1. State of the Regions 2005-06 Presentation by: Dr Peter Brain National Economics 416 Queens Parade, Clifton Hill, Victoria, 3068 Phone: (03) 9488 8444; Fax: (03) 9482 3262; Email: admin@nieir.com.au 7 November 2005

2. The elements of the 2005-06 SOR report 1.The update of regional economic indicators (unemployment, incomes, population, etc.) 2.A survey of LGA’s on infrastructure issues. 3.The technology, capacity and economics of internet access. 4.Population sustainability and the baby bounce. 5.The role of local government in regional economic development and issues in revenue raising.

3. The content: The findings of the indicator update for the regional groupings  Rural, core metro, resource based, dispersed metro, production, lifestyle.  In 2003-04 and 2004-05 for all regional groupings, employment grew faster than population.  Unemployment fell across the board.  Rural and core metro regions had the fastest growth in real incomes.  The core metro region has been increasing its productivity/real income superiority.  The population growth rates between regions are converging.

9. Telecommunication/Internet infrastructure: the core issues/findings  Australia is falling behind in efficiency and access.  The technology is a constraint on performance.  The current regulatory regime is reducing performance for most users.  The relative poor efficiency and lack of coverage is imposing economic costs on the nation.  Practical universal broadband coverage can be provided for around $3 billion in infrastructure costs.

10. Australia is falling behind in quality of internet access A visiting German ICT expert “nearly chocked” when told of the quality of the Australian Broadband Access. (AFR, 4 November 2005) Deutsche TelstraTelekom Basic service256 kbps2 mbps Premium services1.5 mbps16 mbps DT planning roll-out in 50 cities of 50 mbps optic fibre service. East Asian economies planning the same. The Dutch are rolling out fibre optic to all city households and businesses. South Korea – average household service 8 mbps.

11. Core Australian Broadband service: xDSL modem linked via copper wires to DSLAM in exchange Performance falls off sharply as distance from exchange increases.

12. The efficiency of broadband capacity is constrained by existing regulation regimes. (Basic/Premium service – 0.5/1.5 mbps)

13. Current regime  Reduces efficiency of installed capacity by around one third.  Limits the incentive to adopt higher order DSL technologies.  Reduces incentive for network expansion.

15. Expanded broadband coverage will create economic benefit because:  It enables a higher level of e-staging.  There is a direct correlation between the level of e-staging and exporting.  The regions with relatively poor broadband access are the most trade exposed regions.

22. The cost of connecting Australia  68% market penetration per catchment.  Connecting about 70% of remaining exchanges with optic fibre.  Mixed underground/electric cable infrastructure.  Total cost about $3 billion. Remote customers’ satellite solution most viable. Internal rate of return to nation 26%.

23. The baby bounce

24. The baby bounce has been concentrated in core metropolitan regions

26. Drivers of population sustainability  Pace of growth of aged population: % p.a. growth in population over 55 (negative).  Level of ageing: Share of population aged under 55 in 2001.  Consistency of population growth: % of years since 1995 in which the ABS Estimated Resident Population (ERP) has increased.  Effective fertility rate in 2004: Number of one year olds or younger as % of population.  Baby bounce: Change in effective fertility between 2003 and 2004.  Locality dominance: Share of LGA population contained in the largest locality.  Family Attraction: Net migration of 0 to 14 yrs olds 1996 to 2001.  Aged Attraction: In migration of 55 plus year olds as a percentage of population.  Aged employment: Share of over 55’s employed, 2001 Census.  Demographic Stress: A US government measure first introduced in the report in 2003 which is based on the total levels of out-migration and growth rate in the 15 to 55 year old cohort.

27. Top 10 regions for population sustainability

28. Regions which will have the most difficulty in maintaining their populations