AHURI BRIEF

The economic importance of cities

Higher paid jobs cluster in Australia’s state and territory capital cities

The recent Senate report ‘Future role and contribution of regional capitals to Australia’ considered the role of regional cities in Australia’s future development, particularly as a way to reduce the congestion that is already a major impediment in the large state capitals.

However, for working people, the higher paid jobs cluster in Australia’s state and territory capital cities; for every $100 earned in each state capital city a much smaller amount was earned in the regional and rural areas in the rest of the state, ranging from a high of $87 in Western Australia to a low of $64.50 in NSW.

Figure 1: Rate of ‘rest of state’ household medium gross income to state capital gross income, 2013-2014

Source: ABS 6523.0 Household Income and Wealth, Australia, 2013–14. Table 15

Perth had the highest city median gross household weekly income in 2013–14, while the rest of WA had the highest non-city income. These high levels reflect the high wages paid during the mining boom in that state. The high incomes recorded in the rest of Queensland (which were even higher than incomes in the city of Adelaide) were possibly also due to the high wages paid to regional workers during the mining boom in that state.

In NSW, Victoria and Queensland, workers in the capital city are not only earning more but they were also more likely to be employed than workers in those states’ regional and rural areas. Unemployment rates are higher in both Perth and Adelaide than in the rest of their state. This may reflect a range of factors such fewer large regional cities; the nature and structure of regional industries; and the fact that large proportions of these states are sparsely populated, arid or semi-arid desert regions so that unless a person has a job which keeps them in those regions (such as well-paid mining industry work) they are less likely to stay in the area.

Figure 2: Unemployment rate for state capitals and ‘rest of state’, August 2016

Source: ABS 6291. Labour Force, Australia, Table 2

The comparatively low amounts earned in regional and rural NSW and Victoria, which were both roughly similar to the amount earned in regional South Australia, show the reduced economic impression of non-mining industries in rural/regional Australia.

Figure 3: Median gross household weekly income, 2013–14

Source: ABS 6523.0 Household Income and Wealth, Australia, 2013–14. Table 15