State fragmentation & the meaning of NSW economic statistics

Today an article one of Sydney's local newspapers, the Sydney Morning Herald,  quoted the latest Commonwealth Securities' State of the States report placing NSW in eighth place behind both Tasmania and Victoria in a league dominated by Western Australia and the ACT on measures of economic momentum. Those who are interested can find the report here.

I will comment on the report in a moment. But first, some background, background that also fulfils a promise I made to Greg in response to a comment. 

Back in February 2010 I discussed The fragmentation of NSW. There I was concerned with the way economic and demographic change had changed the structure of NSW and the nature of Government responses to those changes. My argument was that NSW as an entity increasingly made less sense and that as a consequence Government approaches to the planning and management of the state had become increasingly fragmented and ad-hoc.

I suppose the overall drivers to this fragmentation can be summarised this way:

• While Sydney still gains wealth from its governing role in NSW, the city has become increasingly disconnected in economic terms from the rest of the state. A lot of NSW State planning is Sydney centred and focuses on ways of managing and controlling its immediate hinterland in areas like residential development. To this end, the definition of metropolitan has been progressively expanded.
• In the far north, the growth of south east Queensland has spilled over into the adjoining areas of Northern NSW, further drawing the area into Brisbane's field. Sydney Government policy here has simply been reactive.
• Something similar is happening in the far south along the Murray.
• And then there is Canberra, the tiger in the room, whose growth has spilled over into surrounding areas effectively extending Canberra's economic sphere of influence. In the case of both the far south and the Capital Territory Region, NSW policy has again been largely reactive.
• Take Sydney, the Richmond-Tweed, the Capital Region and the Murray corridor out of the equation, and you are left with pretty fragmented territory dealt with in a fragmented way.

Turning now to the report.

Taking the above analysis into account, what does the report tell us beyond the obvious fact that the spread of the ACT's economic influence continues? What is this NSW economy?

Pretty obviously it doesn't tell me anything about New England. After all, we don't exist!

Beyond that?

Just as a matter of curiosity, I looked at the latest ABS (Australian Bureau of Statistics) workforce stats released today. This includes various workforce performance data for Sydney and the rest of NSW. Sydney, by the way, is not Sydney as we normally think of it, but the Sydney Statistical Division. This includes the Blue Mountains and the Central Coast. From memory, this includes about 62 per cent of the State population, so effectively dominates the rest in statistical terms.

Now when we look at the workforce data, and this is impressionistic because I have only scanned the numbers, we find:

• The participation rate (the proportion of the working age population seeking work) is lower in the rest of NSW than Sydney, especially for women.
• The proportion of unemployed seeking work is higher than in Sydney.
• The proportion of employed seeking full time work is higher than in Sydney.

So if you look at it this way, the rest of the state appears something of a basket case dragging Sydney down.

Is this true? Well, it's not quite as easy as that. In my next post I will look at the reasons why, focused on New England.    

Problems with New England statistics

Greg wrote in a comment on New State arguments 1 - introduction:

Jim,
Much is made of Australia's "two speed" economy with WA cited as the boom state on the back of mining. Meanwhile an accusing finger is pointed at NSW as being a drag on the national economy.

However, I cannot find any data about how New England fares in the scheme of things. I suspect that it is doing a great deal better than the rest of NSW. Hunter coal is certainly a vital contributor. If NSW looks sick despite having such a strong regional performance in the north then the rest of the state must be in an even poorer shape than the figures show.

Is there any data that shows the relative performance of NSW regions and how that impacts on planning and infrastructure investment for the regions and for NSW as a whole? If it is there then it is hard to find. The statistics all seem to be compiled on a state by state basis without regard to relative diversity of state economies and their respective regional areas. That makes it hard to get a feel for what is really happening.

Greg's comment goes to a heart of a problem that I have talked about before on this blog. Because New England does not exist as a constitutional entity, it is not recognised in the statistics. We have less statistics for New England, population 1.4 million, than we do for Tasmania, the ACT or the Northern Territory,

The general state wide statistics are dominated by Sydney.

Around 63% of the NSW population of around 7 million lives in what is called the Sydney Statistical Division. This is not quite the same as the traditional definition of Sydney, for it includes the Blue Mountains and Central Coast. Further, because most of the higher level jobs are in Sydney, this pulls up Sydney averages.

The census data provides a snapshot of conditions at a point in time. Census data is collected on a  collection district basis, and then totaled to, for example, LGAs. You can get ABS to do special runs by specifying coverage. I generally work by aggregating LGAs because this is simpler, although you have to watch changing LGA boundaries.

Census data forms the basis for much state government planning because it is the most complete. Between censuses, the State Government uses projections based on past trends for planning purposes. This is usually done at a regional level, although in some cases small area studies are used. Some but not all the regional data is published.

A particular problem here is that the Government uses various regional definitions depending on its purposes. An example is the frequent inclusion of the Clarence Valley in the Mid North Coast as compared to the Northern Rivers. This can make it hard to put the data into a consistent structure.

Between census periods, very little social or economic performance data is available on a sub-state level. This actually creates significant planning problems where resource allocation decisions are involved.

Some small area tourism data is collected by ABS, while ABS also provides building approval data on an LGA basis plus some LGA population estimates. Housing NSW rent and sale reports provide some rental and sales. This is on an LGA basis for the Greater Metropolitan Region (this includes the Lower Hunter), regionally aggregated for the rest of the state.

The NSW Business Chamber/Commonwealth Bank publishes a survey of business conditions. This includes a break-up for both Illawarra and Hunter regions, as well as aggregated data for the rest of the state outside Sydney, Hunter and Illawarra. The most recent data did indeed suggest that business conditions in the Hunter were more positive than those in Sydney.

As you can see, it's quite difficult to build up a clear picture of key variables and trends across the North. Quite a bit of my own analysis over the last year or so has been concerned just to lay down a base for further analysis. See, for example:

• New England demography 1 - rise of the coast
• New England demography 2 - problems with projections

I have at least one more post to go to complete this current series.