Impacts of Neo-liberalism on Regional Development in Australia - Case Study Example

Impacts of Neo-liberalism on Regional Development Policy in Australia in the last 20 years: (Authors’ Name) (Institutional Affiliation) Environmental Studies (Lecturer) May 29, 2013 Impacts of Neo-liberalism on Regional Development Policy in Australia in the last 20 years: Abstract This paper explores the impacts of neo-liberalism on the regional development policy in Australia in the last two decades. Similar to other sections of the world, from 1990s the federal governments of Australia have favored more the role of market forces, rather than direct engagements in the regional development. In the 1990s, the negative economic and social impacts of neoliberal systems, alongside the pervasive electoral backlash, constituted to the change in the regional development policy direction. This paper argues that this change is a reflective of the broader adjustment of the neoliberal politics, in which case limited institution building and government intervention are progressively viewed as desirable policy responses. Introduction Just like other aspects of economic and social policy, the regional development in Australia appears to be supported by neoliberal philosophy. Since the beginning of 1990s, political persuasion governments have turned their back on intervention plans in favor of the ones entrenched on market forces (Alston, 1995). The consecutive governments slowly eschewed the Keynesian regulatory framework of the post war era, and practiced political strategy founded on privatization, economy deregulation, reduced social welfare commitment and emphasis on global competitiveness. In the case of regional development, this ended up in winding back of interventionists strategies geared toward massive investment on non-metropolitan services and infrastructure, decentralized industrial programs, and socio-spatial equity. Focus was increasingly put on regional and local competitiveness, self-help development programs, entrepreneurialism and economic efficiency. According to Alexander (1994) in the middle of 1990s however, reflected another transition in the Australian regional development policy. Whereas much of the previous rhetoric concerning regional policy focused on the market roles in establishing the distribution and location of population, employment, and economic activity, the 1990s witnessed growing emphasis on the apparent setbacks of market entrenched solutions to the regional predicaments. In several aspects, neoliberal policy frameworks have generated economic upheaval as well as social disadvantage. This ultimately had considerable electoral effects as a result of the increasing radical politics in several electoral losses and disaffected regions by several state governments’ neoliberal reformists. Regional Development and Neo-liberalism Jones & Ward (2009) point out that the last two decades manifested a decisive change within the political strategies and economic trajectories of the developed nations. As a response to incapability of traditional policies and global recession based on the welfare state and economic protectionism to turn around economic crisis, a number of Western states started shift to an alternative political dispensation based on neo-liberation principles. The neoliberal policy proponents point out that market forces characteristically unleash efficiency, innovation and growth, while governmental expenditures and regulations characteristically create inefficiencies, stifle entrepreneurship, and impede growth both in public and private sectors. In Australia, the widespread held concept was that policy changes founded on neo-liberation principles could enhance Australia’s productivity and economic competitiveness, hence restoring socio-economic well-being, economic growth and profits (Lockie & Bourke, 2009). The neoliberal changes of the last 2 decades were widely propelled by a fundamental shift from regulatory frameworks and post war polices loosely based around the Keynsain management principles. In brief, these reforms comprised: the deregulation and liberalization of economies, the application of market principles (for instance, the user pays), the privatization of government owned enterprises and services as well as the minimization of welfare expenditure. In respect to regional policy, the neo-liberation caused a withdrawal from government proactive engagement in spatial planning, infrastructure provision, and economic development (Massey, 2008). Government change in 1996 caused yet another change in the regional policy. The federal election campaign of 1996 witnessed Labor inclined more to interventionist rhetoric with regards to regional policy. They made the promise that when re-elected, they would increase funding to regional programs, they would maintain rural services, they would support new regional infrastructure programs (specifically for the construction of road and rail services) and a considerable amounts of money would be spend on environmental rehabilitation. The Coalition led by John Howard by contrast appeared to largely keep silent on regional development issue, while focusing on a number of popular concerns such as the cost of living, interest rates for home loans and unemployment (Jones & Ward, 2009). Howard on winning the election announced a number of stern policy changes geared toward further public service downsizing and economy liberalization. This manifested a comeback of more assertive neoliberal agenda which Australia had witnessed in the early 1980s. According to the (National Committee of Audit, 1996) the newly elected government quickly established an inquest by the National Committee for Audit into the civil service. Following investigations by the committee at the Commonwealth Regional Development, it indicated that a number of regional programs were ineffective and inefficient. They committee also indicated that the present arrangements for urban management and regional development overlap with local and state government responsibilities. This report by the committee paved a way for the coalition to stop all regional projects. Under the government of Howard, the Department of Regional Development and Transport was changed to the Department of Regional Services and Transport. Whereas initially could seem merely as an issue of semantics, in the actual sense it meant a more fundamental ideological change in the operations and nature of the Department. The omission of the word “development” indicated the government’s belief that where possible, the government would not be involve in the economies of the region, and also suggested that market factors were most suitable parameters of determining social and economic outcomes and inclusion of the word “services” meant that the state could simply intervene on essential public amenities, especially in telecommunication and transport sector. The degree of shift was also mirrored within the staffing structure in the Department. Before this government came into force, the regional department had over 150 employees and upon the restructuring they were downsized to 8 employees working at the Regional Affairs Unit (Gray & Lawrence, 2005). The regional development low position within the Commonwealth state was advanced by the policy paper Regional Australia: Leading the Way: that was launched during the Federal Budget of 1996. The policy document made no provision to the establishment of a committed Coalition regional development but rather strived to improve the living standards of all Australians regardless of where they stayed, through micro-economic change and made efforts to persuade the electorate that this would be the only means to attain a positive social and economic prosperity for the regional areas. The policy document was also utilized to illustrate how economic reform, especially user pays programs, privatization and deregulation, would be beneficial to the regions. Fundamental to the document was marked dedication to a neoliberal policy framework, which eschewed government involvement in the support of market forces. In addition, it communicated a naïve indulgent of the function of geographical space in respect to regional development. In fact, the state failed to acknowledge the huge spatial variation in the setting of social and economic development and the importance of establishing policies which are responsive to these complex social and economic geographies. The 1998 document: Regional Australia: Our Commitment remained largely similar to the earlier paper and it stated that the primary responsibility of Commonwealth is national economy, both in micro-economic and macro-economic reform and management that subsequently significantly relies on the regional Australia’s strength. However, the overview does recognize that conditions within the regional Australia differ and that environmental issues have the potential to undercut the capacity of certain regions to expand or sustain their economic portfolios, even though the policies do not indicate variations with regards to regional needs (Beer, Maude & Pritchard, 2003). Whereas the regional policy appeared to be formed by neo-liberalism principles, the government of Howard fell short of projecting the level of disenchantment affecting rural populace. As Lockie & Bourke (2009), have indicated, over a decade of withdrawing the service, economic reform and increasing levels of underprivileged had started to take their toll in non-metropolitan regions of Australia. To a certain extent this was manifested in the ascend of the radical party of Pauline Hanson (One Nation) that championed for more economic support for non-metropolitan regions, improvement the provision of rural services and a comeback of protectionism. The RDOs (Regional Development Organizations) The RDOs of the Commonwealth government were component of an effort to establish development and planning units, which would offer a degree of spatial and political coherence at the region stretch. In reality however, this did not happen. The establishment and operation of the regional development organizations were not backed up by any particular laws, and it is majorly upon the individual regions and national government to create these bodies, although with minimal financial aid from the Commonwealth (Commonwealth of Australia, 1994). Hence, the RDOs and Working Nation reflected a relatively considerable shift in policy rhetoric. At least there was a partial acknowledgement that free-market factors may not always offer economically desirable or socially equitable outcomes. Moreover, the Commonwealth at least seemed to be playing a role in regional development and spatial planning. It also apparent however, that the government stayed focused on the neo-liberalism principles (Jessop, 2002). In fact there were no indications that the Commonwealth would inject huge funds in policies geared toward social and economic development. The agenda focused on the libertarian principles of promoting market forces, entrepreneurialism and self-help. Conclusion: The Australian regional policy in its current status still strongly conforms to neo-liberalism principles. Not even one of the present programs champion a return to remarkable government involvement into regional development. Moreover, the policies which are in place appear to be in favor of localities as well as regions being in charge of their individual social development and economic planning. This is demonstrated by programs which are targeted at inter alia, encouraging locally engineered revitalization strategies, promoting local leadership and community involvement in decision making (local). Nonetheless, the idea that such governmental initiatives are in place illustrates shift in neoliberal policy formulation. In the last two decades or so, nearly all kinds of regional development by the governments were eschewed to favor market oriented establishments. The disappointment of this establishment and the political outcomes, resulted to a significant transformation and adaption of the neoliberal program, to an approach that limited state involvement was evident as a playing a distinct role. As a result, there has been a change from economic austere rationalism to some kind of flexible kind neo-liberalism, which appreciates certain free market limitations. References: Alexander, I. (1994) DURD revisited? Federal policy initiatives for urban and regional planning 1991-94, Urban Policy and Research, 12(1), pp. 6-26. Alston, M. (1995) Women on the Land: The Hidden Heart of Rural Australia .Sydney: University of New South Wales Press. Alston, M. (2009) Social exclusion in rural Australia, in: C. Cocklin & J. Dibden (Eds) Sustainability and Change in Rural Australia, pp. 157-170. Sydney: University of New South Wales Press. Anderson, J. (1999) One Nation or Two? Securing a Future for Rural and Regional Australia, Canberra, National Press Club. Beer, A., Maude, A. & Pritchard, W. (2003) Developing Australia’s Regions: Theory and Practice Sydney: University of New South Wales Press. Commonwealth of Australia (1994) Working Nation: Policies and Programs (Canberra: Australian Government Publishing Service. Gray, I. & Lawrence, G. (2005). A Future for Regional Australia: Escaping Global Misfortune Cambridge: Cambridge University Press. Jessop, B. (2002) Liberalism, neoliberalism and urban governance: a state-theoretical perspective, Antipode, 34, pp. 452-472. Jones, M. & Ward, K. (2009) Excavating the logic of British urban policy: neoliberalism as the ‘crisis of crisis-management’, in: N. Brenner & N. Theodore (Eds) Spaces of Neoliberalism: Urban Restructuring in North America and Western Europe, pp. 126-147 .Oxford: Blackwell Publishing. Lockie, S. & Bourke, L. (Eds)(2009) Rurality Bites. The Social and Environmental Transformation of Rural Australia. Sydney: Polity Press. Massey, D. (2008) Spatial Divisions of Labour: Social Structures and the Geography of Production Basingstoke: Macmillan. National Committee of Audit (1996) Report to the Commonwealth Government (Canberra: Australian Government Publishing Service Read More

The neoliberal policy proponents point out that market forces characteristically unleash efficiency, innovation and growth, while governmental expenditures and regulations characteristically create inefficiencies, stifle entrepreneurship, and impede growth both in public and private sectors. In Australia, the widespread held concept was that policy changes founded on neo-liberation principles could enhance Australia’s productivity and economic competitiveness, hence restoring socio-economic well-being, economic growth and profits (Lockie & Bourke, 2009).

The neoliberal changes of the last 2 decades were widely propelled by a fundamental shift from regulatory frameworks and post war polices loosely based around the Keynsain management principles. In brief, these reforms comprised: the deregulation and liberalization of economies, the application of market principles (for instance, the user pays), the privatization of government owned enterprises and services as well as the minimization of welfare expenditure. In respect to regional policy, the neo-liberation caused a withdrawal from government proactive engagement in spatial planning, infrastructure provision, and economic development (Massey, 2008).

Government change in 1996 caused yet another change in the regional policy. The federal election campaign of 1996 witnessed Labor inclined more to interventionist rhetoric with regards to regional policy. They made the promise that when re-elected, they would increase funding to regional programs, they would maintain rural services, they would support new regional infrastructure programs (specifically for the construction of road and rail services) and a considerable amounts of money would be spend on environmental rehabilitation.

The Coalition led by John Howard by contrast appeared to largely keep silent on regional development issue, while focusing on a number of popular concerns such as the cost of living, interest rates for home loans and unemployment (Jones & Ward, 2009). Howard on winning the election announced a number of stern policy changes geared toward further public service downsizing and economy liberalization. This manifested a comeback of more assertive neoliberal agenda which Australia had witnessed in the early 1980s.

According to the (National Committee of Audit, 1996) the newly elected government quickly established an inquest by the National Committee for Audit into the civil service. Following investigations by the committee at the Commonwealth Regional Development, it indicated that a number of regional programs were ineffective and inefficient. They committee also indicated that the present arrangements for urban management and regional development overlap with local and state government responsibilities.

This report by the committee paved a way for the coalition to stop all regional projects. Under the government of Howard, the Department of Regional Development and Transport was changed to the Department of Regional Services and Transport. Whereas initially could seem merely as an issue of semantics, in the actual sense it meant a more fundamental ideological change in the operations and nature of the Department. The omission of the word “development” indicated the government’s belief that where possible, the government would not be involve in the economies of the region, and also suggested that market factors were most suitable parameters of determining social and economic outcomes and inclusion of the word “services” meant that the state could simply intervene on essential public amenities, especially in telecommunication and transport sector.

The degree of shift was also mirrored within the staffing structure in the Department. Before this government came into force, the regional department had over 150 employees and upon the restructuring they were downsized to 8 employees working at the Regional Affairs Unit (Gray & Lawrence, 2005). The regional development low position within the Commonwealth state was advanced by the policy paper Regional Australia: Leading the Way: that was launched during the Federal Budget of 1996.

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