Regional Development VictoriaRegional Development Victoria

State Government of Victoria


Regional Jobs and Infrastructure Fund policy basis


The Government’s key policy agenda is to build a strong economy, improve economic growth and create jobs. Growing regional economies is an important part of the overall economic development strategy for the state.

Regional and rural Victoria generates substantial economic output and directly contributes to the state’s economic competitiveness. Regional and rural Victoria accounts for a quarter of Victoria’s gross state product and boasts competitive strengths across major export industries such as food and fibre and tourism.

The Regional Jobs and Infrastructure Fund (RJIF) is the Victorian Government’s overarching regional development package. It is investing in growing jobs, building infrastructure and strengthening communities in regional Victoria.

Regional and rural Victoria:

  • is home to 1.47 million people
  • supports more than 650,000 workers
  • accounts for 20% of Victoria’s economic output
  • generates one third of the state’s exports.

Sources: NIEIR, ABS 2014

Changing Global Economic Conditions

The RJIF has been established in the context of a changing economic environment where a range of global factors are impacting on the competitiveness and structure of the Victorian economy.

The mining construction investment phase (2005-15) drove economic growth in Australia, lifting Australian living standards through employment and wages growth.

As mining moves out of the construction investment phase into the production phase at a time of falling global mineral prices, Australia has to find other sources of growth and productivity improvements to maintain historical levels of growth in living standards.

Structural transition in the Victorian economy is occurring within the context of a number of macro trends including:

  • the urbanisation of Asian countries
  • technological advancements
  • an ageing population
  • increasing global competition and development
  • the globalisation of supply chains.

In Victoria, the proportion of employment and value-added being generated from services is increasing, manufacturing is becoming less competitive in low value-added products, and farms continue to consolidate.

There are also more immediate challenges including weak business and consumer sentiment, fluctuations in the exchange rate, price changes across key commodities, low levels of business investment and weak productivity growth.

Gross State Product (GSP) data[1] for 2013-14 shows that Victoria had the fifth highest annual average growth rate from 2004 to 2014 among all states; the highest among the non-mining states (excluding ACT). However in 2013-2014, Victoria's GSP growth rate of 1.7% was lower than the Australian, NSW, Queensland, WA and NT averages.

Victoria has also experienced weak productivity growth and flat business investment.

Slower economic growth has resulted in an underutilisation of labour in Victoria’s regions with employment growth deteriorating in the last four years. Regional Victorian employment grew on average by only 0.52% per annum between December 2010 and December 2014 compared to 1.33% between December 2006 and December 2010.

Graph showing Regional Victoria employment (‘000s) 3 month average December 2006-December 2010 

Over the long-term, successful economic transition requires new industries, new skills, continual innovation to drive global competitiveness and active pursuit of new trade opportunities.

The geographic, industry and workforce characteristics of regional economies make them less able to adjust to structural change at a time of reduced economic confidence and tighter fiscal conditions for the state.

Regional Barriers to Growth

Structural transition is an ongoing part of economic development.

Generally, smaller regional economies are more specialised making them less resilient to economic change. Other geographic factors can also impact on their capacity to grow and be more productive including:

  • longer distances to larger metropolitan markets and export gateways
  • a smaller available workforce and lower skills including lower levels of digital literacy
  • reduced access to enabling infrastructure (e.g. telecommunications, freight)
  • lower levels of agglomeration which restricts knowledge transfer and innovation.

Agglomeration is where firms and industries cluster together to increase access to supplier, customers, infrastructure and skilled workers. Agglomeration provides opportunities for improved productivity, increased innovation through collaboration, economic specialisation and knowledge spillovers.

Regional cities serve as major employment and service hubs for regional industries and communities. In comparison to Melbourne, regional centres and towns have smaller populations and slower population growth; longer distances to access facilities, services and jobs; an older population age structure; and greater outward migration of youth.

Some regions are undergoing change at a faster pace and scale than others. For example, in the Latrobe Valley the global shift towards a low emissions economy and the ongoing dependency on coal related activities presents a structural challenge to that local economy.

In the Goulburn Valley, a decade of challenges such as drought, floods, a new water trading system, a fluctuating Australian dollar, and falling farm gate prices are impacting on the economy, employment and confidence.

In Geelong, a generation of macro and micro economic reforms coupled with increasing global competition has led to a decline in manufacturing activity including motor vehicles.

There is increasing pressure on regional economies to find new sources of growth.

New Regional Opportunities

Regional Victoria is well positioned to benefit from emerging global opportunities by building on comparative advantages in the export of food and fibre products, advanced and niche manufacturing, minerals and resources, tourism, and increasingly services (including health and international education).

The Regional Jobs and Infrastructure Fund is designed to address key challenges and opportunities to unlock regional growth potential that are not addressed by core government programs including:

  • creating and maintaining long-term competitiveness in smaller markets
  • driving new economic growth
  • building regional capabilities to drive growth.

The RJIF is guided by five strategic objectives:

  1. Create jobs of the future and diversify the regional employment base
  2. Improve productivity and enhance the long-term competitiveness of regional Victoria through innovation and a transition to new growth opportunities
  3. Create the conditions for business growth by enhancing workforce skills, providing enabling economic infrastructure and facilitating expansion into new markets
  4. Improve the liveability of cities, centres and towns to attract and retain families and young people to live and work
  5. Enhance community capacity through collaboration, leadership development and regional planning.

The RJIF will invest in growing jobs, building infrastructure and strengthening communities in regional and rural Victoria.

The $250 million Regional Infrastructure Fund will invest in major infrastructure projects that create or enhance the conditions for economic growth and build resilient, diversified and environmentally sustainable regional economies.

The $200 million Regional Jobs Fund (RJF) will help companies grow their workforce, innovate, expand their markets and create the jobs of the future. The RJF will attract investment, with a focus on regional competitive advantage or high growth potential businesses and assist to diversify the regional employment base. The RJF includes the $20 million Food Source Victoria initiative which has its own targeted grants program aimed at growing agrifood exports.

The $50 million Stronger Regional Communities Plan will improve the liveability of Victoria’s rural and regional towns to help retain and attract population and build community capacity.

 


[1] ABS 5220.0 Australian National Accounts: State Accounts


Regional Partnerships 
    

Regional Matters Spotlight


Last Updated: 15 April 2016