Monday, 3 July 2017

Coalition's decentralisation program falling woefully short, economist says

Frank Stilwell says wealth inequality still growing, with a marked rise in the share of the top 1% of households in recent years

Malcolm Turnbull and Barnaby Joyce
Malcolm Turnbull and the deputy prime minister, Barnaby Joyce, who has forced the Australian Pesticides and Veterinary Medicines Authority to relocate to Armidale. Photograph: Mick Tsikas/AAP

An eminent economics professor says the Turnbull government’s decentralisation program could be re-engineered to reduce regional inequality significantly but it is falling woefully short of the kind of 20-year plan Australia needs.
Emeritus professor Frank Stilwell, from Sydney University, says the controversial idea of a fast train line between Melbourne, Sydney and Brisbane also has the potential to encourage genuinely beneficial decentralised centres, if supported by the right policies.
The left-of-centre economist was invited by the Australian Quarterly magazine to write about Australia’s “spatial” inequality to mark 44 years since he first wrote about the topic for the magazine.
In the latest issue, Stilwell says Australia’s spatial inequalities – inequalities between cities and “the bush”, between suburbs, between country towns, rural areas, remote and very remote regions – have “pretty much the same patterns” as they did in the 1970s.
But he believes they have become more entrenched over time and said it was not difficult to see how they reflected broader political economic trends.
“The share of national income going to the owners of capital has increased steadily over the last two decades,” he wrote. “Meanwhile, people dependent only on wage incomes are doing it tougher: wages growth has now dropped almost to zero.
“The effects of this asymmetry are evident in urban housing markets, where young wage-earners wanting to buy their first home try (usually unsuccessfully) to compete with investors buying perhaps their 10th or 20th property.”
Stilwell said the popular belief that Australia was “somehow exceptional” because of its egalitarianism must finally be eradicated, because the wealthiest 10% of households, on a conservative estimate, now holds at least half of the country’s total wealth.
He said wealth inequality was still growing, with a marked rise in the share of the top 1% of households in recent years, making the country mid-ranking among Organisation for Economic Cooperation and Development nations.
He said of the Turnbull government’s decentralisation plans that the government could significantly reduce regional inequality if it took decentralisation seriously.
He said Australian politics had a long tradition of “talking” about decentralisation from its big cities but the dominant feature had been political “pork-barrelling”, especially in marginal electorates.
“The deputy prime minister, Barnaby Joyce, has been doing something similar though his push to relocate the Australian Pesticides and Veterinary Medicines Authority (APVMA) from Canberra to Armidale, which is in his own electorate,” Stilwell writes. “This sort of piecemeal action falls far short of anything that could be called a comprehensive approach to decentralisation.
“The redirection of investment and job opportunities away from the existing metropolitan areas is no easy matter, of course. It would take cross-party agreement and a commitment to a 20-year plan, at least.”
He has also voiced his support for the idea of a newly constructed very fast train line between Melbourne, Sydney and Brisbane.
He said the Turnbull government could use a fast train line as the focus of planned new cities at intermediate stations, which would help to reduce regional inequality.
“So long as the resulting land value increases were captured as public revenue rather than privately appropriate,” he said, adding that, if the fast train line was built, other infrastructure and services could then branch off it, and new public housing could also be built in regional areas.
“Provision of public housing in these newly developed towns need not, and should not, be limited in its provision to people with complex social needs.
“Rather, public housing could be an important element in attracting working people to the new growth centres.”

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