1381.0 - Research Paper: A Review of Regional Development Australia Committee Regional Plans, 2013  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 12/03/2013  First Issue
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Image: Economic Threats word cloud

All regions identified at least one threat to their economy. The most commonly raised economic threat – identified by 39 regions – was the reliance on one or few main industries and the need to diversify the region’s economy. Many regions reported that their key industries were seasonally dependent and vulnerable to influences, such as climate and commodity cycles. Other economic threats included fragmented industries, the availability of land for industrial and commercial activity, the cost of freight transport, a lack of value adding to raw commodities and a lack of business expertise.

Other common economic threats reported by RDA committees included the Global Financial Crisis, high Australian dollar, potential impact of the carbon tax and other environmental legislation.

2.1.1 Global Financial Crisis (GFC)

Seventeen RDA committees were concerned about the significant negative impacts of the GFC, from which many industries were still recovering. RDA committees reported that lower consumer and business confidence was reducing business investment, employment growth and small business performance. Mining, retail and tourism were the most commonly reported industries affected by the GFC. The GFC was a concern for RDA committees in urban, rural and remote areas. For example, Sydney RDA noted the effect on the financial services sector, consumer confidence and on people’s investments and superannuation (Sydney RDA, 2011, p. 94), while in the Kimberley there was concern about its effect on the pearling industry (RDA Kimberley, 2011, p. 26).

2.1.2 High Australian Dollar

A negative impact associated with the high Australian dollar was identified by fifteen RDA committees. Many of these committees reported the detrimental effect of the high Australian dollar on manufacturing and agriculture due to the decreased competitiveness of the region’s exports. Other common impacts included a decrease in tourism due to the affordability of overseas holidays, a drop in international student numbers and a trend towards online purchases and purchases of imported goods. For example, these concerns were echoed in Melbourne East and in Tasmania, where tourism, international education, agriculture and manufacturing are important industries (Melbourne East RDA, 2011, p. 44, RDA Tasmania, 2011, p. 30).

2.1.3 Carbon Tax

Eleven RDA committees discussed the potentially negative effects that the introduction of a carbon tax may have. Many of these regions were concerned about the potential impact of increased farm operating costs on the agricultural industry and increased energy costs on the manufacturing and mining industries (for example, RDA Illawarra, 2011, p. 10). There was also concern that an increase in the price of airfares may affect tourism and air services in remote areas. Uncertainty surrounding a carbon trading scheme was identified as a concern due to its effect on investment in new energy production.

2.1.4 Environmental Legislation

Seven RDA committees identified environmental legislation as a potential threat to some industries. Some RDA committees reported that environmental approvals added complexity and uncertainty to investment and business operations, and slowed plans for the resources sector. Some RDA committees were concerned that legislation to protect coastal areas would have a negative impact on commercial fishing and tourism. The Loddon Mallee RDA committee in Victoria reported that its agricultural industry was vulnerable to changes in water policy which reduced allocation for irrigation (Loddon Mallee RDA, 2010, p.9) and the Limestone Coast RDA committee in South Australia reported that the recent Natural Resource Management Bill (2010) may create uncertainty in relation to investment in the forestry industry (RDA Limestone Coast, 2011, p. 2).