Spotlight on Greater Melbourne – Economic Insights and Outlook
On the 5th of September 2023, more than 130 local and state government professionals participated in the Spotlight on Greater Melbourne Economy webinar where we highlighted key findings from the 2023 State of the Regions Dataset.
This blog draws from Rob’s presentation (resources below) and talks through the pre-covid rise of Melbourne’s economy, the ongoing recovery from COVID-19, the economic outlook and the important role that local councils can play in aiding Melbourne as it confronts its productivity challenges.
The six key insights from the Spotlight on Melbourne Economy webinar were:
01 Melbourne emerged as the key driver of Australia’s economic growth 🚀
Melbourne’s economy experienced significant growth in the years leading up to the COVID-19 pandemic. Between 2012 and 2019, Melbourne’s economy expanded by 24%, outpacing the national average.
This growth, however, was not uniform across the city. The inner region, led the sub-regions, followed closely by growth areas. Conversely, many middle-ring areas, transitioning away from manufacturing, experienced slower economic growth.
02 Over-reliance on population growth 📊
But, a critical observation emerged: Despite strong economic growth, Melbourne’s per capita economic growth lagged the national average. This suggests that while Melbourne’s economy was expanding, the standard of living per person did not increase at the same rate.
03 Decentralisation of knowledge jobs 🧠
A notable trend emerged as knowledge jobs began spreading beyond the Melbourne CBD. This decentralisation was most evident in the City of Yarra, which saw a significant 26% growth in knowledge and professional service industry value added between 2012 and 2019.
04 Importance of Precincts 💼
The significance of precincts in driving knowledge-based job growth became evident, with Cremorne emerging as a vibrant knowledge hub within the City of Yarra. Around 46% of Cremorne’s workforce was employed in the knowledge and professional service sector, which experienced a significant 67% growth between 2016 and 2021.
05 COVID-19 recovery remains uneven across Melbourne 🦠
Enter the COVID-19 pandemic, Melbourne’s economy faced a major setback as prolonged lockdowns disrupted the growth trajectory. Economic growth fell to 1.2% per annum since 2019, well below the pre-COVID rate of 3.2% and below the capital city average.
While some industries rebounded in 2021-22, the recovery was uneven. Tourism-dependent industries, including hospitality and transport, struggled to regain their pre-covid levels of employment and output. The construction sector also faced setbacks, with numerous projects delayed or cancelled.
The economic recovery was also uneven across Melbourne. Growth areas and peri-urban regions experienced strong economic growth since 2019. However, Melbourne’s inner south-east and eastern regions faced slower recovery. Inner Melbourne faced mixed conditions with the recovery in business services masking the challenges facing tourism-dependent industries.
06 Need to address productivity and participation 📈
Recent indicators suggest at a slowing economy in Greater Melbourne. Higher interest rates and inflation are impacting household budgets. Population growth, however, is set to rebound significantly in Victoria, potentially alleviating the short-term challenges posed by a national economic slowdown.
But Melbourne’s future prosperity relies on more than population growth. To thrive, Melbourne needs to make progress on its productivity and participation performance. We have a fair idea of what needs to be done, like National Employment Clusters, infrastructure investments in growth areas, skill development and improved housing affordability. But how are these strategies going? Are we on track? And if not, what else is required to drive a new trajectory?
Implications for Local Economic Development
Local councils will play an important role in helping Melbourne regain its competitive edge in productivity and participation growth. The webinar explored three areas that could make a difference:
- Leveraging Infrastructure Investment 🏗️: Melbourne has a strong infrastructure investment pipeline, offering opportunities for local economic development. Councils can leverage these projects to attract knowledge-based jobs to the suburbs.
- Place-Based Federal Funding Programs 💰: Councils can proactively identify projects within their regions to secure competitive grant funding, particularly given the 2023 federal budget’s allocation to city and place-based initiatives such as the Thriving Suburbs and Urban Precincts programs.
- Knowing What Drives Local Growth 📈: Understanding the economic, demographic, housing affordability and liveability changes in your region is fundamental for informed decision-making. We have a team of place experts here to help you make the most of your online information tools.
Please find resources from the webinar below: