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Wednesday, 8 February 2017
Page: 283

Senator SMITH (Western AustraliaDeputy Government Whip in the Senate) (13:42): We all understand that there are significant economic challenges in my home state of Western Australia, and, speaking very frankly, there is no point trying to dance around that sensitive issue. The economic growth figures we saw late last year would indicate that those challenges are not going to ease in the short term without a lot of hard work. I will touch on some of the things the federal government is doing to deal with that situation in a few moments, but it is worth first outlining the reasons regional investment is important to Australia as a whole.

I think the best way to begin to do that is to examine the vital economic contribution our regions are making to Australia's overall economic health, because it is vastly underappreciated just how critical that contribution is, especially in an economy whose future strength rests on its ability to diversify. Now, it is regrettable, but there remains in some quarters an ill-informed, almost snobbish assumption that the regions are a 'drag on economic activity'. In fact, the reverse is true. When you talk to most Australians—and we know that most Australians live in urban areas—and you talk about 'the economy', most of them conjure up mental images of bustling cities, cranes constructing skyscrapers and smokestacks atop factories as being emblematic of economic activity. Thus it would probably shock most Australians to learn that regional Australia accounts for around 40 per cent of Australia's economic output and is responsible for the employment of around a third of the national workforce. The value of that contribution is perhaps best illustrated this way: if you took regional Australia's contribution to economic output out of the picture, the Australian economy today would be about the same size as it was in 1997—almost 20 years ago.

It is also interesting to note that research by the Regional Australia Institute found that since 2001 regional Australia has gained ground on metropolitan areas in productivity terms across virtually every industry, with the possible exception of mining. As we all understand, improving productivity growth is central to growing our economy and it seems this is one area where regional Australia has much teach our metropolitan communities.

Australia's success in weathering the aftermath of the Global Financial Crisis, which hit in the latter part of 2008, is often held up as a modern-day economic miracle. What has been less well understood is just how critical our regional communities were in helping us meet that challenge. In the years immediately following the GFC, there was a significant economic slowdown in metropolitan regions, but regional economies proved far more resilient. In fact, in those two years, half of Australia's economic growth was accounted for by regional activity. Now it is true, some of that was driven by commodity production, which was still in its boom phase at that time, but the full story is a more complex and interesting one. Given the end of the mining `boom', it also offers us some important lessons when it comes to diversifying our economy, especially for my home state of Western Australia.

Returning to stereotypes for a moment, I think if you asked most Australians about which industries are important to regional communities, they would respond with words like agriculture and, especially in WA, words like mining. And they wouldn't, of course, be wrong—those two areas will always be important drivers of regional economic growth. However, what has been most interesting to observe the growth that has occurred over the last decade in the services sector, especially in high-value services in the finance, health and scientific areas. Even in the years when the mining boom was at its zenith, our regional economies were becoming increasingly services-driven.

Now that those boom conditions no longer prevail, it is more critical than ever that, in a state like Western Australia and more generally across the Australian environment, we diversify our economic activities. We need to be focused on leveraging opportunities and confound the misguided, dangerous perception that regional economic management is about managing decline. Nothing could be further from the truth. That is why regional investment is so critical and why it forms such a large part of the Turnbull government's overall economic plan. Because the success of regional economic development in the years ahead will be determined primarily by one thing: the ability of regional communities to attract and retain residents who will be at the forefront of driving growth.

There has always been a lot of talk about the 'potential' of regional communities. The important thing about regional investment is that as much as anything, it is a demonstration of the faith that government has in that potential; that it is not just a buzzword, but something tangible. As political representatives, our challenge is to communicate that more effectively to constituents. This goes back to the point I was making earlier about preconceived attitudes towards regional investment in some quarters. Very often, when you hear conversations about freeway extensions or new train lines or new recreational facilities in metropolitan communities, it is all in the context of 'building infrastructure', as it should be. Yet, bizarrely, if you have that same conversation about building that new recreational facility or upgrading a significant road in a regional community, you start to hear terms like 'pork barrelling' and 'subsidy'—as though the capacity of such facilities to contribute to the economic activity is somehow diminished because they are further away from a capital city such as Perth.

It is time that attitude changed, and I am pleased to say the Turnbull government is committed to doing just that. Sensible, strategic investment in regional communities could help fix the overcrowding of capital cities, such as Melbourne and Sydney and increasingly Perth. It is great to see the Minister for Regional Development, Senator Nash, in the chamber. Both those cities take around 100,000 extra people per year through immigration alone, and infrastructure simply cannot be built quickly enough to keep up. This results in congested roads, huge amounts of time spent getting to work or grocery shopping or taking kids to sport, more pollution and, overall, reduced quality of life. Although the problem is perhaps not yet as acute in my home town of Perth, anyone who has seen the freeways in peak hour over the last few years knows that our turn is just a matter of time.

Building new roads or rail in capital cities costs multiples more than it does in the country because the city project involves buying and bulldozing houses, which costs a small fortune. Conversely, a new road in the country can often be built in a paddock or on crown or council land that costs a fraction of a new city freeway or highway. We should invest in our regions and make them so good that city people are proactively seeking opportunities to relocate. This requires investment by government in partnership with rural communities. Investment gives rural communities confidence to invest in their own futures and to make their own medium- to longer-term decisions. But, of course, regional investment cannot simply be a discussion about investment in infrastructure; increasingly, it is going to require a conversation about investing in people and, importantly, their skills. That is why the Turnbull government's commitment to innovation is so crucial to regional communities around Australia.

I was pleased late last year to join many in Geraldton at what is called the 'West Tech Fest', one of WA's most significant regional centres and innovation projects. We need to stop thinking about innovation as being an inner-city buzzword and start to think more broadly about how the application of new technologies and ideas will help us to strengthen and diversify our regional economies. I had the privilege of addressing the West Tech Fest in Perth the year before last; and it so happened that occasion coincided with the release of the Prime Minister's innovation statement. There was a lot of focus on some of the 'techie' elements of that announcement, which I suppose is inevitable. Yet, as its heart, the innovation agenda is really a job creation agenda, and that is especially true for Australia's regional communities.

Although we may be talking about new technologies, they have a very real and practical application in traditional areas of economic activity, including in agriculture. Not only can technology help regional communities to bridge the tyranny of distance, but it also make it easier to partner with others—with research institutions, suppliers and even government departments so that new ways of doing business can be explored and refined. For me, one of the most exciting elements in the whole innovation package announced 12 months ago was the decision to direct a slice of government procurement spending, which is worth some $40 billion a year, to purchasing from small business and start-ups, including those based in our regional communities.

Government has to lead by example in this area, and this is one way it can support young people in regional communities who are taking a chance and backing their own ideas and putting their own money and energy where their mouth is. Now, of course, nothing happens as quickly as we might like, and that is true in government just as it is elsewhere. As part of the government's commitment to innovation, I think it is important that we look at opportunities to do more of this type of thing. It not only provides a more diverse economic foundation for regional communities but also brings new residents in a way that enriches local community life.