Guest post: Why are NSW mining regions enduring the mining downturn better than Qld regions?

Today I am delighted to publish a guest post from my NSW-based friend and fellow economist Alistair Robson. 

Why are NSW mining regions enduring the mining downturn better than Qld regions?

by Dr Alistair Robson

Despite the Sydney-centric focus on the New South Wales economy, a hidden gem has been the regional labour market. Employment grew by 4.4% over the year to April 2016 outside of Greater Sydney compared with 3.0% within the Greater Sydney area. This growth comes despite the housing construction boom underway in Greater Sydney and drought like conditions in some parts of regional NSW.

Employment growth – % over the year

Al_Chart_1

 Source: ABS, 6291.0.55.001 Labour Force, Australia, Detailed – Electronic Delivery, Table 16. Labour force status by Labour market region (ASGS) and Sex.  Original data have been adjusted to 12 month moving annual averages.

The last period employment in regional New South Wales significantly outperformed Greater Sydney was almost 5 years ago ending in November 2011.

The Richmond-Tweed region bordering South East Queensland performed the best with a stellar 15.0% employment growth rate, followed by the Southern Highlands and Shoalhaven region at 9.5% and the Hunter Valley (excluding Newcastle) at 9.0%.

Comparatively, regional Queensland employment (ex. Brisbane-Gold Coast-Sunshine Coast) has been falling for over 2 years.  There is now a very large gap in regional employment growth between the two states.

Employment growth – Regional QLD (ex. Brisbane-Gold Coast-Sunshine Coast) and Regional NSW (ex. Sydney-Newcastle-Illawarra) — % over year

Al_Chart_2

Source: ABS, 6291.0.55.001 Labour Force, Australia, Detailed – Electronic Delivery, Table 16. Labour force status by Labour market region (ASGS) and Sex.  Original data have been adjusted to 12 month moving annual averages.

Considering the impact of lower coal prices on many Queensland regions it appears remarkable employment growth has been so high in the Hunter region. Proximity to Newcastle and Sydney may have helped the region’s labour market adjust, a benefit which Queensland regions such as Mackay do not have.

Despite strong regional employment growth some areas in NSW experienced falling employment, such as the Far West and Orana, the Murray and Riverina regions. The impact of the drought like conditions may have been detrimental to the labour market in those regions as they have in some regional Queensland regions.

Within the Greater Sydney area employment growth was greatest in the Central Coast region at 12.9% and the South West region of Sydney at 11.4%.

NSW Regional employment growth – % over year to April 2016

Al_Chart_3

 Source: ABS, 6291.0.55.001 Labour Force, Australia, Detailed – Electronic Delivery, Table 16. Labour force status by Labour market region (ASGS) and Sex.  Original data have been adjusted to 12 month moving annual averages.

It is difficult to ascertain why employment growth was higher in regional NSW compared with Greater Sydney and regional Queensland. Perhaps the relative wage and land price gap between Greater Sydney and regional NSW overcame remoteness costs for businesses operating in regional NSW. Regional areas that have recorded the highest employment growth were close to major urban agglomerations, such as the Hunter Valley region and the Southern Highlands and Shoalhaven region to the Sydney-Newcastle-Wollongong urban agglomeration and Richmond-Tweed region to the Brisbane- Gold Coast-Sunshine Coast urban agglomeration.

As Greater Sydney business occupancy and labour costs continue to grow, the competitiveness of regional New South Wales businesses should increase, particularly for urban periphery regions.

Dr Alistair Robson is an independent economist based on the Central Coast of New South Wales. He holds a PhD in economics from the University of Queensland.

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6 Responses to Guest post: Why are NSW mining regions enduring the mining downturn better than Qld regions?

  1. Toby says:

    As a former (and hopefully future) Ballina resident, Alistair must be on the far north coast if he is in Ballina, not the NSW Central Coast? I’d be very interested to hear any further arguments on the cause of the strong growth in the Richmond Tweed. I’m guessing it is driven by Sydney migration of professionals and wealthy retirees – enjoying the lifestyle and connectivity to Sydney generated by key infrastructure such as Ballina airport.

    • Gene Tunny says:

      Yes, silly me, I just assumed Al was still living in Ballina. I will amend.

      I suspect you’re right about the lifestyle factor driving migration to northern NSW. Census data might shed some light on the type of people migrating. Thanks for the comment, Toby.

    • Alistair Robson says:

      I am on the Central Coast looking for work in Sydney Toby. No luck so far so may be moving back to Ballina in a few months.

      About 20 years ago Ballina was a 4 hour drive to the Brisbane CBD on the old Pacific Highway. Now it takes 2 hours and the road is all motorway. To put that into perspective Sydney CBD to Newcastle CBD is about 2 Hours 15 minutes. Much of the area in between is urban and there are strong economic linkages between the two cities.

      Over time I’d expect to see increasing economic linkages between the Richmond Tweed area (particularly the upper part near Tweed Heads) and South East Queensland rather than Sydney. Relatively lower land prices and lots of land compared with the Gold Coast would be attractive to both residents and industry. I suspect there have already been some factories move to Tweed Heads for those reasons. It reminds me of Ipswich City Council 20 years ago – slow growth on the edge of a major city before taking off about 10 years ago. The question is how well the Queensland and New South Wales government’s integrate policies for the region such as transport, environmental, etc?

      Will a Tweed Heads resident hop on a train and commute to a job in Brisbane CBD in the future? There some been some policy agreements such as the Memorandum of Understanding signed between the two Governments in 2011 which may help integration and policy co-ordination. So far I’m not seeing significant progress compared with other cross-state urban areas such as the New York – New Jersey – Connecticut area which seem to do cross state transit very well.

      • Toby says:

        Well, if you move back I hope to cross paths with you sometime in future Alistair. Good luck with the job hunt down south nonetheless.

        There certainly has been improved connectivity to Brisbane. The round trip from Ballina can almost be done comfortably in a day now if attending a medical appointment in Brisbane. However, the area has always been relatively well serviced – Lismore Hospital is a tertiary hospital but yes, it may have less depth in specialists there than required for some.

        I’ve also had a few friends in professional fields move out of the city with family to the area. Retaining some work linkages via the internet with the occasional drive in for a face to face meeting. I’d like to suggest this is a factor but imagine it is very early days for this kind of thing yet. I’ve heard there are people increasingly working under this kind of arrangement in places like Noosa already?

  2. Glen says:

    I have always looked at places within a 4 hour drive of a capital city are a region or satellite of the capital, unlike Townsville or Mackay who are distinctly remote from the capital as Alistair notes. Being within a 4 hour drive makes a lifestyle choice to remain in an area much more appealing, a person can still drive to a medical appointment or others easily in a day and return, even going to a football game or concert would only involved a nights stay and a drive home the next day, Toowoomba would be an obvious example in SEQ and is currently undergoing a revival because of this very thing, many are escaping the traffic and opting for a quieter life but still close enough to take advantages of all the things a capital offers, health, education, events, etc. Even friends who are returning east from Perth talk about a feeling of remoteness whilst there and it is a city of 2 million people, so size it seems does not immune a region either.

  3. Mark Beath says:

    Excellent post. A while ago I noted that areas contiguous with SEQ such as Toowoomba and Wide Bay were also outperforming the rest of regional Queensland. Not sure the most recent data isn’t unwinding some of that. However Wide Bay is interesting as a recovery from what has been the basket case region of Queensland. As a regular traveller of the east coast it isn’t hard to observe the significant upgrades to the Bruce Hwy extending north of the Sunshine Coast. The construction work now happening along the Pacific Hwy between the NSW mid north coast and the Tweed is massive. Also BTW currently disruptive nuisance for travellers.

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