30/05/2022 - 15:09

Regions feeling the pressure

30/05/2022 - 15:09

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THE dust is just starting to settle on a federal election won by a Labor Party that stood on a platform of climate change, cost of living, gender equity, and building Australia’s skills base.

Regions feeling the pressure
High living costs are not restricted to housing. Photo: Business News

THE dust is just starting to settle on a federal election won by a Labor Party that stood on a platform of climate change, cost of living, gender equity, and building Australia’s skills base.

And after talking up the issues, incoming Prime Minister Anthony Albanese and his government now need to follow the talk with action to respond to some immediate economic and social challenges.

Climate action emerged as a priority theme for voters during the campaign, and the incoming Labor government has tied the expansion of the renewable energy sector to the broader economic development agenda for regional Australia.

Labor committed to fund 465,000 fee-free TAFE places in areas experiencing labour shortages, including the regions.

But the picture was confused by Mr Albanese’s pre-election commitment to pull $350 million in uncommitted funding from the Community Development Grants Program and abolish the $400 million Regionalisation Fund.

Mr Albanese went hard on cost-of-living pressures during the election campaign, and made an issue of how regional Australia was doing it especially tough.

The April release of price inflation data from the Australian Bureau of Statistics added fuel to the fire of the cost-of-living debate during the election.

Consumer prices rose by 5.1 per cent nationally over the year to March 2022, and by 7.6 per cent in Perth.

But many regional locations in Western Australia are facing even higher cost-of-living pressures.

The Department of Primary Industries and Regional Development maintains a regional price index that compares the cost of goods and services in WA’s regional centres.

The Pilbara has by far the highest costs of living across the state, with prices nearly 15 per cent higher than in metropolitan Perth.

Housing costs are a particular issue for regional areas of the state.

Housing prices in Karratha are 38 per cent higher than in Perth in 2021, and an eye-watering 65 per cent in Port Hedland.

The same is true in Broome in the far north, with housing costs up to 30 per cent higher than Perth.

This emphasises the short-term imperative to address rising housing cost pressures in regional areas driven by strong demand, limited supply, and shortages in construction materials and labour.

WA Premier Mark McGowan introduced a range of measures in the state budget to boost housing supply and alleviate housing cost pressures, with some specific initiatives for regional areas.

These included a 100 per cent stamp duty rebate for off-the-plan units below $500,000, an expansion of income eligibility for Keystart loans, and a 50 per cent land tax concession for eligible build-to-rent developments.

And it’s no coincidence that the state budget included a specific $19 million commitment to subsidise the development of residential plots in Kalgoorlie and Karratha.

But high living costs are not restricted to housing.

Supply shortages and rising transport costs mean that food prices in remote areas of the Kimberley such as Fitzroy Crossing, Halls Creek and Kununurra are 20 per cent higher than in Perth, and sometimes more.

And the costs of healthcare are more than 10 per cent higher than Perth in many regional centres. Building Australia’s regional economies is unarguably important in delivering jobs and economic security.

But there needs to be a plan to ensure this doesn’t put even more pressure on regional prices.

This should prioritise local infrastructure development, improved supply channels into the regions, and a sustained drive to increase the supply of affordable housing in regional centres.

  • Dr Lili Loan Vu is a research fellow with the Bankwest Curtin Economics Centre.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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