Towards a Blueprint for Revitalising Rural and Regional Australia

You hear a great deal said about how the pace of today's economic change is too great for rural people to cope with, about how it must be slowed and moderated to accommodate the special circumstances of the bush.

I have a different view. I know that rural people are at least as capable of creative adaptation as are urban Australians. Faced with the same opportunities, they will prosper in the same way as other Australians. The types of policies that have been so successful in lifting national economic performance, will also work in the bush.

Rather than slowing down the rate of change in rural Australia, we should be speeding it up! Yet we should be speeding it up in a special way - in a way that takes account of the particular characteristics of regional Australia and the particular requirements for rural development.

Most importantly, we should be speeding it up in a way that does not penalise rural people for past national mistakes. In a way where they are not asked to carry the burden of past over-regulation of agricultural markets; not held responsible for poor national water management since European settlement ; not blamed for the land clearing policies of past state governments; and where the consequences of past national under-investment in rural education, communications or infrastructure are not overlooked.

To achieve faster change we need:

• A higher rate of growth in business investment and capital formation
• A faster rate of increase in the level of rural education and human skills - or put another way, a higher rate of growth in human capital formation; and
• An increased rate of technological progress in rural industries and services.

I know that to many, these three truths are not self-evident. Common sense tells us that technological progress displaces workers. And our common sense is not wrong! Faster technological progress has indeed displaced workers in some industries. Yet this has been accompanied by declining not rising national unemployment.

During the period when the rate of unemployment grew the fastest - the 1970s - the rate of technological progress was the slowest. During that period too, the rate of business capital formation was poor - much slower than the rate of growth in the labour force.

We must learn from this national history. The policies that have resulted in faster national growth and lower unemployment have not been particularly popular. They include cuts in government spending, reduced protection against imports, privatisation of public enterprises, deregulation of markets, National Competition Policy and workplace reform.

Because the period during which these policies have been applied has coincided with a period of poor economic performance in rural Australia, they have become even more unpopular in the bush than they have been in urban Australia.

Some Impediments to Rural and Regional Growth

Before I turn to highlight some serious impediments to rural development, let me make a couple of very positive points.

First, the national program of economic reform, covering the past two decades, has brought benefits to the bush, as well as to urban Australia. These include prices for fuel, electricity, telephones, handling and storage, postage, rail freight, stevedoring - all of which are lower than they otherwise would have been. And that is not to mention interest rates and the cost of imported plant and equipment and motor vehicles. The benefits of economic reform are very real!