Office of the Chief Economist – An economic overview of northern Australia

Monday, 19 June 2017

Developing northern Australia

The White Paper on Developing Northern Australia identified a range of opportunities for the region. Yet despite these advantages, the region faces some challenges.

Proximity to key trading partners

Northern Australia lies in the heart of the Asia-Pacific, a region experiencing rapid population and economic growth. South East Asia and Southern China are just 3 to 5 hours flight from Darwin, providing an opportunity for industries in the north to access Asian markets.
Today, Asia accounts for around 60 per cent of the global population.

Natural Advantages

Northern Australia has vast mineral wealth. The region accounts for most of Australia’s iron ore and gas production, around half of Australia’s coal production and a large share of Australia’s zinc, copper and bauxite production. The majority of resource and energy production in northern Australia is exported to the Asia-Pacific region.

Defence

Northern Australia is the gateway for Australian defence. Its position supports the country’s ability to project and sustain forces into the region for surveillance, humanitarian assistance and disaster relief. Defence investment and employees deliver significant benefits to the north by boosting local economies and populations and improving infrastructure.

Population and remoteness

61 per cent of northern Australia’s population lives in 13 significant urban areas (areas with a population over 10,000). Relative to southern Australia the north is more urbanised – there are more people living in city like relationships - the Significant Urban Area of Townsville has a close relationship with the many smaller communities nearby. This means urban centres in the north are more important to the regional economy than is the case in the south. Outside these urban areas, most of northern Australia is sparsely settled and remote. Industries tend to be smaller and dispersed, which along with low population density, significantly increases the cost of living and doing business. Infrastructure provision and broader investment are also more challenging because of the difficulty in achieving economies of scale.

Water

The availability of water is a major driver of economic activity, particularly for industries key to the north, including agriculture, mining, energy and tourism. While northern Australia receives more than 60 per cent of national rainfall it is highly seasonal and has high evaporation rates, making utilisation challenging.

Labour

Unemployment rates vary substantially across the region, ranging from 9.4 per cent in northern Queensland, to 3.2 per cent in the Northern Territory. Around 64 per cent of employment is in urban areas, with remote areas generally having weak labour markets and low labour force participation. This is particularly evident in the Northern Territory, which has low unemployment in urban areas, but high unemployment in regional areas.

Office of the Chief Economist – An economic overview of northern Australia - Full document