THE Australian Local Government Association yesterday launched its annual State of the Regions report, highlighting the challenges faced by regional communities and economic disparities existing between mining and non-mining regions.
According to the 2011-12 State of the Regions report, prepared by National Economics, inequality between Australian regions has been growing for the past five years as a result of the mining boom and evidence suggests that this trend will not only continue but in all likelihood accelerate during the next five years and beyond.
The report finds that about 80 per cent of Australia is dependent on non-mining, trade-exposed industries, which are being adversely affected by the high exchange rate and relatively high interest rates. It also warns there is a risk that business confidence could evaporate in regions that depend on non-mining industries to further exacerbate the current "patchwork economy".
"Difficulties for the non-mining, trade-exposed industries arise from the faltering recovery from recession in North America, Europe and Japan, leading directly to reduced demand and indirectly to increased competition as businesses in these countries try to increase exports," Leading Economist, Dr Peter Brain said.
"Regions dependent on non-mining, trade-exposed industries include all of Victoria, all of Tasmania, nearly all of South Australia, nearly all of New South Wales and most of Queensland."
The report finds the mining boom has benefited all of Western Australia, two regions in Queensland, mainly Mackay and the Fitzroy Central West region, and half of the NSW Outer Hunter region.
"For those who never look beyond the headlines, the current mining boom would seem large enough to carry the whole Australian economy with it but this has not been the case," Dr Brain said.
President of the Australian Local Government Association, Genia McCaffery said the report highlights some of the many challenges currently facing regional Australia.
"The real challenge in strengthening the economic performance of regional Australia lies in the Federal Government helping regions to make the most of their individual strengths. The challenges of regional development and the need for respective governments to allocate scarce public funds efficiently and equitably are among the issues being discussed at this year's National General Assembly."
"The Report plays an important role in providing unique insight into the macro economic pressures facing Australia's regions. The better we understand these dynamics, the better we are placed to address the issues. It sets out a strong rationale for reform and effective federal leadership," Cr McCaffery said.
Last month, Grattan Institute released a report, 'Investing in regions: Making a difference', stating that governments are spending billions of dollars a year on programs for regional Australia that fail to produce the economic development they are explicitly designed to achieve.
The Grattan report argues for greater investment in "bolting" regions where people and jobs want to go, rather than regions that lack sustainable economic foundations, saying governments will continue to waste money if they do not recognise the fast-changing reality of regional Australia.