Australia's metropolitan cities are clearly divided into areas that generate high levels of income tax revenue and those that are highly dependent on welfare benefits according to researchers at The University of Queensland and Monash University.
In a paper published this week in the Monash University journal People and Place, Scott Baum, Robert Stimson, Patrick Mullins and Kevin O'Connor produce startling evidence of the socio-economic divides that exist in Australia's big cities.
In those communities whose workers are most integrated into the industries and occupations in the ?new economy' with strong global links, an average of only 7 per cent of post-tax income is made up by transfer payments from the Federal Government. The ratio of income tax paid to transfer payments received was 4.9:1.
In contrast, the most disadvantaged communities where levels of structural unemployment remain high and where once prosperous old economy manufacturing industries have been hard hit by economic restructuring, an average of 26 per cent of post-tax income is made up of transfer payments. And the ratio of income tax paid to benefits received is 0:8.
The study analysed patterns of income tax generation and levels of welfare payments received in 250 Statistical Local Areas, across Sydney, Melbourne, Brisbane, Perth, Adelaide, Hobart and Canberra metropolitan regions. Communities were clustered into places of opportunity and vulnerability according to their characteristics on a set of measures showing how local areas were coping with the economic and social transitions occurring in Australian society due to the impacts of globalisation and structural change since the mid 1980s.
The community generating the highest ratio of tax to benefits received in Australia's big cities was Mosman in Sydney, where more than $10.00 of income tax was generated for every $1 received in transfer payments.
The most vulnerable community was Elizabeth in South Australia, where only $0.40 of income tax was generated for every $1 received in benefits.
A high proportion of places in Adelaide and Hobart in particular, plus a significant number of communities in Melbourne, are characterised by the coincidence of high levels of welfare dependency and low levels of labour force skill in sub-regional labour markets where there are very few opportunities for work in the occupations and industries of the new economy.
Large areas in outer suburban Brisbane and the broader Southeast Queensland region, including the Gold Coast and Sunshine Coast also have high levels of welfare dependency in places where economic restructuring and decline of old industries is not a issue.
In Sydney, some areas of significant concentration of disadvantage with high levels of welfare dependency do exist. But in general, all the communities across Sydney, in both the advantaged and disadvantaged categories, tend to have better ratios of tax generation to welfare benefits than in the other cities, except for Canberra.
The researchers say an important policy challenge is how best to overcome the impact of spatially concentrated disadvantage in our big cities. This requires a multi-dimensional approach.
"What is needed is recognition that a ?one size fits all' policy solution will not solve the problems everywhere and that ideally a broader mix of approaches combing both people-based and place-based policies are needed."
The research suggests this could include a mix of policies including labour force skills training programs to develop high levels of human capital, and carefully targeted regional growth programs that might include social housing and industrial renewal in selected localities, might be appropriate.
However, the researchers warn that policy approaches need to recognise the important nexus that exists between employment opportunity, human skills capacity and individual choice of where people want to live.
"The existence of assistance such as social housing within a local community will not necessarily bring about guaranteed reductions in the level of socio-economic disadvantage. Rather opportunities for employment and having the requisite skills to participate are necessary conditions for improvement.
"Households and individuals need to have the capacity-increased knowledge, levels of social capital and material resources-as well as the ability to choose outcomes."
Further details and for interviews, contact:
Professor Robert Stimson - Tel: (w) (07) 3365 6307 or Mobile: 0411 020627
Dr Scott Baum - Tel: (07) 3365 3565 or Mobile: 041 262 5298
Peter McCutcheon at UQ Communications 0413 380 012
or email: communications@mailbox.uq.edu.au
