The re-emergence of nationalistic fringe parties such as One Nation caused many to wonder why, given our continued run without a recession, some areas of the country appear to have turned away from mainstream politics. One suggestion often referred to somewhat derisively as “economic anxiety” argues that some areas – especially those outside the cities – have been left behind. However, a paper by the Grattan Institute pours cold water on this idea, arguing that the economic divide between Australia’s cities and regions is not getting bigger.

Clearly the economy of our nation has changed greatly over the past century – and even in the past few decades. While there has always been a large number of people working in services – from education and health through to retail trade and administration – in the past 30 years, the share of people working in services has risen from 69% to 79%. That is a difference of about 1.2 million people:

The Grattan Institute’s latest working paper, Regional patterns of Australia’s economy and population, looks at the impact of these upheavals to see whether some of the increase in support for more protectionist and nationalistic parties and policies has been fuelled by economic factors that are hidden by general measures such as GDP and national unemployment rates.

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As the paper notes, these changes have geographic consequences. Its authors note that “the loss of agricultural and manufacturing jobs is felt most acutely in regional areas and on the city fringes” – think, for example, about the loss of car manufacturers in Geelong, Elizabeth and Altona.

The shift from agriculture, the decline of manufacturing and the mining boom that was mixed with an influx of income and people (much of which was transitory) has had many wondering if this upheaval and the fact that residents in regional areas feel they are being left behind has caused the increase in support for previously fringe parties.

But, at first glance, it would appear this sense of “economic anxiety” is either misplaced or overhyped as a reason for political change.

The paper does find that there are often large disparities between the urban and regional sectors – average household incomes in regions, for example, is on average much less than in the capital cities.

Measuring the average household income against distance from the GPO in each state there is a clear – if subtle – trend of lower income the further away from the GPO you get:

And while all capital cities except Perth have pockets of low-income postcodes within 10km of the GPO, all as well see a higher tendency towards lower-income areas more on the fringes of the city.

This is of course not unexpected – regional areas and outer suburbs have long been associated with lower incomes than in the “inner cities”. But this alone is not enough to explain increased support for the non-major political parties.

And the problem for those arguing the cause of economic anxiety is that over the past decade incomes have grown at similar levels across all regions, and if anything have grown faster in the regions:

Partly this can be explained by the mining boom but not all of it. The paper notes that average incomes growth rates “have been similar between the city and regions in every state over the decade.”

There was some impact of the mining boom in Perth and Brisbane, however. Income grew strongly in all of Perth’s and most of Brisbane’s suburbs – fuelled by “increased corporate activity and high-income fly-in fly-out workers associated with the mining boom in the Pilbara and the Bowen Basin”.

By contrast, the paper found that in Sydney, Melbourne and Adelaide “income growth per person was highest in areas closest to the city centres and typically below average in suburban areas”.

But, in terms of inequality, it is the inner city areas that suffer the most. By comparing average with median incomes in postcodes the paper was able to look at inequality within small areas and it found that the regions are more likely to have lower levels of inequality:

Again this is not too surprising – inner city postcodes often have a mix of very high-income earners and low-income social housing occupants, whereas regional areas are less likely to have the very high income earners.

But once again the change in inequality over the past decade does not suggest there should have been a rise in “economic anxiety”.

The paper notes that inequality has risen slightly over past decade throughout Australia but “it has generally increased a little more towards the centre of capital cities”:

Certainly this gives no reason for those in the regions to believe themselves being more left behind by the economy than those in the cities.

And, on this measure, there was little difference across the states. The paper found that “inequality increased more in areas closer to the CBD in Sydney, Melbourne and Perth. In the other states, changes in inequality were similar in the cities and the regions.”

With regards to unemployment, the report found that there are likely to be higher level of unemployment in the remote areas – “particularly those with high Indigenous populations”. Within cities, the report found that “areas of high unemployment tend to radiate out in lines from the CBD, separated by patches of low unemployment in neighbouring suburbs” and the high unemployment areas tend to “follow the path of major roads, while adjacent less built-up areas have lower unemployment.”

But once again this in itself does not explain changes in political attitude. The report found that aside from the York Peninsula in South Australia, Gippsland in Victoria and around Townsville in Queensland, in the past five years “unemployment has not got markedly better or worse in regions as opposed to cities”.

It would seem that economic aspects are not the main driver behind the growth of support for minor parties in the regions. But neither does immigration growth – often a key issue for such parties – explain the changes. The report found that most immigrants live in the cities and, while some go to mining areas, those from non-European, non-English speaking countries are much more likely to move to the cities than their European counterparts.

The Grattan Institute paper is an important first step towards better understanding of the political forces currently at play in Australia. Future reports will compare voting choices with this mix of economic and social factors such as age and education attainment.

But at first glance this initial report suggests those who seek to attribute the rise of populist and nationalist parties to economic anxiety in the regions are over-egging their case. There appears little change in the past decade of income, unemployment or inequality that would explain why regional areas might be more willing to embrace fringe parties than their city cousins.