More options to cargo cult thinking?

Feedback on the recent post : Are we stuck with cargo cult thinking has generated interesting comments and debate. Opinions and dialogue seem well in advance of the Council’s draft Economic Development Strategy. Redlands2030 is grateful to Howard Guille for recording and sharing his thoughts and stimulating community dialogue. Where are the options to cargo cult thinking?

Geography and Economic Growth

Geographic realities are important and difficult to ignore. Ross Gittins, writing in the Sydney Morning Herald on 23 July 2014 (Forget mining, big cities are the real engine in nation’s economy) cites a report by the Gratton Institute.  This report found that, 80 per cent of the dollar value of all goods and services in Australia is produced on just 0.2 per cent of the nation’s land mass. Gittin’s found that just about all economic production is generated in our big cities, or as close in as possible to the city centre.  This is relevant to development of the Redland City Economic Development Strategy, because market forces and economic activity are blind to administrative boundaries such as the local government boundary between Redland City and Brisbane.

A premise of the draft Economic Strategy is that the Redlands should generate and capture increased employment for Redlanders.  This is naive.  A housing and development “bubble” will attract people from other localities to do the work. Further, the Redland City draft Economic Development Strategy does little to test the benefits and costs of growth driven by population growth or the flows of capital or employment into or out of the City.

The spatial distribution of economic activity (and where the nation’s economic future lies) is a reality that the Redland Economic Development Strategy should tie into. As Gittins states, economic growth is tied to Australia’s four biggest cities (Sydney, Melbourne, Brisbane and Perth).  So Redland City, being on the door step of Australia’s third largest city,  should  “make sense” of this reality and develop an economic strategy hinged on this reality.

Sadly, the draft Strategy is largely silent on this part of the “big picture” and pretends that an economy can be developed within the boundaries of Redland City. Simplistic populist solutions to complex problems never work. The report of the Grattan Institute, Mapping Australia’s economy: cities as engines of prosperity,  goes further to illustrate the spatial dominance of the central business districts, with the remarkable statistic, that the CBD’s of Sydney and Melbourne – covering a mere 7.1 square kilometres – account for almost 10 per of Australia’s gross domestic product.

Commuting? it’s not all bad

Brisbane CBD is the driver of economic growth in the SEQ region, that includes Redlands

If gross domestic product is so concentrated, then many of the daily commuters from the Redlands to Brisbane are sharing this economic activity through the wages and salaries they earn in jobs in Brisbane’s CBD .  These commuters might buy lunch in the CBD but they bring their pay home … to the Redlands.

A much touted local economy makes sense only if the “more local employment” equates to a higher  income or a higher gross domestic product on a per capita basis. It seems possible that more local jobs could result in lower average incomes.  To match the wages and salaries of the knowledge workers commuting to the City, Redlands needs to attract more smart jobs, wealth creating jobs and knowledge workers.  Not just more jobs.

To a non-economist the Economic Development Strategy should explain how it will deliver average wages or salaries that should be the same or higher than that resulting from a commuting workforce.  The draft Strategy looks to target demand driven industries rather than high income producing or wealth creating industries.  That is cargo cult thinking and a poor strategy … especially if it results in lower per capita outcomes.

These options were canvassed in both the previous Economic Development Strategy for Redlands and the Redlands2030 Community Plan. Another option was canvassed last week in “Smart Growth: An Enterprise Area”