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The Regional Divide and the Future of Small Towns

Paul Collits

Manager Regional Policy, New South Wales Department of State and Regional Development
Adjunct Senior Lecturer, Faculty of the Built Environment, University of New South Wales

Presentation to the "From Strength to Strength" Regional Development Conference, Timaru, New Zealand, September 2003

> >Speech Notes

Background Paper

Small towns are often declining towns. Such decline is measured by lost people, lost skills, lost youth, lost services and lost opportunities for investment. There is often, as a result, a sense of hopelessness among the population.

While not all small towns are in decline, and lost population need not always mean "failure", there is a problem for society. For concentration of economic activity is inevitable in market economies where there are natural attractions for firms and households in co-locating in large population centres. This is seemingly only increasing in the age of global cities and global firms. Yet much of our heritage is in small towns - our roots and our culture. And many people still live there, with reasonable expectations of a decent life.

What, then, should (and can) our societies do to ensure that these places survive? Who is responsible for small town survival? What are the best strategies to ensure that our small places prosper? Is it realistic to expect them all, or even most of them, to survive? Can local economic development make a difference?

Australia, like New Zealand, is losing people from many of its smaller towns, particularly in more remote locations. Traditional industries are in decline in many places. Bigger places are doing better. Massive social changes are driving these changes - not just economic restructuring - though the two processes are linked.

The message here is one of hope and optimism tempered by a recognition that the world is changing inexorably, and that many (though not all) of the changes are occurring to the detriment of smaller places. Those communities that will survive and prosper are going to be the adaptable, the nimble, the flexible, the open, the welcoming, the positive, the experimental, the entrepreneurial.

There is no single formula for success, but there are important signposts in community best practice, the thinking of practitioners, and even in regional development theory.

This paper tries to make sense of place of small towns in a dramatically changing world. Specifically, it seeks answers to a number of questions:

• What is happening in regional areas? And in small towns in particular?
• Is the news all bad?
• What are the key trends affecting regional outcomes?
• What can communities do about regional decline?
• What sense can we make of the regional world?
• What causes some places to succeed while others fail?
• What are the lessons to be learned from successful communities?
• What are we trying to achieve?

One of the key issues for the analysis of economic opportunities in small towns is whether their condition is inherently different from distress regions generally. In other words, is it the lack of size of smaller towns that makes them so vulnerable and their problems so difficult to address? It is critical that local economic developers and communities understand the nature and dimensions of small town decline, the direction and power of the forces behind the trends, and the extent to which they can shape their futures.

Having thought about these things for many years, I have concluded that there are three fundamental questions of regional development. They are not the ONLY important questions. But all other questions flow from them.

• First, "What are we trying to achieve?" OR "How do we define success?" There is much debate and controversy about objectives. There are many objectives, and pursuing some may mean ignoring or even challenging others.

• Second, "Who is responsible for delivering it?" Is it central governments? Is it communities or regions themselves? Is it economic development practitioners? Here, government policy in Australia, and probably elsewhere, has been to work in partnership with communities and regions. Peter Kenyon has said correctly that the cavalry is not coming.

• Third, and perhaps most importantly, "What drives regional development success?" This is the $64 question of regional development, and every community, region and government wants it answered. But there is no easy answer, as we shall see.

The rationale for most regional policies is to try and counter the inequities that result from regional disparities. Much of the debate in Australia about regional divides is really about city and country. In Sydney, we live with the spectre of the city-country divide described often in the media. A recent article, extraordinarily titled "Why we must hate Sydney", described the evils of Australia's global city, its concentration of wealth, its attitudes and its alleged disdain of the rest of Australia.

Sydney is rich. Sydney deprives the State's regions of growth opportunities. Government in New South Wales is Sydney-centric. Sydney is self-absorbed. All it cares about is real estate values. I wonder if Auckland suffers similar angst from other regions in New Zealand. Salt has noted that Auckland has been consistently placed in the top places of growing regions in New Zealand.

The role of cities in economic development, and the concentration of economic activity in larger places, is well know and easily explained. The well known economist Paul Krugman has stated:

Step back and ask, what is the most striking feature of the geography of economic activity? The short answer is surely concentration.

Two Australian observers (Spiller and McDougall) have argued, in similar vein:

Australia used to ride on the sheep's back and the miner's barrow. Today it is powered by the shiny towers in our central business districts, by our vibrant inner city neighbourhoods and our suburban enterprises.

A theme has emerged in the literature stressing the emergence and importance of "global city regions". It is argued that there is a network of cities with globally connected economic relationships and containing "command and control" functions.

It is often pointed out that incomes are higher in the city than in regional areas, wealth is higher, unemployment is generally lower, opportunities are greater, growth is stronger, and there is less "social exclusion". Overseas migrants prefer Sydney in great numbers, with the capital receiving about 40% of the nation's incoming overseas migrants and around 85% of the State's overseas migrants. And, more importantly, it is said that the "centre" grows at the expense of the "periphery".

These sorts of figures seem to reinforce the dominance of large cities and "global city regions". They provide further ammunition for the gloom merchants who focus on the city-country divide.

Contrasting Perceptions of Regional Australia

In Australia, there are two very contrasting views about the future of regional development. There seem to be two ways of viewing regional Australia, two views of the processes driving regional growth, and two ways of conceiving the proper role of government.

One view sees regional Australia as differentiated and certainly not in universal decline. It sees regional development drivers as complex and subject to an enormous range of forces, many of which determine where industry and businesses locate, and few of which are subject to government fiat. On this view, government intervention should be selective and should seek to "make a difference", while not prejudicing the market. Inherent to this argument, though generally unstated, is the view that not all regions will prosper.

The other view see regional Australia as facing a "crisis", with many parts in terminal decline. This situation is said to be unacceptable, caused by government actions and inaction, and requiring substantial and direct government intervention. Such government intervention is, on this view, capable of turning around the declining fortunes of regions, even if at great cost to the taxpayer, provided the right "incentives" are in place for industry to relocate or expand. Inherent in this argument is the view that all (or at least most) regions should prosper.

There is an obsession with population growth in regional Australia. Success is typically defined as population growth, and this is understandable in regions that have suffered decline, and in a country with a large land mass and a very small population.  Yet there is so much more to regional development than population growth. Successful places may have stable or even declining populations in some instances. It depends on whether the communities are viable and meet the needs of residents. Even other indicators such as income, employment and wealth do not capture all of the factors that make up "success" or well being. Out-migration might be a good thing in some respects, especially if the alternative is higher local unemployment and the social problems that often come with unemployment.

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