Regional Cities and City Deals 5 + 31 Forum 12 October 2016 Dr Kim Houghton General Manager Policy and Research RAI
OVERVIEW 1. Regional Cities State of Play 2. What s the problem City Deals can solve? 3. Australian City Deals Based on data for 31 largest regional cities with pop. greater that 50,000
Population Growth REGIONAL CITIES STATE OF PLAY (GVA AND POPULATION GROWTH) Larger Regional Cities have been growing strongly (2.98% CAGR) Growth has stalled post GFC (4.15% before, 1.8% after) High Growth - Mining High Growth - Pop Launceston TAS (LGA) Latrobe VIC (LGA) Regional City Population and Economic Growth 2001-2013 5.00% 4.00% 3.00% 2.00% 1.00% -1.00% All Regional Cities Mandurah WA (LGA) Townsville QLD (LGA) Greater Hobart 0.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% GVA Growth (CAGR) Townsville Darwin Mackay Gladstone Average Growth Toowoomba Port-Macquarie Cairns Geelong Ballarat Bendigo Low Growth Launceston Albury-Wodonga Greater Shepparton Wagga Wagga Bathurst-Orange Decline Latrobe Mandurah Fraser Coast Sunshine Coast-Noosa Gold Coast-Tweed Rockhampton Coffs Harbour Newcastle Bundaberg Bunbury Central Coast Tamworth Wollongong Shoalhaven Ballina-Lismore Hobart
Volatility Ratio (High-Low Forecast/Hist CAGR) FUTURE PERFORMANCE EXPECTATIONS 60.00% Most of these 31 larger regional cities projected to grow at 2-3% pa to 2031. Mackay (R) Wagga Wagga 50.00% (C) 40.00% Hobart (C) 30.00% Gold Coast (C) Toowoomba (R) Launceston (C) Tamworth Regional (A) High growth mining cities are experiencing a significant adjustment, regardless of global conditions. Low growth cities are expected to improve their performance but are most vulnerable to global conditions. Gladstone (R) 20.00% Cairns (R) Fraser Coast (R) Mixed picture for average growth cities with some improving, some moderating. 10.00% Townsville (C) Mandurah (C) Darwin (C) 0.00% -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% Change in Trend Growth Rate (Projected CAGR - Historical CAGR) Average High - Mining High - Pop Low Negative High pop cities will moderate. Data: RAI (PwC) growth projections for each regional city. Expected change in trend growth and volatility of performance to macroeconomic conditions.
HOW CAN CITY DEALS SOLVE THE CURRENT CHALLENGES Each city has a unique combination of issues and opportunities but some trends emerge: 1. Skills and business growth/innovation challenges are central to growth and productivity in regional cities: High growth mining cities are in an adjustment phase City Deals can smooth transitions and nurture growth in alternative sectors. Low growth cities are less productive transitioning the workforce and the business community beyond manufacturing. Average growth and High growth population cities are reasonably well positioned productivity and incomes are generally lower and welfare dependence is an entrenched challenge in many. 2. All regional cities can improve their liveability, arts and cultural sector and the proportion of high incomes and high value services employment. 3. Solving specific external connectivity issues or better activating CBD s can provide infrastructure stimulus and help cities function better.
REGIONAL CITY WEAKNESSES RAI [In]Sight Update
REGIONAL CITY WEAKNESSES Business engine Owner managers Trademark applications Business entry rate Bohemian Index employment in creative occupations Knowledge Intensive Business Services RAI Business Dynamo Index RAI Innovation Index Regional Cities 15% 5.4 11% 5% 1.0 1.8 Metro 16% 12.9 12% 12% 1.5 2.5 Bohemian Index Regional Cities 0.32 Metro 1.06
KEY WEAKNESSES ACROSS REGIONAL CITIES High Growth - mining High Growth - population Average Growth Low Growth Bohemian index Business entries High income job loss Participation rates Bohemian index Knowledge Intensive Business Services Knowledge Intensive Business Services Participation rates Higher income jobs Business entries Knowledge Intensive Business Services Growth oriented local business
HOW CAN CITY DEALS CONTRIBUTE? 6 domains, highly tailored partnerships Infrastructure Transport connectivity Digital connectivity Housing Affordability Commuteability Jobs & Skills High income jobs Owner managers Liveability Creative cities KIBS Innovation Business entries Trademarks Governance Cross jurisdictional Cross policy portfolio
UK CITY DEALS EXPERIENCES Piecemeal grants don t tackle whole of city structural change and specialisation Infrastructure Housing Public Transport upgrades Opening up new land Integrated Transport modes Connecting new developments New roads, rail, etc. Reducing redtape Jobs & Skills Apprentices connecting into opportunities Adult re/up skilling SME catalysing Fit for purpose City solutions Liveability Transport connectivity Cultural diversification Festivals & Events Innovation Value capture & pooled funds Leverage private investment Stimulate cluster production Governance Cross jurisdictional Cross policy portfolio Long term KPIs
Great cities are not static, they constantly change and take the world along with them Ed Glaeser As far as population size goes, big is no longer important, and it can even be a drawback. In fact, the future belongs more to second-tier cities. Any place can become a world-class center today by finding an area in which it outperforms others, by thinking for the long term, by expanding its competitive abilities and by operating globally. Charles Landry