Managing the spatial economy: the view from Victoria and Australia Dr Chris McDonald Open Days – European Week of Cities and Regions Regional Economic Development from a comparative perspective – views from outside the EU Tuesday 5th October, 2010

Australia and Victoria

National reform and aggregate outcomes “Great Australian Settlement” – central wage arbitration, industry protection, government regulation and control Began to unravel during the post-War period – decreasing per capita income, rising inflation and unemployment Three waves of reform to increase productivity and enhance flexibility: Macro-economic reform (1980s): floating of the Australian dollar, enterprise bargaining, reducing trade barriers, and monetary policy Micro-economic reform (1990s): competition in non-traded sectors Human capital reform (2000s): reducing barriers to participation, and improving quality in health and education Since 1990 -1991 per capita income has risen by one-third

Main sectoral and spatial impacts Decline and restructuring of manufacturing plus restructuring, specialisation, and value adding in agriculture Jobs growth associated with: shifting comparative advantage - education, property, finance, insurance demographic change and consumption – retail and public services Much more complex labour market with simultaneous patterns of concentration and dispersal as firms seek advantage: Cheap land, ability to increase scale, and access transport infrastructure (some retail, freight and distribution) Proximity to competitors and clients (knowledge-based industries, some retail and advanced manufacturing) Move with population – inner, middle and outer (large retail, food services)

Concentration of work

Dispersal of work

Increased congestion

Integrated approach to land use and transport planning

Transition to a polycentric city-region

Limits to the current approach There may be more cost effective options to re-shaping settlement patterns (land use regulation and infrastructure are costly) Government is not always good at picking winners Doesn’t set price signals to address congestion/ density/ amenity issues – this pricing might improve the capacity to adapt at least cost Need a stronger focus on human capital infrastructure – looking at universities, hospitals and TAFE as economic assets that shape the development of cities and regions

Longer term policy options National approach to city and regional development that promotes integrated planning and infrastructure investment (building on past lessons of national reform) Examining proposals already in the public sphere about ways to more efficiently utilise road space and land: Value capture mechanisms and incentive payments Pricing congestion Broad based land tax. Shared national focus on the city shaping and regional development potential of human capital infrastructure.

Lessons – reform and multi-level governance Leadership and long term commitment Narrative and evidence to build the case Shared outcomes whilst recognising differing capabilities Clear objectives, performance measures and incentive payments to drive change Allow for regional diversity and subsidiarity