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Cities Beyond Perth Best bets for growth in a new economic environment

Executive Summary

January 2015

Cities Beyond Perth (Executive Summary), January 2015 P a g e | i

The Regional Australia Institute

Independent and informed by both research and ongoing dialogue with the community, the

Regional Australia Institute (RAI) develops policy and advocates for change to build a stronger

economy and better quality of life in regional Australia – for the benefit of all Australians.

Disclaimer and Copyright

This research report translates and analyses findings of research to enable an informed public

discussion of regional issues in Australia. It is intended to assist people to think about their

perspectives, assumptions and understanding of regional issues. No responsibility is accepted

by the RAI, its Board or its funders for the accuracy of the advice provided or for the quality

of advice or decisions made by others based on the information presented in this publication.

Unless otherwise specified, the contents of this report remain the property of the Regional

Australia Institute. Reproduction for non-commercial purposes with attribution of authorship is

permitted.

RAI Research and Policy

Project researcher: Annemarie Ashton-Wyatt, Senior Researcher

Project supervisor: Jack Archer, Deputy CEO

Contributing to research content and review:

Su McCluskey, Chief Executive Officer

Jennie Dwyer, Policy Advisor

Morgan Rennie, Researcher

Tai Nguyen, Researcher

All RAI research is informed by the expertise of the RAI Research Advisory Committee.

Members in 2014/15 are:

Professor Sandra Harding, James Cook University (Chair)

Professor Andrew Beer, University of Adelaide

Professor Graeme Hugo, University of Adelaide

Professor John Tomaney, University College of London

Tim Shackleton, Director, Virtual Health

Cities Beyond Perth (Executive Summary), January 2015 Page | ii

Research Partnership

This research has been funded through a partnership between the Regional Australia Institute

and the Department of Regional Development, Western Australia.

Executive Reference Group:

Tim Shackleton, Regional Development Council of Western Australia

Mike Rowe, Department of Regional Development

Su McCluskey, Regional Australia Institute

Project Steering Committee:

Ken King, Pilbara Regional Development Commission (Chair)

Richard Hancock, Pilbara Development Commission

Bruce Manning, Great Southern Development Commission

Janine Hatch, Wheatbelt Development Commission

Grant Arthur, Wheatbelt Development Commission

John Acres, Department of Regional Development

Denis O’Donovan, Department of Regional Development

Jack Archer, Regional Australia Institute

Acknowledgements

The RAI acknowledges the following people and organisations who have contributed

feedback and ideas during the development of this report:

Aboriginal Workforce Development Centre, Department of Training and Workforce Development

The Busselton Chamber of Commerce and Industry

City of Albany City of Busselton City of Kalgoorlie-Boulder City of Mandurah Department of Corrective Services Department of Training and Workforce

Development Goldfields Esperance Development Commission Great Southern Development Commission Kimberley Development Commission FarmWorx Fiona McKenzie, Department of Planning and Community Development, Victoria

Gascoyne Development Commission

Goldfields-Esperance Development Commission Mid West Development Commission Peel Development Commission Pilbara Development Commission Regional Development Council, Western Australia

RDA Goldfields Esperance

RDA Great Southern RDA Kimberley RDA Mid West Gascoyne RDA Peel Rio Tinto RSM Bird Cameron Shaddicks Lawyers Shire of Carnarvon South West Development Commission The West Australian Regional Newspapers Wheatbelt Development Commission Workforce Education

Cities Beyond Perth (Executive Summary), January 2015 P a g e | 1

Executive Summary

Regions in Western Australia are in a period of transition as the highs of the resources boom

start to diminish. To be successful in this transitional period, regional Western Australia will

need to look to its fundamental competitive advantages and how they relate to a changing

economic environment.

As a result of recent growth, Western Australia has acquired a new source of potential

competitive advantage in the network of larger regional towns and cities across each region.

More than half of the regional population now lives in the 12 largest regional towns and cities

located across each of the nine regions in Western Australia.

These towns and cities offer relatively diverse employment opportunities and many have

grown significantly in recent years. Some are reaching 15,000 residents, which is an important

threshold for long term sustainable development. Others are moving towards becoming

regional cities with high economic capacity, due to a population size of 50,000 or more.

Many of Western Australia’s largest regional centres have only recently reached these growth

milestones and are considering how best to leverage the new opportunities this scale provides.

Significant investment through Royalties for Regions and related initiatives has also changed

the quality of infrastructure available in many of these regional locations.

This report has considered how best to leverage this new source of competitive advantage for

regional Western Australia.

Why Focus on Developing the Largest Regional Centres in Western Australia?

Western Australia’s largest regional centres are worth developing because they:

Provide a greater diversity and quality of services for residents and visitors than

smaller locations. Factors such as market size, workforce diversity, and access to

innovation supports are attractors for entrepreneurship and investment. This enables

sophisticated economies to develop and supports an independent growth pathway;

Are a focus point for key infrastructure such as ports, airports, and major roads that

enable connections to markets for regional Western Australia; and

Are hubs for services to meet the needs of the region’s population and industries. Many

provide a central base for the delivery of health, education and other government

services.

As a result of their size and position in each region’s economy these places play a unique role

in enabling the development of regional Western Australia. Their development should be a

priority within the wider regional development strategy for Western Australia.

Cities Beyond Perth (Executive Summary), January 2015 Page | 2

Four Development Pathways

The Regional Australia Institute’s (RAI) analysis suggests that four different pathways exist that

require a different development approach:

1. Old towns with city-sized opportunities (Albany, Bunbury, Busselton and Geraldton)

Each of these places has an existing population size, diversity of industry and

available infrastructure to provide a foundation for future growth pathways. Capacity

for local innovation, technological readiness and human capital needs to be further

developed to secure these opportunities.

2. Places growing through connected lifestyles (Mandurah and the proposed Avon City)

Proximity to the Perth metropolitan area offers on-going avenues for future population

and economic growth, as residents can have easy access to the city and enjoy regional

living, but this also creates pressures. Development of the local workforce and business

capacity alongside infrastructure and population development will be critical for

building economic growth in the future. The challenge will be to build deeper

connections to the metropolitan area and still maintain a regional identity.

3. Areas well-positioned to access the new global markets (Broome, Carnarvon, Kununurra)

Prospects for new economic growth exist in these places by aligning their unique

natural resources with new domestic and international market opportunities in

agribusiness and tourism. Securing resource access and investment in the development

of these resources will be essential to realise these opportunities. The support and

leadership of local people and local businesses will also help to enable growth.

4. Boom towns in transition (Kalgoorlie-Boulder, Karratha City, Port Hedland)

Rapid growth during the resources boom has created opportunities in these towns and

cities. Future stability and growth will depend on forming effective local responses to

the structural changes in the resources sector. It will be essential to manage adjustment

to demand for local services and workers from the resources sector. In addition, growth

will need to identify opportunities in non-resources sectors to diversify the economy

and reduce the potential impacts of structural change.

Each of these locations has experienced both opportunities and challenges from the resources

boom, but this driver of the Western Australian economy is changing. Key commodity prices

often have cycles of decline after periods of growth, and the demand for labour reduces as

large projects transition from construction to production phases. Accordingly, demand for

workers and services in the resources sector (and related regional areas) is likely to soften.

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A Western Australian Regional City Strategy: Growing Cities Beyond Perth

Given the growth in these regional centres, there is now a strong case for implementing a

specific regional development strategy for these places (Figure 1). The outcome of this

approach should be an established, resilient and growing network of regional cities across

Western Australia.

Common Priorities for Regional Centres

The heart of a regional cities strategy should be region-led initiatives that are focused on:

Services to the region. Large regional centres have a service provider role with the

wider region. This long-standing source of competitive advantage is being disrupted

by technology, better travel options and globalised supply chains. Western Australia’s

largest regional centres must understand and respond to the changing demand for its

services from the wider region through innovative development strategies;

Lifestyle. Western Australia’s largest regional centres offer a unique lifestyle and this is

a core source of competitive advantage. These centres must continue to build local

lifestyle advantages that will attract and retain residents for the long term;

Expanding markets to capture customers from beyond the region. Western Australia’s

largest regional centres have competitive specialisations reflecting the regional

economy. Each centre should encourage local businesses to seek market opportunities

beyond the region to increase resilience to economic changes; and

Targeting emerging growth opportunities. Western Australia’s largest regional centres

need to actively pursue new opportunities in areas like agribusiness, tourism and

education that can offset reduced demand from the resources sector or provide new

sources of growth.

To leverage competitive advantages across the network there is also a need for the State

Government to work with the network of regional centres to:

Improve human capital performance. This is an area where regional centres must be

competitive. It remains an area of significant challenge for many of Western

Australia’s largest regional centres at present;

Ensure resource access and use arrangements are responsive to new sources of demand.

New demand for resource access and use is shifting from the resources sector to

agriculture and tourism. The State Government will need to work with regions to ensure

new demand to be met sustainably; and

Broker competing demands within the network. Places have similar priorities which could

lead to unhelpful competition for resources and undermine collaborative development.

The State Government will need to work to broker between these demands to provide

the best outcomes for the State as a whole.

Cities Beyond Perth (Executive Summary), January 2015 Page | 4

Collaborative Opportunities

Given the common challenges and opportunities within the group of Western Australia’s

largest regional centres, building inter-city collaboration is also essential. Areas where

collaboration should be prioritised include in developing:

The regional knowledge sector across Albany, Bunbury, Busselton and Geraldton;

Services and amenities for different lifestyle groups in Mandurah and the proposed

Avon City;

Complementary events and activity based tourism in Albany, Bunbury, Busselton and

Geraldton;

Cooperative pursuit of new agribusiness and tourism market opportunities in Broome,

Carnarvon and Kununurra;

Incubation of non-resource businesses in Karratha, Kalgoorlie-Boulder and Port

Hedland; and

Development of specialist networks to leverage mining services business beyond

regional Western Australia in Karratha, Kalgoorlie-Boulder and Port Hedland.

Together these initiatives will provide the foundation for leveraging the comparative

advantages of Western Australia’s largest regional towns and cities.

Old towns with city-sized opportunities

Places growing through connected lifestyles

Areas well-positioned for growth in new global markets Boom towns in transition

Cities Beyond Perth (Executive Summary), January 2015 P a g e | v

Figure 1:Regional city development framework

Cities Beyond Perth: Building an established, resilient and growing network of regional cities in Western Australia

• Grow connectivity to Perth

• Pursue areas of competitiveness in retail and services sectors

• Manage developmental pressure to secure regional

identity

Population and economic changes are shifting opportunities for

regions in Western Australia

• Secure access to land and water resources

• Support Indigenous economic engagement

• Facilitate new opportunities for agri-business

• Develop tourism markets

• Engage markets for resource services beyond the region

• Expand non-resources industries

• Support Indigenous

economic engagement

• Develop a highly skilled and flexible labour force

• Meet regional export industry needs

• Expand the local knowledge-based industry

But, large regional centres do not all have the same pathways for growth. Four groups with different imperatives exist across Western Australia:

Old Towns with City-Sized

Opportunities

Albany Bunbury Busselton

Geraldton

Places Growing Through Connected

Lifestyles

Mandurah and the

proposed

Avon City

Areas Primed to Access New

Global Markets Broome

Carnarvon

Kununurra

Boom Towns in

Transition Kalgoorlie Karratha City

Port Hedland

Regional

knowledge sector

Services and amenities for

different lifestyle groups

New agribusiness Tourism market opportunities

Diversification in resources

communities

Events and activity based tourism Indigenous business development

Common opportunities are best pursued in collaboration. Business innovation networks offer practical pathways for cities with common issues to work together

Respond to changing demand for services to the region

Realise lifestyle advantages through population mobility

Link to new growth drivers through emerging market opportunities

Encourage specialist business groups to grow markets outside of region

Regions canHelp grow human capital performance in regions

Facilitate resource access and use arrangements

Broker inter-regional competition for resources

State government

can

Cities Beyond Perth (Executive Summary), January 2015 Page | 6

Contacts and Further Information

The full report of Cities Beyond Perth: Best bets for growth in a new economic environment is

published in two parts:

Analysis of the competitive and collaborative advantages of Western Australia’s

largest regional centres

Profiles of the largest regional centres in Western Australia

To discuss this research report please contact:

Jack Archer

Deputy CEO

Regional Australia Institute (RAI)

jack.archer@regionalaustralia.org.au

(02) 6260 3733

Level 2, 53 Blackall Street

Barton ACT 2600

Further information on the work of the RAI can be found at www.regionalaustralia.org.au