Project partners
Commonwealth of Australia as represented by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA); and the iMOVE Cooperative Research Centre (CRC).
Research objectives
This study aims to answer the following research questions:
- What are the primary determinants of firm and residential location patterns across Australia?
- What are the drivers of or barriers to attracting and retaining businesses and households to regional cities, and how do they differ based on characteristics of businesses, households and regions?
- What are the possible long-term impacts of COVID-19 on firm and residential location decisions across metropolitan and regional cities?
- How are these impacts likely to influence resulting spatial patterns of employment activity and residential settlement within and across these cities?
Background and context
Australia’s population has become increasingly concentrated in the major state capitals. It is commonly accepted that bigger cities are more economically efficient than smaller cities. Economies of agglomeration imply that as more firms in related industries cluster together, their costs of production decline significantly, because of improved access to labour and supporting technologies and services, knowledge spillovers between firms, and the creation of local markets. This can lead to improved economic outcomes in terms of average income, employment growth, innovation and productivity levels, helping attract more residents to the region and spurring further population growth.
Efforts to develop smaller cities have been hindered by the absence of a consensus on whether and how to develop places outside the capital cities. Australia has followed a number of economic growth paradigms over the past 40 years, including perspectives informed by growth pole theory, approaches based on market liberalisation and globalisation, endogenous growth perspectives and policy perspectives drawn from the OECD that have emphasised infrastructure investment and the development of human capital. Despite these varied efforts, many parts of non-metropolitan Australia have either not grown, or have experienced population decline. While it is widely recognised that regional cities offer better quality-of-life, their stagnation and/or decline in Australia over recent decades has been attributed to a mix of weak economies, fewer employment and education opportunities, and diminished service provision.
The COVID-19 pandemic has disrupted these established patterns of firm and household location, through its far-reaching impacts across all aspects of daily life. Many businesses have allowed employees to work from home, whenever possible, although practice has varied between locations and between economic sectors. Schools and universities have partially or fully shifted to online teaching, and homes have become the educational environment for children as well as places of work. Household shopping behaviour and consumption patterns have shifted rapidly, with greater dependence on online shopping and e-commerce than before the pandemic.
Combined with other sociotechnical changes, these short-term disruptions due to COVID-19 could be indicators of more long-term shifts in preferences, with profound implications for extant land use patterns. For example, business surveys in the US find that more than half have permanently closed some or all of their office spaces since March 2020, when the pandemic first broke out, and it remains unclear if analogous trends are likely to be observed across Australian cities. In the context of residential settlement, the ABS reports that “the population of regional Australia grew by 70,900 people during 2020-21, in contrast to a decline of 26,000 for the capital cities... This is the first time since 1981 that Australia's regional population grew more than the capital cities”.
However, evidence seems to be ambiguous on the magnitude and persistence of these effects. For example, in their analysis, the Commonwealth Centre for Population finds that “[our] central projection scenario sees a net shift in migration away from capital cities in favour of regional areas in 2020-21, before gradually returning towards the long-run average… Underscoring the uncertainty surrounding this topic, surveyed experts were split on the impact of COVID-19. Approximately half expect it to have no impact on migration patterns between cities and regions, with the other half expecting a slight shift in favour of migration from capital cities to regional areas”.
In summary, we are facing an unpredictable future that requires a resilient approach to urban and regional planning that insulates our cities and towns from similar future shocks. As the world has become increasingly urbanised and globally interconnected, it is prudent to assume that the ongoing pandemic will not be the last. Neither can it be assumed that the current COVID-19 pandemic will end in a timely and orderly manner. This is particularly the case given low vaccination rates in developing countries and the proven high propensity of SARS-CoV2 to mutate rapidly and unpredictably. Our study will offer insights on the potential impacts of these events and other related sociotechnical changes on the way we plan and build our cities in the future.
