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While the deputy PM sees relocation to rural areas as a solution to poor housing affordability in capital cities, the risks are high without government support for infrastructure and planning. By Claire Connelly .

Economics don’t add up for rural relocation

Sharni Jones is 26. She is a medical scientist but works part-time managing two departments at a Woolworths in Churchill, in rural Victoria, because she can’t get enough hours at the clinical laboratory where she spends the rest of her working week.

The Traralgon laboratory was recently privatised, more than halving its workforce.

“I probably only kept my job because I was so cheap compared to my 50-year-old co-workers,” she says.

Such are the risks associated with working outside a major city.

Nearly seven million Australians live outside metropolitan areas. But according to the Productivity Commission, people in small country towns and rural areas have higher rates of economic exclusion than residents of the inner city. Eighteen of the 20 electorates with the lowest household incomes in Australia sit outside the capital cities.

Deputy Prime Minister Barnaby Joyce suggested last week that metropolitan migration into country towns in pursuit of affordable real estate might be one way to breathe new life into struggling communities.

But the risks of living outside a capital city may prove too great a disincentive.

Dave Hall, an IT consultant who grew up in Melbourne’s eastern suburbs, moved with his family to rural Victoria for a better lifestyle and cost of living. He and his partner, Julie, chose Newstead because of its proximity to Melbourne and the train line. They rented for two years before purchasing a three-bedroom property for $250,000.

During the global financial crisis work dried up overnight and Hall “almost went to the wall”. He relied on “a credit card merry-go-round” to save his family from bankruptcy.

He says this is the risk with life in rural areas.

“Say you get a job in a regional area, based two or more hours from a capital city,” he says. “[and] the company closes that office. You have a mortgage on a property that isn’t even keeping up with CPI, let alone big city prices, kids at school, no easy access to a commuter-friendly train service. You’re stuffed. Your choices are either take another job that pays a lot less or move back to the city with massive costs.”

During the GFC Hall became heavily invested in getting work from Europe and commuted two-and-a-half hours to Melbourne “for a really bad job” to keep the bills paid.

“Eventually I found good work locally and have been on the up and up ever since. But if I lost my main client, it would be a mad scramble to fill that gap,” he says. “Possibly I would have to commute to Melbourne until I found a better option.”

Country towns were once self-sufficient, with enough supply and demand to keep business thriving. But skills shortages and centralisation in the capital cities caused their economies to shrink and unemployment to rise.

Patrick Gray, host of the Risky Business podcast and Byron Bay resident, said moving government departments to regional centres would bring middle-class jobs to the country, with some new arrivals that would pump money back into the local economy.

“Joyce actually successfully had a small department moved from Canberra to Armidale and was pilloried for it,” Gray said, referring to the Pesticides and Veterinary Medicines Authority.

“Detractors said the cost benefit wasn’t there. My question is: Benefit to who, and over what time period?”

Pete and Caroline Davidson moved from Sydney’s northern beaches to north of Newcastle in the Upper Myall region, 20 minutes inland of Bulahdelah.

The couple went from paying about $700 a week on rent to purchasing a two-bedroom house for $400,000. The Davidsons recently built an adjacent office on the property for their “low-stress” satellite phone rental business, which employs two people locally.

But for the poor internet access, the couple could afford to expand the business, Pete Davidson tells The Saturday Paper.

“The answer is really boring: we just need internet that works,” he says.

“The Telstra junction six kilometres down the road has optic fibre but the equipment is so old that properties 400 metres away cannot get ADSL, the phone is barely reliable and the node at the end of our street that runs copper up to the property is so archaic and outdated you couldn’t even hook up ADSL for 400Mbps down.”

Though they live six kilometres from the NBN’s fibre-optic cable, the couple are forced to rent two lines on Sky Muster’s satellite – one for home and one for office – which they say is expensive, slow and drops out regularly.

The Davidsons use four separate internet connections to assure some sort of reliability: 3G Telstra; 3G Vodafone, which requires a drive to the top of a hill; and two Sky Muster broadband connections, switching from one to the other when access drops out.

“If internet was of city standard you could even start up entire call centres in regional areas [such as this]. We could employ half the valley,” he said.

“It has to be cheaper than renting office space in Asia, let alone Artarmon [on Sydney’s north shore]. Customers would be speaking to Australians and you’d be educating people in the local area with transferable skills.”

But Davidson disagrees with Joyce’s push to move government departments to regional centres, claiming it is not the answer. “Local businesses need the infrastructure to help create jobs and encourage people to live in rural areas, you don’t do it by moving highly qualified people out of Canberra who are going to get bored … Let alone the cost.”

Alex Smith, the chief executive of Regional Development Australia, Northern Rivers, tells The Saturday Paper that the long-term aim of local jobs is a good one and should be part of regional planning.

“It might be easier to convince emerging industries that are more mobile, creative artists and their government representatives they don’t have to be in Sydney,” Smith says. “Small industry departmental agencies could easily attract good candidates in the regions.”

Smith says metropolitan infrastructure overload, regional skills shortages, housing affordability stress and a push to decentralise government agencies reinforce arguments for investment in regional Australia.

But, first, governments must devise co-ordinated strategies that address issues that cross state boundaries and jurisdictions.

The Queensland government recently designated the Scenic Rim Shire, south-west of Brisbane, as a Strategic Development Area with a plan to extend electric trains to the regions and build 50,000 new houses.

Kyogle, only 68 kilometres away, could be taking advantage by attracting small construction industries, but first it needs state and federal support for infrastructure and planning. Since the idea crosses state boundaries, it doesn’t get focus for decent roads, bridges and transport, according to Smith.

“It is an underappreciated area which could have new life breathed into it. But the New South Wales government doesn’t want to know about it because they’re not building infrastructure for Queenslanders,” Smith says.

“They don’t see the opportunity to supply jobs, services and products from NSW into Queensland. They aren’t taking advantage of the NSW-to-Queensland export market.”

Smith says regional strategies require patient negotiation and facilitation to help parties understand the value of working together – sometimes across state boundaries.

“It can be difficult,” he says. “Our leaders can only convince industry to move out of the city if there are the regional supports to accommodate them: infrastructure, housing, skills and training centres. That’s why regional and cross-border strategies are important.”

One example Smith raised is in agricultural technology.

His organisation is working with Southern Cross University and Northern Rivers TAFE to establish a body of knowledge to respond to a fleet of solar-powered robot mowers in early stage development.

“We know larger manufacturers like Case, New Holland or John Deere will eventually build those products, but our farmers still need engineers, technicians and programmers to service, maintain and upgrade these devices,” he says.

But these types of projects need various local, state and federal agency support. “A regional strategy like this needs to assess what skills will be needed in 20-30 years and reverse engineer to ensure we can be ready for that.”

The strategy, Smith says, is about getting the stakeholders jointly pitching to large industry to say “we can help research, design, build and support new technologies; you should invest here”.

Labour economist Victor Quirk tells The Saturday Paper that the curse of regional unemployment is in part a byproduct of employment policy generally. Australia once had a bipartisan policy of full employment. Before 1974, unemployment was typically about 2 per cent, with very little underemployment, but that policy was abandoned by the Fraser government and never restored. The national unemployment rate is now nearly 6 per cent, and there is nearly 9 per cent underemployment.

“Labor and the Coalition have had an unstated bipartisan policy of preserving high levels of labour underutilisation, by limiting public-sector employment and activity,” Quirk says.

In addition, replacing the Commonwealth Employment Service (CES) with the privatised Job Network disadvantaged the regions. The CES workforce audits provided an account of the skill sets available in particular locations. The Job Network does not.

“The system,” Quirk says, “has been atomised and fragmented.”

This article was first published in the print edition of The Saturday Paper on Feb 4, 2017 as "Country discomfort". Subscribe here.

Claire Connelly
is an award-winning freelance journalist and co-host of the podcast The Week In Start-Ups Australia.