Building regional Australia - post Budget2017

Regional Australia is home to almost eight million people and continues to be a major contributor to Australia’s economy, accounting for around 30 per cent of the nation’s GDP annually. It’s no wonder it featured heavily in last week’s Federal Budget.

bluenotes sat down with Regional Australia Institute CEO Jack Archer and ANZ General Manager Regional Business Banking Christine Linden to discuss the budget implications for regional Australia.   

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Simone Stella: Last week’s federal budget saw the unveiling of a balance of growth policy like the infrastructure package and levy increases on Medicare. What does the package as a whole mean for regional Australia

" For regional Australia this budget is all about new money for trains and economic transitions.” -Regional Australia Institute CEO Jack Archer 

Christine Linden: Regional Australia had a strong presence in this year’s federal budget and this renewed focus coincides with a sharp uplift in regional Australia’s contribution to the nation’s overall economic prosperity. With many regional communities gaining momentum, there’s now a need to maintain it.

Beyond the investment in roads and rail across the country, regional Australia is set to receive $A472 million over four years from 2017–18 for the establishment of the Regional Growth Fund.

In addition, a further $A200 million has been set aside for the Building Better Regions Fund (BBRF) over the next four years to allow more regional communities across Australia to benefit from the fund.

Jack Archer: For regional Australia this budget is all about new money for trains and economic transitions.

Major new commitments to rail infrastructure including inland rail and regional passenger rail in Victoria are the big ticket items.

These should be transformational for the regions involved, providing much needed freight capacity in our productive inland areas and bringing regional cities into the mix to ease some of the pressure in our major cities.

A fund to support transformational projects in regions undergoing structural adjustment has been committed to, adding to the existing Regional Jobs and Investment Packages, City Deals, Building Better Regions Fund and various structural adjustment initiatives in place for specific regions around the country.

The federal government has put its money on the table but it will be crucial the outcome of all this is more than the sum of its parts.

It’s particularly refreshing to see regional infrastructure and investment being seen by the government as part of the solution to congestion and high growth rates in Sydney and Melbourne, instead of just the usual toll roads focus.

SS: We saw small business in the spotlight with policies like the asset-tax write off and, to an extent, the new National Partnership on Regulatory Reform focused on reducing red tape. How will regional enterprises be impacted?

CL: It’s important to understand regional Australia has a diverse, agile and highly skilled workforce across a number of sectors. The vast majority work within small-to-medium businesses that provide jobs and strength to their local economies.

Businesses looking to bolster their workforce may benefit from the planned $A1.5 billion Skilling Australians Fund which, over four years, will prioritise apprenticeships and traineeships.

The extension of the $A20,000 instant asset tax write-off introduced in last year’s budget (now open to businesses with an annual turnover of up to $A10 million) will be widely welcomed by regional business operators.

It will also be interesting to see what initiatives will be implemented as part of the $300 million allocated to reduce red tape burden on small companies.  

JA: The government’s tax policies for small business will be welcomed by regional business owners, the asset tax write off and planned company tax cuts are popular policies and business owners can see the impact of these more directly than many other policies where the benefits are longer term.

The Skilling Fund is more complex as it is unclear how it will link with a troubled VET sector and is also tied into the 457 visa changes.

We are still waiting to see how the regional component of the visa changes will play out for small business in regions, in particular the regional priority skills lists and the flexibility for regional businesses with different needs to regions which can’t be filled locally to fill vacancies with international workers.

SS: Was there anything the budget missed? What else is needed to ensure the ongoing prosperity of regional Australia?

CL: It was great to see infrastructure front and centre, this is absolutely vital to improving connectivity between domestic markets as well as export opportunities.

Many in regional Australia will point to the issue of mobile black spots and the ‘data drought’ as a miss for this budget.

Reliable and robust communications has long been an issue in regional and remote Australia. As connectivity becomes increasingly important to business operators and producers, we can expect more pressure on government for a long-term fix.

JA: A policy to bind it all together and confirm the long term goals and connections between projects is urgent now.

With the Regional Growth Fund added to City Deals, Jobs and Investment Packages and the Building Better Regions Fund and regional initiatives in other portfolios we need to make sure this all adds up to long term change for the better in regions.

The outcomes of the review in Regional Education later in the year will be crucial. There were some good announcements on education policy in the budget, but we still don’t have a clear pathway forward for regional education as a whole.

Narrowing the significant, entrenched gap in regional-city education outcomes must be a long term goal and on its own nothing in this budget will make a substantial impact.

Telecommunications is also important. We are looking for a decision on the Universal Service Obligation which will guarantee regional Australians access to competitive telecommunications over the long term. The Productivity Commission has recommended change but the government is yet to respond.

SS-Do you think the budget showed an understating at federal level of the needs of businesses in regional Australia?

CL: Regional Australia produces between 30 per cent and 40 per cent of Australia’s total gross domestic product.

It’s home to around eight million people and in my many conversations with our regional business customers, as well as government, there continues to be great emphasis placed on the importance of ensuring regional economies continue to evolve.

The budget included a number of initiatives that will indirectly or directly influence regional Australia and it was positive to see much of the infrastructure investment is focused on regional Australia.

But we can always do more. Health in regional Australia, particularly attracting and retaining GPs in regions, will continue to be a challenge.

JA: There are some strong commitments in this budget that will support regional business and the jobs and prosperity they help to create in regions. Overall we see it as good strong budget for regional Australia.

For regional small business and job growth we would like to see the Government renew its commitment to support innovation in businesses in regional areas. This is a crucial source of growth and new jobs and needs more proactive support.

The government seems to have stepped back from its Ideas Boom commitment to innovation. There are many entrepreneurs are out there having a go in regions.

These early phase and high-growth small businesses are the ones that will create the jobs to replace those being lost in regions due to market and technology shifts.

A dedicated focus on these innovative and high growth enterprises in regions as well as general small business support is something which should be strongly considered in the next 12 months.

Simone Stella is a contributing editor at bluenotes

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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