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Select Committee on Regional Development and Decentralisation
Regional development and decentralisation

ARCHER, Mr John, Chief Executive Officer, Regional Australia Institute

BEER, Professor Andrew, Dean of Research Innovation, University of South Australia, and Chair, Regional Studies Association

COLE, Professor John, OAM, Executive Director, Institute for Resilient Regions, University of Southern Queensland

DUNN, Ms Anne, Director, Every Voice Inc.

HASLAM McKENZIE, Professor Fiona, Director, Centre for Regional Development, University of Western Australia

SORENSEN, Professor Anthony, Private capacity

Committee met at 11:01

Evidence from Ms D unn and Professor Haslam McKenzie was taken via teleconference—

CHAIR ( Dr McVeigh ): Good morning, everyone. I will be making an opening statement as we proceed, but first of all I obviously welcome those members of our expert panel who have travelled to be with us here today. First of all, can I check whether there are any apologies through the secretary? We have one apology, from Professor Robyn Eversole, who is unavailable today. I look forward to the committee having some liaison with Robyn in due course. I would like to advise that although the committee does not require you, as guests today, to provide evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as a proceeding of the respective houses. The giving of false or misleading evidence is a serious matter, and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard, and therefore attracts parliamentary privilege. Do any of you have anything to add on the capacity in which you appear?

Ms Dunn : Every Voice is a regional consultation organisation and it specialises in consulting with regional communities, synthesising views and presenting them to government.

CHAIR: So having declared this first public hearing of the Select Committee on Regional Development and Decentralisation for the inquiry into regional development and decentralisation open, I would just like to make a brief opening statement, as chair, and then, ladies and gentlemen, as an informal roundtable, we will ask you to provide some advice and evidence to the committee in due course.

Today's hearing is the first of a series of public hearings being held to hear evidence regarding best practice approaches to regional development, the decentralisation of Commonwealth entities and supporting corporate decentralisation. The committee thanks each of you today who have agreed to act as an informal expert panel, to attend roundtable discussions with the committee from time to time, and to respond to queries from the committee about various issues, themes and trends that may be identified during the course of our inquiry. This committee determined in one of its earlier meetings that to have an informal expert panel, including people such as yourselves, would be of great benefit to us, particularly today as we commence our formal consideration under this inquiry.

As I have said, just to be clear, in accordance with the committee's resolutions of 15 June 2017 this hearing will be broadcast on the parliament's website. The proof and official transcripts of proceedings will be published also on the parliament's website. Everyone is advised here today that filming and recording are permitted, certainly during this hearing, but I remind members of the media who may be present, or simply listening on the web, of the need to fairly and accurately report the proceedings of the committee.

So with those introductions out of the way, ladies and gentlemen, for your benefit I will ask the members of the committee present to briefly introduce themselves.

Mr LITTLEPROUD: I'm the member for Maranoa, which is in western Queensland—43 per cent of Queensland, to be exact. Three times the size of the state of Victoria, and very regional and rural focused.

Ms SWANSON: I'm the member for Paterson in New South Wales, approximately two hours north of Sydney. It's a regional area that takes in Maitland, which is one of the fastest-growing regional centres. Five people per day are currently moving to Maitland, so it's a very exciting area. Its neighbour is Newcastle, which is a very rapidly growing regional city as well.

CHAIR: I represent the electorate of Groom up in Queensland. It's based around the city of Toowoomba, which is Australia's second-largest inland city behind the capital, Canberra. It's a very important regional economy based particularly on agriculture, agri-business, education and health services for southern Queensland and northern New South Wales.

Ms McGOWAN: I'm an independent member of parliament from north-east Victoria, in the seat of Indi. I'm just trying to scratch my mind for a comparative growth. I'm going to try Albury-Wodonga as Wodonga is in my electorate. It might be the fastest or the second-fastest growing regional area in Victoria. We are envious of Toowoomba and all the wonderful stuff it does there. The other thing it's useful to know about my electorate is water: 50 per cent of the water that falls in the Murray-Darling Basin falls in Indi.

Mr RAMSEY: I'm the husky-voiced member for Grey in South Australia. I am angling for a Blues contract! I represent Grey, which is pretty much all of remote, regional and rural South Australia—about 92 per cent in total. Over a long period of time we have seen a gradual decline in population, as compared to the rest of the state, and so my electorate continues to get larger, even though it hasn't grown for a little while. It's largely affected by the efficiency of agriculture, which is wonderful to behold when you're in the paddock with the farmer—and I've been one. It's great for states and great for the nation, but it's ripping the guts out of our country communities. Finding a solution or a way of dealing with that is very important to me. Almost as important as my voice, which I hope will be back tomorrow!

Mr STEPHEN JONES: I'm the member for Whitlam, which covers southern Illawarra and the Southern Highlands of New South Wales. I'm Labor's spokesperson for regional development, regional services and communications. I'm really keen to hear from you guys on Australian and international best practice when it comes to economic development, the role of government, what government can and cannot do, should and should not do, and best practice examples from here and around the globe that you guys are aware of. Thank you for engaging with us; it's much appreciated.

CHAIR: I suggest that we get an opening statement, or an overview statement, from each of you to start with, and then I'm sure, as we proceed, members of this committee will have questions that we want to pose to you. This is, as I said, a reasonably informal roundtable, and I stress that we are looking forward to your advice at this first public hearing to help us understand some of the issues from your perspective that we will be considering in this inquiry. I trust that everyone has received a copy of our terms of reference for this committee, the draft issues paper that has been distributed to sort of get us going? Let's start with you, Professor Andrew Beer, and then we will move through the panel here before we go to Fiona and Anne.

Prof. Beer : I take two key points out of the terms of reference for the committee and from the title of the committee. The first key point is a focus on issues of best practice in regional development. The second key point is best practice in decentralisation. The two do not overlap completely, and I think the two have lessons that they can share, one to the other.

From my perspective, Australia has a long history of engagement with policies in decentralisation, and we often misinterpret what that history is. The experiments of the 1970s and into, in small part, the 1980s with decentralisation policies had their failures in places like Monarto and, to a certain extent, Blayney, near Orange, but we have also had our successes with decentralisation policies in the past. Research produced in Australia has shown that places such as Albury-Wodonga, with a particular focus on Wodonga, as well as Geelong have produced stronger regional centres as a result of decentralisation policies, practices and planning. These successes have often been ignored and need to be brought to the forefront of public attention. They have created stronger, more resilient regional communities that have generated their own growth impulses. These decentralisation policies alone have not generated success for these places, but they have been one important part of that equation of success.

The second point that I would touch upon is best practice in regional development. In some ways, best practice in regional development includes all of decentralisation, because I would argue that some aspects of decentralisation need to be included in good practice approaches to regional development. The key point that I would add is that when we think about efforts to decentralise public sector investment in particular, we need to think about how those efforts are connected to the global economy. We no longer live in 1950s and '60s Australia; we are a globalised economy with leading-edge resources, technology and other companies. We need to think about how we can use the knowledge economy to drive growth in regional Australia. And, in part, I would argue that, in considering decentralisation activities and the disbursement of public sector expenditures, we need to be focusing upon those institutions that governments support that can drive economic growth for the regions—those institutions that provide new ideas and new intellectual capital, that businesses can commercialise and convert into new opportunities for the nation and for the region.

We know that research and development expenditure across Australia is concentrated in the capital cities. Questions have to be asked about how we can strengthen R&D expenditure by the public sector in non-metropolitan places, including expenditure by the CSIRO, universities and other government institutions. Good practice in regional economic development is accepted as focusing upon endogenous growth—that is, growth that take place because of the assets, abilities and talents of the region and the people that live within it. Government has an important role to play in mobilising those capacities by providing low-interest loans, by providing grants, by ensuring that infrastructure, telecommunications and other services are adequate for the task ahead, and by providing the encouragement and political leadership to deliver change.

Prof. Cole : I would second my colleague's remarks and start by suggesting that regional development in itself is not a silver-bullet scenario. When we talk about regions—and the membership of the committee reflects this. Amongst yourselves, you represent very different parts of Australia with very different characteristics. Regions are complex systems. We focus so much on the economic development elements. The Institute for Resilient Regions, for example, recognises that human capital in itself is the most important attribute of any society, and, indeed, we can point to examples of local innovation and local initiative, reflective of the differences of human capital within our communities.

In David's seat, as the member for Maranoa, taking so much of it, I can point to, for example, differences between Central Queensland and southern Queensland, which reflect the history, the human attributes and the social attributes of these communities and their infrastructure. RAPAD, the Remote Area Planning and Development Board, for example, in central western Queensland is probably one of the better examples of local, collective, shared activity with a strategic vision for a region. That is 12,000 people in an area the size of Germany, doing good things and recognising that they engage most effectively when they work together and they engage most effectively outside the region when they work as one.

To Andrew's points about building off endogenous capacity or local capacity, resilient regions are places that are aware of the issues, are well connected and well educated. One of the things I have come across recently is this notion of deliberative engagement. In Canada, for example, much of the work the health agencies have done with communities involves sitting down and making sure that the community itself has the information needed to make informed decisions. Informed local communities are part of the scenario.

As to decentralisation, and there are three parts in the terms of reference, the simple proposition is that economically viable areas—and the member for Grey recognised the efficiencies achieved, magnificently, in fact, by Australian agriculture, which in itself has contributed significantly to depopulation. Sometimes we can't have our cake and eat it too. World competitiveness and innovation will, in fact, result in the need for fewer fieldworkers.

Indeed, in projecting a scenario for regional Australia we do not serve ourselves well by using the 1911 census, which seems to be part of the benchmark, if you like, for being able to point to where there were once small rail-side communities and where there are none now. Regional Australia, like the rest of the world, is undergoing change.

The real question for many communities is: how do they take part in the future? My colleague, Tony Sorensen, will talk about this, I am sure. The future is services. The future is dematerialisation. The future is 3D printing and digital connectivity. Indeed, 3D printing and the attributes that that type of technological phenomena represent will in time supersede the sweatshops of Asia, which have made much of Australian manufacturing uncompetitive in the 20th century. So history is unfolding all the time and regional Australia has a role to play in that.

We will best ensure a decentralised, robust and competitive regional economy if in fact it is connected to the global opportunity. The recent disposition by some politicians to talk about 'Australia first', or 'America first' or 'Queensland first' does not help the general agenda of ensuring greater enmeshment and greater connectivity. Digital infrastructure is fundamental. For that part of Australia which is beyond the metropolitan critical mass—and, as Bernard Salt reminded us back in April, 18 million people live in 32 cities in Australia, but 18 of those cities are within 120 kilometres of the major metropolitan centres—the issues of regional development in remote Western Australia and South Australia, and Queensland for that matter, will be different, frankly, to that in Victoria and southern New South Wales. The epicentre of Australian population, after all, is still just west of here, about 100 kilometres, and in the space of 100 years it has moved about 50 kilometres west. So this area is very different, and I don't have to tell you that.

I don't know that decentralisation is the primary challenge here. Canberra, after all, is the greatest example of forced removal of public servants from one part of Australia to another, to live in a part of the world where no-one was living 100 years ago. I don't know that we can hold that up necessarily. It's a wonderful initiative, but do we do that everywhere? I would have thought that what we need to do is to emphasise local alignment, building on our heritage and our innate capacities; involving people more generally; having the deliberative discussions; and government recognising its strategic role, which is to invest strategically with a longer term view and with enabling infrastructure—and to recognise, too, geophysical realities. Many parts of Australia in fact will probably be nothing more than a biosphere for the foreseeable future. Maybe that's what we should do; take good care of it and look after it, because it won't be farmland and it won't be urban land. I think it's recognising, too, that not all parts of the country are the same. There is not one agenda here that fits all.

So in that context, I look forward to other remarks and a conversation later.

CHAIR: I'll just interrupt to ask Lisa to introduce herself briefly, if she doesn't mind.

Ms CHESTERS: I apologise for being late. I'm the federal member for Bendigo and Labor's shadow assistant minister for rural and regional Australia, and of course I'm a big supporter of the Golden Square Netball Club.

CHAIR: Anne, for your benefit—a top of which Lisa is wearing, which we can all see at this meeting. Jack, can I ask for your opening comments?

Mr Archer : Thank you, Mr Chairman, and thanks for the invitation to participate. The Regional Australia Institute is really pleased to see that this inquiry is happening and that we have such a diverse group of MPs involved as well. If you just look at the group of MPs around this particular committee you can see the kinds of diversity these terms of reference demand that you engage with. I will just briefly talk about how the institute, as a national organisation, thinks about the diversity of regions, so we have places like Bendigo and Wodonga and Maitland, as part of Greater Newcastle, which are parts of Australia's network of regional cities that extend from Cairns all the way down to Hobart as well as a few in other places around the country. There are enormously different opportunities to most of the communities in Maranoa or Grey, which are very small rural and/or remote places which have a whole different set of challenges. I think it is going to be really important for the committee to think about how you deal with those different contexts, to be able to provide something that is relevant to all of the different types of regions you guys represent, let alone your colleagues in the parliament also represent.

Looking at the terms of reference, they are enormously broad, and so I guess the second comment I wanted to make was that I think while the regions would be too polite to say so, I think the committee telling regions how to develop themselves will not necessarily be a particularly productive contribution, but I think you speaking to the parliament and speaking to the executive and the public service about regional development and how the way in which they act either supports it or does not is a really important opportunity for this committee. The Australian government is an enormous force for regional development. We have quite a funny discussion, and I guess it is part of our federation, about whether the Australian government is engaged in regional development. I think when you set welfare policy, when you set migration policy, when you are the majority investor in infrastructure, there is no question that the decisions that are made here in Canberra have an enormous impact in lots of regions. So thinking about the way in which the Australian government is orientated to support regional development is really important.

In a paper the institute did a while ago with Andrew, we commented that we have some of the most inflexible policies in the country—we are obsessed with consistency and we are obsessed with equity, with people getting the same resources, and we put this out into a place where you have got enormously different situations that people live in. Applying the same subsidy to someone's Medicare consultation if you are living in Grey as compared to living in Mosman in Sydney is false equity—everyone getting access to the same amount of resource is something that is really challenging, particularly for remote areas, where you just do not have access. As a recent example, we just wrote to Greg Hunt. There is a great initiative now to bring more remote health services via telehealth into the Medicare system. The Medicare settings are an amazing barrier to getting better telehealth in the regions. We are just looking at that for mental health, but there is currently a decision that your first consultation must be face-to-face. If you are in the RAPAD region, if you are in Longreach, and we know we have a dearth of psychologists in regions, you are looking at a two- or three-day trip to have that first consultation and so the result of some of those small decisions means that you probably won't get a great outcome and we'll be talking about how there just isn't the demand for these services in regions. As much as we get focused in regional development on things like the Building Better Regions Fund and some of the flexible resources we make available for regional development, I would encourage the committee to think about migration policy and think about health policy.

As John said before, the future is about services, and that is in two ways—obviously with growth in services there are job opportunities, but also the future for many small rural communities is about access to services, and particularly we are looking at the moment at the rollout of the NDIS. If we get that wrong, and the markets for services are not there—I know health and community care organisations in your electorate, Cathy, are worried about the NDIS, and it may not support those business models—it may only be viable to get good services and be disabled in metropolitan communities or big regional cities. If we get that right, we could end up with people in those smaller communities doing much, much better. I can understand the way in which these government decisions are made, the clinical reason for a first consultation in a mental health telehealth situation being face-to-face, but the effect of some of these decisions is really significant and the cumulative effect of the way in which the Australian government makes these decisions is really important.

I would like to have a conversation with the committee around these types of examples, but also about how we can make the Australian government more flexible in response to regions. We do not need Commonwealth bureaucrats to redesign policies to fix things in regions—we need the Commonwealth public service and we need policymakers to be more flexible, to provide pathways for regions to say, 'You know what? We get why you've made that decision but it really does not work in our place, can we have some flexibility?'

When we're thinking about best practice approach to regional development, it is about flexibility in the way we invest, in the way we undertake programs and in the way we regulate and putting some rigour around that so that it's not just a dog's breakfast and government can actually be responsive to regional need and to place based need. People would walk through the doors of your electorate offices all the time, I'm sure, with specific issues, like frustrations around a particular regulation, and even you as important members of parliament say, 'I have no way in which I can get a meaningful outcome for these people,' even though you can see that there is no childcare centre in this town because of a regulatory barrier, or there are no health services being provided to particular groups in the community.

In these opening comments, I would encourage the committee to focus on: how can the Australian government be systematically better for regions, either as an investor or as a regulator or funder of services? Welfare is an another great example of where a little bit of flexibility might help to unleash some of the potential that's locked up in people not engaged in the workforce.

I will touch briefly on decentralisation before I finish up. We have had a look at this in the last little while. It has been the subject of a lot of public discussion. The international evidence—and the Australian evidence, as Andrew talked about—really shows that this can be an important part of the mix and a contributor. If you decide to move some elements of administration to a regional area and you stick to that for 10 years or more, you will change things in that place for the better usually, particularly if that decision to move people is made with some sense of what that region can offer existing labour markets and what else is happening there. The international and local benefits of that approach are pretty clear. If you chop and change all the time, and governments change and we bring things back and we move things around, then it does not go very well.

The other thing I would say on this, though, is that we shouldn't limit our decentralisation discussion to thinking about moving public servant jobs. That is probably a small part of the pie. We'll find there will certainly be some agencies or parts of agencies in the Commonwealth that can be moved. It will largely be regional cities where it will make sense for them to be based, because there are existing labour pools and office accommodation. I don't think we're going to decentralise much to Grey—I'm sorry, Rowan—or Maranoa. Maybe something out at Woomera might be an option. It's difficult to see how you can take Public Service organisations and put them in remote parts, but Toowoomba and other cities like that are obvious examples.

How does the government do contracting of government services? If you look at employment services, we outsource these. They have slowly got bigger and bigger and bigger contracts. So what happens is that local service providers get pushed out of those networks because they can't compete either at a brutal cost level or in terms of the scope of contracts that the government would like to do. So the way in which government does that contracting is really important to local employment and the quality of local services.

Secondly, on decision-making on policy and program matters—when we looked at decentralisation, 17 per cent of Commonwealth jobs are outside the big five cities and Canberra, but very, very few of them are SES level, so there are virtually no decisions being made in regional areas about regional issues, whether that is in Indigenous affairs, which is overwhelmingly focused on remote challenges, or other areas. How do we give more flexibility in decision-making to people actually on the ground doing work and less consistency being driven out of Canberra?

Overall, there is a wonderful opportunity for this inquiry to make an important contribution. It's a great time to do this and we look forward to continuing the discussion and supporting you in any way that we can over the coming months.

CHAIR: Thank you. Professor Tony Sorensen?

Prof. Sorensen : Like the other members of this panel, I thank you very much for the opportunity to be involved in this discussion. I won't repeat what my colleagues have said—and I think there is a lot of wisdom that I've heard this morning already—but I'm just going to put before you some comments that will, I think, alarm you possibly, because the scope of this investigation could be much larger than you think.

We live in a very complex and dangerous world. In fact, I often use the term VUCA, which some of you may have come across. It means volatile, uncertain, complex and ambiguous. It is used by military personnel and project management teams. I think VUCA is a very good summary of the kind of world in which we are operating. Putting on my other hat as a futurist I can see the world getting all the time more volatile, uncertain, complex and ambiguous, which, in fact, I think is going to make the definition of an agenda and the way in fact to reach it much more fraught than I think you might suspect.

After that I would like to turn to what I call the five tyrannies. These are environmental issues that affect policy making in general, but more specifically the area in which we are interested. For example, rural Australia is dominated in many respects by what I call the tyranny of the macro. In other words, the regional level is ever more impacted by, say, what Australia does in terms of foreign policy, its trade agreements, its international links of various kinds and even national events. For example, when the Reserve Bank changes its discount rate and alters the level of the Australian dollar, this can impact massively on farm incomes. When the dollar went to US$1.10 a little while back, farm incomes were slashed by one-third to one-half because we don't set the international value of commodities; they're set on the Chicago Mercantile Exchange and other places. So a decline in the dollar impacts very severely on rural communities.

Then there is the tyranny of technology. As a futurist I have been investigating something like 14 technological arenas, all of which are potentially transformative and could rewrite the geography of rural Australia massively in a short space of time. I will give you one example. There have been forecasts that, within the next 20 years, 40 per cent of all existing jobs will disappear. This is a number that has, in fact, been cited by both Treasury and the Productivity Commission. I think that is something that will possibly set the alarm bells ringing. We tend to think that job displacements will often be of menial, low-level jobs that can be automated. A recent book that I read thinks that within 20 years some two-thirds of all legal, accounting and medical jobs—doctors, lawyers and accountants—may also disappear, with immensely complicated and dramatic impacts on regional Australia.

This is a very fast-moving game, by the way. The pace of technology is accelerating. One forecast I recently read said that the pace of change in the next 30 years will match the extent of change in the last 300. So take that onboard, if you like, but what it suggests is the world in which regional development is operating and trying to create the futures of particular locations is going to have to deal with really a stage that is very rapidly changing. Then I have got the tyranny of unknown futures because at that pace of change we hardly know what the economic and social landscape of particular places will look like, even 10 or 20 years down the track.

There is also the tyranny of expanding scale. Most regional service centres used to in the past service their immediate rural hinterlands with an array of services. Increasingly rural locations are going to have to learn to join the global economy. I come from a small country town, with 25,000 people, but quite a large number of businesses in our town are serving national and global markets, not local markets. I think this is also going to be a major thrust that will dislocate regional systems.

Then there is the tyranny of geography—and this has been alluded to. In effect, rural and Australia is not one thing; it is probably more like 20 things or 30 things. Rural communities are hugely different in terms of their social complexions, their resource bases, their locations with respect to markets or major cities, their infrastructure and services, and other social services. Everything about rural Australia is hugely diverse and complex, and this is another thing that we will have to deal with.

This brings me to another point: what is meant by regional development? In actual fact, I think you will find it is different things to different people, according to the environments in which they live. Some regional communities aspire to grow their populations. So, for them, regional development is about expanding the population base. In other places, it's more like delivering much better services to communities. In other places, where population is probably declining, maybe precipitously, development might not be about retaining population; it might be about expanding per capita income and wealth. I think one observation would have to be that, in the farming community, we have had the disappearance of the small-scale farmer and the emergence of very large-scale, more corporate activities—they could be large family farms, they could be major corporations; alternatively, they might even be farms that are purchased by overseas investors. But, whatever the situation, where we've got large-scale farming operations, per capita incomes and wealth are probably a lot higher than where we retain small-scale farmers. That is another element of diversity, if you like.

So we've got a moveable stage and we've got many different actors on this stage. I think that's something that we will have to remember repeatedly. But all of this does bring me to one observation. I don't know if this committee can actually alter its terms of reference in any way, but it seems to me that one of the terms of reference that might be added is: how do we handle the downsides of rapid technological change? It's possible for me to conceptualise that many small rural communities in remoter locations are potentially likely to implode in the next 10 or 20 years. This then begets the question: how do we handle the distress of communities whose populations are collapsing and whose services are evaporating? I think this is a question that has never been asked before.

Finally—I'm sorry that I may have gone on a little bit longer than you expected—the other day I came across an approach called the 'six Cs'. They are: capacity, choice, connection, collaboration, creativity and change agility. In fact, if you think about it, these are all behaviours. These are all behaviours that we will need to confront rapidly changing futures, especially at the community level. For the first time perhaps, this introduces psychology into the development game. In other words, part of our agenda here might focus on how we change the ability of communities to perceive their operating environment and to change their behaviours in ways that are amenable to accelerating, say, the uptake of new ideas, the grabbing of opportunities; and, perhaps the obverse, to relinquishing the past and letting go of things that are no longer relevant?

So, I think regional development is increasingly in the game of changing people's mindsets, their attitudes, opinions and so forth. With that, I think I will bow out gracefully. But I think this is a very exciting time to be engaged in this select committee. I think you have a very important job and I look forward to participating.

Ms Dunn : Thank you for inviting me. I must say, there are amazing threads through all of the presentations which are similar, and I share most of those. So, the things that I'll reflect to you today are the things that I hear people say in the consultations. Firstly, there's a significant difference whether you're talking about regional centres, rural places large or small, or remote places, as my colleagues have all said. And that is a theme that is going to flow through everything that you look at. When I look at the decentralisation topic, for example, if you're talking about people who live in rural areas, not regional centres, they already experience the loss of decentralisation. In their lifetime they've had hospitals in their towns, they've had primary industry centres, they've had banks, they've had local government centres, and over time all those things have gone. Local governments have been amalgamated and hospitals have been sent to regional centres. So, people in rural areas currently experience the reverse of decentralisation.

So, if we're to talk about how things might be centralised, it's going to be really important to develop a new concept of decentralisation and for that concept to be marketed to people or for people to engage with a different concept so they're not thinking about how services can be returned in the same way they were before. And I think that decentralisation's really a subtopic of the whole regional development discussion, because I think that is true. For everything in regional development that you might want to recommend, it's going to require reconceptualisation and the development of a different way of doing things and engagement of people in that new concept. As I think the previous speaker said, getting people into change and getting change activated means we really have to think about things in a different way, and get them to as well.

So, overall, people say that you can't treat us all the same, which is the challenge that my colleagues have spoken about—how do you have a national policy that has local effect and implementation? People say you can't have strong economic development if you don't pay attention to education, health, environment, social services, arts and culture. So you can't isolate the economic development topic from the vibrant communities topic, which you haven't. But of course that's complicated when you're trying to think of what the future holds and where that might go.

People would say that you require strong and cohesive communities in order to build a strong economic base. What they do say in a positive sense is that there's a growing understanding, which is the place-based notion, that communities and local areas and regions have a story of their own around which they can build an identity, and around that they can build a future. More and more I hear people describing the unique characteristics of where they are and what their story is and what their strengths are. So I think there are real possibilities to build on that if we can move away from the idea that there is one solution for the whole of Australia.

One of the really critical things I see when I'm talking to people is that the differences between the Commonwealth and state governments causes huge frustration. It's irrelevant to people in the community which government is providing the service. What they experience is services that don't work. So I think one of the critical issues for the Commonwealth government is how to engage the state governments in whatever this future of regional development is so that some of the work that has been tried in the past can actually improve as solutions become regional solutions and not national solutions, and they have to include all those services that state governments provide. That relationship and how to get the states into the discussion seems to me to be very critical.

The one other thing I want to touch on—one of the challenges for the work I do and I think for this committee—is how to get the voices that are silent. In your consultations, how are you going to hear from Aboriginal people who live a long way away and don't use the same processes? Few Aboriginal communities are going to write you a submission. I think of all the young people I've consulted with over the last few years. I don't know which of them are going to write you a submission. So I think there are voices in regional Australia that you need to hear from and at the moment I can't see a process whereby you can hear from those voices and understand what the differences are. There are differences geographically. There are differences between places where it's wet and places where it's dry. There are differences between big places and small places. There are differences in east and west between the country and the centre, and then there are differences between population groups and age groups across the community. I think it would be a missed opportunity if this committee didn't really try to hear from that complete range of voices.

Prof. Haslam McKenzie : I'd like to reiterate that I'm very pleased to be a part of this expert panel. I don't wish to reiterate any of the excellent summaries that have been presented, but I actually do have perhaps more questions than contribution. First of all, many of the terms of references, as I read them, I think are suggesting that there is a deficit model—that regional, rural, remote Australia is a deficit. For example, 'developing the capabilities of regional Australians': there are many, many capable people, and I'm sure you'll be getting submissions from many of those people. They are doing their best to grow and diversify a regional economic and employment base. There are many vibrant, cohesive, engaged regional communities. I guess the question then is: through this process that you've embarked upon, how do we avoid that deficit model?

Another consideration is, what is the other side of the coin? And that's cities. In the last census—probably in the last 10 censuses—we've seen growing urbanisation, often at the expense of regional, rural, remote Australia. And we now have a situation—I think it's well accepted—that we have diseconomies of scale in the larger Australian cities. We have to understand that regional, rural and remote Australia are important, because without it we are compromising our defence and security. It's the source of our staples economies, which have driven our economy. It's an important source of employment. There was the recent minerals boom. Probably 60 per cent of that employment phase worked in remote communities of Australia, but their families lived somewhere else. There are good reasons for that, but part of it is policy. Also, the investment in cities has been at the expense of people wanting to live in those places. Rural Australia is also important for very important fundamental human needs: food, water, energy. To understand that by not investing, by not thinking seriously about building and supporting regional Australia, is really at the expense of those cities that we've invested so much in.

I would also be curious to understand. The submissions for this inquiry have already been called, so no doubt you are receiving those as we speak. Is our role as an expert committee to guide you in your deliberations or will we have a role in understanding what those submissions are saying? It's not really clear to me exactly what our role is as an expert panel.

There is one other thing. Anne touched on it. The remainder of the expert panel fall into the trap of eastern-state-centric. There are actually other parts of Australia: the west of Queensland, New South Wales, Victoria—very important places—South Australia, the Northern Territory and Western Australia. The Western Australian population and economy has grown at unprecedented levels, but almost all of that growth has been Perth-centric. The percentage of [inaudible] Western Australians has decreased. Perth is at busting proportions in some cases. I would like to put on the table that understanding that there is another Australia needs to be considered.

CHAIR: Thank you, Fiona. Ladies and gentlemen, thank you very much for those comments. I certainly, as an individual member of this committee, can see some very strong themes coming through in a whole range of those comments. Fiona, I certainly want to answer some of the questions you have just raised. That may be towards the end of this meeting or after this meeting. I am happy to share the responses with all of the expert panel, but, in the interests of time, I might go straight to questions from committee members to the expert panel, if everyone is happy to do that. Meryl, as deputy chair, you may wish to kick us off.

Ms SWANSON: Thank you, Chair. Thank you for those excellent contributions. I passed a note to our committee secretary, Ms Agostino, saying 'Excellent contributions so far.' I commence by thanking you. I picked up on some of the themes that were symphonic throughout all of your presentations. One was that we really are living in a global world. I take into account that you have said that regional, rural and remote Australia cannot all be lumped in together. Places are different and we need to acknowledge that. Can you please speak to, not how other countries are doing it, but how we are faring compared to other places, knowing that we can't lump all of them together as well? I guess I'm asking: in terms of place making and regional development, are there some outstanding examples that we should perhaps look to? Are there some catastrophic failures? I know it's a very big question, but I want to acknowledge that you said we are in a global world. We cannot afford to naval-gaze. Would someone like to pick up on that theme? Tony is looking enthusiastic.

Prof. Sorensen : I've got one example in which I actually participated. It is two years ago now that a group of people in my town from local government, from the regional development authority, from business and various social groups all came together and nominated Armidale for the Intelligent Community of the Year Award, run by the Intelligent Community Forum based in New York. This is a global competition, and 450 entries were received. The first cut was of the Smart21. Armidale actually made the Smart21, funnily enough. We were by far the smallest place to do so, and the other actors in this game included the likes of Kaohsiung and New Taipei in Taiwan; San Diego in California; Montreal, Toronto and Vancouver in Canada; and some of the large cities in Europe. But what this competition told us was that a little place of 25,000 people, when it came to projecting itself as a smart community, could, in fact, hack it with the big guys from all over the world. I think that is instrumental—a good example of how, perhaps, very small places, remotely located by global standards, can in fact participate on the global stage. But, of course, the way we went about things was vastly different to the way other people went about things. So there are different assemblages of actions that nevertheless suit particular places, which enables small places to compete with large places. I think, increasingly, we will see this in the world.

Prof. Beer : Could I add to that. When you talk about Australia in a global environment, of course it is very hard to judge—we are unique. When you look at regional policy and regional development and decentralisation, there are a whole host of other factors that make it difficult. If you think about the European Union, they have seven-year budgets for economic development, regional development, which include a third of their total outlays as the European Union, so enormous moneys go into many regions of Europe. Look at the USA, where there is an incredible variation on a state-by-state basis and what is done and what is not done.

Canada does provide us with a good comparator. They are large, they are isolated, they have a commodities based economy and they even export many of the same things we export. The big difference is they've got more trees and they've got more polar bears than we have. When you look at the Canadian experience, their provinces can be much more active than our Australian states have been in promoting regional development and promoting decentralisation activities. In some instances—in particular I am thinking about Ontario at the moment—they are very active in terms of promoting place based development, they are very active in ensuring high-quality services to all their regional communities and they are very active in ensuring sustainable populations for their settlements. So some places around the world do it better than we do. But it is often very hard to draw out those lessons from nations that are very different to us.

Prof. Cole : If I could follow that. Recently, the Queensland University of Technology hosted the 'young universities of the world' conference and I was struck by the University of Maastricht in the Netherlands. The Netherlands is a good example of where they seem to work corporately as a society to optimise their limited resources—the value of their exported agricultural produce, for example, is worth more than Australia's, because it is the value-adding that is done down the track. Maastricht is an example of a place which has local government, businesses—and they have got Global 500 type businesses—leaders in complex technologies, and the universities are working as a collective. When I asked the mayors of South-East Queensland recently what they were doing to make the best use of the four universities in their precinct, they did not have an answer. It's not something they do.

One of the things we can learn from other parts of the world—and the Europeans are probably a good example—is to bring everyone to the table that might possibly be relevant. At the moment, we tend to look to government to do it for us or for someone else to do it. We all have our roles. I acknowledge the local bias, but TSBE, the Toowoomba and Surat Basin Enterprise—in John McVeigh's seat, but it also touches on David's area—is a good example. It's collaborative. It involves all the major players. Is it the world's best practice? It's moving, I think, with that kind of aim, to be an organisation that matters and doesn't get hung up on who's in and who's out. It seems, to my mind at least, to involve all groups. One of the things we have to watch though—I think of Gladstone and a workshop I did there years ago—is when we focus so much on economic development and leave our social organisations out of it. I think Anne Dunn said before that we must make sure all are at the table. Too often, in the economic development platform, we just talk to state development agencies, businesses, chambers of commerce et cetera and forget that the social capital organisations are where the real people are. Indeed, it's important that we bring them to the table. 15 years ago—

Ms McGOWAN: Could we talk a little bit about process here? You clearly, in what you're doing in Queensland, have some experience about how to get collaboration around the table. A little bit of a conversation for us in the early days of our consultation on some processes that work that you know. Then if I could bring Anne in about young people. Fiona, I know you're good at it as well. A little bit of a chat about how we make sure we get the voices heard so we can design it into the process at the early stages.

Prof. Cole : Cathy, you have to be prescriptive. When I did some work with RAPAD last year around the future of western Queensland in the middle of the drought, one of the things we emphasised—given that we were wanting to look forward 25 years—and insisted on was that participants were to be younger people, people under the age of 40. I must admit, we had to have a discussion about what was old and what was young, but we got there. Indeed, the most productive workshops were the ones where young people predominated. We almost have to sometimes fight our own instincts here, because in one of the workshops—it turned out to be the orthodox group, the leadership group, the older people—it was a very different outcome. We have to be prescriptive about making sure that we get all the voices heard.

One of the things I'm interested in doing, and indeed have suggested to the Productivity Commission that we do—and with my colleagues here, possibly will do it—is look at building a resilience index. A resilience index for regions will involve social capital as well as economic capital. Our Productivity Commission have almost just looked at the economic plank in isolation almost, and predictably it shows that the rich places are the most adaptive.

In the United States 18 years ago, I had a state department fellowship to go and look at renascent communities. In America, of course, government is the last place people look to for solutions. What I saw there, in places like the Appalachians, Pasadena in California, and Hawaii even, was that local self organisation is the first principle of regional development. Ronald Reagan invested billions in a defence industry that Bill Clinton then closed down. Pasadena moved from munitions or advanced military into things like advanced automotive. Pittsburgh lost 13 steel mills in ten years, and moved into advanced manufacture and other forms of economic innovation that derived from their universities. They have Carnegie Mellon and the University of Pittsburgh. Interestingly, in the process there, they drew on their heritage as a community. They didn't go out and try to be something they weren't.

At the University of Southern Queensland, we are world-class in agriculture and engineering. I have to say, I was there for three years before I heard someone say that. I think someone has already talked about deficit: we tend to undersell the quality of innovation and human capacity we have in our regions. I would like to think that the committee would start, in fact—and I would emphasise Fiona's point—by firstly challenging the deficit mentality and the deficit narrative, because it doesn't actually help. I talk about bypassing the federation, because the federation in itself is one of the structural inhibitions and limitations on regional development in this country. Geoffrey Blainey was right: we should have had more states, and then we would be in a different situation. That's not going to happen, so I think it's up to regions to self-organise, talk about their own brands, bypass and go straight to the global economy. That example in Maastricht is a good example. It didn't happen with the European Union; they did it themselves.

CHAIR: Thanks, John. I take it we shouldn't take from your comments that you're recommending more state governments?

Prof. Cole : I think we've missed that point, John. Back before 1900, Henry Parkes said, 'This is the club; let's keep membership just to this.'

CHAIR: Understood.

Prof. Cole : It's been the essential limitation, though, on regional development—certainly in Queensland. Yes, we should have more states. I'll be very popular now!

Prof. Sorensen : I'd like to add to that. I agree wholeheartedly, but, as an example of what might be developed in a local area, the University of New England, a week or so ago, had an interesting event. It was called 'Agmentation', which is a combination of 'agriculture' and 'augmentation'. At the event, six local farmers delivered to us six problems that they were confronting. Those problems were then farmed out to six teams of people. The six teams of people included university students and high school students and members of Cisco Systems, interestingly. The US high-tech firm was a part-sponsor of this event. Under the guidance of mentors, they then went into a huddle for four hours, talking through those problems and imagining solutions to them. This was a competitive event. They came back, they made their pitches in front of a team of judges and the winners were then selected. This kind of approach to dealing with rural problems, which involves young people and is essentially community based and not government based, might in fact be a forerunner of the sorts of things we ought to be doing at the local level. I agree entirely that this is a community based thing as much as a government based thing, but governments can provide guidance and, more critically, governments can provide necessary infrastructure. Poor Fiona's troubles with the broadband here are an example of how important broadband is these days. Fortunately, in Armidale, we have probably got Australia's best broadband. Believe it or not, we are getting migrating firms coming from Sydney to Armidale for both lifestyle and high-quality broadband reasons.

Mr LITTLEPROUD: Thank you for your evidence this morning. From what I picked up, particularly from Mr Archer, was around the government policy settings and the inflexibility around that in particular. I would take from that it would be your strong advice to this committee that we should look at our recommendations through the lens of two different perspectives. One is the larger regional centres and smaller regional areas, such as Rowan Ramsey and I have, and also around what some of the key indicators of success would be. How would we benchmark them going forward?

Mr Archer : The key indicators of success is a really important question to think about. I would say you're right. Think about our larger connected regional communities—Toowoomba and those kinds of places. They have a very different future. That is exactly what I was saying. I think benchmarks of success are important. We focus a lot on growth, we focus a lot on incomes and they vary considerably. When you look at health and education outcomes, there are obvious long-term deficits and gaps that we've been pretty unsuccessful at closing. When you look at some of the headline economic indicators, there are regions that are not doing very well at all, but, in the aggregate, regional Australia is doing pretty well. Incomes have been keeping up, largely, although they're much higher in the inner cities. Economic growth has been very good in aggregate, although it depends on the seasons, the place and its industry structure. A lot of the headline indicators aren't too bad for a lot of places. When it comes to policy I'd encourage you to look at the second level: the health and education gaps and some of the meaningful underpinning engagement of people in the workforce and the kinds of incomes they derive from that. We don't want to lose sight of whether regions are doing reasonably well in those big macro-indicators, but I think underneath that are a lot of signs of things which indicate when a place is going to go off the rails.

Mr LITTLEPROUD: You talked about wealth but also taxation. Would you see that as a possibility?

Mr Archer : Do you mean the variability of taxation?

Mr LITTLEPROUD: The inflexibility of policy as it extends to taxation.

Mr Archer : I think taxation is a tricky one. If you want to create a blunt incentive for a place to do better just by changing headline tax rates, the concerns are about the persistence of that—it's put in place and then disappears—and whether you're increasing the size of the pie or just moving things around. There's been long-term criticisms of those sorts of blunt tax endeavours. When you're looking at income rates and special tax zones and things, I don't think that tax is the first place to go for flexibility. There may be some things around the edges. We have a paper coming out soon about retirement and superannuation settings, particularly in significantly ageing regions, and the disincentives for workforce engagement that can be related to those. There's some potential for flexibility there. I'd be wary about things like income tax rates and some of those real headline figures. The chances of those persisting aren't very good. It's a very blunt instrument to put over a very complex set of situations.

Prof. Haslam McKenzie : The indicators of success are all of the things that Jack talked about, but I also think it's important that decision-makers and policymakers look at age profiles, income per household, the percentage of social service recipients, and how many full-time jobs there are versus part-time or temporary jobs. We also have to be mindful that we talk about good growth. Do we want population growth of unemployable people? No, we don't. Do we want population growth of people 55 years and above? No, we do not. It's important that some of those demographic profiles are part of the decision-making as indicators of success. We have plenty of 65-year-olds who have high incomes but probably are not going to be particularly important for long-term productivity.

Ms CHESTERS: Andrew, I have a couple of questions about why Geelong is successful. As all the committee have said, we have big regional centres and then some smaller ones. Geelong's population is bigger than Hobart's. It's 50 minutes from Melbourne. When the Victorian government moved WorkSafe to Geelong, a lot of people there were excited, because if you lived in Werribee, it meant 20 minutes commuting in the other direction as opposed to coming all the way into Melbourne. It's also had quite a lot of focus of multiple governments at a state and federal level for a while. I'd like some of your thoughts on why Geelong is a success, but you made some other comments about the need for R&D in universities. Why is it that so many of our universities are essentially pulling out of their campuses in regional Australia, or their academics are based in Melbourne and they only do telelectures? Why are they pulling out, and what can we do? Do we have to force them to reinvest in their regional campuses?

Prof. Beer : Fundamentally, we can think of Geelong as a success because the decentralisation initiative in the early seventies, which built upon some earlier moves, created institutional structure that then became the focus of ongoing action over time. In some respects, the Geelong Regional Commission, which was established and has been sustained for a very long time, became part of the narrative about Geelong and its future, which served to attract additional investment from the federal government, the state government and the university sector, particularly in the success of Deakin as a major provider of higher education and research. All of this helped create an ongoing story about what Geelong's future might look like, which was very different to the future that rolled out for Whyalla, for example, which might otherwise have been thought of as comparable in the 1970s. That made a very important contribution to the development of Geelong. It wasn't that the investments taken at that time were that significant, but they had a long-term and lasting impact in attracting public attention. I think the same sort of argument could be made for Wodonga.

You're right that most of the university sector is based in the capital cities, and even the non-metropolitan based universities often have a campus in Sydney, Melbourne or wherever. It's worth noting that even Central Queensland University has a presence in the CBD of Adelaide. Why is that so? Simply put: we have a demand led model now in the university sector, which treats all students as equal. We seek to provide services to students where they can be most efficiently provided and where we can attract students. Population levels are so low in many parts of regional Australia, even in the regional cities, that it's very difficult to justify the often very high costs of providing education, and research services in particular, in those places. How could we solve that problem? I think we could turn back to Jack and say, 'Look at a differentiated payment structure.' That would encourage universities to either grow their existing businesses in regional areas or establish new campuses and facilities, and probably deliver better outcomes for regional Australia in the long term.

Prof. Haslam McKenzie : I work for a university that has vigorously fought against having a regional presence, and that's nothing to be proud of. However, this university strongly advocates field visits, and I take masters and undergraduate students on field visits to regional communities. It's absolutely critical that we are encouraged to do that, because those students, most of whom are urban based, for the first time will go over the Darling Scarp and realise that it is not the badlands. Those people having that experience will probably get their first employment in regional Australia, and that's the way they go forward. In the Pilbara, for example, which has been lobbying for 10 years for a university, the only university that has put its hand up is Central Queensland University. It's all about dollars and squashing as many people as possible into a room. Very poor technological services for video delivery are probably the fundamental reason that people drop out. Again, it's about services, it's about user pays, it's about hot bottoms on seats; it's nothing to do with quality education.

Ms CHESTERS: There was also talk about the CSIRO and R&D, and how critical that is to exploring advanced manufacturing that may occur in the regions. How do we do that? How do we encourage R&D and the CSIRO into the regions? We have a lot of small-to-medium manufacturers out there that might have a great idea, but they feel that they're blocked from capital, from being able to link up with the universities and turn that idea into actual R&D and then investment. I'd like recommendations on how we can break through those roadblocks. John, picking up on some of the comments you made about future services, what do we mean by that for the regions? In a perfect world, where we've fixed the NBN and we all have access to super-fast broadband, what do future services look like for the regions?

Prof. Beer : If I could pick up on your first point, in my working life I drink a lot of coffee and I drink a lot of coffee because I meet with people. I think what is critical for bringing R&D capacity into regional Australia is a physical presence of research and development institutions that includes the CSIRO but is not limited to the CSIRO. It could include parts of the university sector, or other institutions that are so critical. I think it is important to emphasise that, and it is one of the issues where the federal government can have an important influence in terms of shaping the investment and physical presence of those critical infrastructures.

Prof. Cole : As a corollary to that, I would argue that for too long regions have often seen a university as an end in itself—that we have a university, aren't we good. I can argue that regions should be more demanding of what it is they expect of universities, and indeed from my own recent experience we are moving that way. But certainly there is a need for a two-way engagement here and, as a corollary to the point about CSIRO, we need to be thinking of regional capitals to some degree. The point about 18 cities is an important one—32 cities, 18 of which, of course, are within the metro orbit.

The real challenges are in places like Far North Queensland—Townsville, Cairns et cetera—which are well beyond. How do we service those? Townsville is a good example. Notwithstanding some of the issues to do with its reliance on the commodity sector, for example, it has the JCU, it has AIMS, it has the Great Barrier Reef Marine Park and it has Defence. It has a very elaborate infrastructure already there, much of which is services, which is possibly a platform for further development.

Mr STEPHEN JONES: Overwhelmingly the government.

Prof. Cole : It is overwhelmingly the government but I guess, Stephen, the point is: how do we spin off that? I think of the recent work of Advance Queensland, for example. While there seems to be an undue fascination with start-ups, government does have a role, as I think we have said today, in supporting some of, firstly, the narrative, getting the narrative positive, but then making the linkages and helping that process of connecting SMEs, particularly that are in need of capital, to potential backers. There is a mezzanine role there to play, for example.

As to the services, the services that will mostly exist won't be completely at odds with the heritage and nature of the communities we are talking about. In the agribusiness area, for example, there is a whole range of services related to that supply chain. Commodities is another one. What we haven't done very well in this country, when we take something like the recent coal seam gas boom in Queensland, for example, is that in the process of permitting the industry to go ahead, as government we didn't condition that we wanted to see collateral investment in the supply side and value-chain innovation that might have seen the development of a services sector around it.

Gladstone is the centre of the LNG industry in Australia—or eastern Australia, I should say, Fiona—but when you want to talk about technical things to do with gas, you still have to fly to Houston. We have not realised the opportunity of a $60 billion to $80 billion investment in that industry with a related services sector, and that is because we haven't thought that way as government in the past. I think it is something where we need to be strategic about these industries and leverage off them, whether it be agri or commodities or transportation. In Toowoomba we have an example of the inland railway and the related industries that will build around the simple reality of logistics and transportation.

Will it happen everywhere? No, but I think there is an argument to be made for alignment with future development with some of this critical infrastructure, and digital opens it up a little bit more. As we know, you will find personal services providers living in western Queensland, for example, providing to a global market because they have got good internet connection. Will everyone be like that? No, but it is important that we have that there so people have the opportunity to develop their business.

CHAIR: Thanks, John.

Mr STEPHEN JONES: I want to take you up on a couple of those themes. When you kicked off, Andrew, you talked about some successful versus spectacularly unsuccessful examples of aggressive regional economic development. Albury-Wodonga is one that was successful. Blayney was unsuccessful. We can all acknowledge Canberra and I would say Townsville is another. Townsville is the Canberra of the north. It is a government services town, basically. When I look at the successful examples and the point in time they occurred—and this is perhaps a generalisation—they all relied on using retracting manufacturing industries. Places like Albury-Wodonga soaked up the displaced agricultural workforce and got some value-add along the way, and then off the back of that attracted additional services, businesses et cetera. That was the accelerator. Of course, there was migration—and, overwhelmingly, European migration—into those areas as well. Now at least one of those is not going to be the accelerator for regional economic development today.

You have all mentioned the importance of knowledge-based industries, creative-based industries, and I agree. And you, John, usefully talked about the importance of extractive industries getting a greater value-add in that value chain. But if we could focus on the knowledge base, and most groups I know talk about the knowledge base. I butt up against that work that Richard Florida has done, where he basically concludes there isn't a future for these sorts of industries unless you have a city of a particular threshold. The smaller regional areas are, for want of a better word, too 'intimate' to allow for the creativity that is going to generate that sort of industry and that sort of job. Is he right? Is he right about that sort of stuff? What is the counternarrative? What is the different story that says, yes, there is some stuff that we can do at either the governmental level or the rhetorical level to create those sorts of industries, retract those sorts of industries or retain those sorts of workers in those sorts of towns?

Prof. Cole : It is very risky. Florida talks about Pittsburgh. As a sequel to the exit of the steel industry, Pittsburgh put a lot in place around it but then they went off to New York. And Paul Collits did a very nice piece in his work for the Productivity Commission, and it is well worth a read, about re-imaging regions. He emphasises mobility. When we start developing strategies based around territory, the fact is a lot of this stuff is mobile. That creative class that Pittsburgh attracted headed back off or went on to New York. That is the nature of the metro critical mass and the gravity, I guess. I don't have a smart answer for you, but I know there are risks associated with launching too far the other way.

Prof. Beer : Can I disagree with you, John, in the sense that, as I understand it, yes, Pittsburgh went into the advanced manufacturing space, but it now makes a lot of its livelihood out of selling advanced medical services.

Prof. Cole : It does.

Prof. Beer : There are huge hospitals and cutting-edge R&D embedded within the Pittsburgh economy and they have a global marketplace with the services they provide. So you try one form of the knowledge economy and it doesn't work, you move to the next form of the knowledge economy, drawing upon the latent capacities of the university sector. You obviously need to be willing to experiment and you obviously need to be willing to try, and you need to be willing to accept failure on occasion.

The other point I would make in terms of your examples of economic development success stories in terms of regional centres is, yes, Townsville is a public sector centre that has grown et cetera. But the Gold Coast is perhaps the standout in regional development over the postwar period. That was been driven by services—tourism and leisure services, recreation services, lifestyle services. So services can be the manufacturing of the 21st century in terms of driving growth.

We can also look to Finland. I had a visitor from the University of Tampere out. It is a most innovative economy in Finland and much of the innovation is diffused throughout their urban systems. It happens in Helsinki but it also happens in Tampere and it happens in parts of the far north, where you can see the northern lights, for example. So it is not that we are locked into decrying the demise of manufacturing as a driver of growth; in fact, the rise of the service sector economy, whether it is about smart tourism or environmentally friendly tourism, actually opens up new opportunities for places willing to take the challenge.

Mr STEPHEN JONES: If I could sort of add a rejoinder: there's still a threshold size that a town, a city, a region needs to be, and the Gold Coast, I think, is a good example of that.

Prof. Cole : And Andrew emphasised the importance of alignment. The advanced medical manufacturers align well with the innate capacities of the Pittsburgh region, if you like. Other things didn't work out quite so well. But where you can align your knowledge of industries of the future with, if you like, the foundational infrastructure that's been there, Pittsburgh serves as a good example.

CHAIR: Lisa, I'll throw to you for a quick question and a brief response, please, because this is an ongoing conversation, obviously.

Ms CHESTERS: Absolutely. My question is just picking up more broadly what's been said, something Jack said earlier about migration policy for the regions—just sort of exploring that a bit. Are you talking about overseas migration to the regions, or migration from the urban centres and the metropolitan centres out to the regions? We've got refugees in Bendigo, for example, who have resettled there, but what they need is a job. So, are you saying that limiting migration policy to where we have jobs, so therefore connecting migrants with workforce? Or are you talking more about, let's move people first and then see what comes of it? And the second question is, is it all migration—domestic as well as international—or is it more overseas?

Mr Archer : I think the first thing I'd say is that we really underestimate how big an effect our migration policy outcomes have on the population picture. Young people move to the city, and older people—working age or older—leave the city. The difference in population growth between regional Australia and urban Australia is all about international migration. For three censuses in a row, if regional Australia had got the 30 or 32 per cent of migrants that reflects its existing population percentage for the country, then population growth would have been equal. Now, there's a lot of diversity in that. You still would have had small towns challenged and you would have had regional cities getting quite a bit bigger. But migration is fundamental to the population picture.

The second thing we're seeing is that particularly in small rural communities migration of overseas-born people—that could be recently arrived refugees or it could be skilled migrants or refugees who are permanent citizens or even Australian residents who have been in the cities for a while and are moving out there—there's 150 local government areas in this last census that were stable or grew in rural areas as a result of that migration. We do very little to facilitate that. There are some great examples of communities, such as the example with the Karen people at Nhill, but we've been talking to a lot of places about this and there are others who are trying. We do very little to facilitate that migration. If you could move about 1,000 people to small rural areas in New South Wales you wouldn't have a population decline in rural areas. We're not talking about many people. So I think that's one of the things that's missed in this big discussion about rural population decline. We're talking about very small groups of people where we could have more focused programs complementing what we're doing with migration policy and visas to actually find those opportunities in communities. Our work has also shown that there are a lot of rural communities that are actually workforce constrained. There are businesses that don't take on extra people, simply because there isn't a community of people to tap into locally or a clear pathway for that.

So, the first thing I'd say is that our migration system doesn't do a very good job of getting people to regional Australia, and the idea that that's because there isn't any opportunity for them there is I think, frankly, nonsense. There is a pejorative discussion and perspective for a lot of incoming migrants about what opportunities are there, and there's a bias of settlement services to either places like Bendigo or large cities, which essentially injects them there. And I think we can do some really smart things to shift that and potentially make a big impact on the rural decline picture for those small towns that do have opportunities, that do have growth opportunities. It won't turn around every little small town. But it is about visas and migration. It's about communities connecting to the people who can work for the opportunities they've got on offer, rather than people being sent to regions. It's about tapping into people overseas who come from a rural background, rather than just getting someone out of Karachi and sending them to Maranoa, where it's going to be hard to make a fit. So I do think there are a lot of opportunities there, and it would be good to also talk about the ways in which we can support age migration and working age migration as well of existing Australian residents, either migrants or not.

CHAIR: Thank you, Jack. I will have to wrap it up there, but Tony, I believe you want to make a quick contribution?

Prof. Sorensen : Yes, just a quick observation on the migration issue, setting aside international migration coming in and its dispersal in Australia. I live in a small town and the general consensus, talking to friends, is that it's a good idea if in fact the local children get out of town to have a higher education and so forth, because it's important that they see the wider world and expand their vision and so forth. The critical thing is, in fact, then trying to encourage reverse migration: as those children form families, get them to come back. And the way to get families back very often, apart from running a cutting-edge economy, which is expanding its portfolio of, say, new industries, is to run a very high-amenity environment.

Some friends of our family recently came back after running successful businesses in Sydney, but they came back purely for the amenity. The fact is that there were not traffic jams, it was five minutes to anywhere, there was a great cultural life, good environment. And one thing that has not cropped up in this discussion so far is the question of amenity. Governments and communities are at one in trying to promote the amenity of particular locations so that they are appealing, for residential purposes, across all age groups.

CHAIR: Thank you for that contribution. Ladies and gentlemen, I will have to wrap it up there. We are well and truly over time. Fiona, I am conscious that you asked some questions about the expert panel. Perhaps I can make a couple of very brief comments and suggest that, on behalf of the committee, I circulate an email to all of you members of our informal expert panel for ongoing discussion on some of those points you raised. But the points I make now initially, very quickly, are that this is very much an informal—and I stress informal—expert panel that was drawn together by individual members of this committee, making some suggestions of people that we knew or were aware of, and we were interested in a cross-section of skill and of course geographical representation. It is an informal committee, simply a mechanism or a tool that we decided upon in our committee to have what we call an informal expert panel as a reference point, if you like, rather than just the typical inquiry approach of having experts forward through a discussion like this and leave their evidence and then we all move on. So, we do want to maintain the conversation with this committee, and I will circulate on behalf of the committee some comments about that and also, of course, invite your ongoing input both to the content of our discussions and the process by which we best engage you.

My colleagues on the committee have really picked up on some of the important themes you've shared, so we really do appreciate that, and I formally thank you for your attendance here today. I would, as I said, invite you to make further contributions throughout the process of our inquiry, and I will get in touch with you on behalf of the committee about how we best do that. You will be sent a copy of the transcript of your evidence today and will have the opportunity to request corrections to transcription errors. As I said, I will be in contact with you on behalf of the committee about our ongoing consultations. With that, I declare this public hearing closed, and again thank you all so very much. I look forward to further conversations.

Committee adjourned at 12 : 44