Australia has been through 24 years of economic growth without a recession. But that doesn’t mean that the spoils of this second longest period of non-recessionary growth in modern history have been shared equally across the nation.
Rather, new research by PwC, shows a solid trend toward real winners and real losers within the economy as the nature of growth across the economy changes. The research also shows Australia’s economic growth is gradually be concentrated more and more in certain locations.
PwC says out of more than 2,200 locations across Australia “close to 1 in every 5 dollars of national income” is derived from just 10 discreet locations.
And here’s the list of the 10 centres of gravity, with the measurement period taking in the mining boom:
It’s worth noting that the current level of 17.9% of income being generated in these elite locales means more than 80% of Australia’s income is generated in other regions. But for further context around the impact of the move from 16.2% back in 2005 to 17.9% at the end of the 2014 financial year, PwC explains:
it actually represents a real transfer of over $27 billion from locations around Australia to these 10 key locations. This is equivalent to the entire Tasmanian economy and all its employees being transferred into these 10 key locations.
PwC said also a “key trend that was masked during the mining boom has been the role that CBDs and concentrations of high-value-add urban economic cluster have played in driving this trend.”
That’s clear in the list of winners that PwC finds are on the rise on the back of “structural growth” (locations which have had 14 years of real economic growth). This list includes the CBDs of Melbourne, Brisbane and Adelaide along with the WA entrants such as Perth CBD, the East Pilbara and Ashburton (naturally).
Naturally the Sydney CBD is also on the list. But Greater Sydney also benefits from the rise of Pyrmont and Macquarie Park. PwC says that around the country other city fringe suburbs such as “Surry Hills, South Brisbane, Fortitude Valley, Braddon etc,” are also growing in economic prominence.
All up the parts of the country that are experiencing structural growth now account for “15% of the economy,” PwC says.
At the other end of the spectrum one in seven locations, around 315 locales or 13.5% of the total, are undergoing what the authors say is “structural decline” (decline for the majority of years since 2001 and/or have a smaller economy – in real terms – than they did in 2001).
Places like Condell and Wetherill Parks in Greater Sydney which are declining due to their manufacturing and logistics bases. Nanango in Queensland and the La Trobe Valley in Victoria (coal and coal fired power generation), Mount Gravatt and Sunnybank are also declining even with a diverse economic base while Deniliquin on the Murray and the Cairns CBD are also in this category.
Taken together both extremes of this research show that the Australian economy is on a continued path to further concentration.
PwC says that this is important information because it highlights the need for government and policy makers to understand what type of investment is needed where and importantly why.
It will also help manage the inevitable decline of some regions.
“Managing decline is different to stimulating economic growth. Getting these two objectives confused hinders the rebalancing (or transition) of certain locations,” the report said.
That’s the result of the changed and changing global and local economic landscape. Some areas rise while others fall.
Economic history tells us it has ever been so.
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