Local and Regional Economic Development Agencies in Australia
Report Prepared for the
Local Government Association of South Australia
By
Andrew Beer and Alaric Maude
School of Geography, Population and
Environmental Management
Flinders University May 2002
ii
ISBN: 0-9581187-0-1
Published by: Local Government Association of South Australia
The research project on which this report is based was supported by the Local
Government Research and Development Scheme (SA) and the University-Industry
Collaborative Research Grant Scheme of Flinders University.
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Acknowledgements
Many people contributed to this project. First, we would like to thank the Local
Government Association of South Australia’s Research and Development Scheme.
The research project on which this report is based was supported by the Local
Government Research and Development Scheme (SA). Thanks are also due to the
Flinders University Collaborative Industry Research Grant Scheme (UCIRGS) which
provided approximately one fifth of the total funding. Second, we express our
considerable gratitude to the other academics who contributed to this project: Prof
Graham Haughton of the University of Hull; Dr Terry Clower of the University of North
Texas; and, Drs Rachel Naylor and Terry Robson of the University of Ulster. Third,
thanks to those who were employed on this project. These included Mrs Cecile
Cutler, Dr Paul Foley and Mrs Louise O’Loughlin. Fourth, many thanks to Prof Chris
Paris, Prof Jim Allen, Ms Carlin Emer and the other academic and general staff at the
Magee Campus of the University of Ulster. They made Andrew Beer’s Fellowship a
very enjoyable and productive period. This is one of the products of that time.
Finally, we would like to thank the economic development practitioners who
completed the surveys that underpin this project. Their contribution of time and effort
in completing the questionnaires was essential to the success of this endeavour.
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Table of Contents
Title Page i
Acknowledgements iii
Table of Contents iv
List of Figures vi
List of Tables vii
Executive Summary x
Chapter 1. Introduction and Background to the Project 1
1.1 Introduction 1
1.2 The Actions and Effectiveness of Development Agencies 3
1.3 Local, Regional and Community Economic Development 4
1.4 State, Territory and Federal Programs in Australia 7
1.4.1 Federal Support for Regional Economic Development 8
1.4.2 New South Wales and the ACT 10
1.4.3 Victoria 10
1.4.4 Queensland 11
1.4.5 South Australia 11
1.4.6 Western Australia 12
1.4.7 Tasmania 12
1.4.8 Northern Territory 13
1.5 Background to the Study 13
Chapter 2. Methodology 15
Chapter 3. Local and Regional Development Agencies in Australia:
An Overview 19
3.1 The Location, Type and Legal Structure of Respondents 19
3.2 The Governance of Economic Development Agencies 26
3.3 Resources for Economic Development 28
3.4 Conclusion 32
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Chapter 4. The Strategies, Objectives and Actions of Economic
Development Agencies in Australia 33
4.1 The Objectives of Economic Development Agencies 33
4.2 Assistance to Firms 38
4.3 Regional Capacity Building 41
4.4 Sources of Income 42
4.5 Conclusion 48
Chapter 5. The Effectiveness and Performance of Economic
Development Agencies in Australia 50
5.1 Impediments to Effective Action 53
5.2 Tied and Untied Funding 59
5.3 Partners in Economic Development 63
5.4 Conclusion 67
Chapter 6. Australian Agencies in International Context 68
6.1 Comparing National Systems 68
6.2 The Funding of Economic Development Organisations
Across Nations 72
6.3 Functions Performed by Economic Development
Organisations 75
6.4 How Effective are Economic Development Organisations? 77
6.5 Conclusion 81
Chapter 7. Conclusion 83
References 86
Appendix A. Partner Organisations 91
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List of Figures
Figure 5.1 Practitioner Assessment of Effectiveness, Australia,
1996 and 2001 52
Figure 5.2 Practitioner Assessment of Effectiveness by State, 2001 52
Figure 5.3 Competition Between Agencies and Tiers of Government 54
Figure 5.4 Coordination and Regional Leadership Impacts on
Effectiveness 55
Figure 5.5 Funding Factors Affecting Effectiveness 56
Figure 5.6 Impact of Funding Bodies on Effectiveness 57
Figure 5.7 Impact of Agency Capacity on Effectiveness 59
Figure 6.1 Respondent Assessment of Effectiveness by Nation 77
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List of Tables
Table 3.1 Number and Percentage of Respondents by State 19
Table 3.2 What Type of Organisation is Your Agency? 20
Table 3.3 Type of Agency by State and Number 21
Table 3.4 What is the Legal Status of Your Organisation? 22
Table 3.5 Year of Establishment, Australia 23
Table 3.6 Year of Establishment by State 24
Table 3.7 What is the Economy of Your Region? 25
Table 3.8 Size of Population Served 25
Table 3.9 Population of Area Served by State 26
Table 3.10 Composition of Board or Governing Organisation 27
Table 3.11 Approximate Annual Expenditure 28
Table 3.12 Estimated Annual Expenditure by State, Percentage
in Each Category 29
Table 3.13 Number of Paid Staff, Australia 30
Table 3.14 Paid Staff Employed in Regional Development
Organisations by State 30
Table 3.15 Volunteer Staff Working in Regional Development
Organisations by State and Territory 32
Table 4.1 Objectives of Regional Economic Development
Organisations by State 34
Table 4.2 Firm Assistance Activities Undertaken Over the Past
Two Years by State 39
Table 4.3 Regional Capacity Building Activities Over the Past
Two Years by State 40
Table 4.4 Income from International Organisations by State 43
Table 4.5 Income from the Federal Government by State 43
Table 4.6 Income from the State/Territory Government by State 44
Table 4.7 Income from the General Rate Revenue of Local
Government 45
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Table 4.8 Income from a Local Government Dedicated Tax
by State 45
Table 4.9 Income from Business Memberships by State 46
Table 4.10 Income from Private Foundations by State 47
Table 4.11 Income from the Sale of Services by State 47
Table 4.12 Income from the Sale or Lease of Property by State 48
Table 5.1 Government Grants Tied to Specific Projects as a
Percentage of All Income by State 60
Table 5.2 Untied Government Grants as a Percentage of All
Income by State 61
Table 5.3 Tied Income from Non-Government Sources as a
Percentage of All Income by State 62
Table 5.4 Untied Income from Non-Government Sources as a
Percentage of All Income by State 63
Table 6.1 Type of Organisation 70
Table 6.2 Legal Structure of Organisations 71
Table 6.3 Area Served by Jurisdiction 71
Table 6.4 Paid Staff by Jurisdiction 73
Table 6.5 Percentage of Agencies in Each Jurisdiction Reporting
Participation in Each Function within the Last Two Years 76
Appendix A Tables
Table A1 Partners – International Organisations by State 91
Table A2 Partners – National Departments and Agencies by State 91
Table A3 Partners – State or Territory Departments by State 91
Table A4 Partners – Local Government by State 92
Table A5 Partners – Other Regional or Local Development
Organisations by State 92
Table A6 Partners – Local Venture Capital Providers by State 92
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Table A7 Partners – Banks and Other Financial Institutions by State 93
Table A8 Partners – Property Developers and Retailers by State 93
Table A9 Partners – Manufacturers by State 93
Table A10 Partners – Utilities by State 94
Table A11 Partners – Other Private Businesses 94
Table A12 Partners – Business Groups – Such as Chambers of
Commerce 94
Table A13 Partners – Environmental Groups 95
Table A14 Partners – Indigenous Groups 95
Table A15 Partners – Other Community Groups 95
Table A16 Partners – Universities 96
Table A17 Partners – Technical Education and Further Education
Agencies 96
Table A18 Partners – Research and Development Organisations 96
Table A19 Partners – Local Political Representatives 97
Table A20 Partners – Trade Unions 97
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Executive Summary
This study examines local and regional economic development agencies across
Australia and discusses their performance relative to comparable organisations in
England, Northern Ireland and the United States of America. The report presents the
outcomes of a survey sent to local economic development practitioners across
Australia. Some 505 responses were received from all States and Territories and the
results represent the most comprehensive data collection on economic development
agencies ever undertaken. In part the study updates a survey undertaken five years
earlier and it has been possible to draw comparisons across the period 1996 to 2001.
The research found that:
• Local government underpins economic development efforts in this country.
Economic development organisations based in local governments are the most
numerous type of development body in Australia and local governments are the
most important partners of these agencies. Local government funding enables
many of these bodies to operate and respond to the needs of their regions and
communities.
• State Governments and the Federal Government are also important for local
economic development agencies across Australia. However, while significant
they are less important partners than local governments, and the Federal
Government is primarily perceived to be important for its role in funding
programs.
• There are significant differences in the ‘institutional architecture’ of economic
development agencies across the States and Territories. This affects the funding
arrangements in each jurisdiction, the level of resources, the goals and objectives
of the organisations and the strategies they employ. The differences suggest
there are useful lessons to be learnt from the transfer of experience from one
State or Territory to the next.
• Economic development agencies in Australia are relatively small organisations,
with modest staffs and modest budgets. Most organisations rely upon two or
three public sector funding sources, of which the general rate revenue of local
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governments is most important. Agencies raise some independent funding, such
as membership subscriptions and the proceeds from the sale of services, but
these are relatively minor amounts. In Western Australia and South Australia a
notable proportion of agencies receive funding from a dedicated local
government tax.
• Local and regional economic development agencies in Australia are
overwhelmingly located outside the capital cities. This reflects institutional
arrangements whereby regional development boards and similar structures have
not been established within the metropolitan boundaries. A similar pattern of
rural concentration was evident in England, the USA and Northern Ireland.
• Economic development practitioners rated their effectiveness more highly in 2001
than in 1996. A higher percentage of practitioners felt they had a major impact
on the well-being of their region, and a smaller percentage felt they had only a
slight impact, in 2001 than compared with 1996. The more buoyant assessment
in 2001 compared with 1996 reflects the maturing of the sector and a more stable
policy environment.
• Respondents to the survey rated budget factors – particularly insufficient core
funding – as the greatest impediment to their effectiveness. Practitioners
reported some problems with competition between agencies and tiers of
government, but these did not have a major deleterious impact.
• Most agencies had the achievement of economic growth within their region as a
primary objective, and this was largely interpreted as growth in employment.
Relatively few agencies had addressing income inequality and overcoming the
disadvantages suffered by the most marginal within society as an organisational
aspiration. Many agencies aspired to improve the quality of life within their
region.
• Attracting businesses to their region, assisting in the growth and development of
local businesses, building partnerships between public sector agencies and the
private sector and assisting local people establish enterprises were high priorities
of respondents.
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• Many agencies were engaged in marketing their region on the global and national
stage and assisting with major events was one of the most frequently cited
activities undertaken by respondents.
• Relatively few Australian agencies engaged in high technology business
assistance such as encouraging supply chain associations, assistance with ISO
standards, providing access to venture capital, conducting business incubators or
providing space within an Industrial Estate or Science Park.
• Economic development agencies play an important leadership role within their
communities. This finds expression in strategic planning, the co-ordination of
programs across and within the tiers of government, and in encouraging
networking between firms.
• Local and regional economic development agencies across Australia work with
many partners. Local government is the most frequently mentioned partner,
followed by State Governments and the Federal Government. However, they
also work with business organisations such as Chambers of Commerce,
Indigenous groups, environmental groups and community groups. This reflects
the ‘grass roots’ nature of much of their activity. They have relatively poor links
with research organisations such as universities, and this is a cause of some
concern.
• When compared with respondents in Northern Ireland, England and the United
States economic development agencies in Australia were relatively cautious in
their assessment of their effectiveness.
• Participants in the survey from the United States had a very positive view of the
impact of their actions, and in part this reflected their relatively narrow economic
development objectives. The US respondents were more likely to define
development activities in terms of firm recruitment, were focussed on protecting
the local tax base, and were often funded by dedicated taxes. Interestingly, local
government was as prominent in economic development in the USA as in
Australia.
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• Respondents from England were largely drawn from local government. They
drew funding from a range of sources, including local government revenues, but
also significant resources from the national government and the European Union.
Economic development based around property initiatives has a long history in
England, and was reflected in the results of the survey. The English respondents
were also much more likely than their Australian counterparts to engage in
technologically sophisticated approaches such as supply chain associations or
business incubators.
• The responses from Northern Ireland reflected the strong community involvement
in economic development in that jurisdiction. A relatively weak role for local
government appears to have generated a number of challenges.
The report concludes that economic development agencies have an ongoing role in
the development of Australia’s metropolitan and non-metropolitan regions. They
perform a valuable role in securing employment opportunities, services and
infrastructure for the populations they serve. Further strengthening their capacity
could be an important step towards stronger regional economies across Australia.
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Chapter 1. Introduction and Background to the Project
1.1 Introduction Local economic development strategies and organisations are prominent in virtually all
developed economies (Hall and Hubbard 1996; Harvey 1989). As a number of authors
have noted (see, for example, OECD 1997; Teitz 1994), there has been a shift away
from economic development policies conceived and applied at the national level to
systems of local or regional development. Individual cities and regions have assumed
responsibility for attracting investment as well as taking initiatives that generate a
climate that nurtures small and medium sized enterprises. In part, the popularity of
locality based economic development approaches is a reflection of the deficiencies of
previous policies. The highly centralised regional planning that dominated from the end
of the Second World War through to the 1970s was predicated on the assumption of
on-going economic growth. These earlier policies aimed to redistribute economic
opportunities from assumed abundance. This could not be sustained after the mid
1970s when the on-going industrial growth of the advanced economies was checked.
The adoption of local, regional or community economic development also reflects the
changing nature of economic activity and the relationships between businesses and
governments. Globalisation has meant that a town or region’s role within the national
economic system may no longer be as important as its place within international
production systems. The development of international agreements (such as the North
American Free Trade Agreement) and the emergence of supra-national bodies, such as
the European Union, have hastened this process. Today cities, regions and
communities seek out new markets for the products of their region and attempt to
facilitate investment in infrastructure.
Place-based development activities have focussed on communities as well as regions.
Increasingly, community economic development has attracted attention and policy
prominence both internationally (Haughton 1999) and nationally (Beer and Maude
2002; Mission Australia 2002). These approaches overlap with conventionally-defined
local and regional economic development, adding further complexity to an already
tangled field.
2
The emergence of strategies and structures for economic development that are
focussed at the local, rather than the national, level inevitably raises a number of
questions. These include whether local or regional economic development
organisations are effective in achieving growth for their constituent regions, whether
some institutional arrangements and programs are more productive than others,
whether state or local government engagement is more likely to result in economic
development, and whether the Federal Government can and does play a significant role
in local development success?
This report, and the research that informs it, attempts to understand how local and
regional economic development is organised and practiced in Australia. It addresses
this concern from two perspectives: first, it seeks to develop a full understanding of how
place-based economic development activities are pursued within each of the States and
Territories, second, it compares the Australian model of regional and local economic
development with the models followed in the USA, England and Northern Ireland. An
international comparison allows the identification of new programs and new
philosophies of economic development. Facilitating the transfer of new approaches,
and encouraging the review of existing practices within Australia, is a specific objective
of this research.
This report examines the different structural arrangements or ‘institutional architectures’
for local economic development across the Australian States and Territories. These
architectures are also referenced against other nations. The report focuses upon the
funding, governance, staffing and type of region served by economic development
bodes as these factors form the framework within which local and regional economic
development activities are pursued. It considers also the types of activities economic
development bodies engage in, the partners economic development bodies work with,
and their effectiveness in achieving growth.
The research presented in this report addresses practical questions relating to the
operation of local and regional economic development programs and policies.
However, this work in rooted in strong academic foundations. There is a very
substantial body of work on the nature and impact of economic development initiatives
(see, for example, Blakely 1994; Harvey 1989; Haughton 1999; Cooke and Morgan
1998) and many of the ideas within this literature are embedded within this project. The
3
coverage of issues such as partnerships, networking, support for business incubators
and firm networking explicitly reflects the policy and academic concerns within the
relevant literature. Other concepts, such as institutional thickness (Amin and Thrift
1994) are assessed implicitly but have been equally important in the development of the
research and the assessment of its findings.
1.2 The Actions and Effectiveness of Development Agencies Determining the effectiveness of local economic development is one of the core
concerns of this research project. It is a question that raises substantial conceptual and
methodological difficulties. While there is a substantial North American literature (see,
for example, Accordino 1994; Bartik 1994; Wolman, Ford and Hill, 1994) on the topic,
as well as relevant papers from the United Kingdom (Hughes 1991; 1998), the methods
used to assess the effectiveness of economic development programs and strategies
are beset by problems. These include the subjectivity of many indicators (Reese and
Fasenfest 1997), poor client awareness of the achievements and efforts of economic
development agencies (Turok 1989) and the long lead times for economic development
activities to bear fruit (Hughes 1998). Moreover, agencies may be reluctant to have
their programs evaluated due to fear of a negative outcome and the potential closure of
their programs, or even the organisation itself (Dewar 1998). It is therefore difficult to
develop a reliable measure of agency effectiveness: outcome indicators are rarely
available and expert opinion is a flawed evaluation technique as there are few experts
in the field, and those that are available are likely to place a positive bias on their
assessments.
International organisations with an interest in regional economic development provide
some guidance on best practice. For example, the OECD’s (1997) review of regional
development in member nations suggested four primary strategies for fostering regional
growth: investment in infrastructure networks; the provision of support to small and
medium sized enterprises; encouragement of foreign direct investment; and the
creation of an environment conducive to innovation. These are broad guidelines indeed
and leave considerable gaps with respect to how to put these objectives into practice.
Reese and Fasenfest (1997) argued there is an absence of theory to guide the efforts
of economic development practitioners, although Knudsen (1997) contends that there is
not an absence of theory, but a glut, though without a clear consensus on what works
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best. Both sets of authors, perhaps, paint too bleak a picture. There is a critical mass
of literature that argues regional development programs should seek to build the
capacity of the region and the firms within it (see, for example, Blakely 1994; McKinsey
and Co. 1994) rather than engage in industrial recruitment (Loveridge 1996; Industry
Commission 1996). The latter strategies carry high risks and high costs, and may
ultimately work to the detriment of the nation as firms ‘trade-off’ assistance packages
from competing regions.
Local economic development agencies are confronted by significant choices in seeking
to advance their region or locality. There are a multitude of strategies potentially
available – from the advancement of industry clusters through to labour market
programs, regional promotion, and the establishment of business incubators – but it is
not possible for development agencies simply to ‘read off’ and apply an unequivocal
menu of most successful strategies. Moreover, as a number of North American authors
have noted (Rubin 1988; Dewar 1998), the selection of development strategies and
actions is often based on political, rather than economic, grounds.
1.3 Local, Regional and Community Economic Development The differences in language or terminology within economic development appear small
but they exert a powerful influence. If you review American or British publications much
of the discussion is concerned with local economic development, that is, a town or city
or rural community working to achieve economic growth. In Australia a practitioner
would describe that work as regional economic development. Further, professional
economic development practitioners in Australia do not recognise their work as part of
community development or community economic development (Haughton 1999).
Within the Australian experience, community development relates to the voluntary
sector and is often associated with the efforts of dying country towns to revitalise
themselves through community participation and community agitation (Kenyon and
Black 2001).
How should we define and distinguish between community economic development,
local economic development and regional economic development? In part the task is
made easier by the fact that the differences between local and regional economic
development are relatively unimportant. They are most accurately separated by scale:
5
geographic scale and the size of programs and expenditure. Ed Blakely provided a
comprehensive definition of local economic development:
Local economic development is process-oriented. That is, it is a process
involving the formation of new institutions, the development of alternative
industries, the improvement of the capacity of existing employers to produce
better products, the identification of new markets, the transfer of knowledge, and
the nurturing of new firms and enterprises. (1994 p. 50)
The goal of economic development is ‘to increase the number and variety of job
opportunities available to local people’ (Blakely 1994, p. 52). Some would quibble with
this objective as they place the emphasis elsewhere. For example, some construe
economic development to be concerned with the creation of wealth within the region, as
a more prosperous economy has a greater number of jobs and those jobs tend to be
more secure. Others make strengthening the local or regional economy their priority,
and attempt to add depth and breadth to the employment base. For a third group,
addressing poverty is the key issue and they seek to secure jobs for the unemployed
and better jobs for the underemployed. Regardless of emphasis, it is clear that priority
is attached to achieving economic growth within the region and advancing the number,
quality and type of jobs available.
Local and regional economic development embraces strategies and actions designed to
advance the economy or well-being of a locality. Amongst other things, individual local
or regional economic development initiatives aspire to:
• Reduce unemployment
• Increase regional income levels
• Raise Gross Regional Product (or Gross State Product)
• Improve the competitiveness and profitability of businesses within the region
• Stimulate business start ups
• Improve average quality of life
• Reduce income differentials within the region/locality or across regions
• Attract inward investment
• Find new markets for the businesses of the region/locality
• Enhance the infrastructure of the region.
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American authors and policy makers recognise that their efforts are local in focus
whereas Australians tend to refer to regional economic development. However
Australian regional development programs are only regional with respect to their non-
metropolitan focus (see Beer and Maude 1997). They are not regional programs in the
sense of having regional impacts, as they are too poorly funded to exert a genuinely
regional influence. This point is borne out by Gleeson and Carmichael’s (2001)
calculation that Australian governments would need to spend an additional $24 billion
per annum on regional development if they were to match the economic development
efforts of the European Union.
Community economic development is a more complex intervention within the social
fabric of a locality. Haughton (1999) points out that community economic development
is an holistic strategy to advance the well being of all members of the community and is
best thought of as a three stage action agenda, comprising:
1. At the level of the subsistence economy attention is given to the non-market and
informal sector activity. The intention is to help individuals with basic survival and to
build up local kinship and friendship networks. It includes increasing access to and
reducing the cost of basic goods and services, such as fresh food;
2. The local market economy is addressed by promoting self-employment, small
business development, and community initiatives such as co-operatives. Here the
objective is to develop an integrated economy where businesses trade amongst
themselves thereby reducing the leakage of expenditure and increasing the range
of economic activities within the community;
3. At the level of the global economy, community development can provide training
and work experience to help people overcome social exclusion and assist
individuals move into jobs with globally active firms. Community development also
serves a role in lobbying to ensure the provision, and maintenance, of services.
Both community economic development and local economic development present
challenges of policy and challenges of implementation. Stimulating economic growth in
a region is a demanding task and agencies – for a host of reasons – are as likely to fail
as succeed. Community economic development presents even greater challenges
because it requires an integrated and far reaching approach to the problems of
deprived places. Importantly, successful community development strategies must pay
7
attention to, and resource, the subsistence needs and social networks of the poorest
members of the community, as well as attracting inward investment, boosting
productivity and marketing the community internationally. Local economic
development/community economic development raises practical challenges because
the two fields of operation often merge into each other. Many agencies would claim
both to be local economic development agencies and actors in community
development. This raises substantial questions of definition and measurement for a
study of this nature.
With a few exceptions, the Australian agencies covered in this study are concerned with
local or regional development. Very few are community development bodies, or
engage in community economic development as part of their ‘core business’.
1.4 State, Territory and Federal Programs in Australia Most local and regional economic development activities in Australia are organised
at the State level rather than nationally. There are simply more agencies, more
programs and greater sources of funding operating within the States than
empowered through Federal initiatives. Most State and Territory Governments have
put some form of local and regional economic development framework in place since
the mid-1980s (Fagan 1987; Moon and Willoughby 1998; Beer and Maude 1997)
and while some states rely on local governments or community-based organisations
to operate and fund these agencies, they are state systems, with a State
Government imprimatur.
The Industry Commission (1996) found that State, Territory and local governments
devote substantial resources to regional development but most of this funding is
directed into subsidies to attract firms. It calculated that in 1994-95 some $2.5 billion
was spent by the State Governments on industry attraction – either in the form of
cash inducements or tax relief – while local governments provided a further $220
million in incentives. Within this perspective regional development is equated with
state development, and competitive federalism (Stilwell 1974) encourages bidding
wars between states. Recent examples include the competition to host the
headquarters of Virgin Blue, the battle to secure the GMH engine-building plant and
8
on-going subsidies to ‘secure’ the future of Mitsubishi Australia in Adelaide. This
type of industrial recruitment1 has been condemned by many researchers as
wasteful (Industry Commission 1996) and inefficient (Blakely 1994). These activities,
however, are generally undertaken by central government bureaucracies –
Departments of Industry and Trade, Departments of State Development – and
therefore do not directly impinge upon the practitioners surveyed as part of this
research. There are indirect impacts as regional development practitioners may find
that central government officials have negotiated subsidies to relocating firms.
In virtually all Australian jurisdictions the ‘state’ development activities of the central
bureaucracies are complemented by regional development bodies that operate at a
regional – that is sub-state – level. The operation of seven different systems of local
and regional economic development in Australia raises questions of theoretical and
practical significance. Key questions for each jurisdiction include: Who has power
and responsibility for local and regional development? What types of development
assistance are pursued and how are these programs organised? How are agencies
in each State funded? Is there more than one type of economic development
agency, and if so, what is the relationship between the various bodies? How have
the State frameworks been integrated with Federal policy initiatives? Are there
better models of local and regional economic development and what can be learnt
from the failings of current systems?
Tracking the changes in regional development arrangements is a difficult task (Beer
2000) as this area of public policy is subject to continuing review. Recent attempts to
map and elucidate economic development arrangement in Australia include Beer
and Maude (1997), Dore and Woodhill (2000) and the Report of the South Australian
Regional Development Taskforce (1999). The key features of each State and
Territory system, and Federal arrangements, are discussed below.
1.4.1 Federal Support for Regional Economic Development Any attempt to describe the framework or institutional architecture of economic
development is made difficult by the phenomenon of institutional accretion. That is,
the introduction of new policies and programs may be accompanied by a fresh set of
1 Some American authors and commentators use the more colourful term of ‘smokestack chasing’.
9
agencies that partly, but not entirely, replace previous structures. This problem is
evident at both the Federal and State levels, but perhaps more obvious in the former.
In the 1970s the Federal Government encouraged the formation of Voluntary
Regional Organisations of Councils (VROCs) as a mechanism for local government
co-operation for dealing with issues of concern to individual councils but whose
geographic scope extended beyond the boundaries of an individual municipalities
(Cutts 1996). In the 1990s the Federal Government established Regional
Development Organisations (RDOs) under the Regional Development Program
(RDP) and while their funding was removed after 1996, it is still possible to find the
vestiges of these bodies in some regions.
Area Consultative Committees (ACCs) are the primary Federal Government
institution for supporting the development of Australia’s regions. They currently
(2002) sit within the Department of Transport and Regional Services (DoTARS) but
in the past were part of the employment portfolio. There are 56 ACCs around
Australia and they cover all of Australia, including the metropolitan areas. Each ACC
operates as an Advisory Committee recommending expenditures and strategies that
promote the development of the region and – most importantly – its workforce.
Regional Assistance Program funds are accessed through the ACCs, with each
having a budget of around $200,000 for regional development projects.
The Federal Government has also supported a number of other bodies under
smaller, less systematic, programs. This has included, for example, ten
organisations in rural areas supported under the Rural Partnership Program (RPP),
but these have been relatively small scale initiatives. Unlike the Keating
Governments, the Howard Governments have not sought to establish a set of
overarching regions for the delivery of Federal assistance. They have, however,
supported the development of regions through a number of funding programs,
including the Regional Solutions Program run by the Department of Transport and
Regional Services and the New Enterprise Initiatives Scheme (NEIS) run by the
Industry Department (Mission Australia 2002). The Howard Governments have
embraced community development as part of their reform of the welfare support
system (The Reference Group for Welfare Reform 2000 [McClure Report]) and new
funding sources such as the Stronger Communities Program have been important for
some regions. Finally, we should recognise that both the National Heritage Trust
10
(NHT) and the Networking the Nation (NTN) program have had a significant impact
on the funding and activities of many regional development agencies who have used
the very considerable resources available through these programs to advance the
well-being of their communities and regions.
1.4.2 New South Wales and the ACT
New South Wales has a long standing set of institutional arrangements for the
development of its non-metropolitan regions. Until the 1980s the NSW Government
retained decentralisation as a policy objective (Collits 1995) and continued with
programs intended to shift population and economic activities out of Sydney. There
are fourteen Regional Development Boards in NSW, covering all the non-
metropolitan area, and relatively recently a Regional Development Board was
established in Western Sydney. The Boards and their regions are of long standing,
dating back to 1972.
The NSW Government also supports Business Enterprise Centres (BECs) and they
work with persons seeking to establish a small business. They also provide advice
to existing businesses seeking to expand their operations or who require expert
assistance on business related topics. BECs, for example, were one of the avenues
used by the Australian Tax Office to provide information to small business about the
New Tax System introduced in June 2000. The NSW Government’s suite of
community economic development programs include the Main Street/Small Towns
Program and are important locally (Collits 1997; Tually 2001).
The Australian Capital Region Development Council operates in the ACT and south
east NSW. Its territory extends from Goulburn in the north, to Tumut in the west and
Eden in the south east. It is jointly funded by the ACT and NSW Governments.
1.4.3 Victoria Local and regional economic development was recast in Victoria in the early and mid
1990s with the restructuring of local government. Previous arrangements were put
aside and the larger, newly established, local governments were charged with
responsibility for developing and implementing local economic development. Many
of these initiatives were newly formed when they were surveyed in 1996 (Beer and
Maude 1997), and a number of respondents at that time reported considerable
11
difficulties and confusion in undertaking these tasks. By 2001 these arrangements
were more firmly established.
Local economic development in Victoria is most commonly undertaken by Economic
Development Units (EDUs) situated within a local government. In a number of
instances these functions have been sub-contracted to other agencies, and these
are often bodies that existed prior to the reform of local government.
1.4.4 Queensland Queensland has a strongly developed, but diffuse, set of regional agencies. In the
past the Queensland Government did not financially support regional development
agencies. Queensland’s 2001-02 budget announced $8.7 million of funding for the
Queensland Regional Development Initiative with monies going to five Regional
Economic Development Corporations, five Remote Area Boards, fifteen Regional
Economic Development Organisations and to the Institute of Sustainable Regional
Development (Sustaining Regions, 2001, p. 51). The economic development
landscape in Queensland is affected by the much stronger role of local government
in that state (Beer and Maude 1997). Individual local governments are important,
and VROCs remain an important catalyst for economic development efforts.
Community based organisations appear more significant in Queensland than
elsewhere in Australia, with agencies such as the Dawson Valley Development
Association lobbying for infrastructure and other services.
1.4.5 South Australia
Regional development efforts in South Australia are focussed on the 13 Regional
Development Boards that cover all of non-metropolitan South Australia.2 There are
also a number of Business Enterprise Centres throughout the metropolitan area, and
their role is to assist small businesses, and those intending to establish a small
business. The Regional Development Boards were formally established in the early
1990s and receive part funding from the State Government with the remainder from
2 These are the Limestone Coast Regional Development Board; the Mallee Regional Development Board; the Riverland Regional Development Board; the Fleurieu Development Board; the Adelaide Hills Development Board; the Northern Regional Development Board; the Mid North Development Board; the Yorke Peninsula Development Board; the Port Pirie Development Board, the Northern Adelaide Development Board; the Whyalla Development Board, the Eyre Peninsula Development Board and the Kangaroo Island Development Board.
12
the local governments within the region. They are administered by Boards drawn
from the community as well as local government. Unlike the Regional Development
Boards in NSW, the staff are not State government employees but are contracted to
their individual Board. Following the report of the Regional Development Taskforce
(1999) some pressures grew for Regional Development Boards in South Australia to
take on additional responsibility for all aspects of community development. However,
the funding agreements established by State and local government which underpin
the boards remain explicitly focussed on investment and jobs.
1.4.6 Western Australia There are nine Development Commissions in Western Australia and between them
they cover all the non-metropolitan parts of the state. They are amongst the best
funded economic development agencies in the country, with all having budgets in
excess of $1 million (Beer and Maude 1997). Many cover very substantial territories
as, like South Australia, all non-metropolitan parts of the State are covered. The
Chief Executive Officers of these organisations are members of the Western
Australian public service. They have the status of a head of department in order to
ensure a high level of co-ordination within the state public service. The scale at
which the Development Commissions operate has encouraged the establishment of
local government sponsored agencies. These typically work for the development of
an individual local government.
Business Enterprise Centres operate in Western Australia. They are much smaller
bodies than the Development Commissions and operate at a much more local level.
Like their compatriots in South Australia and NSW, they primarily work with small
businesses to generate additional employment opportunities.
1.4.7 Tasmania The Tasmanian Government has provided on-going financial sponsorship to local
economic development agencies and this is a reversal of circumstances that existed
in 1996 (Beer and Maude 1997). The Department of State Development partly funds
12 Enterprise Centres through funding agreements that specify business related
outputs. The agencies may also undertake community development activities. Most
of the agencies funded by the Department of State Development have only one paid
staff member – the Chief Executive Officer. Regional development agencies are
13
therefore much less well developed in the island State than elsewhere. There are
also a number of innovative community development initiatives in Tasmania and
many of these rely on Federal Government funding.
1.4.8 Northern Territory The local economic development landscape in the Northern Territory is relatively
under-developed. The Territory Government has sponsored a number of initiatives,
including the establishment of Regional Development Committees, but these
initiatives have had no funding and the Committees and other developments have
often withered prior to formal establishment. Aboriginal Land Councils are important
within the Territory’s economic development scene, because of their charter to
oversee the development of their people, their control of resources and their ability to
gain access to Federal funding programs.
1.5 Background to the Study This project follows on from earlier research undertaken into the Effectiveness of State
Frameworks for Local Economic Development (Beer and Maude 1997) produced for the
Local Government Association of South Australia. That work led to a number of other
publications (Maude and Beer 2000; Beer 1998; Beer 1997) and was part of a
burgeoning interest in the nature and operations of regional economic development
organisations (see, for example, Fulop and Brennan 1997 and 2000; Cutts 1996;
Northwood 1995). In that project we interviewed key informants in each of the States
and Territories in order to develop a full picture of economic development arrangements
in that jurisdiction. That work was then followed up by a postal questionnaire sent to
450 economic development bodies across Australia. We received some 183 responses
to that survey.
A re-examination of the issues covered in the initial research was considered both
appropriate and desirable as:
• By 2001 the policy environment had changed considerably, with the demise of the
Federal Government’s Regional Economic Development Organisations (REDOs)
following the election of the Howard Coalition Government in 1996;
14
• Reviews of regional economic development programs were completed in a number
of States and Territories, including South Australia, Western Australia and
Queensland (Beer 2000);
• Local government had been reformed in a number of jurisdictions with further
amalgamations occurring in South Australia. The local government amalgamations
imposed by the Kennett Government were finalised in the period up to 2001 and the
leadership of local governments in Victoria returned to elected officials during that
time.
Perhaps more fundamentally, local and regional economic development agencies have
remained an important policy and program tool of governments. The debates over the
future of Rural and Regional Australia (RARA) that were so prominent in the late 1990s
(McManus and Pritchard 2001), stimulated governments to reconsider how they met the
needs and aspirations of non-metropolitan residents (South Australian Regional
Development Taskforce 1999). Inevitably this raised questions about the part played by
local and regional economic development bodies.
In part this study replicates the earlier research. Some of the questions asked in 1996
were asked again in 2001 and the capacity to consider the state of economic
development organisations in Australia in two time periods adds an important
dimension to our analysis. Extending the work internationally was considered important
because of the perception that Australian practitioners might learn valuable lessons if
they were equipped with a better understanding of how agencies in other nations
operate. Key questions include: How well funded are Australian agencies compared
with their USA or English compatriots? What are the core activities of overseas
practitioners and how do they compare with the strategies and programs of Australian
economic development agencies? And are there programs in other nations that result in
economic growth that are not pursued in Australia? This report sets out to answer
these questions in order to inform the development of better policy and practice in local
economic development in Australia. It aims to contribute to an informed debate on how
to best assist all Australian regions.
15
Chapter 2. Methodology
This research has brought together information on local and regional economic
development agencies throughout Australia and in three other nations. In developing
our research methods we considered three criteria: the information needed to be
broadly comparable across jurisdictions; the method of data collection needed to be
cost effective; and the research needed to produce robust conclusions about the
organisation of economic development agencies in each of the jurisdictions covered.
Case studies of one or two agencies would not be sufficient. In the light of these
considerations data for this project were collected via a postal survey sent to the Chief
Executive Officers of economic development agencies.
A questionnaire was developed with a core that was common to all nations and all
Australian states but with scope for additional questions in any jurisdiction. The
questionnaire used language that was understandable across national boundaries.
Where categorical data were collected, scales were adjusted to reflect national
differences or a common measure was applied. For example, respondents were asked
to report on their agency type. The list presented to Australian practitioners was
different, but similar, to that sent out in America and Northern Ireland. In another
question, respondents were asked about the size of their budget. In each nation
practitioners were presented with a number of categories, all of which were multiples of
their national average salary. These raw data were then translated and reported as
multiples of average earnings.3
The development of the questionnaire was influenced by our experience with the 1996
data collection. Questions that had previously provided valuable information were
retained, while those that had been less useful were discarded. A number of questions
were added to the survey. Many of these reflected the priorities and key
3 This remains one of the most problematic areas within the data collection. A direct comparison of cash values was not appropriate because of the undervaluing of the Australian dollar in 2001 and the relative overvaluing both of the pound Sterling and the US dollar. The Mars Bar index was considered, as was the McDonald’s Index, but multiples of average salary appeared to offer a simpler solution. The Economist magazine produces the McDonalds index and reported that in 2001 ‘The Australian Dollar is the most under-valued rich world currency, 35 per cent below McParity’ (The Australian 2002).
16
policy questions evident in other nations. For example, a question was added on the
nature of the partnerships engaged in by economic development practitioners, at the
request of the English researcher.
This is a critical issue in England and Northern Ireland, though it has received far less
prominence in Australia and the United States. Similarly, we asked respondents to
report on their funding sources. These included international funding opportunities that
are not important in Australia or the USA, but are important in Europe. Finally, a
number of questions were added or adjusted to accommodate changes in economic
development practice. For example, respondents were asked to report if they promoted
supply chain associations. This strategy was relatively unknown five years ago but has
since become prominent in the United Kingdom.
The sample frame was developed through a number of processes. In Australia
questionnaires were sent to:
• all local governments;
• all Area Consultative Committees (ACCs);
• Business Enterprise Centres (BECs);
• Indigenous organisations charged with economic development (such as some Land
Councils);
• surviving Regional Development Organisations (RDOs) established by the Keating
Government in the 1990s; and,
• formal Regional Development Boards (NSW and South Australia) or Regional
Development Commissions (West Australia) that are supported and funded by State
governments.
In addition questionnaires were sent to a number of other organisations that do not sit
within a broader class of agency that had either responded to the 1996 survey or came
to our attention through the course of the survey – often by referral from another
respondent. Surveys were sent to the population of agencies rather than a sample as
we wished to receive sufficient responses in each State and Territory to permit us to
draw robust conclusions.
17
Approximately 1,000 questionnaires were sent out in Australia and 505 responses were
received. This response rate of 50 per cent was achieved after one follow up to non-
responding organisations.
The collection of data in England, the United States and Northern Ireland generated a
number of practical and conceptual difficulties. While there is a burgeoning academic
literature and industry on local, regional and community economic development,
relatively few studies have attempted to compare national systems. Notable exceptions
include Regional Development Agencies in Europe edited by Halkier, Danson and
Dambourg (1998) and Governance, Institutional Change and Regional Development,
edited by Danson, Halkier and Cameron (2000). These books focus on Europe and do
not use a common evaluative data set. This absence within the body of work on
economic development agencies and practice is understandable, as no individual is
fully conversant with the economic development system or practices in more than one
nation. To overcome this hurdle a collaborative approach was used. Expert
researchers from each nation were recruited to oversee the collection of data and take
responsibility for the presentation of results for their country.
In the United States 500 questionnaires were posted to local economic development
practitioners. This sample frame was drawn from the membership list of the
Association of American Economic Development Professionals. A follow up
questionnaire was sent approximately three months later. Some 214 responses were
received in the USA,4 for a response rate of just over 40 per cent.
Surveys were sent to 500 economic development agencies in England. The population
of organisations was compiled to include:
• All Regional Development Agencies
• Local Governments
• Local Learning and Skills Councils
• Business Link/Small Business Service agencies.
4 Tragically, the follow up questionnaires for the USA were posted out just prior to Sept 11 2001 and were received during the period of the anthrax mail scare.
18
One hundred and twenty responses were received in England for a response rate of 20
per cent. A higher response rate was achieved in Northern Ireland where 350
questionnaires were sent out and 122 responses were received. Follow up
questionnaires were sent approximately six weeks after the initial returns were due.
In Northern Ireland surveys were sent to:
• The regional offices of the Local Economic Development Unit (LEDU)
• Local Governments
• Rural Regeneration Partnerships
• Community Groups
It is worth noting that, to a certain extent at least, Northern Ireland is an outlier within
the group of jurisdictions covered by this research. Northern Ireland has a population of
just over 1.5 million, geographically it is small and 30 years of ‘The Troubles’ have
resulted in a unique economic development landscape.
The methodology employed in this project has important implications for how our results
are interpreted. Our findings are the outcome of the analysis of the responses we
received and our data relate to the respondents to our survey. While all possible care
was taken in framing the research it is possible that the data are not truly representative
of local or regional economic development organisations in any place because of
unknown biases. For example, it is possible that we overlooked an important class of
economic development agency. Alternatively, we may have decided not to include a
group (such as Aboriginal and Torres Strait Islander Commission (ATSIC) Regional
Councils) that on occasion perform an important economic development function. This
is an important caveat to the interpretation of the results. However, having accepted
that fact, we believe our results shed considerable light on the nature, structure and
functioning of economic development agencies in these places.
19
Chapter 3. Local and Regional Development Agencies in Australia: An Overview
This chapter considers the structure of local and regional economic development
agencies in Australia. It reports the findings of our 2001 survey as they relate to the
institutional arrangements for the delivery of local economic development assistance
and considers how these arrangements vary on a state basis. It addresses questions
such as, what is the nature and type of local and regional development agencies in
Australia? What are the most important funding sources and supporters of locally-
based economic development activities? What is the legal structure these agencies
operate under? What are the goals and objectives of these agencies? And, how well
funded are they and what is the constituency they serve?
3.1 The Location, Type and Legal Structure of Respondents Five hundred and five Australian organisations responded to our survey (Table 3.1). Of
these, one third came from New South Wales, 18 per cent were from Western Australia,
15 per cent were from Victoria and 12 per cent came from South Australia. Just under
nine per cent of responses came from Tasmania, three and a half per cent were from
the Northern Territory and just two responses were received from the ACT. In broad
terms, the distribution of responses matches Australia’s population though the smaller
jurisdictions – South Australia, Tasmania and Western Australia – were somewhat over-
represented. The geographical distribution in 2001 is also broadly comparable with the
responses received in the 1996 survey (Beer 1997).
Table 3.1 Number and Percentage of Respondents by State State or Territory Number %
New South Wales 142 28.0 Victoria 78 15.4 Queensland 70 13.8 South Australia 62 12.2 Western Australia 90 17.7 Tasmania 44 8.7 Australian Capital Territory 2 0.4 Northern Territory 18 3.5 Total 506 100.0
20
Respondents were asked to report their agency type (Table 3.2). Some 285
respondents, or 56 per cent of the total, were a branch or agency of local government.
This is slightly higher than the 52 per cent of respondents from local government in
1996, but still broadly comparable. Business Enterprise Centres (BECs) were the next
largest group with 69 responses or 13.6 per cent of the total, followed by regional
development boards or committees with 59 responses, 11.6 per cent of returns. Thirty
two Area Consultative Committees (ACCs) responded to the survey and this represents
just over half of all ACCs. Eight Development Commissions in Western Australia, and
19 Voluntary Regional Organisations of Councils (VROCs), replied. There were nine
responses from agencies charged with the implementation of Main Street program and
four responses from local government authorities. Two Chambers of Commerce
responded, as did three public utility organisations and one Aboriginal Development
Corporation.
Table 3.2 What Type of Organisation is Your Agency? Type of Organisation Number %
Regional or Local Development Board, Organisation or Committee
59 11.6
Area Consultative Committee 32 6.3 Branch of Local Government 285 56.1 Voluntary Regional Organisation of Council 19 3.7 Development Commission 9 1.8 Small Business Service (eg BEC) 69 13.6 Chamber of Commerce or other Business Assoc. 2 0.4 Public Utility 3 0.6 Urban/Commercial Business District (Main Street) 9 1.8 Local Government Council for Remote Community
1 0.2
Local Government Authority 4 0.8 Aboriginal Corporation 1 0.4 Total 505 99.4
The results presented in Table 3.2 reinforce the importance of local governments in
local and regional economic development in Australia. Local governments are actively
engaged in promoting the well-being and growth of their territories. While other tiers of
government may spend more on regional development initiatives – often, albeit, in the
form of subsidies designed to attract businesses to their capitals (Industry Commission
1996) – local governments are important because of their ubiquitous engagement with
21
local and regional development. In part this engagement is enforced: the restructuring
of local government in Victoria in the mid and early 1990s required local governments to
take responsibility for economic development. However, local governments in other
jurisdictions have assumed prominence in this area in response to local needs.
Table 3.3 Type of Agency by State and Number Type of Agency NSW Vic Qld SA WA Tas ACT NT
Regional or Local Development Board, Organisation or Committee
12 6 8 16 7 4 1 5
Area Consultative Committee 9 10 6 5 - 1 - 1 Branch of Local Government 72 51 50 32 56 17 - 7 Voluntary Regional Organisation of Council
12 2 3 - 1 1 - -
Development Commission 1 - - - 8 - - - Small Business Service (eg BEC)
31 5 3 5 16 8 1 -
Chamber of Commerce - 1 - - - 1 - - Public Utility - 1 - 1 - 1 - - Urban/Commercial Business District (Main Street)
2 - - 2 1 4 - -
Council for Remote Community - - - - - - - 1 Local Government Authority - 1 - - 1 1 - 1 Aboriginal Corporation - - - - - - - 2 Other 2 1 - 1 - 6 - 1 Total 141 78 70 62 90 44 2 18 Agency type by state is presented in Table 3.3 and the differences mentioned in
Chapter 1 are apparent in the responses received. Local governments are
proportionately much more important in Victoria and Queensland than in the other
states. There were more local government respondents in NSW than in any other state
but VROCs were also important, as were Regional Development Boards and Business
Enterprise Centres. South Australia had a mix of respondents, including BECs,
Regional Development Boards, and local governments. Local governments were also
prominent in Western Australia and in Tasmania. Only two responses were received
from the ACT, one from a Regional Development Board and the other from a small
business service. The Northern Territory had the most distinctive pattern of responses
with five of the eighteen returns coming from agencies dealing with remote and
Indigenous development.
22
Agency type is an important indicator of the status and funding of an economic
development organisation. However, these labels may have diverse meanings in
different jurisdictions. For example, Regional Development Boards in NSW are fully
funded by the State Government, but in South Australia they are funded on a roughly
equal basis by the State Government and local governments. Development
Commissions in Western Australia are fully funded by the State government, but in
NSW organisations with this title are invariably funded by either private subscription or
by a single local government.
Table 3.4 What is the Legal Status of Your Organisation?
Legal Status Number %
Part of State Government 8 1.6 Part of a Local Government 320 63.0 A Statutory Authority 15 3.0 A Government Established Board 9 1.8 Non-Profit Private Company or Corporation 48 9.5 Non-profit Registered Association or Charity 88 17.3 A Foundation 1 0.2 Informally Constituted Group 8 1.6 Combination local government and private company 2 0.4 Combination Statutory Authority and Non-Profit Organisation
1 0.2
Combination Govt Board and Non-Profit Organisation 1 0.2 Unit of TAFE or University 1 0.2 Industry Association 1 0.2 Partnership (government and regional company) 1 0.2 Not Stated 1 0.2 Total 505 99.4
Practitioners were asked to report the legal status of their organisation and the results
are presented in Table 3.4. A number of points stand out in the data. First, the data
reinforces the significance of local governments in sustaining place-based economic
development activities. Just under two thirds of all respondents were constituted as
part of a local government. Non-profit registered associations or charities were the next
most common group with 17 per cent of responses, followed by non-profit private
corporation or company with 9.5 per cent. Statutory authorities (of which the Western
Australian Development Commissions would be an example) accounted for 15
responses or three per cent of the total. There were eight bodies that were part of State
Government and nine government-established boards. It is interesting to note that only
23
one response was received by a University or TAFE based agency, and this is in
contrast to the experience of other nations where higher education institutions are often
important participants in regional economic development (Garlick 1998, NCIHE 1997).5
Table 3.5 Year of Establishment, Australia Year Number %
Before 1900 79 15.6 1901 to 1950 55 10.8 1951 to 1960 6 1.2 1961 to 1970 6 1.2 1971 to 1980 17 3.3 1981 to 1990 67 13.2 1991 to 1995 149 29.3 1996 to 2000 80 15.7 Missing 46 9.6 Total 505 100.0
Most economic development agencies in Australia were established relatively recently.
The quarter of respondents who reported an establishment date prior to 1950 have
undoubtedly furnished the date of establishment of the local council within which their
unit operates. Some 13 per cent of agencies commenced operations in the 1980s while
30 per cent were established between 1990 and 1995. Between 1996 and 2000 a
further 80 agencies, or 16 per cent of the total, began operations. These data reinforce
the information collected in the 1996 survey which noted a high rate of ‘births’ amongst
economic development agencies in the first part of the 1990s. This reflected the reform
of local governments in Victoria, the establishment of Regional Development
Organisations (RDOs) by the Commonwealth, the setting up of ACCs and several
initiatives within the states. When compared with the data from the 1996 survey, it
would appear that the rate of ‘births’ amongst economic development agencies has
slowed, though the ‘death’ rate has remained high. Many of the agencies that
responded in 1996 are no longer extant, with RDOs no longer funded, and many
community led initiatives now defunct. It is likely that the death rate amongst agencies
will taper off as fewer new bodies are created and as those already established achieve
viability.
5 This issue is covered in greater depth in Chapter 6.
24
Table 3.6 Year of Establishment by State
Year NSW %
Vic %
Qld %
SA %
WA %
TAS %
ACT %
NT %
Before 1900 17.1 4.1 23.4 16.9 31.2 13.2 - - 1901-1949 13.2 1.4 17.2 6.8 22.1 13.2 - - 1950-1960 2.3 0.0 0.0 1.7 1.3 2.6 - - 1961-1970 0.8 1.4 3.1 0.0 2.6 0.0 - - 1971-1980 4.7 0.0 3.1 3.4 1.3 5.3 - 25.01981-1990 22.5 8.1 9.4 6.8 14.3 10.5 50.0 37.51991-1995 25.6 71.6 23.4 23.7 22.1 26.3 50.0 37.51996-2001 14.0 13.5 20.3 40.7 5.2 28.9 - - Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0N = 129 74 64 59 77 38 2 16
On a State and Territory basis, the two Territories had the most youthful profile of
economic development agencies, with none established prior to 1970. South Australia
also exhibited a younger profile with 40.7 per cent of responding agencies established
between 1996 and 2001. This reflects a number of factors, in particular the roll-out of
the Business Enterprise Centres; the restructuring of some local governments; and the
greater prominence given to economic development issues within both established and
new councils. Victoria had the most concentrated profile amongst the States and
Territories with just under 72 per cent established in the period 1991 to 1995. This
corresponds with the restructuring of local government in that state. Both NSW and
Western Australia exhibited a relatively mature profile and relatively few agencies were
established after 1996 in these jurisdictions. Western Australia also had the highest
percentage of respondents reporting a genesis prior to 1900. This reflects local
government responses and the relative stability of local governments in that state.
Data on the type of region covered by each development agency is presented in Table
3.7. To a very substantial degree local and regional development activities in Australia
are directed at the countryside. This is reflected in the fact that 40 per cent of agencies
were based in predominantly rural regions and a further 39 per cent operated in mixed
urban and rural regions.
25
Table 3.7 What is the Economy of Your Region? Economy of Region Number %
Predominantly rural 205 40.4 Predominantly urban 100 19.7 Mixed urban and rural 200 39.4 Total 505 100.0 Just 20 per cent of agencies focused on predominantly urban regions and this is in
stark contrast to the distribution of the Australian population with 42 per cent of the
population living in Sydney and Melbourne and 65 per cent living in the state capitals. It
has been noted previously that state governments have not established economic
development agencies in the capitals (Beer and Maude 1997). For instance, Western
Australia’s Development Commissions do not cover Perth, South Australia’s Regional
Development Boards exclude Adelaide and New South Wales’s Regional Development
Boards do not cover the major portion of Sydney.
Local and regional economic development is largely pursued in non-metropolitan
regions (Table 3.7). Fully 40.4 per cent of respondents reported their region was
predominantly rural, while a near equal percentage served a mixed urban and rural
region. These findings are consistent with the data arising out of the 1996 survey (Beer
1997).
Table 3.8 Size of Population Served Population Size Number %
Less than 1,000 47 9.3 1,001 to 10,000 143 28.1 10,001 to 100,000 222 43.7 100,001 to 1,000,000 87 17.1 More than 1 million 6 1.2 Total 505 99.4
The rural focus of much economic development activity in Australia was reinforced by
the data on size of population served (Table 3.8). Almost ten per cent of respondents
reported their agency oversaw the development of a region or locality with fewer than
1,000 residents. A further 28 per cent were responsible for the development of
territories with between 1,000 and 10,000 residents. The modal, or most common,
26
response saw agencies indicating they served a region with a population between
10,000 and 100,000 persons. Table 3.9 Population of Area Served by State
Population Size NSW %
Vic %
Qld %
SA %
WA %
TAS %
ACT %
NT %
Less than 1,000 5.0 6.4 7.1 3.2 14.4 13.6 - 50.0 1,001 to 10,000 23.4 6.4 37.1 27.4 36.7 31.8 - 27.8 10,001 to 100,000 46.8 53.8 31.4 50.0 40.0 52.3 - 11.1 100,001 to 1,000,000 21.3 29.5 22.9 17.7 8.9 2.3 100.0 11.1 1 million or more 3.5 3.8 1.4 1.6 0.0 0.0 - - Total % 100.0 100.0 100.0 100.0 100.0 100.0 - - N = 141 78 70 62 90 44 2 18 Just six agencies were responsible for a region with more than 1 million residents. Area
Consultative Committees (ACCs) are one type of economic development body with a
large constituency. Some of the metropolitan ACCs – particularly in Sydney, Melbourne
and Brisbane – cover substantial populations and regional economies and this is borne
out by the data presented in Table 3.9. Of the states, Western Australia had the
highest percentage of agencies working in regions with fewer than 1,000 residents, and
in total over half of agencies in that state served a population of less than 10,000.
Queensland also had a high percentage of agencies serving a relatively small
population (1,001 to 10,000 residents) though few with under 1,000 population. Fully
50 per cent of respondents in the Northern Territory worked for communities of under
1,000 persons while the two respondents from the ACT both indicated they served a
population of between 100,000 and one million.
3.2 The Governance of Economic Development Agencies The management of local and regional economic development agencies is an important
dimension of their effectiveness. Within Australia there has been considerable
emphasis on achieving a mix of community leaders on the Boards of Management of
economic development agencies, with the McKinsey Report arguing for broad ranging
representation that includes both the public and private sectors (McKinsey and Co
1994). There is a very considerable international literature on public/private sector
partnerships within economic development (see, for example Smallbone 1991) and a
parallel body of work on the role of business elites in shaping development efforts
27
(Tickell and Peck 1996). While many economic development agencies adhere to the
principle that Boards of Management should be drawn from a variety of sectors,
research has shown that such management arrangements are often of limited efficacy.
Fulop and Brennan (1997 and 2000) suggested that Boards may have difficulty with the
range and depth of material canvassed in the agency’s operations, while our earlier
research indicated that some practitioners felt that Boards of Management could be an
impediment to effective operations (Beer 1997). Governance structures are therefore
important both for policy and the development of a better understanding of regional
development agencies.
Data on the composition of the Boards of Management of local and regional economic
development organisations across Australia are presented in Table 3.10. It is clear that
three types or styles of management predominate. The first and largest group of
agencies have a governance structure dominated by the public sector. This is a logical
consequence of the predominance of government-funded and sponsored agencies. It
also reflects the very real difficulties many agencies have in attracting entrepreneurs
and private business people onto boards of management. The second largest group
accounted for just under 30 per cent of responses and had a mix of public sector and
private sector representatives. This cluster of agencies is closest to the ideal
management model promoted by McKinsey and Co (1994). The third largest group of
agencies, some 23 per cent of the total, have management structures dominated by the
private sector. This group of agencies may have a greater capacity to act in
conjunction with the private sector because of their access to the business sector.
These three groups account for almost 90 per cent of responses. Boards dominated by
members from the voluntary sector were the only other group of any size. These
agencies would be more likely to engage in community development. Table 3.10 Composition of Board or Governing Organisation
Board Composition Number %
Predominantly from the public sector 181 35.6 Predominantly from the private business sector 121 23.8 Predominantly from the voluntary sector 36 7.1 A variety of groups, no one group dominant 151 29.7 Combination, private and voluntary sectors 5 1.0 Combination, government and private sectors 3 0.6 Local Government Councillors 1 0.2 Not stated 6 1.2 Total 504 100.0
28
Table 3.11 Approximate Annual Expenditure Annual Expenditure Number %
Nil 7 1.4 Less than one average salary but more than zero 24 4.7 0.1 – 0.99 54 10.6 1– 2 70 13.8 2.1 – 4 40 7.9 4.1 – 8 20 3.9 8.1 – 12 14 2.7 12.1 – 20 27 5.3 21.1 – 25 13 2.6 25.1 – 37 36 7.1 37.1 – 50 23 4.5 50.1 – 75 23 4.5 75.1 – 125 145 28.8 No formal budget 1 0.2 Not stated 10 2.0 Total 505 100.0 3.3 Resources for Economic Development The funding available to regional development agencies exerts a critical influence on
their ability to promote the development of their region. Table 3.11 presents the
budgets reported by respondents to the survey. Almost 30 per cent of practitioners
reported they had budgets in excess of 125 salaries but this is not consistent with the
findings of the 1996 survey (Beer 1997) and other information on the budgets of
economic development agencies (Burgess, pers. comm). Previously we found
economic development agencies had a median annual budget of $220,000 per annum.
While funding may have become more readily available over the five years preceding
the survey, few agencies would have economic development budgets of this
magnitude. Western Australia’s Development Commissions have budgets on this scale
but Regional Development Boards in South Australia and NSW, the Economic
Development Units within local government in Victoria and the ACCs all have more
modest resources. Rather, respondents have reported the total budget of their parent
organisation, which in many instances is the budget of a local government. This
circumstance may have arisen from two conditions: first, some agencies may not have
known the direct expenditures on economic development initiatives and were forced to
report the known budget for their broader body. Second, some local governments
consider all their expenditures – including roads, libraries, childcare services –
29
contribute to the economic and social well-being of their community and therefore
should be accounted for as development expenditures.
If we set to one side the 145 respondents that reported expenditures in excess of 125
salaries, the majority of the remainder had modest budgets. Some 188 of the 350
agencies that did not report a budget in excess of 125 salaries had expenditures of less
than eight full time salaries.
As noted previously, it is difficult to make meaningful comment on the resources
available to economic development agencies because some reported the total budgets
of their parent body (such as a local government) rather than the budget dedicated for
economic development activities. It is, however, possible to make some comment on
the distribution of resources across states, as shown in Table 3.12.
Table 3.12 Estimated Annual Expenditure by State, Percentage in Each Category
Annual Expenditure NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Aust %
Nil 1.4 1.3 - 1.6 - 4.5 - 5.6 1.4 Less than one average salary
5.0 2.6 1.4 3.2 - 25.0 - 5.6 4.8
1-2 average salaries 9.2 5.1 1.4 1.6 2.2 6.8 - 4.8 2-4 average salaries 16.3 7.7 4.3 4.8 12.2 15.9 - 5.6 10.7 4-8 average salaries 15.6 17.9 17.1 16.1 6.7 13.6 - - 13.9 8-12 average salaries 7.1 15.4 12.9 9.7 3.3 - - - 7.9 12-20 average salaries 2.8 6.4 4.3 6.5 1.1 - 50.0 11.1 4.0 21-25 salaries - 9.0 - 8.1 1.1 - - 5.6 2.8 25-37 salaries 4.3 5.1 2.9 6.5 10.0 - - 11.1 5.3 37-50 salaries - 2.6 2.9 1.6 7.8 - - 5.6 2.6 50-75 salaries 2.8 1.3 7.1 9.7 15.6 6.8 50.0 11.1 7.1 75-125 salaries 1.4 1.3 1.4 4.8 12.2 2.3 - 22.2 4.6 More than 125 salaries 31.9 24.4 41.4 24.2 25.6 25.0 - 16.7 28.7 No formal budget 0.7 - - - - - - - 0.2 Not stated 1.4 - 2.9 1.6 2.2 - - - 1.4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Agencies in Tasmania and the Northern Territory recorded the highest percentages with
a nil budget or a budget of less than one salary. By contrast Queensland had the
highest percentage with more than 125 salaries, but this reflects the responses of local
governments. As would be expected, Western Australian agencies appeared relatively
well funded, with 52 per cent reporting a budget greater than 50 salaries. South
30
Australia recorded a relatively even spread of budgets, as did Victoria. New South
Wales by contrast, exhibited a pronounced bi-modal distribution concentrated in the
lower and upper values.
Table 3.13 Number of Paid Staff, Australia
Number of Paid Staff Number %
0 23 4.5 1 50 9.8 2 – 5 134 26.4 6 – 10 41 8.1 11 – 20 30 5.9 21 – 50 62 12.2 51 – 100 57 11.2 More than 100 76 15.0 Missing 32 6.3 Total 505 100.0
Table 3.14 Paid Staff Employed in Regional Development Organisations
by State
Number of NSW Vic Qld SA WA TAS ACT NT Total
Paid Staff % % % % % % % % %
0 3.9 5.6 1.4 1.7 2.3 22.5 - 5.9 4.9 1 13.4 8.3 10.1 5.0 7.0 27.5 - - 10.6 2-5 32.3 41.7 30.4 31.7 15.1 15.0 50.0 17.6 28.3 6-10 7.1 11.1 7.2 15.0 7.0 - - 23.5 8.7 11-20 1.6 2.8 1.4 10.0 19.8 2.5 - 5.9 6.3 21-50 9.4 5.6 10.1 10.0 30.2 5.0 50.0 23.5 13.1 51-100 10.2 4.2 26.1 13.3 8.1 17.5 - 5.9 12.1 More than 100 22.0 20.8 13.0 13.3 10.5 10.0 - 17.6 16.1 Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 N = 127 72 69 60 86 40 2 17 473
The number of paid staff engaged by economic development agencies provides a
better indication of their size and impact. The information presented in Table 3.13
reinforces the small size of most of these bodies, with just under 14 per cent having
either no paid staff, or one paid staff member. Twenty six per cent of agencies
employed between two and five staff, while 15 per cent reported more than 100
31
employees. This latter group was almost certainly comprised of respondents who
enumerated all agency or local government staff, even though these people may not be
directly engaged on economic development programs.
Tasmanian agencies had the smallest staffs with 22.5 per cent reporting no paid staff
and almost half recording one or no paid staff (Table 3.14). Surprisingly 16 per cent of
respondents in NSW reported either no or one staff member, and this suggests that the
NSW agencies have the smallest staffs amongst the large states. Thirty per cent of
Western Australian practitioners reported they had between 21 and 50 staff whereas 42
per cent of Victorian respondents had 2-5 staff. Queensland recorded the largest
percentages in the upper categories with 39 per cent reporting more than fifty staff.
Once again, this reflects the large number of local government respondents from this
state.
Volunteer staff are potentially an important resource for economic development bodies.
Across Australia there are a number of programs and initiatives that encourage the
unemployed to work for community and other bodies, and many within the general
community willingly donate time to development activities. Table 3.15 presents data on
the percentage of agencies using volunteer staff and the numbers engaged. It is clear
from these data that voluntary labour is important for just over 20 per cent of
development agencies. South Australia had the highest rate of volunteer staff, with 11
per cent of respondents reporting they had between two and five unpaid assistants.
Almost 10 per cent in South Australia reported they had more than 100 volunteers, and
this suggests a number of economic development organisations in South Australia
make use of community members to promote their programs. The Northern Territory
had the second highest rates of voluntary participation, and this is in keeping with the
small scale and limited funding of agencies in this jurisdiction. Tasmania also had a
significant proportion of agencies using voluntary labour, and this suggests unpaid
labour replaces employed staff in those places where agencies have limited funding.
32
Table 3.15 Volunteer Staff Working in Regional Development Organisations by State and Territory
Number of Volunteer Staff
NSW %
Vic %
Qld %
SA %
WA %
TAS %
ACT %
NT %
Total
0 74.3 83.1 77.1 69.4 84.3 77.3 - 72.2 77.1 1 6.4 - 5.7 - 3.4 4.5 50.0 5.6 4.0 2-5 6.4 2.6 4.3 11.3 1.1 2.3 - 11.1 5.0 6-10 2.1 - 5.7 3.2 6.7 9.1 50.0 - 4.0 11-20 2.9 5.2 2.9 1.6 1.1 4.5 - - 2.8 21-50 3.6 5.2 1.4 3.2 1.1 2.3 - 5.6 3.0 51-100 0.7 - 1.4 1.6 1.1 - - - 0.8 More than 100 3.6 3.9 1.4 9.7 1.1 - - 5.6 3.4 Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 N = 140 77 70 62 89 44 2 18 502 3.4 Conclusion This chapter has considered the structure and distribution of economic development
organisations across Australia. It found that numerically local governments are the
dominant force in economic development across Australia. The chapter has also
shown that many agencies operate as incorporated bodies, and that there is a relatively
even distribution of sector representation in boards of management. Roughly one third
had boards dominated by the private sector, one third had public sector dominated
boards and there was a balance between the two sectors for the remaining third.
Local economic development agencies are concentrated in non-metropolitan regions
relative to their share of Australia’s population. This reflects, in large measure, the
policy prominence afforded to non-metropolitan development initiatives. This is both a
hangover from the decentralisation policies of the past (Beer 2000; Collits 1995) and
the recent prominence of Rural and Regional Australia in public debate. Most
economic development agencies served a population of between 10,001 and 100,000
persons but this varied significantly by State and Territory. It is difficult to comment on
the level of resources available to economic development agencies as many
respondents reported the staff and cash budgets of their parent organisation.
33
Chapter 4. The Strategies, Objectives and Actions of Economic Development Agencies in Australia
What economic development agencies do, why they choose to pursue particular
activities and how they pursue their objectives lies at the heart of the practice of
economic development. In the first chapter we noted that while there is a substantial
body of academic and policy work on local economic development, there is not a clear
consensus on what constitutes ‘effectiveness’ or best practice in this field.
For example, some agencies continue to engage in industrial recruitment, while others
focus on promoting the expansion of the firms already within their region. A third group
are highly active in labour market training and recruitment, while others emphasise
place promotion. The survey asked them about their objectives, as well as their specific
activities. The questionnaire also distinguished between two types of activities: on the
one hand there were strategies and actions directed at assisting individual firms, and on
the other respondents were asked if they sought to promote the development of their
region more generally. This latter group of regional capacity building initiatives differed
from the former both in their geographical extent and in the likely overall community
benefit.
4.1 The Objectives of Economic Development Agencies Table 4.1 presents data on the objectives of economic development agencies and
shows that almost all agencies aspired to promoted economic growth (however defined)
within their regions or localities. Across Australia 81 per cent of agencies reported that
promoting economic development was an objective of their organisation. Western
Australia and the Northern Territory had the lowest rates of positive responses with 66.7
per cent, while Victoria and Queensland had the highest at 87.1 and 90 per cent
respectively. Improving regional incomes was not synonymous with promoting
economic growth as only 26 per cent reported that their agency sought to raise incomes
in their community of operations. Amongst the larger jurisdictions South Australian
agencies were more likely to be focused on the income of their constituents, with 35 per
cent of respondents providing a positive response to this question, while just 17.8 per
cent of Western Australian agencies reported that raising regional incomes was an
objective.
34
Table 4.1 Objectives of Regional Economic Development Organisations by State
Objectives NSW VIC QLD SA WA TAS ACT NT Total
% % % % % % % % %
Promote economic growth
82.3 87.2 90.0 88.7 66.7 77.3 100.0 50.0 80.6
Increase local incomes 29.8 19.2 31.4 35.5 17.8 18.2 50.0 22.2 25.7 Promote employment growth
64.5 80.8 78.6 75.8 44.4 54.5 50.0 44.4 65.1
Improve the quality of life of regional/local economy
61.0 66.7 74.3 67.7 73.3 65.9 50.0 77.8 67.7
Regenerate the regional/local economy
51.1 55.1 67.1 64.5 51.1 45.5 - 11.1 53.5
Diversify the regional /local economy
45.4 48.7 61.4 51.6 51.1 34.1 100.0 11.1 47.9
Protect local govt. revenue base of this area
37.6 21.8 37.1 38.7 44.4 27.3 - 38.9 35.4
Retain or increase the population
39.7 43.6 50.0 48.4 56.7 22.7 - 33.3 44.0
Attract/recruit new businesses to the area
58.2 65.4 68.6 71.0 63.3 47.7 100.0 27.8 61.4
Develop local businesses (start ups etc)
54.6 70.5 54.3 59.7 46.7 43.2 50.0 22.2 54.1
Build local partnerships between public agencies, private sector etc
58.2 70.5 64.3 71.0 50.0 59.1 50.0 50.0 60.8
Stimulate local people and entrepreneurs in development
47.5 52.6 52.9 54.8 46.7 47.7 50.0 55.6 50.1
Build the capacity of the region for development
44.7 60.3 68.6 62.9 47.8 40.9 50.0 38.9 52.7
Improve employment, income and welfare of the disadvantaged
24.1 32.1 32.9 37.1 17.8 9.1 50.0 50.0 26.7
Promote environmentally sustainable development
48.9 47.4 62.9 61.3 57.8 45.5 - 27.8 52.5
Lobby governments on behalf of the region
59.6 52.6 64.3 66.1 50.0 47.7 - 50.0 56.7
Promote/publicise the region nationally and internationally
33.3 55.1 45.7 41.9 34.4 31.8 - 22.2 39.0
Promote property development
13.5 23.1 25.7 24.2 23.3 9.1 - 5.6 19.0
Provide or facilitate labour market training
14.2 28.2 20.0 22.6 6.7 9.1 - 33.3 17.0
Provide a job placement service
2.8 3.8 7.1 6.5 - 6.8 50.0 5.6 4.2
35
For most Australian economic development bodies economic growth is more likely to be
interpreted as employment growth rather than higher regional incomes. Fully 65 per
cent of agencies across Australia reported that they aspired to promote employment
growth, but only 26 per cent aimed to increase local incomes. Leaving aside the ACT
where there were only two respondents, South Australian agencies were more likely to
have higher regional incomes as an objective with 35.5 per cent providing a positive
response to this question, followed by 31.4 per cent of agencies in Queensland and
29.8 respondents in Victoria. Less than 20 per cent of agencies in Tasmania and
Western Australia had higher regional incomes as an objective, and this is an interesting
pairing given the very different economic development frameworks within the two.
Western Australia and the Northern Territory were the only jurisdictions where under
half of respondents held employment growth as an objective. By contrast, 81 per cent
of Victorian agencies, 79 per cent of Queensland respondents and 76 per cent of South
Australian agencies sought employment growth.
Improving the quality of life within the region was an objective of 68 per cent of
respondents across Australia. It was therefore more significant than employment
growth, and the second highest positive response amongst the list of objectives. The
Northern Territory had the highest positive response at 78 per cent, followed by
Queensland at 74 per cent, Western Australia at 73 per cent and South Australia at 68
per cent. All jurisdictions recorded high percentages of positive responses for the
question but it is noticeable that the larger states with sparser populations ranked
highest. This may reflect the greater impact of economic restructuring and the loss of
services on their regions.
Just over half the respondents across Australia reported that they sought to regenerate
their local economy while slightly under 50 per cent sought to diversify their region’s
economic base. Regeneration activities were most important in Queensland and South
Australia and not important at all in the Northern Territory. It is important, however, to
note that regeneration has a very different meaning for Australian economic
development practitioners than for their British counterparts. In the UK there is specific
‘Regeneration’ funding,6 but in Australia regeneration refers to private sector and
6 One of the most significant funding sources in the UK is entitled the ‘Single Regeneration Budget’ or SRB.
36
community activities to revive ailing local economies. Both ACT respondents to the
survey reported that diversification of the regional economy was one of their objectives
and this is consistent with Canberra’s dependency on the Australian Public Service.
Queensland agencies were more likely to engage in diversification activities than
agencies elsewhere and diversification was not important in the Northern Territory.
One third of respondents reported that protection of the local government revenue base
was a goal of economic development initiatives. It was more important in Western
Australia than elsewhere, and this may reflect the large number of relatively small rural
local governments in that state. Some 44 per cent of respondents indicated that they
sought to retain or increase their region’s population. Once again the larger states –
notably Western Australia, Queensland and South Australia – gave this greater priority.
This no doubt reflected their sparse populations and the impact of population loss in the
broadacre cropping regions.
Attracting businesses to their regions, developing local businesses, building
partnerships between public sector agencies and the private sector, and stimulating
local people in development were all collectively awarded high priority by the
respondents. South Australian respondents were most likely to try to recruit firms, with
71 per cent holding this as an objective. An equal percentage of South Australian
agencies sought to build partnerships between the private sector and the public sector
and this was followed by 70.5 per cent of respondents from Victoria. Only in Tasmania
and the Northern Territory was firm recruitment an objective of less than half of the
respondents, and this may reflect their relative isolation and the poor prospects of
economic development bodies in these jurisdictions attracting new firms via tax breaks
or other inducements. Respondents from Victoria placed a high priority on developing
local firms and led all other jurisdictions by a considerable margin. Only 22 per cent of
Northern Territory respondents held the strengthening of existing firms as a priority.
Once again, this may reflect the industry structure of the Territory.
Just over one quarter of Australian respondents reported improving the incomes of the
disadvantaged and generating better welfare outcomes as an objective of their agency.
As noted before, this reflects the fact that Australian economic development bodies do
not generally engage in community development but instead focus on ‘regional well-
being’. Fully 50 per cent of Northern Territory respondents sought to improve the
37
employment, income and welfare of the disadvantaged, but under 10 per cent of
Tasmanian agencies held this goal. In most jurisdictions a third to 20 per cent of
respondents aimed to address the welfare of the disadvantaged.
The role of economic development bodies in promoting ‘regional well-being’ was
reflected in the high percentage of agencies who reported that lobbying governments
on behalf of their region was an important objective. Nationally 56 per cent indicated
that this was an organisational objective, with between half and two thirds of
respondents in all jurisdictions providing a positive response. Efforts to build the
capacity of the region for development is a second dimension of ‘regional well-being’
aspirations. Fully 53 per cent of agencies nationally reported that this was an objective.
This goal, however, was less evenly distributed with 68 per cent of Queensland
agencies, 63 per cent of South Australian agencies and 60 per cent of Victorian
agencies focussed on this. By contrast only 41 per cent of Tasmanian respondents and
48 per cent of Western Australian respondents reported regional capacity building as an
objective.
Nationally just over half the respondents (53 per cent) reported promoting ecologically
sustainable development as an objective of their organisation or body. This varied from
63 per cent of agencies in Queensland to 28 per cent in the Northern Territory. This
result suggests a very high level of ecological awareness amongst economic
development agencies. This may genuinely reflect growing environmental awareness,
or it could be a function of the premium placed on ‘clean and green’ produce within
international markets. The substantial funding made available to regional development
bodies through the National Heritage Trust (NHT) may also have affected agency
objectives.
The promotion of property development, providing or facilitating labour market training,
and the provision of a job placement service were not significant objectives amongst
Australian economic development agencies. In part this is a consequence of the fact
that priorities lie elsewhere, but it also reflects the importance of other institutional
arrangements – such as the Jobs Network – in these fields.
38
It is worth noting that just under 40 per cent of agencies across Australia saw the
marketing of their region as a key objective. This relatively low percentage contrasts
with the prominence of place marketing within the international literature on economic
development (give refs ).
4.2 Assistance to Firms Table 4.2 presents data on the firm assistance activities undertaken by agencies over
the previous two years. The table presents a snapshot of what economic development
agencies engage in and what collective priority they award to each strategy. Some 81
per cent of agencies reported that they assisted with the conduct of major events. This
type of activity raises the profile of a region or place, directly stimulates demand and
may have a positive impact on political support for economic development (refs).
Just under 80 per cent of agencies marketed their regions and this was the highest rate
of participation in any single activity. This result is made more interesting because the
data presented in Table 4.1 demonstrated that regional marketing was not a high
priority objective. This suggests agencies consider regional marketing as an important
means to an end, not an end in itself. Both ACT respondents engaged in regional
marketing and 90 per cent of Queensland respondents were active in this area. The
Northern Territory was the only jurisdiction where regional marketing was relatively
unimportant.
Assisting firms gain access to government funds was the second most significant firm
development activity. Some 74 per cent of respondents provided this assistance, and
this was closely matched by the 73 per cent of agencies nationally who provided
information on government programs. Clearly, economic development agencies serve
as an important conduit or channel for information flows between enterprises and
government programs. The ACT recorded a 100 per cent response against both
activities, and almost 90 per cent of Victorian respondents engaged in these activities.
Across all jurisdictions very similar, if not identical, percentages were recorded for each
activity suggesting that individual agencies would engage in both activities if they
engaged in one.
39
Table 4.2 Firm Assistance Activities Undertaken Over the Past Two Years by State
Firm Assistance NSW VIC QLD SA WA TAS ACT NT Total
Activities % % % % % % % % % No
Marketing the region 75.2 87.2 90.0 82.3 72.2 63.6 100.0 38.9 77.2 390 Business Incubator 21.3 28.2 12.9 14.5 20.0 15.9 50.0 5.6 19.2 97 Industrial Estate/ Science Park
23.4 34.6 22.9 14.5 12.2 13.6 - - 20.2 102
Other provision of land or buildings
39.0 39.7 47.1 40.3 44.4 22.7 - 22.2 39.2 198
Reduced taxes 25.5 29.5 21.4 21.0 16.7 29.5 - - 22.8 115 Subsidy for relocation 10.6 16.7 8.6 4.8 12.2 2.3 - - 9.7 49 Training and recruitment of labour
34.0 48.7 32.9 54.8 22.2 36.4 50.0 5.6 35.8 181
Streamlined approval process
39.7 46.2 42.9 33.9 41.1 23.3 - 22.2 38.8 196
Co-ordinating public sector process
54.6 62.8 44.3 64.5 41.1 34.1 100.0 22.2 50.5 255
SME support 46.1 66.7 34.3 58.1 37.8 31.8 100.0 11.1 45.3 229 Assisting access to venture capital
31.9 30.8 24.3 27.4 14.4 18.2 50.0 - 24.8 125
Providing information on Govt. programs
73.8 87.2 80.0 79.0 62.2 61.4 100.0 38.9 73.1 369
Help with access to funds
73.8 89.7 77.1 85.5 63.3 61.4 100.0 41.2 74.2 374
Assistance with technology transfer
29.1 28.2 35.7 48.4 21.1 29.5 100.0 11.1 30.5 154
Assistance with ISO standards
9.9 15.4 11.4 29.0 11.1 11.4 - 5.6 13.5 68
Assistance in marketing within nation
41.8 48.7 34.3 48.4 34.4 27.3 100.0 - 38.8 196
Assistance marketing internationally
17.7 29.5 21.4 32.3 18.9 9.1 50.0 - 20.8 195
Supply chain associations
21.3 38.5 25.7 30.6 14.4 6.8 - - 22.4 113
Assisting development of clusters
31.9 60.3 42.9 50.0 15.6 20.5 50.0 - 35.0 177
Tourism promotion 69.5 70.5 78.6 77.4 75.6 81.8 - 33.3 72.5 366 Assisting with major events
79.4 89.7 78.6 90.3 75.6 84.1 - 55.6 80.8 408
Urban Business District (Main Street)
64.5 69.2 54.3 77.4 54.4 59.1 50.0 5.6 61.0 308
Programs to help establish small business
47.5 59.0 28.6 51.6 37.8 40.9 50.0 16.7 43.8 221
Other Local Employment Creation Progress
53.2 65.4 64.3 61.3 36.7 50.0 50.0 44.4 54.1 273
40
Tourism promotion is the last of the activities that nationally recorded more than 70 per
cent positive responses. Fully 72.5 per cent of agencies promoted tourism and this
ranged from 82 per cent of bodies in Tasmania through to 79 per cent in Queensland
and 70 per cent in NSW. Only one third of respondents in the Northern Territory sought
to assist their firms by promoting tourism.
Four activities – other local employment creation programs; programs to help establish
small business; small and medium sized enterprise support; and the co-ordination of
public sector processes – had between 40 and 70 per cent participation by agencies.
Table 4.3 Regional Capacity Building Activities Over the Past Two
Years by State
Capacity Building NSW VIC QLD SA WA TAS ACT NT Total
Activities % % % % % % % % % No
Improve physical infrastructure
68.8 74.4 80.0 79.0 74.4 56.8 50.0 88.9 73.1 369
Improve telecommunications
52.5 60.3 58.6 67.7 52.2 36.4 50.0 55.6 55.0 278
Improve services 48.9 50.0 48.6 51.6 51.1 43.2 - 61.1 49.5 250 Building/ Develop business sites
43.3 57.7 54.3 54.8 60.0 36.4 50.0 27.8 50.3 254
Education and training for youth
35.5 48.7 38.6 41.9 24.4 31.8 50.0 44.4 36.8 186
Education and training for minorities
22.0 24.4 21.4 35.5 14.4 18.2 50.0 55.6 23.6 119
Education and training – general
33.3 44.9 28.6 40.3 27.8 22.7 100.0 33.3 33.7 170
Improve strategic planning
70.2 80.8 77.1 80.6 64.4 61.4 100.0 33.3 71.1 359
Analysis of regional economy
68.1 76.9 67.1 69.4 47.8 34.1 100.0 16.7 61.2 309
Developing cooperation and networking
56.0 84.6 64.3 61.3 42.2 50.0 50.0 22.2 58.0 293
Co-ordinating government programs
57.4 70.5 58.6 58.1 38.9 34.1 100.0 55.6 54.5 275
Acting as an advocate or lobbyist
66.7 79.5 75.7 80.6 64.4 54.5 50.0 50.0 69.5 351
Identification of Business opportunities
53.2 71.8 65.7 56.5 43.3 27.3 50.0 33.3 53.5 270
Influence land use regulations and planning
41.1 46.2 50.0 53.2 47.8 38.6 - 33.3 45.1 228
41
4.3 Regional Capacity Building All regional economic development agencies engaged in regional capacity building
exercises. That is, strategies and actions designed to improve the competitiveness or
economic position of their region. The four most commonly pursued activities were:
improving physical infrastructure (ranked first); strategic planning (second); acting as an
advocate or lobbyist (third) and analysis of the regional economy (fourth). These four
activities reflect the fact that many economic development agencies perform a political,
as well as economic, role. They perform this role because many regions suffer from a
shortage of key infrastructure that retards development (Dowrick 1995; Neutze 1997).
Additional infrastructure is needed in order to allow existing and new firms to grow. In
rural areas in particular, regional development bodies act as the ‘voice’ of their region,
particularly within the apparatus of State and Federal Government. Individual local
governments are often too small and too disconnected from government processes to
act as an effective lobbyist for their territory. Similarly, economic development bodies
with an explicit regional function often develop strategic plans as a first step to co-
ordinating and implementing development activities across the boundaries of a number
of local governments.
Fifty eight per cent of respondents were involved in developing co-operation and
networking within their region while just over half (55 per cent) of all respondents
reported that they were involved in improving telecommunications within their region.
This relatively high percentage may reflect participation in the Federal Government’s
Networking the Nation program. A similar percentage were involved in co-ordinating
government programs (54.5 per cent) and 53.5 per cent identified business
opportunities for their region. A further 50 per cent were involved in building or
developing business sites and 49.5 per cent were engaged in the improvement of
services for their region or locality. Just over 45 per cent of respondents attempted to
influence land use regulations and planning.
The respondents to the survey did not, in the main, engage directly in activities that
addressed the education and skills of the region’s workforce. Only 37 per cent were
involved in the education and training of youth, 34 per cent participated in the education
of the general population and just 24 per cent participated in the training of minorities.
42
The data on regional building capacity activities presents an interesting story. Clearly,
most agencies engage in regional capacity building activities. Many of these are
focussed on the co-ordination of government programs and the sorts of facilities and
services – telecommunications, regional infrastructure et cetera – that governments
have traditionally provided. There is therefore a strong public sector focus within
regional capacity efforts and this suggests that institutional arrangements that facilitate
a strong connection between economic development agencies and the departments
and authorities of state governments are likely to be more effective. In Western
Australia this is achieved by awarding the Chief Executive Officers of the Development
Commissions equivalent status to the head of a government department, and both
Western Australia and South Australia have Regional Development Councils. These
have served as a mechanism for presenting the concerns of regions and regional
development bodies to governments. Private sector focussed activities have a
prominent place within regional capacity building. The development of co-operation
and networking between firms is recognised as critical for successful regional
development within contemporary economies (Saxenian 1994; Martinez-Fernandez
1999) while the identification of business opportunities helps market the region and its
products globally. Clearly, regional capacity building initiatives cannot have a singular
focus on the public sector.
4.4 Sources of Income The level and source of funding available to economic development agenices is clearly
important. It affects their security of operations, the quantum of funds available for
economic development and the priorities or values of the agency. This section presents
data on the funding of economic development agencies across Australia. It considers a
range of potential funding sources, some of which are highly relevant, others of little
impact on Australia’s economic development scene.
Table 4.4 demonstrates that funding from international sources is unimportant for
economic development agencies in Australia. Some 95 per cent of respondents
reported zero income from this source and only 2.4 per cent recorded any income, and
that was less than 20 per cent of their total budget.
43
Table 4.4 Income from International Organisations by State
State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 92.9 93.6 98.6 98.4 95.6 100.0 50.0 83.3 95.0 20 or less
1.4 1.3 - - - - 50.0 11.1 1.2
Missing 5.7 5.1 1.4 1.6 4.4 - - 5.6 3.8
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
The Federal Government is an important source of revenue for economic development
agencies across Australia with 65 per cent receiving some income from the national
government and its agencies. In most instances, however, the funding received was
relatively modest, with 31 per cent securing less than 20 per cent of their income from
Federal Government sources, and a further 17 per cent receiving between 21 and 40
per cent of their income from Federal programs. Some six per cent of agencies
received more than 80 per cent of their funding from the Federal Government and this
group would be comprised of ACCs and other Federally-established initiatives.
Table 4.5 Income from the Federal Government by State
State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 42.6 37.2 28.6 33.9 32.2 50.0 50.0 16.7 36.4 20 or less 29.8 34.6 31.4 35.5 30.0 22.7 - 27.8 30.5 21 to 40 12.1 9.0 24.3 16.1 28.9 15.9 - 11.1 17.0 41 to 60 2.8 1.3 5.7 3.2 3.3 6.8 50.0 22.2 4.4 61 to 80 0.7 2.6 1.6 1.1 - - 5.6 1.2 81 to 100 6.4 10.3 8.6 8.1 - 4.5 - 11.1 6.3 Missing 5.7 5.1 1.4 1.6 4.4 - - 5.6 3.8
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
There was relatively little variation across states in the receipt of Federal monies.
Northern Territory and Queensland respondents were the most likely to receive some
income from the Federal Government, while the Tasmanian respondents were the least
likely (Table 4.5). The high percentage of Northern Territory respondents to receive
44
Federal monies – with 11 per cent getting almost all their funding from this source –
reflects the relatively low number of responses from this jurisdiction, as well as the
special circumstances within the Territory.
Somewhat surprisingly, 30 per cent of respondents across Australia did not receive
financial support from the general rate revenue of local government (Table 4.7). This
was most pronounced in the two Territories where 50 per cent (ACT) and 56 per cent
(NT) of agencies reported nil local government general revenue. Within the larger
jurisdictions between 23 per cent (SA and Queensland) and 34 per cent (Tasmania) of
respondents reported nil income from general rate revenue.
Table 4.6 Income from State Government by State
State or Territory Income
% NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 29.8 43.6 35.7 32.3 16.7 52.3 50.0 16.7 32.3
20 or less 29.1 35.9 34.3 35.5 33.3 25.0 - 27.8 31.9
21 to 40 13.5 7.7 17.1 6.5 13.3 11.4 - 22.2 12.3
41 to 60 14.9 2.6 7.1 4.8 11.1 6.8 50.0 16.7 9.5
61 to 80 5.7 5.1 2.9 16.1 7.8 2.3 - 5.6 6.5
81 to 100 2.1 - 1.4 3.2 12.2 2.3 - 5.6 3.8
Missing 5.0 5.1 1.4 1.6 4.4 - - 5.6 3.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Table 4.6 shows that revenue from State governments provides an important platform
of funding for many agencies. Some 32 per cent of respondents received no funding
from State governments but the same percentage received up to 20 per cent from this
source. A further 12 per cent received between 21 and 40 per cent of income from the
State and Territory governments. Interestingly, few agencies were totally dependent on
State government funding and the level of funding provided by State governments was
relatively uniform across jurisdictions. The data reinforce the importance of State
governments in supporting regional development initiatives and the diversity of funding
used by the majority of agencies.
45
Table 4.7 Income from the General Rate Revenue of Local Government
State or Territory
Income %
NSW %
Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 29.8 33.3 22.9 22.6 30.0 34.1 50.0 55.6 29.9 20 or less 19.1 10.3 24.3 30.6 25.6 20.5 50.0 22.2 21.4 21 to 40 12.1 6.4 15.7 11.3 20.0 15.9 - 5.6 13.1 41 to 60 12.1 9.0 1.4 12.9 13.3 6.8 - 5.6 9.7 61 to 80 2.8 9.0 11.4 4.8 3.3 6.8 - - 5.5 81 to 100 18.4 28.2 22.9 16.1 3.3 15.9 - 5.6 16.8 Missing 5.7 3.8 1.4 1.6 4.4 - - 5.6 3.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Some 17 per cent of respondents across Australia received between 81 and 100 per
cent of their income from the rates of local government (Table 4.7). Victoria had the
highest number of agencies dependent on rate revenue at 28 per cent, and this reflects
the primary role of local governments in supporting development initiatives in that state.
Table 4.8 Income from a Local Government Dedicated Tax by State
State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 70.2 71.8 67.1 66.1 55.6 72.7 100.0 94.4 68.1 20 or less 7.1 3.8 10.0 6.5 8.9 2.3 - - 6.5 21 to 40 7.8 11.5 14.3 9.7 17.8 9.1 - - 11.1 41 to 60 4.3 3.8 4.3 11.3 7.8 4.5 - - 5.5 61 to 80 0.7 2.6 - 4.8 3.3 6.8 - - 2.4 81 to 100 4.3 2.6 2.9 - 2.2 4.5 - - 2.8 Missing 5.7 3.8 1.4 1.6 4.4 - - 5.6 3.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Dedicated local government taxes were not a major source of funding for economic
development agencies. However, one-third of South Australian respondents received
some income from this source, with 11 per cent receiving between 41 and 60 per cent
of income this way, and 45 per cent of Western Australian agencies received income
from dedicated local government taxes. Some 18 per cent of Western Australian
46
respondents received between 21 and 40 per cent of income through this mechanism.
Dedicated local government taxes may be an area of innovation in funding economic
development that should be pursued by more jurisdictions.
Business memberships or subscriptions are not an important source of funds in
Australia with 87 per cent of respondents indicating zero income from this source (Table
4.9). This circumstance appears uniform across Australia. Only one Victorian
respondent indicated that they received more than 80 per cent of their funding from
private sector income.
Table 4.9 Income from Business Memberships by State State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Australia%
0 78.0 88.5 94.3 88.7 95.6 79.5 100.0 94.4 87.1 20 or less 10.6 3.8 2.9 8.1 - 11.4 - - 5.9 21 to 40 3.5 1.3 1.4 - - 2.3 - - 1.6 41 to 60 1.4 - - - - 2.3 - - 0.6 61 to 80 0.7 - - 1.6 - - - - 0.4 81 to 100 - 1.3 - - - 4.5 - - 0.6 Missing 5.7 5.1 1.4 1.6 4.4 - - 5.6 3.8
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Private foundations are also an unimportant funding source for economic development
agencies across Australia (Table 4.10). Some 94 per cent of respondents indicated
they did not receive funding from this source. The very low profile of private
foundations in funding economic development activities raises interesting questions of
policy, as the Foundation for Rural and Regional Renewal has been encouraging the
establishment of community foundations.
47
Table 4.10 Income from Private Foundations by State
State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 93.6 91.0 97.1 95.2 93.3 97.7 100.0 94.4 94.3 20 or less 1.4 2.6 1.4 3.2 - - - - 1.4 21 to 40 - - - - - 2.3 - - 0.2 61 to 80 - 1.3 - - - - - - 0.2 81 to 100 - - - - 1.1 - - - 0.2 Missing 5.0 5.1 1.4 1.6 4.4 - - 5.6 3.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Income from the sale of services is a more important funding mechanism for economic
development agencies than either foundations or business subscriptions (Table 4.11).
Just over one quarter of agencies received between one and twenty per cent of their
income from the sale of services. Some agencies receive all, or virtually all, of their
income from this funding stream but they represent just one per cent of the national
total. It is worth noting that the sale of services is a critical funding mechanism in the
United States but Australian circumstances militate against it becoming as prominent
here. In part this reflects the broader remit of economic development agencies in this
country (see Chapter 6), but it also reflects the lesser prominence of firm relocation
within economic development. Western Australian agencies were more likely to raise
income from the sale of services than those in other states with almost 40 per cent of
respondents receiving between one and twenty per cent of income from this source.
Table 4.11 Income from the Sale of Services by State
State or Territory
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 51.1 66.7 62.9 67.7 45.6 61.4 - 55.6 57.0 20 or less 27.0 17.9 27.1 29.0 36.7 27.3 100.0 22.2 27.7 21 to 40 12.8 9.0 4.3 - 11.1 4.5 - 11.1 8.3 41 to 60 2.8 1.3 1.4 - - - - - 1.2 61 to 80 0.7 - - - - 2.3 - - 0.4 81 to 100 - - 1.4 1.6 1.1 4.5 - - 1.0 Missing 10.4 10.1 2.8 3.2 8.8 - - 11.2 7.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
48
The sale or lease of property is not a substantial source of income for economic
development agencies across Australia (Table 4.12). Fully 84 per cent of respondents
reported nil income from this source and this is consistent with the low percentages
discussed earlier in the chapter of agencies involved in property development.
Approximately 11 per cent of respondents reported they received between one and
twenty per cent of income from the sale or lease of property, and there was relatively
little variation across states.
Table 4.12 Income from the Sale or Lease of Property by State
State
Income %
NSW %
VIC %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 80.1 80.8 85.7 90.3 82.2 90.9 50.0 83.3 83.6 20 or less 11.3 12.8 8.6 8.1 12.2 9.1 - 11.1 10.7 21 to 40 1.4 1.3 1.4 - - - - - 0.8 41 to 60 0.7 - 1.4 - - - - - 0.4 61 to 80 - 1.3 - - - - 50.0 - 0.4 Missing 5.7 3.8 1.4 1.6 4.4 - - 5.6 3.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
4.5 Conclusion This chapter has considered the objectives, activities and sources of funding of
economic development agencies across Australia. It has found that:
• Economic development bodies in Australia receive their funding from a mix of
sources, although the general rate revenues of local governments appears to
support the majority of agencies;
• Outside the smaller jurisdictions of the ACT and the Northern Territory there is
relatively little variation in how agencies are funded;
• Economic development agencies in Australia aspire to promote the general growth
of their region and they have a very high profile in the conduct and organisation of
hallmark events;
49
• Regional capacity building activities are largely focussed on working with the senior
tiers of government to improve services, infrastructure and public sector co-
ordination within the region. Encouraging networking between firms is also
important.
• Regional or local growth was equated with employment growth by most
respondents, and economic development agencies were unlikely to focus on the
needs and challenges of those on lower incomes. However, a surprisingly high
percentage reported that they were active in encouraging ecologically-sustainable
development.
50
Chapter 5. The Effectiveness and Performance of Economic Development Agencies in Australia
The impact or effectiveness of economic development agencies is a critical issue.
Governments and communities support these bodies to promote regional and local well
being, but the processes and mechanisms for evaluating their success may be poorly
developed. As discussed earlier, there are a number of conceptual and methodological
hurdles to assessing the impact of economic development agencies. These include
beneficiaries being unaware of the actions undertaken to advance their well-being
(Turok 1989); the small size of economic development agencies relative to the regional
and national economy (source); and the substantial lags between policy interventions
and improvements in regional performance (Reese and Fasenfest, 1997). The absence
of a single measure, or even set of measures, of performance is one of the greatest
hurdles to the evaluation of economic development bodies. Commonly available data
such as levels of new investment or shifts in employment may be affected more by
external factors – such as the strength of the national economy – than the actions of
any agency. On the other hand, more subjective measures – such as the adoption of
best practice models – are questionable because of the need to recognise that the
appropriateness of strategies varies on a region-by-region basis. Moreover, there are
few external observers with sufficient knowledge of the operations of any agency to
gauge their effectiveness and rank relative to others.
Respondents to our survey were asked to assess the impact of their agency on the
performance of their region or locality. Self assessment of performance clearly has
shortcomings as respondents may be tempted to exaggerate or inflate the impact of
their organisation. However, prior experience suggests that the confidential nature of
the data collection encourages respondents to be frank in their assessments. We do
not suggest that this is a definitive measure of effectiveness, but it can provide valuable
insights and may serve as a point of departure for a more thorough investigation of
these issues. Respondents were asked to rank their performance on a scale ranging
from 1 (No Impact) through to 7 (Major Impact). The results are shown in Figure 5.1
and are presented alongside the data collected in the 1996 survey. The charting of the
assessment of effectiveness permits us to draw a number of conclusions:
51
• Respondents do not appear to have unduly inflated the assessment of their
performance. Figure 5.1 shows both positive and negative evaluations of
achievement and this suggests a degree of validity to this indicator.
• Most agencies reported an impact toward the middle of the distribution, though
skewed to the positive. A third of respondents felt their agency had an
appreciable impact on the development of their region or locality and almost 60
per cent scored their organisation as a five or better on the seven point scale.
• Agencies generally reported higher levels of effectiveness in 2001 than in 1996.
All the low score categories (no impact, slight impact, and some impact) either
declined or were static, while there was growth in the higher categories (an
impact, an appreciable impact, and major impact). There were fewer responses
in the category ‘substantial impact’.
The data permit us to draw a number of conclusions. First, we can conclude that – at
least in the eyes of the practitioners – most economic development agencies have a
positive impact on their region or community. The respondents felt that they were
making a contribution to the economic well-being of the region and its residents. It
positively reinforces the establishment and maintenance of economic development
initiatives. Second, respondents had a more positive attitude to their work and
effectiveness in 2001 than in 1996. We believe this reflects a number of factors. In
1996 many of the respondents (such as the ACCs, local governments in Victoria and
RDOs) were recently established and were uncertain as to their future directions and
impact. Those that have survived to 2001 now have well established programs and
may already see the impact of their actions. A greater level of collaboration and
‘institutional thickness’ would have contributed also to the higher scores in 2001. That
is, agencies have established relationships of support and mutual enterprise that
facilitate the flow of information and development of partnerships. In 1996 many of the
established state and local government based agencies were unsure of their
relationship with the newly funded Federal Regional Development Organisations
(RDOs) and ACCs. By 2001 these issues had been resolved.
52
Figure 5.1 Practitioner Assessment of Effectiveness, Australia, 1996 and 2001
Figure 5.2 Practitioner Assessment of Effectiveness by State, 2001
05
101520253035404550
No Im
pact
Slight
Impact
Som
eIm
pact
An Im
pact
AppreciableIm
pact
SubstantialIm
pact
Major
Impact
Missing
Impact
Per c
ent
NSWVicQldSAWATasNT
0
5
10
15
20
25
30
35
No Im
pact
SlightIm
pact
Some
Impact
An Impact
AppreciableIm
pact
SubstantialIm
pact
Major
Impact
Missing
Impact
Per c
ent
19962001
53
Responses for individual States and Territories followed the general pattern but there
was significant variation across jurisdictions (Figure 5.2). Across the States and
Territories:
• Respondents from Queensland provided the most positive responses. The
score of six (substantial impact) was the modal response at just over 30 per cent
of agencies.
• The Northern Territory had the lowest scores, as well as the largest percentage
of missing responses. This reflects the small size and remoteness of many of
these agencies.
• Almost 45 per cent of respondents from both Victoria and Tasmania gave a
score of five (appreciable impact) and this suggests a modest, but uniform, level
of achievement across agencies in these two States.
• South Australia’s respondents provided scores slightly more positive than the
national average. Fully 40 per cent of agencies in South Australia reported that
they had an appreciable impact (score of five) and a further 30 per cent reported
an impact (score of four).
• The responses from NSW very closely matched the national aveage.
5.1 Impediments to Effective Action What factors influence effectiveness? Why aren’t economic development agencies
more effective and what specific barriers – resource constraints, local politics et cetera
– advance or impede their work? This section considers the responses provided by
practitioners to a series of questions about potential checks on their operations. In
broad terms we cover the nature and level of resources available to economic
development agencies; competition between agencies; the capacity of agencies and
the impact of the decisions of funding bodies. These questions were included in the
survey because they reflect sentiments voiced in the 1996 survey.
Figure 5.3 presents the responses to three statements on competition between
agencies. The first asked practitioners to agree or disagree with a statement that
competition between agencies across the tiers of government generates difficulties; the
second related to competition between agencies within the same sphere of
54
government; and the third inquired after competition and conflict between development
agencies.
Figure 5.3 Competition Between Agencies and Tiers of Government
It is clear from Figure 5.3 that competition between organisations was a relatively minor
problem. Of the three, competition between agencies at different tiers of government
was perceived to be the greatest problem with almost 20 per cent indicating that it was
a clear problem (a score of 5 out of 7), while eight per cent considered it to be a major
problem (a score of 7). Eighteen per cent of respondents felt that competition with
agencies from other tiers of government was an appreciable problem (a score of 3) and
this was the modal response for this question. Competition between agencies within
the same tier of government was a lesser concern, though 20 per cent of respondents
ranked it as a clear problem, and four per cent a major problem. However, this conflict
does not appear to have its origins in overlap or duplication with other economic
development agencies as 22 per cent of respondents indicated that there was not a
problem with conflict from their peers (a score of 1) and a further 16 per cent
considered it to be a slight problem (a score of 2). This suggests that while the
performance of individual economic development agencies is affected by boundary
0
5
10
15
20
25
Not Stated
Not a
Problem
SlightProblem
AppreciableProblem
A Problem
Clear
Problem
SubstantialProblem
Major
Problem
Dont Know
Not
Applicable
Assessment
Per C
ent
Competition Between Agenciesat Different Tiers of Government
Competition Between Agenciesat Same Tier of Government
There is Competition andConflict between DevelopmentAgencies
55
disputes and ‘turf wars’ with other organisations, in the main these disputes are with
different types of organisations (such as planning departments, or infrastructure
providers) rather than other economic development agencies.
Figure 5.4 Co-ordination and Regional Leadership Impacts on Effectiveness
0
5
10
15
20
25
30
Assessment
Per C
ent
No Development Agency isRecognised as Leader
Uncoordinated Development Plansfor this Region
Programs Delivered by thisAgency Not Coordinated
Respondents to the survey indicated they had concerns over the co-ordination of
programs and initiatives within their region (Figure 5.4). For 20 per cent of respondents
the absence of a development agency that was recognised as the regional leader was
not a problem. Either an agency or other body performed this role, or alternative
leadership arrangements were in place. However, 12 per cent of respondents indicated
that this was a major concern (a score of 7) and a further ten per cent considered it a
substantial problem (a score of 6). The responses to this question were somewhat bi-
modal with agencies considering it either not a problem or a clear problem.
Responses to the question that there are uncoordinated development plans for their
region similarly attracted a bi-modal set of responses. Some 18 per cent recorded that
this issue was not a problem, while a further 18 per cent considered it to be a clear
problem. The outcomes of both this and the previous question suggest that some
regions have co-ordinated their efforts and planning, while co-ordination of effort
56
remains a challenge elsewhere. Finally, respondents indicated that the co-ordination of
programs delivered by their agency was not a problem. Some 27 per cent indicated
that it was not a problem (score of 1 out of 7), a further 15 per cent said it was a slight
problem (a score of 2), and only two per cent indicated that it was a major problem.
Figure 5.5 Funding Factors Affecting Effectiveness
The discussion of the previous two sets of impediments to effectiveness suggests that
while co-ordination and competition between agencies does have a negative impact on
the performance of agencies, it is a somewhat muted effect and not uniform across the
sector. On the other hand, the data on the impact of funding concerns on performance
presents an unequivocal picture: funding issues are of concern to economic
development practitioners and adversely affect their performance.
0
5
10
15
20
25
30
StronglyD
isagree
Disagree
Disagree
Slightly
Not a
Concern
AgreeSlightly
Agree
StronglyAgree
Don't Know
No
Applicable
Assessment
Per C
ent
This Organisation Lacks Funding for itsCore BusinessEffectiveness of Organisation Reducedby Short Funding Time FramesEffectiveness of Organisation Reducedby Insuff icient Untied FundsToo Much Time Spent Seeking Funding
57
Almost 30 per cent of practitioners agreed that their organisation had insufficient core
funding (a score of 7 out of 7). A further 15 per cent agreed (a score of six) and only six
per cent of agencies disagreed strongly (a score of 1). The fact that some disagreed
with this proposition is to be expected given the significant variation in funding levels
across agencies throughout Australia. The short funding time frames available to
economic development bodies was also a major concern, though not to the same
extent. Some 16 per cent agreed strongly that short funding time frames had a
negative impact on effectiveness, while 10 per cent agreed and 16 per cent agreed
slightly.
Insufficient untied funds were a concern for many – though not all – organisations.
Approximately 40 per cent of respondents gave a score of 5 (agree slightly), 6 (agree)
or 7 (agree strongly) to the statement that the effectiveness of their organisation was
reduced by insufficient untied funds. A very similar pattern of responses was recorded
for the statement that too much time was spent seeking funding, with just over 40 per
cent indicating their agreement.
The data on funding is significant in two respects. First, for many agencies problems
with the level and nature of funding is a concern. Financial shortfalls limit their
effectiveness and divert their efforts from economic development activities to fund
seeking. Second, a smaller percentage of agencies reported problems with their
funding in 2001 than in 1997 (Beer 1997). This may reflect a number of factors
including improved funding arrangements for many agencies (for example, increased
funding for Regional Development Boards in South Australia and the introduction of
Tasmanian Government funding for some employment initiatives); the ‘death’ of the
most vulnerable agencies in the period 1996-2001; the evolution of a more astute
economic development sector able to manage with limited budgets; and, finally, greater
use of alternative funding sources.
58
Figure 5.6 Impact of Funding Bodies on Effectiveness
The priorities of the agencies that provide funding to economic development agencies
were seen to constitute a modest problem. Approximately half of all agencies
disagreed or strongly disagreed with the propositions that their effectiveness was
reduced by inflexible funders; that the priorities of the funding bodies have a greater
impact on their organisation than the needs of the region; and that the effectiveness of
their organisation was reduced by frequent changes in the priorities of funding
providers. On the other hand, 40 per cent of respondents either agreed slightly, agreed
or agreed strongly with these statements and this indicates that the priorities of funding
bodies are seen to be unduly influential by a sizeable minority of agencies.
Figure 5.7 examines the degree to which factors internal to the responding agencies
have a negative impact on their performance. The responses in this instance are
unequivocal as the practitioners felt they and their staff had appropriate skills, that they
had access to best practice models of economic development, and that their
organisation had the capacity to engage in strategic planning. To a certain extent these
results are expected as few would identify internal failures as more important than
negative external influences. However, it does suggest that projects and programs
aimed at increasing the skills of economic development practitioners, training them in
0
2
4
6
8
10
12
14
16
18
20
Strongly
Disagree
Disagree
Disagree
Slightly
Not a C
oncern
Agree S
lightly
Agree
Strongly A
gree
Dont K
now
Not A
pplicableAssessment
Per C
ent
Effectiveness Reduced by InflexibleFunders
Priorities of Funders Have MoreInfluence On Organisation thanRegional NeedsEffectiveness Reduced by FrequentChanges in Funder Priorities
59
strategic planning techniques and/or introducing them to new models of economic
development would have a limited take up. It is worth noting in this regard that the
Keating Government’s Regional Development Program attempted the latter two.
Figure 5.7 Impact of Agency Capacity on Effectiveness
5.2 Tied and Untied Funding Previous work (Beer 1997) and the discussion above has shown that the level and
nature of funding available to economic development agencies can be an impediment
to effectiveness. In 1996 some agencies reported they had either insufficient funding
and others indicated that the tied nature of much of their income restricted their
flexibility and impact. Both the level and method of funding are therefore important and
data on income sources are presented in Tables 5.1 to 5.4.
0
5
10
15
20
25
30
StronglyD
isagree
Disagree
Disagree
Slightly
Not a C
oncern
Agree Slightly
Agree
Strongly Agree
Dont Know
Not ApplicableAssessment
Per C
ent
Staff Lack Appropriate Skills
Agency Lacks Access to Best Practice
Organisation Lacks Strategic PlanningCapacity
60
Table 5.1 Government Grants Tied to Specific Projects as a Percentage of All Income by State
Grants
% NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 18.9 18.1 13.8 19.6 8.6 29.3 50.0 18.8 17.4
1 - 10 15.0 16.7 23.1 30.4 25.9 24.4 - 18.8 21.1
11 - 20 15.7 9.7 13.8 8.9 21.0 4.9 - 6.3 13.3
21 - 30 9.4 8.3 10.8 8.9 18.5 4.9 - - 10.2
31 - 40 3.1 9.7 9.2 7.1 7.4 2.4 - - 6.1
41 - 50 7.1 6.9 6.2 5.4 6.2 14.6 - 6.3 7.2
51 - 60 7.1 8.3 6.2 3.6 2.5 - - 6.3 5.2
61 - 70 4.7 4.2 1.5 - 1.2 2.4 50.0 6.3 3.0
71 - 80 4.7 5.6 3.1 1.8 3.7 2.4 - 12.5 4.1
81 - 90 3.1 1.4 1.5 3.6 2.5 2.4 - 2.4
91 - 100 11.0 11.1 10.8 10.7 2.5 12.2 - 25.0 10.0
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Table 5.1 shows that across Australia 50 per cent of agencies receive less than half
their income in the form of tied government grants.7 Some 17 per cent received no
income as tied grants from government. At the other extreme, ten per cent of agencies
received between 90 per cent and 100 per cent of their income as tied funding. One
quarter of the respondents in the Northern Territory and one eighth of respondents in
Tasmania received all or virtually all their income in this way. Only 2.5 per cent of
Western Australian respondents received between 90 and 100 per cent of income as
tied government grants, although 15 per cent of respondents received between 40 and
50 per cent of their income as government monies tied to particular projects or
programs.
7That is funds provided for a specific purpose or program. Under tied programs funds cannot be used for purposes others than those specifically determined by the funder.
61
Table 5.2 Untied Government Grants as a Percentage of All Income by State
Grants %
NSW %
Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 46.5 56.9 34.9 18.2 16.3 56.1 50.0 31.3 37.9
1 - 10 11.8 12.3 12.7 20.0 11.3 4.9 - 18.8 12.5
11 - 20 13.4 9.2 6.3 16.4 20.0 12.2 - 18.8 13.4
21 - 30 4.7 1.5 14.3 9.1 17.5 4.9 50.0 12.5 8.9
31 - 40 6.3 4.6 6.3 3.6 6.3 - - 6.3 5.1
41 - 50 3.1 1.5 6.3 10.9 7.5 9.8 - - 5.6
51 - 60 0.8 1.5 6.3 1.8 3.8 4.9 - - 2.7
61 - 70 1.6 3.1 - 3.6 2.5 2.4 - 6.3 2.2
71 - 80 0.8 - 1.6 9.1 5.0 4.9 - - 2.9
81 - 90 4.7 3.1 6.3 3.6 5.0 - - 6.3 4.2
91 - 100 6.3 6.2 4.8 3.6 5.0 - - - 4.7
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Across Australia untied government grants (Table 5.2) were far less important than tied
grants with almost 40 per cent reporting that they received no untied government
monies. Some 25 per cent of agencies received between one and 20 per cent of their
income via untied government grants but only 18 per cent received more than half their
income from untied government sources. NSW and Victoria (6.3 per cent and 6.2 per
cent) had the highest percentage of respondents receiving more than 90 per cent of
their income as untied government grants.
Table 5.3 demonstrates that few agencies received significant tied funding from non-
government sources. Fully 63 per cent of respondents recorded no tied income from
non-government sources, and only 10 per cent or so of respondents across the country
reported more than 20 per cent of their funding came in this form. Just under five per
cent of agencies in Tasmania received between 90 and 100 per cent of their funding in
this way, but this pattern was not repeated elsewhere.
62
Table 5.3 Tied Income from Non-Government Sources as a Percentage of All Income by State
Income
% NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 63.0 58.2 66.7 62.3 58.4 70.7 50.0 75.0 63.0
1 - 10 12.6 17.9 13.3 28.3 16.9 7.3 - 6.3 15.3
11 - 20 6.3 3.0 - 5.7 9.1 - 50.0 6.3 5.0
21 - 30 2.4 4.5 6.7 1.9 3.9 4.9 - 6.3 3.8
31 - 40 2.4 4.5 6.7 - 3.9 2.4 - - 3.2
41 - 50 4.7 3.0 5.0 - 5.2 2.4 - 6.3 3.6
51 - 60 2.4 4.5 - - - - - - 1.4
61 - 70 - - - - 1.3 4.9 - - 0.7
71 - 80 3.9 3.0 1.7 - - - - - 2.3
81 - 90 0.8 1.5 - 1.9 1.3 - - - 0.9
91 - 100 1.6 - - - - 4.9 - - 0.9
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
As indicated in the previous chapter, untied income from non-government sources
(Table 5.4), was a relatively important source of funding for the respondents to our
survey. While just over one third of agencies across Australia received no income from
this source, just over one third received more than half their funding as untied ‘other’
income and nine per cent received between 90 and 100 per cent of their income from
these sources. This suggests that some groups at least have very considerable
flexibility in their funding and income sources. They are not dependent on governments
for the funding and may have the ability to direct their resources to those priorities they
rank most highly.
63
Table 5.4 Untied Income from Non-Government Sources as a Percentage of Income by State
Income
% NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
0 37.3 41.5 36.7 41.5 26.0 36.6 50.0 50.0 36.6
1 - 10 4.8 9.2 6.7 5.7 14.3 7.3 - 18.8 8.4
11 - 20 11.1 4.6 11.7 1.9 2.6 9.8 - - 7.0
21 - 30 4.8 3.1 8.3 1.9 10.4 2.4 - 6.3 5.5
31 - 40 3.2 6.2 6.7 3.8 5.2 4.9 - - 4.5
41 - 50 8.7 7.7 11.7 1.9 11.7 14.6 - 6.3 9.1
51 - 60 4.8 3.1 - 9.4 6.5 - - 12.5 4.5
61 – 70 5.6 7.7 5.0 3.8 10.4 2.4 - - 5.9
71 – 80 3.2 6.2 5.0 7.5 5.2 2.4 - - 4.5
81 – 90 2.4 4.6 5.0 17.0 1.3 2.4 50.0 - 4.8
91 - 100 14.3 6.2 3.3 5 6.5 17.1 - 6.3 9.1
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
5.3 Partners in Economic Development Recent writings in economic development have highlighted the importance of agencies
working in partnership (see Morgan and Cooke 2000). The partnerships established
and nurtured by economic development agencies may have a significant impact on their
ability to encourage growth. Respondents to our survey were asked to indicate which
organisations or bodies are their partners. The results of this analysis are presented in
Appendix 1, as the volume of material militates against presentation within the body of
the report. It is clear from the responses that most organisations have well developed
partnership arrangements with a range of different organisations or bodies.
Governments are the most important partners of economic development agencies (with
local government most important, state government ranked second, and the Federal
Government ranked third) and this reflects both their funding of economic development
initiatives, and their control over many of the fundamentals of regional economic
growth, such as infrastructure, service etc. Businesses and local politicians constitute
the second tier of partners, followed by financiers, utilities, environmental groups and
Indigenous organisations. It is notable that economic development agencies in
Australia have a limited engagement with universities and other research organisations,
and rarely work in partnership with trade unions. Both omissions should be cause for
concern.
64
A number of points stand out from the responses to which bodies are partners with
economic development agencies:
• International organisations are not important partners for economic development
agencies in Australia. Only 21 per cent of agencies indicated that they had any
importance.
• National departments and agencies were considered very important partners by
the respondents to the survey. Some 47 per cent rated them as very important
partners, while 32 per cent considered them moderately important. The
significance attached to national bodies would reflect a) their role in funding
many programs, b) their importance in the supply of infrastructure and services,
c) their role in information provision and d) the impact of many agencies – such
as the Land and Water Research and Development Corporation or the CSIRO –
in leading policy and technology development.
• Some 72 per cent of respondents considered State or Territory Departments to
be a very important partner. Once again, this would reflect the funding role and
infrastructure provision of this tier of government.
• Fully 74 per cent of respondents reported that local government was a very
important partner in economic development initiatives. The data suggest local
government is considered a more important partner than the State or Federal
Governments.
• Other local or regional development organisations were significant partners.
Some 39 per cent of respondents reported that they were moderately important,
while 38 per cent considered them very important. These data suggest there is
a relatively high degree of collaboration across agencies.
• Local venture capital providers were not important partners. Some 36 per cent
indicated that they were not important and 27.5 per cent indicated they were
mildly important. It is probably that even this modest response overstates the
case as the venture capital market is not well developed in Australia.
• Banks and other financial institutions were of limited importance as partners of
economic development agencies across Australia. Thirty six per cent of
respondents indicated they were mildly important partners and 17 per cent
reported that they were moderately important.
• Property developers and retailers were of some importance as partners of
economic development agencies. Twenty four per cent of respondents rated
65
them important partners and 14.5 per cent considered them very important
partners.
• Utilities such as gas and electricity providers are not one of the core partners of
economic development bodies but one third of them considered them
moderately important. Utilities may be of growing importance as power and gas
markets are further commercialised and de-regulated and as providers seek to
encourage the growth of their customer base.
• Almost 40 per cent of respondents indicated that business groups such as
Chambers of Commerce were very important partners, and a further 32 per cent
considered them moderately important partners. Earlier we noted that
Chambers of Commerce were not an important source of funding for economic
development agencies, and the responses to this question suggest that the
relationship with peak business groups is non-financial, but nevertheless
important. Chambers of Commerce may be an important pathway for the
objectives of economic development agencies. A similar pattern was evident in
the data on the role of other private businesses as partners, though they were
seen to be somewhat less important than the peak organisations.
• Environmental groups were afforded greater priority as partners of economic
development agencies than might have been expected. While 16 per cent
indicated that they were not a partner, 33 per cent reported that they were a
mildly important partner and virtually the same percentage considered them
moderately important. Just under 11 per cent of respondents felt that
environmental groups were very important partners. These data suggest many
agencies are engaged in dialogue and co-operative action with environmental
groups, and this may reflect a general awareness of environmental issues, the
impact of National Heritage Trust funding, the promotion of ‘clean and green’
produce, or other factors.
• Indigenous groups were moderately important partners for the respondents to
the survey. While 19 per cent indicated that Indigenous groups were not
partners, 16 per cent felt they were very important and 27 per cent considered
them moderately important.
• Community groups were of some importance as partners for the economic
development practitioners who responded to our survey. Almost 40 per cent
considered them to be moderately important and 31 per cent judged them mildly
important.
66
• Universities and TAFE were not important partners for economic development
agencies, especially the former. Some 25 per cent of respondents indicated
that universities were not a partner and only 13 per cent indicated they were an
important partner. TAFE fared better, with 15 per cent of respondents
evaluating them an important partner and 33 per cent considering them a
moderately important partner. The low ranking afforded universities is of
concern given the international literature on the important role of universities in
stimulating regional economic growth (Saxenian 1994; Goddard 1998; Goddard
and Chatterton 1999; Garlick 1998). Research and development organisations
(Table A18) were also not considered important partners, with a meagre nine
per cent of organisations reporting them to be important partners. Some 23 per
cent indicated that they were not partners at all, and 29 per cent said they were
a mildly important partner. In combination these data suggest poor articulation
between research institutions and local and regional economic development
bodies, which in turn suggests missed development opportunities because of
the gap between development bodies and ‘cutting edge’ research.
• Local political representatives were seen to be one of the most important sets of
partners. Some 36 per cent ranked them very important partners and a further
30 per cent of respondents considered them moderately important. There was
considerable variation across the States and Territories with 46 per cent of
Queensland respondents and 45 per cent of Victorian respondents considering
political representatives very important partners, but only 5.6 per cent of
Northern Territory respondents and 23 per cent of Tasmanian respondents
placed them in this category.
• Trade Unions were not important partners of economic development agencies
across Australia. Almost 50 per cent considered them to be ‘not a partner’ and
only 2.2 per cent ranked them a very important partner. It is interesting to
contrast this result with the responses relating to Chambers of Commerce and
private businesses. Economic development agencies must either consider
businesses to be more important than labour organisations for achieving
economic growth or they lack the skills and abilities necessary to engage in
dialogue with trade unions. Whatever the cause, the results suggest there is
greater scope for development bodies to work with trade unions.
67
5.4 Conclusion
This chapter has considered the effectiveness of economic development agencies in
Australia. It has also examined the range of factors that have contributed to, or limited,
the impact of these organisations. The chapter has shown that economic development
practitioners had a more positive view of their effectiveness in 2001 than in 1996, and
this reflects the maturing of the sector and the removal of some Commonwealth-funded
organisations. The chapter has demonstrated that the nature and level of funding
remains a concern for many economic development practitioners. This is considered
the major impediment to effective action by practitioners, especially limited core
funding, the tied nature of many funding programs and the need to seek out other
funding sources. To a lesser extent the priorities of funders were seen to exert undue
influence on the activities of economic development agencies. The analysis of funding
levels showed that many agencies continue to rely on tied funding, and this varies
across the States and Territories. Finally, the chapter considered the partnership
arrangements of development bodies. It showed that agencies have an array of
partners, with local, State and Federal Governments serving as first tier partners; the
business sector, community groups, infrastructure providers, environment groups and
Indigenous organisations occupying the second tier; and some other organisations,
such as universities, research bodies and trade unions in the third tier. The limited
engagement between research institutions and local government bodies is a concern
because of the growing importance of knowledge industries in fostering regional growth.
68
Chapter 6. Australian Agencies in International Context
6.1 Comparing National Systems There is sufficient commonality of intention and purpose across nations that some
programs and strategies have crossed national boundaries. There is scope for a
meaningful exchange of information between practitioners from different countries.
Economic development practitioners from the United States, for example, could discuss
the implementation and effectiveness of Main Street Programs with their Australian
counterparts. However most English or Irish practitioners would have limited
experience or resources to draw upon in that conversation. Economic development
practitioners in England, Australia, Ireland and England would be familiar with business
incubators but very few Australian practitioners would be aware of Local Exchange and
Trading Schemes (LETS) and many would question the role of ‘community’ in economic
development. Importantly, while there are common elements in the theory and practice
of economic development at the local scale across nations, there are significant
divergences also. There are differences of language, differences of structure,
differences of function.
Governmental structures exert a profound influence on the practice of economic
development. As the discussion above has shown, there is significant variation within
Australia with each State and Territory running its own framework for local economic
development (see also Beer and Maude 1997), but the differences are far greater when
we cross national boundaries. Within the context of this study we can make a useful
division between the federal systems of Australia and the United States on the one
hand, and the unitary systems of England and Northern Ireland on the other. As the
data show, local economic development in Australia and the United States is, in large
measure, driven and funded by local government and the fiscal imperatives that come
from local government cannot be ignored. Importantly, it is not the role of local
government in economic development per se that is important, the key feature is the
distance between the economic development function and the apparatus of central
government. Australian and US national governments find it easier to distance
themselves from responsibility for place-based economic development than in a unitary
69
jurisdiction such as England. Northern Ireland presents special challenges to our
understanding of the structures of economic development. The range of functions
available to local government-based economic development is affected by their position
within the structure of government. They are either forced, or are able, to perform a
different range of tasks in the pursuit of economic development than in systems more
closely aligned with central government agencies.
Who are the economic development agencies in each of the nations covered in this
study? Which branch of government dominates – if at all – and how do these
institutional arrangements vary on a country-by-country basis? Table 6.1 presents data
on the type of organisation that responded to our survey on a national basis. In
reviewing this data, and the international comparisons generally, we need to be mindful
of potential biases. We have a relatively small sample of responses from England and
the USA and they may not be truly indicative of conditions in those countries. The
returns from neither nation, for example, includes community development
organisations and there is therefore a risk that we are not comparing like with like.
However, the data do indicate the activities, objectives and funding of the responding
groups of economic development bodies in these nations. It is a stepping stone to a
more informed understanding of economic development activities globally, and the
relative position of Australian agencies.
In the USA regional or local development boards were the dominant type of economic
development agency, followed by units of local government. Between them these two
types of agency accounted for almost three quarters of responses. Public utilities were
responsible for a further seven percent of responses. Local government based units
dominated with 56 per cent of responses, followed by 12 per cent for regional
development boards and 14 per cent for Business Enterprise Centres (BECs).
Northern Ireland had a more complex pattern of responses with 47 per cent of
responses coming from community based organisations, ten per cent from local
government, 4 per cent from agencies of the Northern Ireland government, 13 per cent
from Chambers of Commerce or other business associations, and fourteen per cent
from regeneration partnerships. Local government dominated in England with 61 per
cent of responses, followed by 19 per cent for Local Learning and Skills Councils, eight
per cent for Business Link/Small Business Services and eight per cent Local
Regeneration/Strategic Partnerships.
70
The type of organisation does not inform us fully of the key legal and financial
relationships that support economic development initiatives. The title of an organisation
is often less important than its legal status and the financial relationships embedded
within that status. Respondents were asked about the legal status of their organisation
(Table 6.2). Not-for-profit companies were the dominant legal structure in the USA with
almost 30 per cent of responses, followed by part of local government at 26 per cent
and statutory authorities at 12 per cent, charities at 10 per cent and government
established boards at 7.5 per cent. In Australia 63 per cent of organisations were part
of local government and a further 17 per cent were constituted as part of a charity.
These data underline the central role of local government in economic development
activities in Australia. Some 33 per cent of respondents in Northern Ireland were not-
for-profit companies, 20 per cent were registered associations and 11 per cent were
part of local government. A further 11 per cent were part of local government. These
data, in combination with the data presented in Table 6.1, suggest a relatively complex
framework of economic and community development in Northern Ireland. Finally, 54
per cent of English respondents were legally part of local government while 14 per cent
were statutory authorities. This was the second highest proportion in this category for
any of the nations covered in this study.
Table 6.1 Type of Organisation
USA Australia Northern Ireland England
Type
% Type % Type % Type %
Regional Dev. Board
42.5 Regional Dev. Board
12 Community Organisation
47.1 Branch of Local Govt.
61
Branch of Local Govt.
32.0 Branch of Local Govt.
56 Branch of Local Govt.
10.1 Local Learning and Skills Council
19
Public Utility 4.2 BEC 14 NI Government
4.2 Business Link/Small Bus Service
8
BEC 3.0 Main St 2 Chamber of Commerce or other Business
13.4 Local Regeneration/Strategic Partnership
8
Other 18.0 Other 10 Educational Organisation
13.8 Chamber of Commerce
2
Chamber of Commerce
4.2 Regeneration Partnership
14.3 Other 3
Other 5.0
71
Table 6.2 Legal Structure of Organisations
USA Australia Northern Ireland England
Type % Type % Type % Type %
Not for Profit Company
29 Part of Local Govt.
63 Non-Profit Company
33 Part of Local Govt
54
Part of Local Govt.
26 Part of Charity
17 Registered Association
20 Statutory Authority
14
Statutory Authority
12 Statutory Authority
3 Informal Group
11 Govt. Established Body
4
State Govt. Agency
2 State Govt. Agency
2 Part of Local Govt.
11 Non Profit Company
12
For Profit Company
5 Part of Central Govt
2 For Profit Company
3
Non-Profit Charity
10 Informal Group
3
Govt. Established Board
7.5
As Table 6.3 demonstrates, economic development organisations in Northern Ireland
and Australia were most likely to serve a rural region, while those in England were more
likely to serve a mixed or urban population. Economic development agencies in the
USA were relatively evenly distributed between the three types of location. However in
all instances, there were more economic development agencies in rural areas than
population shares would indicate. This probably reflects the depth of economic difficulty
confronting most rural regions, the policies of central governments and the presence of
fewer but larger organisations in the cities. Table 6.3 Area Served by Jurisdiction United
States %
Australia
%
Northern Ireland
%
England
% Predominantly Rural
36 40 40 29
Predominantly Urban
29 20 21 23
Mixed 35 40 37 50
72
6.2 The Funding of Economic Development Organisations Across Nations
A number of questions were asked about the funding of economic development
organisations. Agencies were asked to indicate their total budget for economic
development activities and these data has been translated into multiples of average
salary in order to ease comparison across nations. The data suggest that English
economic development agencies are far better funded than their compatriots
elsewhere: 60 per cent reported a budget in excess of 125 salaries. By comparison just
one per cent of agencies in Northern Ireland reported this level of funding, while 25 per
cent reported less than the equivalent of one full time salary and almost 60 per cent had
a budget equal to less than eight salaries. For Australia just 2 per cent had a budget in
excess of 125 salaries, while 56 per cent had a budget of less than 8 salaries. The USA
data present a somewhat different picture with 10 per cent of organisations having a
budget greater than 125 salaries, and 33 per cent having under eight salaries.
It is possible that the budget data present a misleading picture of the size of economic
development organisations in England relative to other jurisdictions due to some error.
Data on the size of the staff working on economic development was collected and is
presented here in Table 6.4. The data show that economic development organisations
in England tended to have larger numbers of employees. More than 40 per cent had in
excess of 100 employees and 70 per cent had in excess of 21 employees. In contrast,
13 per cent of Northern Ireland’s organisations had no employees and 11 per cent
employed just one person. Sixty three per cent of agencies in Northern Ireland had
fewer than five staff. Australia and the United States had a broadly similar distribution
of employee numbers: respectively 16 and 13 per cent of economic development
organisations had one or no employees; two to five employees was the modal category;
and 7 and 16 per cent had more than 100 staff members.
73
Table 6.4 Paid Staff by Jurisdiction
United States
%
Australia
%
Northern Ireland
%
England
% Nil Staff 4 5 13 3 One Staff 12 11 11 1 2-5 40 28 39 8 6-10 13 9 13 7 11-20 11 6 7 8 21-50 11 13 7 10 51-100 1.5 12 2 20 101+ 7 16 9 41 The source of funding varied between jurisdictions.
In the USA –
• International sources of funds were unimportant
• Local government general revenues were the most important funding source
• Local government dedicated taxes were important for a minority (roughly 20%) of
responses
• National government revenues were generally not important with 10 per cent
receiving 20 to 40 per cent of income from this source, but half receiving none
• State revenues were important for one third of respondents
• Subscriptions, but more importantly the sale of services, were important for
approximately one third of respondents
In Northern Ireland -
• The pattern of funding was highly fragmented, with relatively few commonalities
across respondents
• Some agencies received European Union funding
• Some agencies received funding from the Northern Ireland Government
• Some agencies reported appreciable income from private foundations/trusts
• Local government funding was important for a minority of respondents
74
In Australia -
• Two thirds of agencies received some form of national government funding with 30
per cent receiving up to 20 per cent of their budget from this source
• Two third of agencies received some form of State government funding with 30 per
cent receiving up to 20 per cent of their budget from this source
• Two thirds received local government general revenues with 17 per cent gaining
more than 80 per cent of their income from this source
• Private foundations were unimportant
• Subscriptions were unimportant, as were local government dedicated taxes
In England:
• 35 per cent of respondents received up to 20 per cent of their revenue from the
European Union
• 25 per cent of organisations received all their funding from the British government, a
further 8 per cent received between 80 and 100 per cent from this source. Just
under one third gained no funding from the national government
• 25 per cent of agencies received up to 20 per cent of income from a Regional
Development Agency
• 21 per cent received all their funding from local government while just over one third
received no local government funding
In the United States most funding was untied, but elsewhere government funding to
economic development agencies was tied to specific programs. In Australia 43 per cent
of agencies reported that tied government funding accounted for between 10 and 30
per cent of their income. In Northern Ireland 17 per cent of organisations reported that
tied government funding was the source of between 30 and 70 per cent of their income,
while in England 18 per cent of agencies reported tied government funding accounted
for 90 to 100 per cent of income. A further 16 per cent of agencies received between
70 and 90 per cent in the form of tied grants. This suggests that higher levels of
funding distinguish the English economic development scene, and that the funding is
tied to defined programs.
75
6.3 Functions Performed by Economic Development Organisations
The respondents to the survey were asked what economic development activities or
functions they had been involved in over the last two years. The results are
summarised in Table 5. There are a number of interesting elements within the data but
some of the conclusions that stand out are:
• Marketing a region or locality is of central importance to most agencies in most
jurisdictions
• English economic development agencies are more likely to be involved in business
incubators; the provision of industrial estates or science parks; and the supply of
land and buildings. In part this reflects their larger size, but the long history of
property based regeneration initiatives is important also
• The training and recruitment of labour is an important activity for economic
development agencies in all jurisdictions
• American agencies are more likely to provide incentives to relocating firms, either
through subsidised relocation expenses or tax reductions. By contrast Northern
Ireland agencies provided few subsidies
• The streamlining of approval processes was important in Australia, but not
elsewhere
• The co-ordination of government programs; the provision of information about
government programs; and assisting firms gain access to government funds were
common activities in all jurisdictions except Northern Ireland
• Work on supply chain associations was only important in England
• American agencies were more likely to assist firms with access to venture capital,
but even there only one third of respondents had engaged in this activity
• Assistance with major events was important in all jurisdictions – and very important
in Australia – but Urban Business District/Main Street Organisations were primarily
important in Australia and the US
• English agencies had the highest level of support for small business with 69 per
cent offering Small and Medium Size Enterprises (SMEs) support, and 64 facilitating
the establishment of small businesses
• English agencies were more likely to assist in the development of industry clusters
than in any of the other nations covered in this study.
76
Table 6.5 Percentage of Agencies in Each Jurisdiction Reporting Participation in Each Function within the Last Two Years
Function Performed
United States
%
Australia
%
Northern Ireland
%
England
% Marketing the Region
85
77
48
66
Conducting a Business Incubator 19 20 27 42 Provision of Industrial Estate of Science Park
29 20 20 47
Provision of Land or Buildings 45 40 25 54 Tax Reduction 32 22 1 13 Subsidised Relocation 18 10 3 10 Training and Recruitment of Labour 58 35 36 66 Streamlining of Approval Processes 27 39 0 8 Co-ordinating Public Sector Processes
69 50 27 71
SME Support 53 45 47 69 Assistance in Accessing Venture Capital
37 25 20 24
Provision of Information on Government Programs
81 73 56 68
Help in Gaining Access to Govt. Funds
72 74 62 70
Assistance with Technology Transfer
35 30 32 32
Assistance with ISO Standards 15 13 13 26 Assistance with Marketing Nationally 40 39 25 35 Assistance with Marketing Internationally
20 21 20 25
Assistance with Supply Chain Associations
7.5 22 16 41
Development of Clusters 33 35 24 55 Tourism Promotion 56 72 45 63 Assistance with Major Events 56 80 62 63 Urban Business Development (Main Street)
54 61 24 33
Help the Establishment of Small Businesses
52 44 52 64
Other Local Employment Creation 45 54 57 61
77
6.4 How Effective are Economic Development Organisations?
How effective are economic development agencies in achieving their goals or
mandates? Are they able to generate economic development to a level commensurate
with community expectations? The evaluation of any public sector program is difficult
and the issues involved in assessing economic development programs have been
discussed elsewhere (see Maude and Beer 2000). In this instance, the respondents
were asked to assess the performance of their organisation and the results are
presented in Figure 6.1.
Figure 6.1 Respondent Assessment of Effectiveness by Nation
A number of points stand out from the data:
• Respondents didn’t simply argue that their agency or organisation was effective in
their task, they clearly weighed their assessment and attempted an honest
evaluation
0
5
10
15
20
25
30
35
40
No Im
pact
Slight Im
pact
Som
e Impact
An Im
pact
AppreciableIm
pact
SubstantialIm
pact
Major Im
pact
Per
Cent
Australia
USA
Northern Ireland
England
78
• Generally the US respondents had a more positive view of the effectiveness of their
agency with a higher percentage claiming a major or substantial impact
• The English respondents felt they had made an appreciable impact, but recorded
the lowest rates for major impact
• No US respondents felt their organisations had a slight impact on their region
The broad scale assessment of effectiveness provides a preliminary indication of the
impact of economic development organisations. Perhaps more importantly, however, it
raises questions about what factors – internal and external – limit the ability of these
bodies to achieve their objectives. A number of questions were asked about
impediments to economic development agency performance and these are presented
in summary form below:
For Australia:
• Competition between agencies from the different tiers of government was a
moderate problem
• Competition between agencies within the same tier of government was a moderate
problem
• A minority of respondents felt that the lack of a lead development agency in the
region was a problem
• Competition between agencies generally was not a problem
• Insufficient funding to undertake the core business of the economic development
organisation was seen to be a major problem. Some 28 per cent strongly agreed
that this was a problem and over half agreed moderately or slightly
• Short term funding time frames were a moderate problem
• Insufficient untied funds were perceived to be a problem with one third agreeing
strongly or moderately
• The time spent seeking funding was seen as a problem for a modest percentage of
respondents
• The influence of funding agencies in setting priorities for the economic development
agencies was a concern for many respondents
• There was modest concern that respondents were not involved in negotiations and
discussions surrounding the relocation of large businesses into their regions
79
For the United States:
• Competition between agencies from the different tiers of government was somewhat
of a problem
• Competition between agencies within the same tier of government was a concern
for a small percentage of respondents
• The respondents reported that there was ample regional leadership
• Competing plans for the development of their region or locality was a problem for a
small percentage of agencies
• Insufficient funding to undertake the core business of the agency was a problem,
but not overwhelmingly so. The responses were evenly divided.
• Insufficient untied funding was a problem, but not overwhelmingly so. The
responses were evenly divided.
• Respondents disagreed strongly that they spent too much time seeking funding
• Respondents considered their staff appropriately skilled
• Inflexible funding providers did not present difficulties for the majority of economic
development organisations who participated in the survey
For Northern Ireland:
• Competition between agencies from the differing tiers of government was a major
concern. Over half scored a four or above on a seven point scale where seven was
a major problem. Eleven per cent gave a score of seven.
• Competition between agencies within the same tier of government was somewhat of
a problem
• The lack of a lead agency within a region or locality was identified as a major
problem
• The presence of different and unco-ordinated planning systems was identified as a
major concern
• Competition and conflict between agencies was identified as a concern by the
respondents
• The lack of sufficient core funding was a highlighted concern, with 35 per cent of
respondents agreeing strongly that they lacked sufficient core funding
• Fifty two per cent of respondents agreed strongly that short funding time frames
were a problem
80
• Twenty eight per cent of respondents agreed strongly that they lacked sufficient
untied funds
• Thirty six per cent agreed strongly that they spent too much time seeking funds
• There was a modest consensus that the priorities of funders exerted too great an
influence on economic development activities
• To a slight degree a lack of regional leadership was considered a problem
For England:
• Competition between agencies from the different tiers of government was reported
as a problem. Some 28 per cent reported a five or six on a seven point scale where
seven was a major problem.
• Competition between agencies within the same tier of government was a modest
problem. Some 28 per cent reported a five or six on a seven point scale where
seven was a major problem.
• The lack of a lead agency in the region was not a problem
• Competition between development agencies generally was a moderate concern
• The respondents generally reported that they did not have problems with insufficient
core funding
• The respondents agreed that short funding time frames were a problem. Sixty two
per cent agreed slightly to strongly
• To a modest degree insufficient tied funds were perceived to be a problem
• Approximately 40 per cent of respondents felt inflexible funding bodies reduced the
effectiveness of their organisations
• There was no real concern that funding-body requirements overwhelmed the needs
of the region
A number of themes can be summarised from the results reported above. First, in most
jurisdictions competition between agencies – especially from different tiers of
government – was a problem but this was more acute in Australia and Northern Ireland.
Economic development practitioners in Australia felt the effectiveness of their
organisation was reduced by insufficient core funds for their organisations; short
funding time frames, and to a lesser degree, the time taken to find revenue sources.
The respondents from the USA presented the most positive set of responses, and while
there was competition between agencies, and some felt they lacked sufficient core
funding, overall their responses suggest relatively few impediments to the effective
81
operation of their agencies. The English respondents were mainly concerned with the
short time frames of funders and competition between agencies. The former reflect the
tied nature of their funding. The responses from Northern Ireland suggest the presence
of many more impediments to effective economic development activity. These include:
competition between agencies both within and between the spheres of government; the
lack of a lead agency within the region; insufficient funding; funding time frames that are
too short and too much time spent seeking funding. These were major concerns for the
Northern Ireland respondents and indicate substantial hurdles in the pursuit of
economic or community development.
6.5 Conclusion
This chapter has considered some of the key aspects of local and community economic
development agencies in the United States, Australia, England and Northern Ireland. In
aggregate the data presented in this paper suggests that there are four very different
models of regional development under study. There are important commonalities
across the jurisdictions with local economic/community economic development
agencies engaging in broadly similar activities and employing comparable strategies.
However the mix of ‘tools’ employed and the emphasis given to each differed
appreciably.
The governmental structures supporting economic development activities varied
appreciably. In the two Federal systems – the United States and Australia – local
governments formed the backbone of economic development activity. Structural
arrangements were more complex in Northern Ireland and in England local government
was the key actor, but statutory authorities and national government funding was also
important. The funding of local and community economic development agencies
appeared to exert a significant impact on effectiveness. The United States model –
where both special purpose and general local government revenues supported
economic development initiatives – appeared to generate relatively few difficulties for
agencies. US agencies were the only group to report sufficient self-generated
revenues, principally through the sale of services. Economic development agencies in
England were better funded and made use of a mix of local government and national
income sources, but reported difficulties with the short time frames of funding agencies.
In Australia local government general revenues were the most important funding
82
mechanism but economic development agencies tapped into funding sources from
Federal, State and local government sources. However, as was discussed in the
previous chapter, these multiple funding sources came at a cost: practitioners reported
inadequate core funding; too much time spent seeking funds and problems with the
short time frames of funding providers. Agencies in Northern Ireland reported a number
of concerns arising out of funding including inadequate core funding, insecurity of
funding, short time frames for funding and difficulties with the priorities of funding
agencies directing economic development efforts ahead of the real needs of their region
or community.
83
Chapter 7. Conclusion
The economic performance of, and quality of life in, metropolitan and non-metropolitan
regions remains an issue of considerable policy concern. There is growing evidence
that Australian society is becoming more unequal (Gregory and Hunter 1995 and 1996)
and that this differentiation is expressed regionally (O’Connor, Stimson and Daly 2001).
Research has shown that there are growing income differentials between ‘the city’ and
‘the bush” (Lloyd, Harding and Hellwig 2001) and widening gaps in service provision
between the city and country areas (Gerritsen 2001; Argent and Rolley 2001). The
differences between metropolitan and non-metropolitan areas are important, but they
are not the only changes evident within Australia’s pattern of development. The rate of
growth of some of the capital cities – Sydney, Brisbane and Perth – is far greater than
in other capitals - such as Hobart and Adelaide. We know that increased regional
differentiation is a product of a more open economy, with global economic processes
generating opportunities and challenges for individual communities and regions. Some
have prospered under a more open economy while other regions have declined.
How can governments and communities respond to the changing economic
circumstances of the contemporary world? Over recent decades government policies
have shifted from attempting to direct economic development in the 1960s and 1970s;
through to the formation of industry plans (the Button Car Plan and the Button Steel
Plan) in the 1990s, and the embracing of economic rationalism from the 1980s onwards
(Pusey 1991). At the regional level, State Governments have moved from
decentralisation policies to regional growth strategies (Collits 1997), while the Federal
Government has had an intermittent engagement with regional issues (Beer 2001).
Regional development and regional issues have been a growing burden on local
governments, though this dimension to local and regional policy in Australia is perhaps
least well understood. Significantly, both State and Federal Governments have paid
increased attention to service provision and community development in addressing the
needs of regions in decline. These focii appear to reduce the importance of economic
development agencies as a) they rarely have a role in service delivery and b)
community development – at least as it has been promoted across rural Australia –
largely relies on the volunteer efforts of community leaders.
84
This study has shown that it is wrong to assume that economic development agencies
may no longer be relevant in addressing the problems confronting regions. It has
shown that place-based economic development is a large and diverse sector, and its
participants work in a flexible manner to achieve growth for their regions and positive
employment outcomes. The study has shown that while economic development
agencies count local, State and Federal Governments as their most important partners,
they also collaborate with individual businesses and business associations,
environment groups, community groups and Indigenous organisations. Clearly, they
are deeply enmeshed within the social and economic fabric of their communities. This
is reflected in the considerable range of activities they engage in. Australia’s local and
regional economic development agencies work to improve the efficiency of approval
processes, co-ordinate the actions of government bodies, market their region, provide
information on government programs and assist both established businesses and those
intending to set up a new enterprise. They are important for the tourism industry, for
retailing and in providing firms with access to government programs and funding. They
work to assist the welfare of individual firms, but they also build the capacity of their
region.
Local and regional economic development agencies have an important role in the
further development of Australia’s economy. Much of what they achieve reflects good
practice: there is a strong emphasis on encouraging endogenous growth; networks
have been built between firms within and across regions; and economic development
agencies are often an important avenue for regional engagement with global markets.
This has been reflected in the positive rating of practitioners in assessing effectiveness
of their organisations. There are, however, less positive aspects to local and regional
economic development in Australia. Industrial recruitment remains prevalent despite
the fact that most practitioners recognise that paying subsidies to firms to either stay in
a location or relocate to their region is likely to have minimal benefits. As has been
argued elsewhere (Beer, Maude and Pritchard forthcoming), industrial recruitment is
largely driven by political concerns and it is difficult to imagine governments abandoning
the practice.
When compared with international peers, economic development agencies in Australia
appear to pursue less sophisticated approaches to encouraging the growth of their
regions. In part Australia appears to fall between two stools: on the one hand American
85
practitioners define development very tightly in terms of employment creation and the
attraction of new enterprises. They use a range of well established techniques to
achieve these ends, and generally report high levels of satisfaction with their success.
In England, by contrast, economic development practitioners adopt a more holistic
definition of development and use technology, community development, network and
other tools to advance the well-being of their communities. When compared with
England, Australia’s economic development agencies are strong on community links,
the promotion of the region, tourism, and the organisation and promotion of major
events, but appreciably weaker in encouraging supply chain associations, the
implementation of clusters, the running of business incubators and the provision of
industrial estates. To a certain degree the weakness of Australian agencies in these
areas reflects both the smaller role of government within our society, and the special
history of regional development policy in the United Kingdom. However, we should be
concerned that Australian economic development bodies appear to lag behind
comparable agencies in other countries in the implementation of new approaches to
regional development and in facilitating technological development. This conclusion is
reinforced by the weak partnerships between economic development agencies in
Australia and research institutions such as universities or the CSIRO.
The results of this study furnish grounds for concluding that action is needed to improve
the performance of economic development bodies across Australia. We cannot ignore
the need to improve the funding of these agencies, both in the total quantum of funding
provided and in the mechanism of delivery. Untied funds are needed that allow
agencies to identify the priorities of their region and how best to address them. There is
scope also to improve the technical resources available to agencies. They need to be
provided with better information about new approaches to facilitating economic
development, they need access to funds to establish business incubators and related
initiatives, and they need to be given the opportunity to establish meaningful
relationships with universities and other research bodies. Local and regional economic
development agencies are strongly focussed on immediate and local issues – as
reflected in the importance of their relationship with local government – but it is
important that they are equipped to build bridges to the global economy. At this stage
that capacity appears underdeveloped.
86
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Appendix A Table A1. Partners – International Organisations by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner
61.7 46.2 58.6 48.4 62.2 70.5 50.0 88.9 59.0
mildly important
25.5 32.1 20.0 24.2 12.2 9.1 - 5.6 21.0
moderately important
2.1 6.4 4.3 4.8 8.9 - 50.0 - 4.6
very important
0.7 7.7 1.4 3.2 4.4 - - - 2.8
not stated 9.9 7.7 14.3 19.4 12.2 20.5 - - 12.3 not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A2. Partners – National Departments and Agencies by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 1.4 - - 1.6 5.6 11.4 - 5.6 2.8 mildly important
15.6 9.0 15.7 11.3 21.1 20.5 - 5.6 15.0
moderately important
33.3 35.9 22.9 27.4 37.8 31.8 - 22.2 31.7
very important
45.4 53.8 60.0 54.8 31.1 29.5 100.0 61.1 46.7
Not stated 4.3 1.3 1.4 4.8 4.4 6.8 - - 3.6 not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A3. Partners – State or Territory Departments by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 1.4 - - - 1.1 9.1 - - 1.4 Mildly important
3.5 1.3 1.4 8.1 1.1 2.3 - - 2.8
moderately important
24.1 20.5 15.7 17.7 22.2 20.5 50.0 22.2 21.0
Very important
70.9 75.6 80.0 71.0 71.1 59.1 50.0 72.2 71.9
not stated - 2.6 2.9 3.2 4.4 9.1 - - 2.8 Not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
92
Table A4. Partners – Local Government by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
1.4 2.6 2.9 1.6 2.2 - - 5.6 2.0 5.0 5.1 1.4 4.8 3.3 6.8 - 5.6 4.4
12.1 5.1 8.6 11.3 10.0 2.3 50.0 11.1 9.3 73.8 78.2 80.0 74.2 67.8 75.0 50.0 66.7 74.1
5.0 3.8 4.3 4.8 10.0 6.8 - - 5.5 2.8 5.1 2.9 3.2 6.7 9.1 - 11.1 4.8
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A5. Partners – Other Regional or Local Development
Organisations by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 2.8 1.3 4.3 4.4 2.3 - 11.1 3.0 mildly important
9.9 15.4 8.6 16.1 11.1 13.6 - 38.9 12.9
moderately important
44.0 43.6 42.9 35.5 35.6 29.5 50.0 22.2 39.2
very important
38.3 38.5 37.1 38.7 38.9 40.9 50.0 11.1 37.6
Not stated 4.3 1.3 7.1 9.7 10.0 13.6 - 11.1 6.9 not applicable
0.7 - - - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A6. Partners – Local Venture Capital Providers by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 38.3 35.9 24.3 35.5 40.0 34.1 - 61.1 36.2 mildly important
32.6 30.8 28.6 27.4 17.8 22.7 100.0 22.2 27.5
moderately important
19.9 21.8 25.7 19.4 14.4 13.6 - - 18.6
very important
2.8 6.4 12.9 4.8 11.1 4.5 - - 6.5
not stated 6.4 5.1 7.1 12.9 15.6 25.0 - 11.1 10.5 not applicable
- - 1.4 - 1.1 - - 5.6 0.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
93
Table A7. Partners – Banks and Other Financial Institutions by State
l NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner
40.4 35.9 27.1 32.3 23.3 29.5 100.0 44.4 33.3
mildly important
36.2 43.6 38.6 38.7 27.8 36.4 - 22.2 35.8
moderately important
14.2 14.1 20.0 12.9 26.7 11.4 - 27.8 17.2
very important
3.5 2.6 8.6 3.2 7.8 - - - 4.4
not stated 5.7 3.8 4.3 12.9 14.4 22.7 - - 8.9not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A8. Partners – Property Developers and Retailers by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 22.0 16.7 18.6 9.7 21.1 22.7 100.0 44.4 20.2mildly important
29.1 21.8 34.3 37.1 22.2 25.0 - 33.3 28.1
moderately important
29.8 29.5 27.1 35.5 27.8 22.7 - 11.1 28.3
very important
14.9 29.5 14.3 9.7 16.7 11.4 - 5.6 16.0
not stated 4.3 2.6 5.7 8.1 12.2 18.2 - - 7.1not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A9. Partners – Manufacturers by State
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 24.1 14.1 25.7 17.7 32.2 27.3 50.0 88.9 26.1mildly important
30.5 24.4 31.4 30.6 17.8 27.3 50.0 - 26.1
moderately important
26.2 23.1 25.7 30.6 24.4 13.6 - 5.6 24.0
very important
14.2 37.2 10.0 8.1 10.0 6.8 - - 14.5
not stated 5.0 1.3 5.7 12.9 15.6 25.0 - - 8.9not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
94
Table A10. Partners – Utilities by State
l NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 18.4 11.5 28.6 14.5 15.6 9.1 - 16.7 16.8 mildly important
32.6 28.2 20.0 24.2 28.9 43.2 100.0 44.4 30.1
moderately important
31.9 38.5 27.1 29.0 30.0 13.6 - 22.2 29.5
very important
10.6 19.2 14.3 19.4 12.2 4.5 - 11.1 13.3
not stated 6.4 2.6 7.1 12.9 13.3 27.3 - - 9.5 not applicable
- - 2.9 - - 2.3 - 5.6 .8
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A11. Partners – Other Private Businesses
l NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 7.8 5.1 10.0 3.2 8.9 9.1 50.0 44.4 8.9mildly important
24.1 21.8 31.4 22.6 20.0 29.5 50.0 22.2 24.4
moderately important
41.1 37.2 27.1 25.8 37.8 31.8 - 11.1 34.1
very important
17.0 26.9 20.0 35.5 17.8 11.4 - 5.6 20.4
not stated 9.9 9.0 11.4 12.9 15.6 18.2 - 11.1 12.1not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A 12. Partners – Business Groups – Such as Chambers of
Commerce
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 4.3 2.6 4.3 3.3 6.7 11.4 - 61.1 6.9mildly important
12.8 15.4 18.6 18.0 15.6 18.2 - 16.7 15.7
moderately important
36.9 25.6 41.4 32.8 31.1 27.3 100.0 5.6 32.5
very important
42.6 55.1 31.4 41.0 37.8 34.1 - 5.6 39.7
not stated 3.5 1.3 4.3 4.9 8.9 9.1 - 5.6 5.0not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
95
Table A 13. Partners – Environmental Groups
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 22.7 16.7 5.7 6.5 16.7 13.6 - 38.9 16.0mildly important
32.6 24.4 42.9 38.7 27.8 34.1 100.0 38.9 33.3
moderately important
33.3 42.3 32.9 35.5 33.3 20.5 - 11.1 32.9
very important
7.8 12.8 12.9 12.9 8.9 13.6 - 5.6 10.5
not stated 3.5 3.8 5.7 6.5 13.3 18.2 - - 7.1not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A.14. Partners – Indigenous Groups
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 19.1 21.8 7.1 16.1 24.4 27.3 - 11.1 18.8mildly important
28.4 26.9 35.7 32.3 26.7 27.3 100.0 11.1 28.9
moderately important
32.6 34.6 27.1 24.2 20.0 25.0 - 22.2 27.7
very important
14.2 14.1 21.4 17.7 16.7 - - 50.0 16.0
not stated 5.7 2.6 7.1 9.7 12.2 20.5 - - 8.1not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A15. Partners – Other Community Groups
l NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 5.7 9.0 1.4 3.2 11.1 - - 16.7 6.1mildly important
40.4 35.9 31.4 22.6 18.9 29.5 50.0 33.3 31.3
moderately important
38.3 30.8 38.6 41.9 36.7 43.2 50.0 27.8 37.4
very important
13.5 20.5 24.3 16.1 22.2 15.9 - 11.1 18.0
not stated 2.1 3.8 4.3 16.1 11.1 11.4 - 5.6 6.9not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
96
Table A16. Partners – Universities
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
Not a partner 20.6 11.5 18.6 19.4 42.2 36.4 - 61.1 25.3mildly important
32.6 19.2 24.3 35.5 22.2 27.3 50.0 16.7 26.9
moderately important
29.1 35.9 27.1 32.3 15.6 13.6 50.0 16.7 26.1
very important
12.1 29.5 21.4 4.8 6.7 - - - 12.7
Not stated 5.7 3.8 7.1 8.1 13.3 22.7 - - 8.5not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A17. Partners – Technical Education and Further Education
Agencies
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 9.9 6.4 10.0 11.3 25.6 13.6 50.0 33.3 13.7mildly important
32.6 17.9 30.0 35.5 31.1 36.4 50.0 27.8 30.3
moderately important
41.1 43.6 32.9 32.3 20.0 20.5 - 16.7 32.7
very important
10.6 29.5 21.4 11.3 8.9 9.1 - 16.7 14.9
not stated 5.7 2.6 5.7 9.7 13.3 20.5 - - 8.1not applicable
- - - - 1.1 - - 5.6 .4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A18. Partners – Research and Development Organisations
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 23.4 14.1 17.1 11.3 36.7 20.5 50.0 66.7 23.4mildly important
29.8 25.6 27.1 38.7 22.2 36.4 50.0 22.2 28.9
moderately important
29.1 35.9 37.1 32.3 23.3 20.5 - 5.6 28.9
very important
10.6 19.2 11.4 4.8 3.3 - - - 8.7
not stated 7.1 5.1 5.7 12.9 14.4 22.7 - - 9.7not applicable
- - 1.4 - - - - 5.6 0.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
97
Table A19. Partners – Local Political Representatives
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 7.1 7.7 1.4 8.1 7.8 2.3 - 16.7 6.5mildly important
18.4 15.4 17.1 21.0 23.3 27.3 - 38.9 20.4
moderately important
32.6 30.8 28.6 30.6 23.3 29.5 100.0 33.3 29.9
very important
36.9 44.9 45.7 30.6 35.6 22.7 - 5.6 35.8
not stated 5.0 1.3 7.1 9.7 10.0 18.2 - - 7.1not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table A20. Partners – Trade Unions
NSW
% Vic %
Qld %
SA %
WA %
Tas %
ACT %
NT %
Total %
not a partner 46.1 37.2 42.9 37.1 62.2 45.5 100.0 77.8 47.3mildly important
31.9 33.3 32.9 38.7 17.8 25.0 - 5.6 28.9
moderately important
13.5 20.5 11.4 12.9 4.4 4.5 - 5.6 11.5
very important
2.1 3.8 4.3 1.6 1.1 - - - 2.2
not stated 6.4 5.1 8.6 9.7 14.4 25.0 - 5.6 9.9not applicable
- - - - - - - 5.6 0.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
