Thimk, Grattan Institute, Thimk!
The Grattan Institute has just published a new study Mapping Australia’s economy: cities as engines of prosperity that looks carefully at where the new jobs are and how this is reshaping who we are and what we do.
I have a soft spot for the thimkers at the Grattan Institute. They thimk big thimks and seem to have the interests of all Australians at the centre of their thimks.
“A great reshaping of Australia’s economic geography is underway. The nation has moved from prosperity coming from regional jobs in primary industry a century ago, to suburban jobs in manufacturing after World War Two, to city centre jobs in knowledge-intensive businesses today.”
“The manufacturing industry greatly influenced the layout of cities. Many manufacturers needed large amounts of land, so located their factories where it was plentiful and affordable. Suburbs away from city centres had far lower rents and less congestion, making them attractive locations.
Onto something, but then…
“Today the Australian economy is no longer driven by what we make – the extraction and production of physical goods – but rather by what we know and do.”
The Grattan thimkers just skated right past the best, completely impartial measure of national excellence – what the rest of the world actually wants to buy from us, our exports, which looks like this:
Australian Services – the CBD clusters the Grattan Institute is drooling over – are simply not globally competitive.
I see and welcome a recent uptick in Rural exports that has decisively broken a 35 year downward trendline. Hooray! They want to buy our food and fibre.
The RBA paper Australian Exports: Global Demand and the High Exchange Rate these graphs are lifted from observes and welcomes a core of excellence in Australian Manufacturing that has survived despite the high Aussie dollar – High Skilled and Medium Skilled Manufactures:
When the RBA turns its attention to Services, it sees potential only in Tourism and International Education, which actually look very ordinary:
Further, they have little need for the CBD-focused employment the Grattan thimkers are excited about. International Education needs good teachers and a stick of chalk; tourism needs natural and built attractions. Both need good airports, accommodation and hospitality – by the trade and the wider population.
The Grattan thimkers warm to the task:
“Economic activity in Australia is concentrated in and around large cities. But it is not distributed evenly within cities. Central business districts (CBDs) are especially important: they represent substantial concentrations of employment, and even more intense concentrations of economic activity. They are vital to the economy of Australia’s large cities, and hence to the national economy.
Garbage! If Australia’s Services sector had any merit whatsoever, the world would queue up and bang on the doors to buy our wares. They are doing no such thing.
The Grattan Institute has been sold a pup by well-coiffed and expensively groomed city professionals who simply don’t make the grade by international standards. Many of our best educated simply take their skills where the best price is paid and the rest focus on rent-seeking in the FIRE sector. That table just above proves it.
If the Grattan thimkers wanted to reignite prosperity and national competitiveness, they would look at the cost of land – for Rural, Manufacturing and Services, for business and for workers alike. Inexpensive land de-risks all economic activity. We have been bloody fools to abandon this vital natural advantage to the ticket –clippers.