ACT tops nation’s rankings for economic and social resilience
Major drought conditions afflicting most parts of Eastern Australia and flooding in Queensland; and the substantial closure of the car manufacturing industry in South Australia and Victoria.
These are just some of the domestic challenges our states and territories have faced over the past four years. Not to mention international influences such as the trade war between the US and China and commodity market fluctuations, in part driven by the iron ore mine closures in Brazil.
How resilient are our states in facing up to such events?
The ACT tops nation’s rankings for economic and social resilience (ARCI) assessed the states and territories by 12 equally weighted indicators, grouped in 3 categories – economic, socio-demographic and ‘community connectivity’.*
Just as the inaugural ARCI report found in 2015, ACT ranks highest, due to strong social and community factors; although this has taken a downturn in the last two years.
Victoria ranks as Australia’s second most resilient jurisdiction, because of its strong economic capacity. NSW ranks third, marginally ahead of QLD and WA.
While it is important to note that resilience does not equate to economic success, our report does show a correlation between adaptability and growth. ACT, Victoria and NSW’s growth rates from 2014-2018 mirror their top three ARCI resilience rankings.
Rather than growth per se, the index aims to quantifiably assess the settings available to achieve growth in a post-shock environment. The better a region is able to collectively enhance economic, socio-demographic and community outcomes the more likely it will be to withstand adversity and bounce back quickly. Adaptability is about being able to move away from the economic past and achieve a better outcome.By any measure, Australia could be considered a resilient country, having weathered many economic and environmental challenges in recent history. Luckily we as a nation have been spared from widespread social and community devastation such as war, famine and major civil unrest.
But while this is true, the capacity for individual jurisdictions to deal with significant economic, social and community challenges is varied. Some jurisdictions have a diversity of economic activity but poor social capacity and even poorer community connectivity.
Resilient regions need not only economic strength during times of uncertainty but also a strong social fabric binding the community together to ensure it can return to the ‘good times’ in the shortest period possible, and hopefully surpass them thereafter.
Improving regional capacity in areas identified to have low resilience is more likely to be achieved through a place-based policy framework, given the challenges of delivering uniform policy settings across diverse populations and geographies.
The implications of our report are that policy-makers need to ensure not only the fundamentals of a diverse, investment-orientated economy but also that the necessary complementary building blocks of an educated, healthy population exist, while at the same time providing the environment for a safe and engaged community.
Key factors that explain the movement in the economic index since 2014 include:
Income inequality, as measured by the Gini coefficient, has improved slightly for Australia during the past four years. However, improvements in income equality have not uniformly progressed. NSW, SA and Tasmania have seen household income slightly more skewed to the top quintile, compared to other jurisdictions, while ACT has seen more even household income distributions since 2014.
NSW most economically diverse
NSW continues to be the most economically diverse jurisdiction, with its economic structure largely replicating that of the national economy. The ACT has the least economic diversity, with high levels of activity associated with public administration. But the ACT achieves a socio-demographic capacity value substantially higher than any other jurisdiction in Australia, as it consistently achieves very high levels of educational attainment, high life expectancy and female participation in the labour force, and comparatively moderate levels of household poverty.
Women in the workforce
Levels of participation by women in Australia’s labour force continue to rise year-on-year, with every state and territory recording higher levels in 2018 than what was recorded in 2014. The ACT and NT continue to have the highest levels of female participation within their jurisdictional labour force, while Tasmania and South Australia have the lowest.
Households living in poverty remains a significant social, economic and community problem. Most jurisdictions over the past 4 years have been able to improve the situation for some households, lifting them out of the poverty trap and into a more stable economic foothold. Unfortunately this hasn’t been the case for either WA or the NT, where poverty rates increased between 2014 and 2018.
Regional affordability, as measured by housing costs as a proportion of gross household income, has improved in Victoria, South Australia and Tasmania, and worsened slightly in the remaining states and territories. NSW remains the least affordable location for accommodation relative to household income in Australia.
The rate of ‘business churn’ – the number of new businesses starting up and existing businesses closing – has increased across Australia since 2014, and is notably higher in Victoria and ACT.
R&D spend has dropped off in most jurisdictions since 2014, including by around 15 percent for businesses located in NSW, 7 percent in Victoria, 10 percent in South Australia and 5 percent in Tasmania. One shining light for this indicator has been WA, which has seen R&D activity increased by more than 80 percent compared to spending four years ago.
Internet connectivity has improved with the continued roll-out of the NBN across Australia. Tasmania achieved the greatest improvement in connectivity over the past 4 years, while the ACT now has more than 96 percent of residents connected to the internet.
- regional economic indicators, that capture concepts of industrial diversification, business dynamics, regional affordability measured as a product of housing costs and income levels, and income equality;
- socio-demographic indicators, that capture concepts of life expectancy, educational attainment, female labour force participation and poverty;
- community connectivity indicators, that capture how familiar with and civically active a region’s residents are, as expressed by participation in sport and voter participation, incarceration rates and net overseas migration.