Context

This post on regional South Australia is the third of a series of posts on inequality.

The first post looked at inequality of household incomes between states. It found that South Australia’s share of income is below its share of the population, and that the state’s share of both national household income and population has decreased over the last two decades.

The second post looked at inequality within South Australia. It found that while the broad pattern reflected the national spread across income quintiles, the South Australian distribution was characterised by relatively lower incomes at the top end of the income spectrum.

This post looks at regional South Australia. Again, the data is drawn from the ABS Household Income and Wealth series, with “regional” being defined by the ABS “Rest of State” data beyond Greater Adelaide. This categorisation obviously conflates very different regional and remote areas, but it does still reveal some important economic dynamics beyond Adelaide.

Again, I use the share of total/aggregate income as a key analytic. The share of aggregate income captures changes in both income and population, and in a regional context it highlights changes in a key material base of community viability and development.

Regional South Australia’s Share of State and National Income

Incomes in regional areas vary greatly from area to area and from year to year depending on the local industry-base, weather patterns and commodity prices. The 2019-20 data collection also overlapped with bushfires and COVID, but the ABS methodology was designed to minimise the impacts of those events so the data reflects long-term trends.

South Australia has a particular regional demographic (shared with WA) of a particularly dominant capital city. Around 80% of the SA population live in the Greater Adelaide area, while the rest of the state is large and lacking other big cities. This in itself creates economic, social and service-delivery challenges in much of regional South Australia, but it is made worse by lower average incomes.

Average (mean) gross household income in regional South Australia in 2019-20 was $1679 per week, which was 81.6% of the Adelaide average – although household size was also smaller in regional South Australia (2.2 people per household in the regions, 2.4 in Greater Adelaide). However, given average household income in Adelaide was also below the national average, this meant that the average household income in regional South Australia was just 72% of the national average.

At the aggregate level, regional South Australia accounted for just 17.7% of the total household income in the state, while housing 19.9% of the population. By comparison, regional areas in all states accounted for 31% of the Australian population and 27% of all household income. So regional South Australia is struggling relative to both Adelaide and to other regional areas.

Inequality within Regional South Australia

The overall income spectrum in regional South Australia appears to mirror Greater Adelaide. Adjusted for household size, the income share for the bottom two quintiles, the P90/10 ratio and the Gini Coefficient are all fairly similar between Adelaide and the “rest of the state” (more details here). However, the census data mapping the proportion of the population in different income brackets tells a more nuanced story.

The Adelaide and regional SA numbers are shown in the graph below in the same way that my previous post mapped the national/SA figures. In both cases, for the relatively poorer jurisdiction, we see a greater proportion of households in the middle-income categories and significantly fewer among higher income households – in this case, households earning over $2,000 a week.

Some of the differences evident in the graph above are an effect of household size, where bigger households in Adelaide more likely to contain multiple income-earners, but it is also just a simple question of geography. To extend the conclusion of my previous post: the rich don’t live in regional South Australia (at least not in the same proportions as in Adelaide, or the rest of the country).

Changes over Time

However, the biggest concern about regional inequality may be the changes over time. Just as the national figures show that South Australia has lost both population share and income share over the last twenty years, so too regional South Australia has lost both income and population share within the state.

The graph below is similar to one used in the previous post on South Australia’s share of the national household income, but this shows regional SA’s share of aggregate state household income. Regional SA’s share of income and population is plotted on the left axle, while average household incomes (as a percent of those in Greater Adelaide) are plotted on the right axle.

In all years, regional South Australia’s share of aggregate household income was below its population share, but there has also been a clear decline of the regional income share over the last two decades (from 22.6% of SA’s total household income in 2000-01 to 17.7% in 2019-20). As the graph shows, the early years of this decline was associated with a fall in average regional household incomes relative to Adelaide. However, even when this relative fall in average income levelled off and improved, regional South Australia’s share of aggregate household income still fell – driven by significant declines in population share.

Given that this regional decline is relative to a state which is also declining in the national data, the end result is particularly worrying. Regional SA’s share of national household income has declined by nearly a third over the period, from 1.6% in 2000-01 to just 1.1% in 2019-20. This makes maintaining economic (and political) viability harder relative to the rest of the country, a fact which can drive further decline.

Conclusions and Speculations

I have suggested that the picture of regional inequality – the unequal incomes between regional SA and the capital city – mimics the differences between South Australia and the national income distribution. This obviously suggests that there are some similar dynamics at play.

David Peetz (and others) have argued that the majority of the gains of neoliberalist economic growth over the last 30 years have gone to finance capital. The data under consideration here is consistent with that analysis. Such financialisation processes tend to concentrate income in the geographic centres of finance, leading to a relative decline in income in the areas outside those centres. This in turn creates a periphery where households are living at a base rate (arguably propped up by nationally regulated incomes), but where it is more difficult to sustain higher incomes as population and income is attracted to core areas.

This type of effect is compounded for regional South Australia. The core-periphery process happens between South Australia and the financial centres of the Australian economy, and is then repeated between regional South Australia and Greater Adelaide.

I deliberately use the academically contentious (and somewhat dated) term “periphery” because it summons a long history of debate over colonial and post-colonial development. While I will not go over those debates here, some of that “development” should ring warning bells about policies we might adopt to address the under-development and subsequent inequality in our own periphery.

For instance, the Australian regional development default often appears to be to intensify the extraction of natural resources. This is intellectually lazy and driven more by private profit than community development, but crucially, as Joe Collins argues in a recent JAPE article, such “extractivism” does not guarantee development and comes at great costs to the environment, and often to local communities – Indigenous and settler.

Further, the low-wage strategies adopted in parts of the post-colonial world may also be counter-productive. Given the particular shape of the income graphs above, low-wage strategies may simply increase numbers in the low-mid income brackets, but do little to close the gaps identified at the higher end which are drivers of geographic inequality (albeit while making internal distributions more even). At best, it is a levelling-down, rather than levelling-up, approach.

I may return to these policy arguments in future posts, but my main purpose here was simply to examine the data on regional inequality in South Australia. However, the results, which posit regional South Australia as the periphery of the periphery, clearly bode badly for equality and for the economic sustainability of those regional areas. A significant migration and regional development policy response is required.