The Future Is Big Business In Australian Regional Towns Companies and start-ups have traditionally chosen capital cities like Sydney and Melbourne for their headquarters. They’ve enjoyed the economic and infrastructure advantages of major centres and access to a larger pool of skilled employees. Operating out of a capital city also has a certain prestige connected to it. But, things are changing. A NSW Parliamentary Inquiry found 25 per cent of new businesses are based in regional locations. Digital connectivity and a rising social and environmental conscience among consumers mean that where you are is less relevant today, than who you are and how you do what you do. As a result, many large and small businesses are choosing to take advantage of the increasing investment and interest in regional development, fuelled by government support for tourism and efforts to ease population pressure on major cities.
WHERE THE ACTION IS
Places like Geelong (VIC), Byron Bay (NSW) and Wollongong (NSW) are particularly attractive to companies of all sizes offering the lifestyle benefits of a regional location – more affordable housing, cheaper cost of living, less traffic congestion, strong community connections – within comfortable commuting distance of capital cities. Table: Fast growing regional towns in New South Wales and Victoria
|TOWN||WELL- KNOWN FOR|
|Wollongong (NSW)||Software and digital content, education and tourism|
|Byron Bay (NSW)||Art, music and performing arts and start-ups|
|Surf Coast (VIC)||Creative, advertising, marketing, architecture, design and visual arts|
|Geelong (VIC)||Start-up hub, tourism, arts and culture|
|Newcastle (NSW)||Tourism, business, arts and culture|
|Ballarat (VIC)||Tourism, arts and culture, events, music, sports|
|Shepparton (VIC)||Arts and culture, tourism|
Source: Regional Australia Institute
TWO REGIONAL SUCCESS STORIES
Two regional success stories in NSW are travel business TripADeal in Byron Bay, and fashion outlet Birdsnest in Cooma.
Local Byron bay residents, Norm Black and Richard Johnston chose to set up their new business in Byron Bay rather than Sydney in 2011. They wanted to grow away from a pressure-filled environment. While this move allowed them breathing room, they faced huge challenges early on. “When we were growing in the beginning, we were missing almost a 1000 calls daily because Telstra couldn’t get phone lines into the area,” Norm told News.com.au. The company had to install satellites and other expensive equipment just to communicate with customers. However, the company soon overcame these teething issues and their idea took off. In 2016 and 2017, TripADeal topped the Financial Review’s Fast 100 and Fast Starters List for tremendous growth of 465 per cent. The duo said starting and running a business in a regional area known for shorts and surf lifestyle has played a huge part in their success. They have the freedom to do things differently and create their own corporate culture – employees can wear thongs to work if they wish. In 2004, local Cooma resident Jane Cay founded Birdsnest, a women’s online fashion business. Today, the business employs over 140 locals and had a turnover of 20 million last year. The company also has a physical shop in the town, an hour from Canberra, and is a popular travel stop for ski tourists. From July to December, they open a pop-up store in Canberra, tapping into the large local market. In Victoria, things are also moving along nicely. Seeley International, Australia’s largest air-conditioning manufacturer has recently relocated to Wodonga, a move that will create more than 300 jobs in the state. The company will also get access to one of the lowest payroll tax rates in the state. While these examples highlight exciting possibilities, regional businesses also face many challenges. Skill shortages, lack of infrastructure, and communications service levels are just some of the concerns companies have when considering the move. So how are these concerns being addressed?
STATE GOVERNMENT INVESTMENT
The Victorian and New South Wales governments are leading the way in offering financial incentives to businesses to move operations to regional areas. In NSW, the Investment Attraction Package makes it easier for businesses to start and establish themselves in regional NSW. The package offers generous financial incentives and interest-free loans that companies can use towards reducing government levies and relocation costs. A reduced payroll tax rate is also on offer. The Skills Relocation Assistance program (the other half of the program), gives skilled workers $10,000 for relocation expenses and temporary accommodation. It’s expected these incentives will attract global companies and skilled workers to regional NSW. Businesses also have access to a Regional Investment Coordinator – who acts as a “personal assistant” to smooth the whole process. Through Regional Development Victoria (RDV), the government provides a range of funds to create jobs, build infrastructure, support arts, culture, and business in Victoria. The Victorian government has created a $200 million Future Industries Fund to help develop high-growth industries such as medical, pharmaceuticals, new energy technologies, food and fibre, transport, defence and construction, international educational and professional services. In return, these industries will generate well-paid jobs attracting highly skilled professionals to regional centres.
REGIONAL SETTLEMENT POLICY FOR NEW MIGRANTS
A yet-to-be released population policy by the current government focuses on immigration. New migrants arriving in Australia will be directed to settle in regional areas to ease pressure on capital cities. The flow-on benefit to regional business may be an increase in the number of appropriately qualified and skilled workers. Settling skilled and unskilled migrants in regional areas isn’t new, but there are talked about changes coming to existing arrangements. Migration agent Amanda Tinner from Visa Executive said, “Up until a few years ago, we had a temporary regional migration program where employers had salary exemptions for their employees and lower skill requirements for those who worked and lived in regional towns. Immigration has now changed its laws to level the playing field for everyone – so employers are now paying the same salaries in regional towns that they’re paying in the cities.” This is not the only challenge. “How will the government encourage people to migrate here but restrict them to a particular town? What will keep migrants in regional areas once this requirement has been met?” asks Amanda. The policy has yet to be implemented. Meanwhile, state governments are also working hard to encourage domestic and international visitors to visit lesser-known regional towns, to boost the tourism dollar as well as inspire companies who may be interested in taking advantage of financial and tax incentives.
BOOSTING REGIONAL TOURISM – BENDIGO’S “PHENOMENAL SUCCESS”
A recent event hosted by the British Chamber of Commerce in Melbourne brought together key representatives from tourism, business and trade organisations. One of the themes that emerged from the discussion was that international tourists and corporate travellers also needed to experience the sights and sounds of regional Australia. Panelists agreed that events were a great way to attract corporate travellers or road warriors to these regions (along with leisure travellers). Paul Constantinou, CEO and Founder of Quest Apartment Hotels said corporate travellers who arrived on Monday and left on Thursday might be persuaded to stay longer if there was an interesting event like a tennis tournament on the weekend. “Bendigo is a phenomenal success where arts and exhibitions are being used successfully to bring people to the town. The Princess Grace exhibition held a few years ago literally filled Bendigo throughout the weeks and for up to six to nine months. We’ve also seen the opportunity for better accommodation in Bendigo and other regional towns experiencing growth. Our biggest growth in commercial and industrial developments in Melbourne sit outside the city,” said Paul. Quest Apartment Hotels is just one major player in the tourism industry that is focusing on regional expansion, and capitalising on government incentives. So what’s next for companies wanting to move to regional centres?
TO MOVE OR NOT TO MOVE
Business is booming in many regional areas because of government funding, generous tax incentives and flexible policies. And businesses are starting to pay attention. What makes one town better than another for a business or start-up may be a mix of different factors. However, regional centres are showing promise and potential for companies wanting to operate out of these areas. As Australia’s population grows and demand for goods and services, regional areas may prove to be more profitable for companies because of the financial and tax incentives on offer. Published by: The Employee Mobility Institute, December 2018