Research shows stark economic divide between the city and the bus

Some great research in the Aus today, showing the stark economic divide between the city and the bush. Over ten years, a 2.6% gap in wages.This builds on reporting last year by Matt Wade in the SMH that showed a similar gap between Sydney and the rest of NSW. 
His report looked at growth rates over three years, and showed a 2.5% gap in growth, with regional NSW actually going backwards. 
These wage and growth figures tell the economic story behind the populist political reaction we are seeing in NSW & Australia. It is an economic story that deserves much closer scrutiny.

The Australian today: "Between 2005 and 2015, capital city wage earnings have increased, on average, by 3.72 per cent a year once inflation is taken into ­account. The comparison figure for country Australians is a more-than favourable 4.59 per cent. Once the mining engine rooms of East Pilbara and Ashburton in Western Australia are removed from the regional picture, what’s left is an average wage increase of just 1.13 per cent."

Read the story here:

PwC modelling reveals one nation split into haves and have nots

The Australian
February 27, 2017
A hidden income divide has opened between city and country Australia since the global financial crisis, with disparities in wages, wealth, property values and population growth creating fertile ground for the kind of populist ­revolt that threw Britain out of ­Europe and Donald Trump into the White House.

Exclusive modelling commissioned by The Australian from PricewaterhouseCoopers shows that over the past 10 years, average wages in state capitals have grown at three times the rate of wages earned by workers living in non-mining regional towns and rural communities.

At the same time, each new ­arrival in the regions has been matched by three in capital cities, a trend that has overheated the Sydney and Melbourne property markets and added to a growing wealth imbalance between suburban and country homeowners. Since 2009, median house prices in Sydney have risen at more than twice the value of houses in the rest of NSW.

The new figures support the on-the-ground findings of a political, social and economic examination of our regions conducted over the past three months by a team of senior reporters from The Australian.

Those findings, published today and throughout this week, document the disillusionment with Canberra and the political class, and perceptions of postcode bias in services and opportunity fuelling the rise of Hansonism ahead of state elections in Western Australia, Queensland and ­Tasmania. 

In the NSW Hunter Valley town of Kurri Kurri, where the closure of an aluminium smelter has seen unemployment spike to three times the national average, in the north Queensland sugar town of Ayr where 37 per cent more people have joined the dole queue in the past three years and in Victoria’s Goulburn Valley where cannery jobs are precarious, Pauline Hanson’s message is resonating even if her policy prescriptions don’t add up.

A socio-economic breakdown of polling booths that returned a strong vote for One Nation at last year’s federal election shows a strong correlation between wage stagnation and support for Senator Hanson’s party.

In Queensland and NSW, two of three states that elected One Nation senators, 19 out of 20 polling booths that returned the highest portion of One Nation votes recorded below-inflation ­income growth between the 2008 and 2014 financial years. In Queensland’s Lockyer ­Valley, where one in three people voted for One ­Nation, the statistical tale is bleak; flat wages and a doubling of crime in the town of Laidley, and in neighbouring Gatton, shrinking wages, in real and nominal terms, and a near tripling of crime.

Despite Senator Hanson’s ­attacks last week on Australia’s “welfare handout mentality’’, some of her strongest support comes from regions that have seen increases in dole payments of up to 114 per cent.

The PwC modelling strips back the distorting data from the once-in-a-generation mining boom to reveal anaemic growth in real wages experienced by people who live outside our biggest cities.

Between 2005 and 2015, capital city wage earnings have increased, on average, by 3.72 per cent a year once inflation is taken into ­account. The comparison figure for country Australians is a more-than favourable 4.59 per cent.

Once the mining engine rooms of East Pilbara and Ashburton in Western Australia are removed from the regional picture, what’s left is an average wage increase of just 1.13 per cent.

“That certainly says that people in cities and in mining have done a hell of a lot better in terms of wages than people outside of mining in the regions,’’ said Saul Eslake, a leading economist and vice-chancellor’s fellow at the University of Tasmania. “There are some concerns about it (but) what is far from clear is what can or should be done about it.’’

When compared to parts of northern England that swung the Brexit vote and the Middle America towns that helped elect Mr Trump, regional Australia has been resilient. The mining boom kept Australia out of recession, the suburbs have absorbed the worst of the manufacturing downturn and strong commodity prices and a lower dollar are supporting a thriving agriculture sector.

Yet ABS labour figures show the most important commodity in any country town — jobs — is ­becoming relatively scarce in some regions.

Unemployment in all states and territories was 6.12 per cent for regional Australia compared with 5.55 per cent in the capital cities. In every state other than South Australia, unemployment in the regions was running higher than the capitals.

“The research we have done shows that jobs are absolutely ­essential to regional communities,’’ said Rod Tanton, a regional and urban modelling expert from the National Centre for Social and Economic Modelling.

“If you have got a growing manufacturing industry or a growing services industry or a hospital or schools, that is what keeps a place together.’’ Regional Australia Institute chief executive Jack Archer said the results from last year’s census, due for release in April, would show whether political disaffection in the bush was based on perceptions or something more serious.

“If people are feeling a bit left out, you can turn that around. If we are getting into those serious, entrenched economic challenges, it is quite a different policy challenge,’’ he said.

Country Australians, as a rule, have been happier with their lot than their city counterparts. An Australian Unity Wellbeing Index survey conducted in the lead-up to last year’s federal election showed regional seats made up seven of the top 10 electorates on the index. Of the 10 seats that scored the lowest on the index, eight represented suburbs in capital cities.

An author of the survey, Deakin University senior fellow ­Delyse Hutchinson, said stronger community connection and less stress from housing costs and traffic congestion were likely reasons for a greater sense of wellbeing. “There is a belief that you are away from the city and isolated and have less opportunity, but there are other things about living in ­regional areas that are likely to benefit quality of life,’’ she said.

A sense of wellbeing has not stopped voters turning to One ­Nation, particularly in areas that have endured years of negligible income growth.

The Victorian regional electorates of Mallee and Murray have the highest reported wellbeing of any federal seat in the nation, yet polling booths in Mallee and Murray returned the two highest votes for One Nation, as a percentage of the total vote, at the last election.

Recent polls indicate that one in four Queenslanders is preparing to vote for One Nation in this year’s state election. Support for the party in WA is tracking at a more modest 13 per cent.

John Pasquarelli, a founder of One Nation and the author of Senator Hanson’s infamous maiden speech to parliament 20 years ago, said the polls were lagging her true support. “I think she can win government in Queensland,’’ he said.

Mr Eslake said the likelihood of a Trump-like political shift in Australia was tempered by two factors; our compulsory voting system and the absence of a political figure capable of capturing one of the established parties — as Mr Trump did — and using it to impose a populist agenda.

He added, however, that the grievances of regional Australia were real and justified.

“It is a fair point for someone in regional Australia to say that the policy mix that has been pursued for the last 25 years has disproportionately benefited people who own property in cities and who work in well-paid private sector or government jobs. They have been the clear winners. Governments haven’t done enough to share that around.’’

Additional reporting: Mark Schliebs


The SMH in November "Economic growth in Sydney averaged 2.2 per cent between 2012 and 2015, while regional areas of NSW contracted by 0.3 per cent in that period, research by SGS Economics and Planning has revealed."

You can read that story here