The Australian Parliament is currently undertaking an inquiry into regional development and decentralisation, but the inquiry’s rationale has been brought into question by a brilliant submission from SMART Infrastructure Facility Senior Research Fellow (and occasional QEW contributor) Joe Branigan titled:

The Contribution of Australian Cities to Our Enduring Prosperity

Joe argues that, instead of actively encouraging regional decentralisation, we should focus on making our major cities work better, by reducing traffic congestion and improving connections between our capitals and satellite cities (e.g. between Brisbane and the Gold Coast or Sydney and Wollongong). Typically, cities have higher levels of productivity than regional communities and also lower unemployment rates due to thicker labour markets (see chart below based on Joe’s calculations presented in his submission). Joe argues:

…regionalisation and decentralisation policies could lead to higher overall unemployment in Australia because regional areas do not work as efficiently in matching workers to jobs as do our large cities…

…a superior public policy approach to pursuing regionalisation and decentralisation would be to: (i) focus on addressing the major problems in our cities such as traffic congestion, housing costs and energy costs that negatively impact on productivity and liveability; and (ii) better connect the adjacent satellite cities and towns to our largest cities, such as the Sunshine Coast to Brisbane and Wollongong to Sydney via better road and rail connectivity. The integration of the Gold Coast and Ipswich into the Greater Brisbane region over the past two decades is worth studying.

Joe makes some excellent points here, and the integration of Ipswich and the Gold Coast into the Greater Brisbane region is definitely worth studying, although current levels of traffic congestion on the M1 are raising doubts about how successfully we have integrated the Gold Coast. With the Queensland Opposition currently pushing for an alternative route to the Gold Coast (although not yet committing funding to it, I should note) this will no doubt be an important issue in the upcoming State election campaign.

For anyone interested in regional economic development, I highly recommend you read Joe’s submission.