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Costa Tomato Exchange in Guyra

Rising to the challenge

Published 4th May, 2018

The NSW Government has a role to foster economic growth in engine industries of regional NSW. We can do this by investing in infrastructure, skills, advocacy and promotion, and the business environment.

NSW is an economic powerhouse for Australia and an internationally competitive economy in its own right.

What it will take

For regional areas to further flourish, they depend upon these key points:

  • Strong trade agreements and relationships – International trade and investment makes up a large proportion of the NSW economy. Relationships and trade agreements are central to driving regional growth in the long term, particularly trade with other Asia-Pacific nations.
  • Migration and foreign investment – These will become more important as more skilled workers are demanded by regional businesses, accompanied by a shift in family-owned businesses such as farms being bought by international companies. An emphasis on younger migrants can also serve to balance ageing populations. With the right local support, migrants settling in regional NSW can play a role both in helping to fill immediate workforce shortages and to create new jobs.
  • A strong and thriving Sydney – The success of regional NSW is tied to the continued success of Sydney, Australia’s largest city and most important global gateway.
  • Governments working together – With Commonwealth and local governments working alongside the NSW Government, we can create a growth-friendly environment, from facilitating favourable terms of trade, to providing water connections and streamlined planning approvals.
  • Governments and industry working together – Rising to the challenge will overwhelmingly benefit the private sector. We can create a business-friendly environment by ensuring regulatory settings protect the community while not hindering enterprise, and leveraging private-sector investment where benefits are largely private.
  • Governments and communities working together – Engaging communities in government decision-making helps local economic development initiatives better address the needs of different community members, and forges a joint commitment to better outcomes.
  • Aboriginal economic participation – Aboriginal economic activity is a vital and growing area that will build a stronger foundation for social, economic and cultural prosperity in NSW. Supporting greater participation and opportunities for Aboriginal people will create jobs and employment, lift education and skills, and activate regional economic potential.
  • A focus on growth – Targeting investment in regional centres that are forecast to grow will prioritise efforts for the greatest and most sustainable growth, and cement those regional centres as hubs for their surrounding areas, in line with the Future Transport Strategy 2056 hub-and-spoke model.

Aboriginal economic activity is a vital and growing area that will build a stronger foundation for social, economic and cultural prosperity in NSW. Supporting greater participation and opportunities for Aboriginal people will create jobs and employment, lift education and skills, and activate regional economic potential.

Industries driving the economic future of regional NSW

The ‘engine industries’ that will drive regional NSW economies over the next 20 years include established sectors, and emerging sectors that are gaining ground in their share of the regional economy1.

Established sectors

Icon representing agribusiness and forestry Agribusiness and forestry

Regional NSW will continue to be a significant producer of agricultural commodities. The shape of employment will change as primary producers move to value-added products and capitalise on the premium branding status of NSW produce. In addition to value-added food and beverages, key products will include meats, vegetables, grains, milk, cotton, wool and forestry products. Success is underpinned by productive farmland, diverse growing conditions, efficient technology use and a reputation for quality.

Icon representing resources and mining Resources and mining

Resources and mining will continue to be an economic specialisation in a small number of regions. Raw materials from this sector will continue to be in demand across a broader number of regions and in industries such as construction. Advances in automation and digitisation are expected to transform the future mining workforce, reducing total jobs in these industries and increasing the proportion of highly skilled and technical jobs.

Icon representing tourism Tourism and hospitality

A growing international tourist market from Asia and beyond will visit NSW looking for different travel experiences. Regional NSW’s diverse and natural beauty will continue to draw domestic and overseas visitors, with opportunities growing for niche and personalised travel experiences championed by small and medium sized businesses.

Icon representing tertiary education and skills Tertiary education and skills

Both the domestic and international market for tertiary education will grow, boosted by increasing urbanisation and the rapid economic growth of Asia. Innovation in tertiary education, and vocational  education and training will help ensure regional NSW adapts to increased automation in traditional industries while leveraging new opportunities offered by digital disruption.

Icon representing health and residential care Health and residential care

Australia’s population is not only projected to grow and age, but to have an increased life expectancy. Moreover, ageing will be more pronounced in regional NSW. By 2038, the health and residential care industry will employ almost 80,000 extra people, accounting for nearly 20 per cent of regional jobs. Advances in digital and telehealth may accelerate support for older Australians to ‘age in place’, enabling people to stay in their own home longer if they choose.

Icon representing freight and logistics Freight and logistics

Freight, logistics and distribution services are already a backbone industry of regional NSW. Better freight connectivity with and along the east coast will enable more efficient and cost-effective logistics solutions, and could drive the development of distribution centres in Metro Satellite regions.

Icon representing defence Defence

Defence and supporting industries will capitalise on the Australian Government’s policy of having a locally developed and built defence supply chain, supported by the newly-created Defence NSW organisation and NSW Defence and Industry Strategy. Developing defence industry precincts and networks will focus on locally relevant projects that build on a region’s comparative strengths. Each $1 billion in government operational spending on defence in NSW contributes $1.4 billion in Gross State Product and 10,000 jobs.

Emerging sectors

Icon representing advanced manufacturing Advanced manufacturing

With state-of-the-art facilities and cutting-edge technology across regional NSW, advanced manufacturing is driving economic growth. Leading manufacturers are attracted to regional areas by skilled workforces, low-cost environments, and access to markets and leading research centres. High-tech design and development, innovative research, product customisation, and client-focused support and repair services are all future drawcards.

Icon representing renewable energy Renewable energy

NSW has excellent renewable energy resources by international standards. NSW faces a pivotal opportunity to capitalise on the state’s significant energy resources, and signal to the market new high-potential areas for renewable energy project development, to support a more secure, affordable and clean energy system for people and businesses in regional NSW.

Icon representing technology-enabled primary industries Technology-enabled primary industries

Agricultural technology – or ‘agtech’ – businesses have developed partnerships with research institutions to lead technology advances in regional NSW. Developing local innovations in agricultural practices including planting, fertilising, feeding, monitoring, pest control, harvesting and monitoring livestock movements could significantly grow this sector. Agtech could become an economic engine industry in its own right.

The role of government

Market forces and megatrends will continue to generate economic opportunities and challenges during the next two decades.

Government has the potential to help industries, businesses and communities to better harness those opportunities as they arise.

This means working more closely with regional economies and stakeholders, and better coordinating across government agencies. Fundamentally, each region of NSW is unique and decision-making should be tailored, rather than ‘one size fits all’.

The NSW Government should identify and remove market failures that serve as obstacles to competition and regional growth. In doing so, it is important to avoid unsustainable industry assistance. However, where a market failure can be addressed through better coordination, regulatory improvements or efficient public investment, the government can and should act to promote sustainable growth.

The Regional Economic Growth Enablers Report, released in 2017, identified key economic enablers that government can most effectively use to encourage growth. These include:

  • infrastructure
  • skills
  • advocacy and promotion
  • providing a growth-conducive business environment. 

The regional growth plans, NSW State Infrastructure Strategy and Future Transport Strategy 2056 provide a long-term road map of how the government will use its enablers of infrastructure and planning (which shape the business environment) to maximise longterm sustainable growth and amenity across the state.

A great example of where the government has been able to directly foster growth in regions is the health sector in Orange. This vibrant sector has grown from the foundations of basic service provision through government planning, including investment in a new base hospital. It has grown to become the largest employing industry in Orange2encompassing not just government services but private industry, tertiary medical education and allied health; and providing services well beyond the local population.

Our government’s framework for regional economic development

Our 20-year vision is an extension of the Regional Development Framework, which launched three core objectives:

  1. Amenity – Providing quality services and infrastructure in regional NSW
  2. Growth – Aligning effort to support growing regional centres
  3. Potential – Identifying and activating economic potential

Related NSW Government policies and strategies

Pyramid diagram with four levels (from largest to smallest): Portfolio policies; Regional NSW Policies; Regional vision; and Regional economic strategies.

Source: NSW Government documents

Principles for future investment

On top of the Regional Development Framework’s three core objectives, we are focused on seven key principles to guide us when making decisions on regional economic development. These principles are aligned with the economic enablers.3

Infrastructure

Icon representing transport Improved travel between regional centres and from cities and international gateways – Better transport infrastructure and services enable increased business activity, a wider labour market and better lifestyles.

Icon representing freight Freight networks that will increase the competitiveness of key regional sectors – Efficient freight transportation underpins the viability and competitiveness of key and emerging sectors. High-performing freight networks are essential for regional NSW to compete in the global marketplace.

Icon representing wifi Affordable, reliable and fast internet to support people and businesses – Fast, reliable connectivity supports business growth, helps rural communities thrive, improves health and wellbeing, and makes it easier for people to access online public services.

Icon representing light Reliable accessible water and energy – Energy and water are vital to people and business. Securing climate-resilient water supply is particularly important for key industries, and digital advances will largely require reliable energy.

Skills

Icon representing skilled labour A skilled labour force for current and future needs of the regions – Helping people reskill, upskill and reinvent careers is essential for regional workforces to exploit future opportunities. This includes investing in research and development for jobs for the future.

Advocacy and promotion

Icon representing  regional strength and endowment Recognising each region’s strengths and underlying endowments – Each of regional NSW’s areas is distinct and claims its own natural, human or built endowments. This requires bespoke government decision-making

Business environment

Icon representing regulation and planning Regulation and planning to promote commercial opportunities – Planning and regulation settings must maximise employment and income-generating opportunities. Better coordination, joined-up governance and clear signals to attract industries to targeted locations will optimise local advantages

References

1. NSW Centre for Economic and Regional Development (2017), Regional Economic Growth Enablers Report; Australian Department of Employment (2017), Employment Outlook to May 2022.

2. Regional Development Australia

3. Note, this does not replace, supersede or negate the important role of business cases, cost-benefit analyses and other investment analyses to determine projects and funding; the principles are a higher-level guide to, for example, the types of project that should be prioritised for further examination. The most efficient funding mechanism would be considered – which may, but would not necessarily, include government spending.

Published 4th May, 2018
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