shouldn't mean that simply because you're not in the resources boom there isn't opportunity. There is and the challenge of course is to identify local solutions and a commitment to diversifying the economic base.

REBUILDING AND GROWING REGIONS

The other thing that's going to be a pressure on us of course is the floods. I've spent most of January and a good part of the early part of this month visiting flood affected areas. I must say it's going to be an enormous reparation bill. But again, here is the challenge. There's not much point replacing what was there if it's going to become vulnerable again. The challenge is to look at how we can make communities that have been affected like this more resilient. The question of flood mitigation comes into the equation.

But what has struck me, when it comes back to this theme that is the subject of my address, the resilience of regions, it is on display in terms of the reaction to the floods and the cyclones, that as much as the community has been battered, it has pulled together and it is determined to rebuild.

What I want to do is to entrench that concept of localism in the way in which that rebuilding takes place, the same way as in terms of the Murray-Darling Basin solution, entrenching the principle of localism in the way we meet the challenge. Because I've convinced, I'm sure Tony is too, that as you go around and visit the communities there is acceptance of the fact that if communities are to survive they have to have healthy rivers. But in meeting the challenge of restoring health to the rivers you also have to ensure that the socio-economic consequences are properly considered and balanced.

Again, it's not lack of resources. If you look at the money that is allocated for solving the Murray-Darling Basin problem alone, it is $9 billion with $3 billion, essentially, for water buybacks, and close to $6 billion for infrastructure.

The infrastructure component shouldn't just be seen as a competitor for water buy back because, in finance terms, you'll never win that argument. The argument that has to be put in the interests of advancing the infrastructure question is you've got to do more than just return water to the system.

You've got to not just sustain regions; you've got to grow them.

You've got to strengthen the base on which their traditional economy can do better with less, and that can only be done if there is preparedness to invest in the infrastructure needs. That, again, is going to come back to local solutions.

I mentioned the RDAs and they're going to be an important part of the structure, going forward. There are 55 of them around the country and one-eleventh of them are here today. But when it comes to the Murray-Darling Basin we've involved all 11 in trying to help us find the solution and I'm delighted to say that all of those 11 will be meeting in Canberra next Monday.

We've got Craig Knowles coming. He's the new chairman of the Murray-Darling Basin Authority. But what we are challenging the RDAs to do is to come forward with those practical solutions whereby the investment in infrastructure can be utilised in a way that achieves the twin objectives: returns of water flows, but also more efficiency in the way in which the activity is undertaken.

The 55 RDAs, I think, are an important structure, going forward. They're going to be the eyes and ears of the government on the ground. They have to be the co-ordinating mechanism if we're to bring all of these strands together. They will be the filter for the disbursement of many of the funding options as we go forward. So it is important for all to understand the significance in the structure of delivering regionalism that the RDAs play.

I also want to be in the position, longer term, where we can put them on a financial footing that goes beyond an electoral cycle; that gives them certainty to plan and be part of that strategic vision going forward.

I also think it's important that we look at place-based approaches to economic development. It is interesting that we are getting good responses to this, in terms of WA and Victoria - the new Government in Victoria helped by the fact that the previous Government had actually put a very good state based structure in place - one that essentially does mirror the RDA structure.

The notion of place-based comes back to partnership; not just being about communities and the Federal Government, but communities and all levels of government and the private sector within it, because if the localism argument is made to work properly it not only produces efficiency, but it produces an agenda that no government, whatever its political persuasion is, can ignore.

If the proposal stacks up, if it is seeking to draw resources from the three levels of Government and also incorporate the element of the private sector - where it is about addressing market gap - if you can build that sort of partnership, going forward, I think the opportunities are pretty exciting indeed.