AUSTRALIA REGIONAL DEVELOPMENT STRATEGY
Why didAustralian Governments Abandon the Regional Development Strategy ofDecentralization During the 1980s?
Why didAustralian Governments Abandon the Regional Development Strategy ofDecentralization During the 1980s?
The concernfor development has prompted various governments to adopt variouspolicies to achieve development at grassroots. Decentralizationpolicies involve dynamic initiatives to support rural development(Brancati, 2008). Basically, decentralization can be understood asthe transfer of some of the powers of the national government toregional or local authorities. The use of centralization is usuallyin response to the need for national unity, while decentralization ismeant to respond to demands for diversity (Brancati, 2008). The twoforms of administration coexist in various political systems. Sincethe 1980’s there appears to be a consensus that centralization ortotal decentralization are both not viable and its therefore criticalto put good systems in place in association between the national,regional and local authorities (Stimson, 2001). Australia’s use ofregional policy has for a long time been in a dilemma. With differentgovernments changing hands, some have been in support while othershave not been open on decentralization as noted by Stimson (2001).This paper will focus on decentralization strategy in Australia andthe way it has been criticized hence its abandonment in the 1980’sas the sole mode of initiative to ensure rural or regionaldevelopment.
Australiaregional policy has two main forms of critics there, are those whobelieve that the government has been doing too much to encourageregional development (Storper, 2005), while others believe there istoo little if any being done to enhance regional development (Stoner,2013). The former argument is the most vocal and prominent one thatwas led by the abandonment of decentralized strategy of regionaldevelopment.
RegionalDevelopment Strategy of Decentralization in Australia-Expansion anddecline in Australia agriculture before the entry of Britain into theEuropean Economic Community (EEC)
Australia hadbeen founded by Britain for its export of primary products (Stoner,2013). By the end of Napoleonic Wars in 1815, Britain had become thelargest financial, commercial and manufacturing nation in the world.To pay for itself, the Sydney colony exported fine wool to Britainamong other agricultural products. Even before Britain joined EEC,Australia was experiencing a drop in the export income of its ruralproducts including wool and domestic products. For example thecontribution of the rural sector to the country’s GDP in early 1950was about 29 percent which had fallen to just 13 percent by 1962-1963and at 8 percent by 1970 (Storper and Venables, 2004).
Decline inAgriculture after Britain Joined EEC
Even thoughagriculture in Australia was in the decline, after British joinedEEC, it further declined in 1973. Australia butter exports toBritain, for instance, fell from 79,000 tonnes in 1972-1973 to only7,000 tonnes in 1981-1982. The number of beef cattle in New SouthWales had reached a high nine million in the mid 1970’s butdeclined significantly to five and a half million by the start of1980’s. The decline prompted a change in regional developmentpolicy (Uren, 1994).
Regionalmanufacturing decline after the Global Recession of the Mid 70’s
A year afterthe joining of EEC by Britain, there was a global recession. Therecession was triggered by the support of the United States forIsrael during the 1973 Arab Israel conflict and by the Arab nations’decision in retaliation to hike the price of oil from $6 a barrel to$23 a barrel. The effect led to a rise in unemployment in Australiarise from a low of 2 percent to a high of 5 percent (Stimson, 2001).The country’s manufacturing industry in particular started to layoff employees. The number of workers in this industry in Newcastleand Wollongong declined by ten and eight percent respectively.
RegionalDevelopment New Direction in Australia after Decline-Continuation ofregional development in NSW by the State Government
After NevilleWran (Labor) took office in 1976, he initially retained the Askin’s(Liberal-Country Party Coalition) Government’s Department ofDecentralization and Development and set about introducing veryambitious regional development policies. Although it appeared futilein long term gains, the Government succeeded in implementing some ofhis policies in regional development. In 1977, Government increasedaid to rural industries by achieving passage of the CountryIndustries Act 1977 which granted payroll tax rebates for processingor manufacturing industries outside metropolitan regions (Uren,1994). In 1980, Wran changed the Department of Decentralization intothe Department of Industrial Development and Decentralization whoadministered policies in Sydney and in other regions.
Withdrawalof the Support of the Federal Government for Regional Developmentafter Recession of 1980-1982
In early1980’s the occurrence of a global recession resulted in 9 percentrate unemployment in Australia by 1983 the same year the Hawke LaborGovernment was elected to Australia’s federal Government. In thecontext of regional development, the Hawke administration, consideredthat, a Federal Government should not participate in regionaldevelopment. Hawke introduced a lightly funded remedial regionaleconomic policy that was referred to as the County Centres Project.In NSW the central west received two of these projects, including oneat Lithgow and another in the Parkes-Forbes-Cabonne region. Theyinvolved significant community collaboration and the production of afeasibility study for a small project (Stoner,2013).
GreinerGovernment Retreat from Regional Development
The Greinerof (Liberal-National Coalition), Government took office in 1988 alsoreduced participation in regional development. The Government adopteda more reproached model with regional development being transferredto a new Department of Business and Consumer Affairs. The mainincentive scheme and principle focus for regional development in NSWbecame the Regional Business Development Scheme (Storper andVenables, 2004). The scheme was meant to provide subsidies forrelocation and establishment. This move was a drift away from anopen-ended assistance for regional development to an approach ofcase-by-case. The Greiner government eliminated the differentialprovisions of the payroll Tax Rebate Scheme which had encouragedbusinesses to locate in regional areas.
FaheyGovernment Revival of Regional development in NSW
In 1992, JohnFahey (Liberal-National Coalition) became the Prime Minister of NSW.Under Fahey’s leadership the Government decided to backtrack on theGreiner’s administration’s restraint on regional development. In1993, the NSW Government reinstated regional development to portfoliostatus introducing a Department of Business and RegionalDevelopment. The activities of this Department included newstrategies, together with previous ones to now include the RegionalBusiness Development Scheme, Assistance Towards BusinessEstablishment, Resources for Regional Development, the RegionalBusiness Infrastructure, the Main Street Program and the BusinessExpansion Program (Stimson, 2001).
Recessionof the 1990s and Renewal of Government Participation in RegionalDevelopment by the Federal Government under Prime Minister Keating
A recessionthat occurred in Australia in 1992 saw unemployment in the countryshoot to 11 percent. In response to this, Paul Keating, who was thethen Prime Minister, reintroduced augmented spending for developmentin the regions. When he was re-elected in 1993, Keating stretched hisGovernment’s focus on regional development by transforming theFederal Department of Industry and Technology to the Department ofIndustry, Technology and Regional Development which was put underAlan Griffiths as the minister (Storper,2005).
DivergentPaths of State and Federal Government in Mid1990s
TheCarr government took over office in 1995 from John Fahey.Nevertheless, they re-affirmed to commit to regional development. Theprevious Department of Business and Regional Development was changedto the Department of State and Regional Development. Michael Egan inhis first budget speech as the treasurer mandated that, theDepartment of State and Regional Development together with regionalindustries and the Federal Government conduct an audit regarding theeconomic status and potentials of all the regions to identify thefirms and industries, national and global, for which the regions willprovide natural synergies (Storper, 2005). After Keating Governmentdeparted office, in 1996, the new Government under Howard declaredits intention to cut down federal involvement in regional development(Stimson, 2001).
The impactof National Competition Policy
At the timethat the central government was setting out to shift from regionaldevelopment, the impact of national competition policy of the Keatinggovernment were beginning to be felt. National competition policy wasthe term coined to what was effectively a force to commercialize whathad been, basically, large scale regions of production that wereuntil then owned by the government (Brancati, 2008). This aspect ofdevelopment particularly covered the production of gas, electricity,water and railway transport. The impact of the policy led to declinein regional and urban power supply at the beginning of Keating regimeand the first two years of Howard Government. Unemployment rate shot.The effects of National Competition Policy became detrimental in thelong run. There wasa reduction of protectionist policies, such as tariffs, formanufacturing industries. The results were the reshaping ofemployment from primary industries and manufacturing to tertiaryemployment in service, high-tech and education (Stoner,2013). The ultimateeffect of this policy has recently been seen with the forthcoming endof car manufacturing in Australia – an industry that began in theyears immediately after World War Two (Uren, 1994).
Australia’sregional policy has evolved in various ways since the 1960’s fordifferent reasons. Many elements of former polices have been doneaway with, and some elements have been taken on board as new and moremultifaceted regional problems emerged and fresh ways of dealing withpast issues have been unearthed. Something of consensus in regionalpolicy among the major political parties and in different statesexists. There are a number of principles that most authoritiesaccept- the bottom up initiatives self-help communitiesfacilitation over central direction a partnership approach a focuson service delivery and change management strategies based on areacompetitive advantage a region specific approach and a focus onregional leadership. Brancati (2008) argues that as an approach,decentralization, which is a focus on the entire community primacyand on balanced development, has lost touch and has been silentlydumped, although ‘regional’ most silently means non-metropolitanfor policy makers.
Notwithstandingcommon views across governments, no consensus of this nature existsamong the larger regional policy community including both vitalacademics and country interest parties. There are several critics ofgovernment policy, majority believing that governments are doing verylittle particularly the Commonwealth Government (Stoner, 2013Stimson, 2001). They believe that, governments have been overshadowedby ‘economic rationalism’ which both have resulted to regionalproblems and will not sort them, and that more public financing wouldenhance regional outcomes where more ‘national’ regional policyis needed (Stimson, 2001).
There are notwo governments that have an exactly similar approach to regionaldevelopment as regional development entails a wide range ofphilosophies, objectives, definitions of regional policy tools,instruments, implementation initiatives, funding mechanisms,bureaucratic structures (Storper and Venables, 2004). In Australiaand in several other countries interested in spatial economicdevelopment, certain ways of approaching regional development emergedin the past twenty years. Various regions in Australia opted foralternative approaches to regional development (Stoner,2013).One of the major developments in regional policy has been theintroduction of new objectives, fresh concepts, new regionaldevelopment tools, and fresh ways of thinking about regionaldevelopment. Current regional development is characterized by a newset of buzz words including sustainable development, regionalspecific policies and local solutions to local issues, regional andregional competitive advantage, an emphasize on regional leadership,bottom up approach and community oriented economic development, afocus on growing already existing businesses as opposed to industryattraction, facilitation, collaborations, the self help ethos andestablishment of new mesolevel organizations that drive regionalstrategies (Brancati, 2008). These fresh ideas that have changed theway governments view regional development and respond to issues ofregional development. For instance the New South Wales governmenttermed this approach as Strategic Intervention, with main focus beingon strategic over the intervention (Storper,2005).
EachGovernment introduced policies that were relevant to their politicalideology with the intent of ensuring that decentralization was notsolely responsible for regional development. Although most policiesappear as if they encourage regional development throughdecentralization, they are basically inherent to the FederalGovernment. This gives the Federal Government an upper hand incontrolling development. Ultimately, the abandonment ofdecentralization policy in Australia in the 1980’s was prompted bythe decline in agricultural production, increased unemployment rateand declining manufacturing. The different governments have tried tocontrol regional development in order to maintain growth in theregions and the country at large through various approaches.
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