Regional Australia: people not just projects
26-October-2011
Breakfast speech to SEGRA Conference
Wednesday 26 October 2011
*** check against delivery ***
As I flew down here, I flew down over some great parts of our nation.
I flew down over Thallon which stores up to 300,000 tonnes of grain yet it doesn’t have a flour mill. I don’t know why. We have trains that leave there and the top speed they can reach is 40 kilometers an hour because they never bothered doing up the railway line. Now it goes by road and it just wrecks the road.
I flew over Moree, the richest agricultural shire in the world and its production of everything from sheep to cattle to cotton to wheat, an incredible area. Yet it has only access to a port to its south-east. Newcastle is predominantly its only port. Why I don’t know, because just up the road from it, it could have access to the port of Brisbane. It could have inter-nodal port access but we just never bothered in our nation to connect it up.
In my own town of St George we produce around $640 million worth of cotton. Not bad for an area of about 4 to 5000 people. If our whole nation did this we would be the richest nation on earth, all renewable income each year.
I flew over Deniliquin which has the capacity to feed over 20 million people through our rice industry. Yet we see the intent through our Murray-Darling Basin plan to want shut it down.
We flew over Dubbo, that has a massive meat industry, massive sale yards and one of the biggest problems they have is the multiple layers of bureaucracy as they try to move produce around our nation.
I flew over assets that people in other parts of the world want to buy and are buying at a rate of knots. The Australian people are quietly sitting back and we are letting substantial parts of our nation be purchased by overseas interests. And good luck to them, they are smarter than we are. They see the future wealth and opportunity that we miss and we are letting them do it because we are naive.
Later on you will hear a speech from the Labor party and when I hear from the Labor party, I get to the end and I never quite understand what they have said. I am reading this morning that they are turning “top-down, on its head”. I am not quite sure what that means. They will “join the dots”, “bottom up” and deliver for a multiple-level “patchwork economy”. And once they have done all of this they are going to “set it in stone”. What on earth does all that mean? I have no idea.
I do agree, however, with one quote from Simon Crean.
Last September Simon Crean told The Australian that:
We've got to get away from pork-barrelling . . . this sense that you only hand out stuff around election time. We've got to get away from this notion of just football grounds or sports stadiums or local halls to investing in communities, investing in our skills and our youth, our education.
That makes a lot of sense. But I am in a place today called Geelong and it is a beautiful place. I went for a run around it last night. It has a great football team, the Cats. The trouble is, the Cats also got themselves $10 million from a regional development fund for one grant for a football stadium. Another $10 million for Geelong went to a library and culture centre.
Now if the people of Geelong found out that Moree got $20 million and Geelong got nothing they would be a little bit upset.
And I go back to the statement of Mr Crean that he is not going to invest in football grounds. Well, between here and St George, of all those towns I talked about, Deniliquin, Moree, Thallon, all of these opportunities we have, what did we invest in, a sports stadium. That is the biggest investment between the two towns.
Only 6.3 per cent of the applications sent in to the Regional Development Australia fund were successful, 35 out of 553 were successful.
For all the flaws of our previous program, Regional Partnerships, and I know it went to the Auditor-General, 72 per cent of those applications were successful, 931 out of 1370 projects.
The average size of the grants under the current process was $4.3 million. How many other places have missed out because of that? How many other places have got nothing because of that?
If we want to help Geelong we have to help the manufacturing industry. If the manufacturing industry goes well then the Cats will go well. If the manufacturing industry closes down then the Cats will go as well.
The future promise of regional Australia
I get worked up about this because I passionately believe that regional Australia has a magnificent role to play in Australia's future. It is not a future based on government handouts and welfare but a future based on economic opportunity.
Right now three-quarters of our exports come from the industries of mining and agriculture located in regional Australia. In this century our country has what we have always wanted but lacked: substantial demand for our products, proximate to our ports.
If we sit nine people at a table and that person there puts $100 in his pocket, and he walks across to that table and devises the transactions to get the $100 moved around the nine people at that table, then the GDP of that table will be $1000. We have got to remember if that person had not turned up with that $100 in the first place then the GDP of that table would be zero. The people at that table would say we are ninety per cent of the GDP. But they are 90 per cent of nothing unless the money actually turns up.
And the person who turns up with the money in this nation is called regional Australia. Where are the coal fields, they are in regional Australia. Where are the iron ore fields, they're in regional Australia. Where are the cotton fields? Where is the wheat? Regional Australia. Where are the cattle? Regional Australia. Where are some of the premier tourism venues, Ayers Rock or the Great Barrier Reef, regional Australia?
In this nation we have to break down the inhibition of populating our regional areas where our export wealth is produced. It is vital to invest where we make our money if we wish to pay our debts back.
We must not define the prosperity of this nation to a wealthy unpopulated mining and agricultural interior and trade exposed manufacturing and service crescent moon where all the attention shines on only a small part of our potential. We have to make sure that we inspire the opportunity to move to and invest where the money is.
This also requires a cultural epiphany that your life does not end if you end up in St George or any other of the growing regional towns.
Central and western Queensland is on the cusp of an historic minerals boom through the development of coal seam gas. Properly managed this can be an economic opportunity of unprecedented scale. Poorly managed it could tick every box of an environmental and social disaster.
The East Texas Field was discovered in 1930 and, because in America landowners own the minerals under their property, much of this wealth accrued to ordinary Texans.
Dallas, once a backwater, boomed. The University of Texas is now in the top 50 universities in the world, a higher ranking than any in Australia. From the desert, Houston emerged to be the fourth biggest city in America.
The East Texas Field was the biggest oil field discovered up to that time at 6 billion barrels of oil. The commercially proven gas in the Bowen and Surat basins amounts to about 5 billion barrels of oil equivalent and that amount is still growing.
But that opportunity will only truly create a lasting legacy of wealth, if the people of Roma, Chinchilla, Dalby and Gladstone can keep some of the wealth they create. There is no reason Roma can't be a vastly more substantial town than it is.
It's not parochialism or sugar bagging to invest where you make your money. It makes absolutely pragmatic sense; it is what a business does. It invests where you make your money because that is the only way you get yourself out of a problem.
So we have a duty for our entire nation, not just the regions, to make sure that we invest in regional Australia.
Regional Australia: what has worked and what hasn't
I am sure that the past year must have been an exciting time for those working in the regional Australia field. In the afterglow of an election it seemed like regional Australia had been inadvertently given the keys to decision making and that a new dawn for regional Australia was about to begin.
Yet after an initial frenzy of focus on regional Australia there has been very little follow through with things that are different or revolutionary. Over the first year of minority government regional Australia was mentioned in the media just over 2500 times according to the Parliament House website. But almost half of those mentions occurred in the first three months of the year.
This measure is not perfect but it is indicative of how the focus has been taken off regional Australia while we have instead shifted to debate the carbon tax. The country independents have to shoulder much of the blame for this as they have been willing passengers on the government's carbon tax journey.
A failure to deliver for regional Australia is evident over the past year is also evident in the gap between the Government's promises and delivery.
The government promised a $6 billion Regional Infrastructure Fund mostly funded by the mining tax but the biggest allocations from this program have gone to capital cities not the regions. The biggest allocation so far has been $480 million to upgrade roads around Perth Airport. Unless the road around Perth airport goes all the way to Kalgoorlie, it is not going to be a regional road. Another $54 million has been allocated to the Blacksoil interchange just outside Brisbane.
The government promised a dedicated regional website to reveal where government funding was being directed on a regional basis. For the first year this website has played host to only a photo competition, the winners of which included a photo of the Sydney Harbour bridge and the Gold Coast. The website, myregion.gov.au, has now gone live as they say. But there is little more content available through this website than is already available through the Australian Bureau of Statistics National Regional Profile website. In the first two months of the website’s forum only 17 comments have been from non-departmental or non-RDA staff. There are seven public servants employed to run the website.
Just to all the small business people from regional Australia today, can you imagine having the luxury of employing seven staff just to run a website.
That brings me to perhaps the biggest achievement to date. The establishment of the Department of Regional Australia. This part of the government’s deal with regional Australia has been a boon for public servants. When the department was established a year ago there were 186 staff brought across from the regional development and local government parts of the infrastructure department. There are now 332 full-time equivalent staff employed in these areas. An increase in staff numbers by 80 per cent or 146 people. Do people feel that regional Australia is getting 80 per cent better service?
Yet, as revealed at Senate estimates last week, less than 10 per cent of the staff that work in the regional Australia part of the Department are employed outside of the capital cities.
A generally good step by the government has been the reinvestment in Regional Development Australia committees. This was something that the Coalition called for in its regional Australia policy at the last election. We wanted to return the Regional Development Australia committees to something like the old Area Consultative Committees, which Labor had dismantled in its first term, even though now I hear Simon Crean taking credit for first establishing them.
This is genuinely a good thing. We need to invest in a partnership with regional Australia to get the right outcomes for regional Australia.
The government has recently announced $150 million in funding for the first round of the Regional Development Australia Fund but it is not clear whether this is working either. Two-thirds of this funding went to the one-third of seats in regional Australia held by Labor or Labor supporting independent members. No funding went to Tasmania outside of Hobart, no funding in Queensland went west of the Great Dividing Range.
Indeed, all up only 6.3 per cent of applications were successful. Over 60 per cent of applications were deemed non-compliant.
At this stage, the Regional Development Australia Fund process has failed to establish a genuine partnership with regional Australia. When less than 10 per cent of the best ideas that have come forward from the 55 Regional Development Australia committees get accepted you have to wonder whether next time they will just throw their hands up in the air and say why bother.
This outcome is in stark contrast to the Coalition’s record under the Regional Partnerships program. As I mentioned earlier, under that program, 72 per cent of applications received funding.
I don’t want to say that there were not problems with the Regional Partnerships approach too. They were all catalogued diligently by the Auditor-General released right in the middle of an election campaign. Clearly the guidelines and assessment process had to be strengthened after that report.
But now there would appear to be such a red tape burden on local governments that it is worth asking: Is the competitive grants funding process the best approach? I have heard of councils having to spend more on the grants application process than the size of the grant they are actually applying for. Many of those bureaucrats in Canberra spend their whole time assessing applications. Would it be better for us just to give the money directly to the regions or local governments?
The Roads to Recovery program does present an alternative way. Under that program, money is granted directly to local governments. Although they must spend it on projects within certain guidelines, it is up to the local council to decide which roads are most worthy.
A direct funding model might be a better template for future regional development spending, rather than a competitive grants program which imposes substantial red tape burdens, while failing to deliver a genuine partnership between the Commonwealth and local government.
Over the next month I plan to write to all of the 55 Regional Development Committees and all of the local governments in regional Australia to determine what their views are on this issue. Ultimately, the design of regional development programs should be guided by the views of the people of regional Australia.
The Coalition’s different approach
True regional development can only occur through investing in the people of regional Australia. The projects we select are important but only to the extent they represent a true partnership with the people of regional Australia. Regional development has to be about the people, not just projects.
During the negotiations with the independents last year, the Coalition proposed a revamp of the zone taxation scheme. This revamp will provide targeted tax concessions to five rural areas. Under this scheme, individuals in eligible areas would pay no tax up to $55,000, a family with one child would pay no tax below about $75,000 and family with two children, no tax below about $85,000. We want people to fly in and live, not fly in and fly out.
We want to have the vision for new areas of our nation to open up. Whether that is in Weipa, whether that is in the Kimberleys and to say the politically incorrect thing to those in urban constituencies that if our nation has a future then this is what we must do.
We want to encourage more young Australians to move to those regional areas where the jobs are. The majority of unemployed Australians reside in our capital cities. Welfare recipients who refuse to take up jobs in the regions should not expect to continue to receive those benefits. We can also adjust our migration policies so that new Australians can help fill the skilled and non-skilled labour shortages that exist in some regional areas.
Such a scheme is already in place for medical professionals. Under the Medical Rural Bonded Scholarship Scheme, doctors are required to live and work in rural areas for a minimum of six years. We can extend this program to other skills and professions.
The Coalition has established a dams task group to get dams back on the agenda. We have been travelling around the country listening to how people on the ground want to solve their water management issues.
People like Fred Pascoe, Mayor of Carpentaria Shire and head of the Gulf Savannah Development Corporation. He sees that the only way for his fellow indigenous people to get ahead is to have access to the jobs and opportunities that other Australians take for granted. I wish people would speak to Fred before they start making decisions that we should not have any more dams.
We have not built a major dam in this country for over 20 years. In 1980 we could store in dams about 4.5 mega litres per person. Now the figure is just over 3.5 mega litres and if don't do anything by 2050, if we don't build any more dams, it will be below 2.5 mega litres per person.
But the Coalition is actually going to build dams because we know that water is wealth and if you can construct the dams, you can construct the wealth to take us forward.
We want to encourage investment in nation- building infrastructure through the Infrastructure Partnerships Scheme. This will allow the nation building ideas of people in regional Australia, such as the inland rail, to get 10 cents in the dollar tax deduction for investments in nation-building infrastructure. So, under this scheme, a superannuation fund would pay only 5 cents in the dollar on investments that added to our nation building capacity.
The Coalition’s approach to regional development will be all about developing a true partnership with the people of regional Australia. That is why I will be writing to regional local governments and regional committees to get their views on what I should do as I develop the Coalition’s policy for the next election. That is why the Coalition is committed to getting people to move to regional Australia.
There is great opportunity in regional Australia’s future but that opportunity can only be realised by the people of regional Australia not a government in Canberra.