By any measure, Australia could be considered a resilient country, having weathered countless economic and environmental challenges.
The resilience of Australia’s regional communities is particularly entrenched — mostly connected to concepts of ecology, psychology and engineering, and more recently, in the context of a shock, disaster or adversity.
As resilience becomes increasingly vital to ensure the future of country areas, the concept is finding its way into academic debate and government policy documents. Framed in the concept of “regional capacity”, it contemplates how well placed local and regional economies are to adapt to factors such as the rise of global competition, unplanned major plant closures and the technological innovation revolutionising current work practices.
The notion of regional resilience is dynamic, as it focuses on a region’s ability to respond to shocks, either by maintaining a pre-existing state, or by returning to its previous level or rate of output, employment or population growth.
But research into this area by KPMG Australia partner and chief economist Brendan Rynne determines that regions are complex, multi-faceted and continually changing, which makes defining and measuring regional resilience challenging.
Rynne points out that economic resilience not only reflects the pure economic characteristics of a region or area, but also relies on the interplay of social-demographic and community factors.
Put simply, he says, the economy cannot function without individuals working as a community to achieve social outcomes. The better a region is able to collectively enhance economic, social-demographic and community outcomes, the more likely it will be to withstand adversity and bounce back in the shortest time possible.
“Adaptability is about being able to move away from the economic past, and achieve a better outcome than where that historical outcome may have taken them.”Rynne studied similar research from the US, where The Institute of Government Studies at the University of California Berkeley applied methodology and techniques that allow for comparisons across metropolitan regions, and the identification of strong and weak conditions relative to other metropolitan regions.
Rynne applied the same methodology to calculate the Australian Regional Capacity Index (ARCI). It assesses income equality, economic diversification, regional affordability, the economic dynamic index, educational attainment, female labour force participation, poverty, life expectancy, incarceration rates, net overseas migration, participation in sport and voter participation.
“The ARCI attempts to show the relative regional resilience for each state and territory in Australia, and implicitly each region’s capacity for adaptation and adaptability,” Rynne says.
“It doesn’t attempt to measure absolute growth, either economic or population; rather it seeks to quantifiably assess the settings available to achieve growth in a post-shock environment.”
Key to regional resilience is the ability to adapt, he says.
“Adaptation, for example, is about a region’s ability to respond to some form of shock, predominantly economic shock, by moving back up to the economic past it came from. Whereas adaptability is about being able to move away from that past, and achieve a better outcome than where that historical outcome may have taken them. Being able to lift up and really move on to a new economic trajectory.”
KPMG collated the data on the individual parameters, determining that Victoria has generally been the state with the highest economic capacity for the period under review.
The Northern Territory, New South Wales and Tasmania achieved the lowest resilience ranking, reflecting relatively weak outcomes.
Rynne emphasises that it is important to recognise that these measures are not seeking to identify jurisdictions with the greatest economic activity or fastest economic growth. Rather they determine the jurisdictions that have the capacity to limit the size of any downswing in economic activity during a recessionary event, and correspondingly the capacity to bounce back after a recessionary event has occurred.
Rynne says the analysis is thought provoking as the outcomes may not appear intuitive in the first instance.
“I think this allows governments to test the various policy approaches at a sub-regional level to better understand whether or not you may, in fact, be getting an unintended outcome by the adoption of the uniform policy. Finally, at a regional level, this allows the analysis to be looked at consistently.”
The implication is that policy makers need to strive for not only the fundamentals of a diverse, investment-orientated economy, but also the complementary building blocks of an educated, healthy population, while at the same time providing the environment for a safe and engaged community, he says.
Undertaking this research on a sub-regional basis would provide an assessment of the capacity of different geographic areas within a jurisdiction to bounce back from a shock in the shortest period possible.
The report also points out that 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.
“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,” Rynne says.
Written by: Nina Hendy
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