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Southbank an economic superstar

09 Jul 2015

Southbank an economic superstar Image

A major report from PricewaterhouseCoopers (PwC) last month reinforced what we Southbankers know, but is little understood or appreciated by outsiders – that we are punching well above our weight when it comes to driving the national economy.

The Understanding the Economy From the Ground Up report shows that the Australian economy grew 46 per cent ($461 billion) between 2001 and 2014 and that the best performer during that time was Melbourne CBD – which includes Southbank and Docklands.

Melbourne CBD contributed $24.4 billion and grew 76 per cent during the 13-year period – more than Sydney CBD and more than the best Western Australian mining regions of Ashburton and East Pilbara.

The Sydney CBD economy grew 37 per cent during the same period, with the report authors pointing out that its potential growth, unlike Melbourne’s, is geographically constrained.

The report shows a growing national reliance on a handful of standout local performers such as Southbank.

PwC looked at the “granular” modelling of more than 2000 locations across Australia to uncover how fragmented and concentrated our economy is, PwC economic director Rob Tyson said on June 25.

“This information provides a huge opportunity for business and government to tailor investment strategies to local nuances,” Mr Tyson said while releasing the geospatial economic modelling (GEM) on each region.

The report found that economic development is concentrated in just a few locations, with nearly one in five dollars of Australia’s national income coming from just 10 locations (out of 2214 locations)

“This implies that there are a very small handful of locations that really matter to the Australian economy,” the report said. “There are a very large number of locations in Australia that, from an economic perspective, matter very little.”

“A key trend, masked during the recent resource booms, has been the role that CBDs and concentrations of high value add urban economic cluster have played in driving this trend.”

“While the spotlight has been on the Pilbara and the phenomenal growth of economic activity generated from these resource deposits, it has actually been these urban areas which have been steadily generating a larger share of economic output.”

“This has driven the bulk of this change and is also the most important factor as we move beyond the mining boom.”

The report pointed out that, despite national growth, one in three locations went backwards during the study period.

And, while this is not so important from a national perspective, it highlights a growing gap between economic winners and losers.

“Fewer key locations will be relied upon to drive an increasingly large share of economic growth.  From an economic point of view, this implies we should potentially be less worried about the fact that one in three locations are contracting,” the report says.

“However, from a social and equity point of view this creates unique challenges and potential conflicts between economic and social policy and investment imperatives.”

The regions where economic activity is going backwards include Churchill (-21 per cent) and Moe (-20 per cent) in the LaTrobe Valley.

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