There are two areas in which Australia is in new political territory, yet echoing old themes from Europe. As a minority government relying on independents to implement its program, Labor is among friends in Europe, where minority governments are often the rule, rather than the exception. It can be argued, however, that the Westminster framework and the peculiar circumstances of this election mean that the Australian situation is quite different to that found overseas, and that in this area we will need to navigate our own course.
Regional policy, however, is a different matter. Yes, Australia has had a regional policy agenda for many years, both federally and among state governments. But historically it has been relatively marginal in the broader scheme of Australian politics. The regions tend to reach public prominence only in relation to broader discussions about macroeconomic policy, or anger over apparent pork barrelling, or particular political circumstances such as the regional backlash against the Kennett government in Victoria. In that instance, the Labor Party secured power, also with the help of independents.
The situation in the European Union is radically different. Regional policy warrants much greater attention and investment in regional programs is more than one-third of the European Commission’s annual budget. This has been driven by the big internal disparities in standard of living and economic activity amongst the 293 European regions.
Perhaps not surprisingly, there are a number of dimensions to the inequality among regions. In the first place, there are the apparent discrepancies between the west and the east. But more importantly, most prosperous regions in terms of GDP per capita (the standard measure of wellbeing) are all urban - London, Brussels and Hamburg. In fact, 43 per cent of the economic output of Europe is produced in the so-called “pentagon”, which includes Paris, Milan and Munich.
At the national level, the wealthiest country, Luxembourg, is more than seven times richer than Romania and Bulgaria, the poorest and newest EU members. But the national data only obscures even more significant differences within the national boundaries, so that the more exclusive parts of London are not only much wealthier than the rural regions of Romania, they are also worlds apart from regions in Wales, for example, or northern England.
Broadly speaking, the regional policy focus of the European Union can be summarised as the four “C”s: convergence, competitiveness and co-operation, which are grouped together in what is now termed Cohesion Policy.
The underlying focus is improving the capacity for economic competitiveness, through investments in infrastructure, vocational training and job creation activities, environment and sustainability initiatives, and research and innovation. Some of the funds are targeted specifically to the poorest regions, while some funds (particularly innovation and research) are open to all regions, including those in urban settings.
So what does this mean for an Australian Government which must suddenly give much greater priority to regional policy? In the first place, one important warning is to avoid being caught up in ad hoc and politically-driven project funding. Rather, the European experience suggests the government needs a much more considered and comprehensive understanding of the patterns of regional inequality in Australia (including those within urban areas).
Second, the policy framework must be comprehensive, linking major investments with targeted initiatives that promote skill development and employment in regional areas. These initiatives need to be co-ordinated, and designed to deliver sustainable benefits for the longer term, not simply driven by political convenience.
In initiatives such as Regional Development Australia and Infrastructure Australia, there are beginnings and resources which can be part of the renewed Regional Policy for Australia. But as the European experience indicates, without a more comprehensive framework that gives priority and focus, and integrates the various activities into coherent strategy, much of the investment can become marginal and wasted.
While it would have been interesting to have an independent as a member of Cabinet, it makes much more sense for Simon Crean to have been given the portfolio of Regional Australia, Regional Development and Local Government. He is an accomplished Minister with relevant experience in portfolios that matter to regional Australia. The naming of his portfolio signals clearly that he will focus on much more than skills and employment, with a primary agenda of bringing regional Australia firmly into the national policy fold.
Of course, as we know from Europe, “regional” is much more than rural. Crean’s challenge is to develop the kind of inclusive and comprehensive policy framework that goes beyond recent deals, to provide a foundation for cohesive and sustainable development for all parts of the nation.