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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

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Background Paper

For governments, formulating regional policy has many challenges. Typically, the expectations of stakeholders, particularly regional communities and their representatives, are high. Yet the capacity of governments to shape regional development outcomes is often very weak and typically indirect.

There is a lack of agreement over what "regional" means. There are those who argue that regional policy should be applied to urban areas and cities as well as to the traditional Australian focus of policy - non-metropolitan areas.

There are often multiple and ill-defined objectives, despite Armstrong and Taylor's injunction to be clear about objectives. Governments, of course, have a vested interest in being anything BUT clear about objectives, lest they fail to meet them and be held accountable. And achieving a range of objectives simultaneously is nigh on impossible, in view of the complexity of the processes driving regional development.

There are many levels at which policy can apply. Outcomes can be sought at the level of the individual enterprise, for example, or at the community level, or at the regional level so beloved of the new regionalism theorists, or at the industry level. In New South Wales, programs cover all of these levels of intervention.

There are multiple choices over which policy instruments to use. Even if agreement were reached about ends, which tools are best to use in their achievement? Grants or loans? Assistance to the enterprise? For what purposes? For how long should incentives be provided?

Regions are unequal in the extent to which they can benefit from policy interventions. Governments may wish to achieve more even development, or reduce disparities. Yet the less attractive a place is to investors in the market place, the harder the task of government. It may be harsh to judge government interventions as ineffective in places of such little promise.

Perhaps most importantly, there are conflicting theories and a lack of consensus over the drivers of regional success (more on this later). If governments and regions do not know exactly which drivers of regional growth are the most important, which levers are they to pull?

There is a huge impact on regional outcomes of other policies and from processes that governments cannot control, especially in the age of rapid globalisation. This has been referred to by Sorensen as the "tyranny of the macro".

Regional conditions vary over space and time. In an area where interventions may not yield results for many years, the impact of local conditions in the intervening period may alter the trajectory of growth in all sorts of ways that make it impossible to untangle the impacts of both government interventions and other drivers of growth.

Then there is the problem of evaluation. It is difficult to know what works and to measure the impact of what governments do. Evaluation has not generally been a priority in Australian regional policy for a number of methodological and political reasons.

There is a waxing and waning of government interest in regional development. While in New South Wales, governments have generally continued the programs of their predecessors, at Commonwealth level in Australia interest has been far more sporadic. Yet even at State level, there have been times where regional policy has been of minor significance to government.

Finally, regional policy can take a long time to work, and as Sir Humphrey once said, government is about surviving till Friday afternoon.

Yet in Australia, despite these obstacles, much has been demanded of regional policy, and poorly performing regions are often explained as the outcome of policy failure rather than naturally occurring spatial processes. Interest groups and local councils are adept at blaming higher levels of government for poor local conditions.

Some of the objectives variously sought by regional interest groups in regional New South Wales have been:

• A more populated inland;
• Less regional out-migration;
• Retention of more young people in regions;
• A less dominant capital city;
• A more favourable regional business climate;
• Regional "well being";
• Lower regional unemployment;
• Fewer inter-regional disparities;
• Higher regional incomes.

This list merely scratches the surface. The list is ambitious, to say the least, in view of the constraints on policy outlined above. Successive NSW governments have generally being content simply to try and create jobs in regional New South Wales.

Realistically, most governments are going to adopt a "cover all bases" approach to regional development. They are not going to go out of their way to help small towns in particular. They are also going to continue trying to attract investment to cities, firstly because they would rather have the investment in the city than see it go to another jurisdiction, and secondly because they realise that national economic growth is now largely driven by the cities. And they are going to continue implementing macro policies that generate national economic gains but which may impact unfavourably on some regions. And they are going to encourage what Tony Sorensen has called "DIY regional development", where communities are cast in the starring role and handed the responsibility for their futures.

Governments have adopted a pragmatic approach to helping small communities. They are essentially providing strategic funding and technical guidance. And their efforts have not been without success.

New South Wales Government programs such as the Living Centres Program, the Townlife Development Program (recently renamed the Towns and Villages Futures Program) and the Main Street/Small Towns Program are encouraging towns to develop as livable places attractive to those who place a high premium on quality of life.

The NSW Government has a wide range of local economic development programs aimed at developing regional economies with the maximum input from local communities.

These programs provide funding and other assistance and are designed to help regional communities build local economic capacity.

The Main Street/Small Towns Program assists regional communities in taking a proactive and strategic approach to their future.

The program enables communities to better utilise their resources to enhance their unique strengths and quality of life.

Since July1999, 145 communities have been assisted under this program.

For example, assistance has been approved to Gilgandra Shire Council for employment of a promotions and economic development officer, and to Coonamble Shire Council toward development of an information technology skills database.

Other examples include:

• Supporting efforts by Bellingen to implement a community planning process for seaboard communities.

• Providing assistance to Cabonne Shire Council toward the staging of the 2002 and 2003 Cabonne Daroo Awards.

• Providing assistance to the Broken Hill Chamber of Commerce to run a customer service and management training workshop.

• Supporting the staging of the Kiama Seaside Festival.

• Providing assistance to the Yamba District Chamber of Commerce for the development of a web portal for Yamba as a marketing tool and e-commerce development.

The Developing Regional Resources Program provides seed project funding for local organisations investigating or pursuing economic opportunities and developing innovative approaches to local development.

The program is designed to strengthen regional economies, particularly through the development of innovative industry activities.

The Towns and Villages Futures Program builds upon the success of the Townlife Development Program which was introduced in 2000/01 to foster economic growth and job creation in regional communities with a population of 2,500 or less.

The Program offers communities the opportunity to take a proactive and strategic approach to their economic development. Assistance is available to implement projects which have a degree of community support and will lead to new economic activity. These include development of new products or services, developing new markets for existing products and services, staging of events such as conferences/conventions and tourism development activities.

To date over 100 communities in regional New South Wales have been offered assistance under the program.

The Government is injecting $1.2 million into the Towns and Villages Futures Program over four years.

The Commonwealth Government too has adopted the bottom up approach. Through its Regional Solutions and Sustainable Regions programs, devised following the Regional Australia Summit in 1999, the focus is assisting communities to craft their own solutions to ongoing issues of decline or restructuring.

This brings me to local economic developers. What can be done about all this by communities and their economic development professionals? The two views, held by the self-styled realists and the small town optimists are, respectively, that much small town decline is historically inevitable, and that therefore there is little that local interventions can achieve; and that local economic developers and their communities can have a substantial impact on outcomes.

While there can be no definitive answer to this in the absence of empirical study - and there are huge methodological issues with this - a lot depends on what one's definition of success is.

It is very difficult to determine whether economic development agencies affect regional outcomes positively, and if so, to what extent. The state of regional program evaluation is the subject for another time...

What is "community economic development"?

It has been defined by the Municipal Association of Victoria in its widely used Ready Set Go Manual as follows:

Community economic development is a process of identifying and harnessing local community resources and opportunities, to stimulate economic and employment activity. Three concepts underpin both the philosophy and practice of community economic development. These are:

1. Community economic development builds upon the simple premise that a community has within itself, or within its grasp, considerable capacity and opportunities to influence its economic future;

2. Community economic development is not a panacea for all the problems and changes impinging on local communities. Rather, it must be viewed as a complementary strategy to broader state, national and global influences, which will still be the major determinants of wealth and job creation in any community. However, community economic initiatives enable a local area to respond to these wider forces, to adapt them and to capture potential opportunities; and

3. Community economic development calls for a new way of thinking about the nature of public leadership by all spheres of government.

According to the Manual, CED:

• focuses on the stimulation of opportunities that will generate additional income and jobs, while preserving and hopefully enhancing the dynamics and features that make the local community special;
• actively involves local people in decision making about their economic future;
• seeks more resilient, durable and diversified local economies;
• encourages development processes compatible to local aspirations, needs, values and resources;
• emphasises a holistic approach to development;
• emphasises specific actions; and
• involves collaboration and partnership between the public, private and community sectors.

Coffey and Polese have defined "local development" as follows:

The term local refers to an event or action which is initiated and/or sustained by the population of a regional or sub-regional unit. We define development as a process of economic growth, accompanied by a structural shift, that is both long-term and irreversible. The results of this process include an increase in the relative productivity of a region's economy and thus a rise in the per capita income of its population.

Local developmentis thus locally induced economic growth, occurring within the context of the existing free market system... In essence, local development, as we define it, refers to a particular form of regional development in which endogenous or local factors play a principal role...

Local development policy, as defined here, is necessarily based on the assumption that regions can develop comparative advantages based upon indigenous enterprise, and that their fate is not completely predetermined by locational, structural, or resource characteristics, nor by fluctuations in external demand.

The respective roles of local leaders, economic development practitioners and community members are critical in ensuring both local ownership of the process of community economic development and a strategic approach.

For some experts it is axiomatic that successful local economic strategies are built on successful communities. In other words, it is important to build the community's social capital, focus and cohesion first before seeking to expand investment and economic activity.

Local ownership and commitment are seen by communities as critical to the success of economic development strategies. This has been stressed many times by practitioners in the field. According to Kretzmann and McKnight:

All the historic evidence indicates that significant community development only takes place when local community people are committed to investing themselves and their resources in the effort. That's why you can't develop communities from the top down, or from the outside in.

This pretty much sums up the rationale for local economic development. It recognises that local actions, including community based actions, can make a difference to the local economy and to the community's quality of life, whatever the challenges are that broader economic and social change throw up.

This does not mean that local action can solve every problem, or that local economies exist independently of the rest of he world, or independently of market forces. Local economic development is not a panacea. Not all communities have the resources to make a difference, and events shaping local economic outcomes often occur beyond the region.

Local economic developers are also generally a very young profession.

Beer identified 460 local economic development bodies to whom he sent questionnaires in his study. One of the interesting things Beer discovered was how relatively recent most Regional development bodies are. Of the 180 responses that Beer obtained, around 70% were from organisations which had been formed since 1990.

Beer has raised questions as to whether practitioners have sufficient skills and resources to perform the bewildering range of economic development tasks assigned to them by their employing organisations, and to meet community expectations. The practitioners studied also seem to have a pessimistic view of their own capacity for making a difference to their communities.

This finding is of some concern.

However, it should also be noted that a recent survey of DSRD's Main Street Small Towns Progam revealed that 80% of communities involved in the Program decided to continue with the program when the State Government's funding contribution ceased. This would indicate a very strong self-belief on the part of practitioners and communities who clearly see much value in what they do.

It is also clear that what they do as local economic developers is important. As governments have gradually handed more responsibility to communities for their economic well being, the role of practitioners has taken on added significance for local communities.

Their task is a noble one.

Tom Peters, addressing a local economic developers' conference, once described delegates as "a thousand inventors of urban, rural and suburban tomorrows".

The task can also be a thankless and even a demeaning one. There is another, less flattering view of economic developers:

"One of life's lowliest creations who walks the earth in miserable solitariness prayerfully petitioning the gods of Gross National Product to "bring me please, one small industry so that I may take it to my bosses and say unto them, 'Lo! masters thy humble servant is deserving a pat on my little pointed head for I have laboured long and hard in the vineyards and have produced a goodly harvest".

Many practitioners say that small towns must look to their own resources to survive and prosper. They really have no choice but to do this. The cavalry is not coming from outside. Businesses must be the core of any small town development strategy. In practice, this means growing existing small businesses.

The key question from all of this is what the case studies, and the various theories of regional growth, tell communities about local economic development. What is the "learning"?

We can all learn from the experience of other places and the methods they have used to achieve a measure of success. Yet the successes of other places must be kept in perspective, for several reasons.

First, we don't know for sure whether improvement in a town's performance is the result of local action, or simply the outcome of favourable external circumstances.

Second, economic developers undertake a wide range of activities. Which of the hundreds of activities they undertake each year make the most difference to their community?

Third, there is no agreement over what, ultimately, drives regional economic success. Phil Burgess is one writer who wants communities to move away from the obsession many have with "growth" as the only measure of success.

Fourth, there is agreement that local conditions vary widely, and that growth drivers are complex. Lessons cannot simply be transmitted from one place to another.

Fifth, the success facto in town x, even if known and accepted, may simply not exist in town y, and may not be replicable. That town x has survived and prospered might mean little to town y. Even knowing the reasons for town x's success may not help.

Sixth, measures of success vary with definitions of success. How we define success is critical, and we might need to modify our definitions.

A town might have growing population, in net terms, and low unemployment. But the jobs might be low paid and boring. There may be little choice in employment. There may be few cultural facilities.

On the other hand, places might be losing population and still economically successful. Examples abound of successful businesses operating in places with stable or declining populations. Often the decline in people has occurred because of the success in business, for example in agriculture.

Against whom or what should towns be measured? Measuring small towns against larger towns is in reality meaningless. Incomes are higher in Sydney than in regional New South Wales. So what? This is to be expected.

The conviction that we have as economic developers is that local action can make a difference, whatever else is going on outside. The question then becomes, how do we do it? What are the strategies? Strategy matters because resources are finite. None of this is to suggest that there is nothing to learn from success elsewhere. Far from it. There are patterns to success - but not guarantees. The first step is to have realistic expectations. Recognise what is happening in the world. Determine the things the community can change. Be dissatisfied. Recognise that nothing is inevitable.

My mother used often quote to me the old prayer:

"Give me patience to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference."

I don't know if this was written by an economic developer, but it contains a particular resonance for those trying to generate local development while facing brutal and persistent outside forces. Local economic development must be built on principles such as this.

Little wins matter, for all sorts of reasons. That is why there is merit in defining success in terms of specific projects. Heroes and successful projects may still leave communities with lots of problems, but they generate hope and confidence in the future.

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