1. 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

2. Australia and Victoria

3. 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 per capita income has risen by one-third

4. 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)

5. Concentration of work

6. Dispersal of work

7. Increased congestion

8. Integrated approach to land use and transport planning

9. Transition to a polycentric city-region

10. 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

11. 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.

12. 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