[In]Sights for Competitive Regions: Human Capital – January 2015 1

[In]Sights for Competitive Regions:

Human Capital

[In]Sight: Australia’s regional competitiveness index is the lens regions need

to make the most of their advantages.

This report provides an analysis of Human Capital in [In]Sight: Australia’s regional competitiveness

index. Other analysis reports, a detailed user guide and the online interactive map including 624

regional competitiveness profiles are available at www.regionalaustralia.org.au/insight

[In]Sights for Competitive Regions: Human Capital – January 2015 2

Making the Most of Our Regional Human Capital

The skills, health and education of a region’s workforce are fundamental to its competitiveness. Strong human capital enables communities to be more productive, to innovate and to respond to changes in the economy. [In]Sight: Australia’s regional competitiveness index reveals vast differences between the education and health outcomes for people in regional Australia. The greatest disparities emerge in primary and secondary educational outcomes and in the distribution of people with university qualifications. Poor outcomes in some regions should not be viewed as an inevitable result of location. Many of the most competitive regions for the Human Capital theme are located within regional Australia. The strong outcomes for some rural and remote communities demonstrate that competitive human capital can be developed in all parts of Australia. Australia’s greatest competitive challenge is to achieve more equitable education outcomes across regional Australia. This will ensure that all Australians can find a productive place in the economy and secure the quality of life for themselves and their communities. It will also enable our regions to realise their potential.

[In]Sights for Competitive Regions: Human Capital – January 2015 3

[In]Sights for Competitive Regions: Human Capital – January 2015 4

[In]Sights for Competitive Regions: Human Capital – January 2015 5

Introduction

This report examines the key trends within the Human Capital theme in [In]Sight: Australia’s regional

competitiveness index. Human capital is one of the most crucial factors in a region’s competitiveness. The

skills, health and education of a workforce are fundamental to prosperity.

Competitive Human Capital is important for increasing productivity. Less competitive Human Capital

undermines the ability of a community to fulfil local job and business opportunities. Strong human

capital also allows communities and the individuals within these communities to respond to shifts in the

economy.

Each local government area (LGA) is grouped into a regional type including Regional Cities, Connected

Lifestyle Regions, Industry and Service Hubs and the Heartland Regions. Trends across the regional

areas in each state are also reviewed.

This report is one of a series of 10 examining the trends in each of the themes of [In]Sight.

Measuring Human Capital in [In]Sight

Indicators of basic education:

Early childhood development (sourced from Social Health Atlas of Australia data): The

proportion of children in their first year of school classified as developmentally vulnerable. A

lower percentage of developmentally vulnerable children leads to a better ranking.

Primary school education (sourced from NAPLAN data): The proportion of high test results

achieved out of all completed primary school NAPLAN tests. A higher proportion leads to a

higher ranking.

Secondary school education (sourced from NAPLAN data): The proportion of high test results

achieved out of all completed secondary schools NAPLAN tests. A higher proportion leads to a

higher ranking.

Early school leavers (sourced form ABS data): The proportion of the adult population that did

not complete year 12. A lower proportion of early school leavers leads to a better ranking.

Lifelong learning (sourced from ABS data): The proportion of adults participating in education

and training. A higher proportion of people participating in education or training leads to a

high ranking.

Basic education is the foundation for competitive human capital. This is also the area in which

governments and communities can have the most direct influence on competitiveness in this theme

through improving schooling and other initiatives

[In]Sights for Competitive Regions: Human Capital – January 2015 6

Indicators of post school qualifications:

University qualifications (sourced from ABS data): The proportion of adults who have a degree.

The higher the proportion of the population with a university qualification, the higher the

ranking.

Technical qualifications (sourced from ABS data): The proportion of adults with a certificate or

diploma. The higher the proportion of the population with a technical qualification, the higher

the ranking.

Having a large proportion of the workforce with a technical or university qualification is essential to

competitiveness. Qualification indicators are more difficult to influence as they are reflective of the

local labour market demand for skills as well as the presence and performance of educational

institutions.

Indicators of potential constraints on competitiveness:

Health (derived from Social Health Atlas of Australia data): The proportion of adults with at

least one of the four health risk factors of smoking, harmful use of alcohol, physical inactivity

and obesity. A lower proportion of adults with health risks lead to a better ranking.

English proficiency (ABS Census 2011): The proportion of people who self-identify as being

able to speak English well or very well. Regions with higher proportions of people that have a

proficient level of English earn higher rankings.

Further information on this theme and the measurement and construction of the index can be accessed

in the [In]Sight 2014 Users Guide.

[In]Sights for Competitive Regions: Human Capital – January 2015 7

Human Capital and Competitiveness in Regional Australia

Regional Australia shows great diversity in human capital competitiveness as seen in Figure 1. The most

competitive areas are spread across the country.

Queenscliffe and Surf Coast in Victoria, Kiama and Armidale in New South Wales and Denmark in

Western Australia were the best performing regional areas overall, each ranking within the top 50

LGAs in Australia.

Areas in regional Australia occupy some of the highest rankings for secondary school outcomes, health

and English proficiency. On the other hand, all of the lowest ranked areas lie beyond Australia’s major

capital cities. This disparity in outcomes is a challenge for increasing the competitiveness of regional

Australia.

Figure 1: Competitiveness of LGAs in Australia for Human Capital

Source: [In]Sight: Australia’s regional competitive index

[In]Sights for Competitive Regions: Human Capital – January 2015 8

Indicators of Education Across Life Stages

Early childhood and lifelong learning outcomes are quite similar across Australia, however regional

areas do not rank nearly as highly on average compared to metropolitan areas across the primary

and secondary education indicators. The average proportion of high NAPLAN scores on secondary

school tests was 24.3 per cent in regional LGAs compared to 43.8 per cent in metropolitan areas.

Early childhood development in Mansfield near the Alpine areas of Victoria is very successful with only

3.8 per cent of children assessed as developmentally vulnerable. In contrast, 80 per cent of children in

the Central Highlands in Queensland were assessed as developmentally vulnerable. The average

across all regional areas was 26.6 per cent.

The rate of high school completion differs across Australia. Hobart and Darwin were amongst the best

performing regional areas on this indicator, with completion rates of 70 per cent and 61 per cent

respectively. Leonora in Western Australia and Torres in Queensland also showed high completion

rates. However, only 9 per cent of adults in Wujal Wujal in Queensland had completed year 12 which

limits the workforce options for this community.

Overall, the education results for regional Australia remain disappointing and a central challenge for

the future. The potential of many places will only be realised if we can do better in education across

life stages.

Indicators of Qualifications

Regional areas need a knowledgeable and skilled workforce to grow. Higher rates of technical

qualifications are common in regional Australia reflecting the importance of primary industries to many

regional economies. On average, 32.3 per cent of all working age people in regional LGAs have a

technical qualification, compared to only 28.7 per cent in metropolitan areas. Almost half of the

working age population in Great Lakes on the New South Wales north coast has a technical

qualification, making it one of Australia’s most technically proficient areas.

University qualifications are generally less prevalent in regional Australia compared to technical

qualifications. However there are important clusters of expertise. Queenscliffe in Victoria and Hobart

have the highest levels university qualifications with over 40 per cent – figures significantly higher than

the 11.9 per cent average across all regional LGAs. Increasing the demand for university educated

workers should be an important goal for many regional areas to provide greater flexibility and

capacity in the local economy.

Indicators of Health and English Proficiency

On average, regional LGAs have 61.8 per cent of the population exhibiting preventable health risk

factors. Although this is higher than the metro LGA average of 52 per cent, some of the healthiest

areas are also in regional Australia. A healthy population means that there is a healthy and productive

workforce available to industry and business to underpin economic development.

[In]Sights for Competitive Regions: Human Capital – January 2015 9

Four of the top five LGAs for health outcomes were located in regional Australia. Townsville in

Queensland and Boddington in Western Australia were some of the most competitive LGAs with around

37 per cent of adults in those areas having preventable health risks.

Ninety two per cent of the Australian population identifies as being able to speak English ‘well’ or

‘very well’. For many regional areas this level approaches 100 per cent. The lowest rates of English

speakers are in remote areas, such as MacDonnell in the Northern Territory at 66.5 per cent. This low

level of English proficiency makes it more challenging for large parts of the potential workforce in

these remote areas to compete for jobs and engage in education.

[In]Sights for Competitive Regions: Human Capital – January 2015 10

Human Capital in Different Types of Regions

Overall trends and the best and worst performers are important but it is also important to consider

different groups of regions with similar foundations in regional Australia. The RAI identifies four distinct

and important groups of regions that have different development pathways (Figure 2).

Figure 2: Four types of regional communities Source: RAI Talking Point: The Foundations of Regional Australia

Educational indicators show a divide between the regional elements (Table 1). Regional Cities and Connected Lifestyle Regions are consistently more competitive while Industry and Service Hubs and the Heartland Regions are less competitive on average. The exception to this is in early childhood where Regional Cities, Industry and Service Hubs and the Heartland Regions are less competitive compared to Connected Lifestyle Areas. Overall, the divide between different geographical areas is less prominent before school age. Smaller rural and remote heartlands areas are the least competitive regional element with many regions struggling to achieve the basic education levels every region and every Australian needs to compete in today’s economy. However, some of Australia’s smallest Heartland Regions are achieving very strong education outcomes. Weipa in Queensland is the highest ranking regional LGA for secondary education: it ranks 19th nationally.

[In]Sights for Competitive Regions: Human Capital – January 2015 11

Table 1: Summary of average results for each type of region within each education indicator

Group Regional Cities Connected Lifestyle

Regions

Industry and Service

Hubs Heartland Regions

Lifelong learning Most competitive

(46.3%)

Highly competitive

(46%)

Less competitive

(43.8%)

Least competitive

(43%)

Early school

leavers

Most competitive

(56.2%)

Competitive

(58.7%)

Competitive

(60.7%)

Least competitive

(62.7%)

Early childhood

development

Less competitive

(27.1%)

Most competitive

(23.1%)

Highly competitive

(28.3%)

Least competitive

(27%)

Primary education Most competitive

(57.8%)

Highly competitive

(56.8%)

Competitive

(54%)

Least competitive

(46%)

Secondary

education

Most competitive

(31.1%)

Highly competitive

(27.7%)

Highly competitive

(28.2%)

Least competitive

(21.9%)

Different competitive capacity is also evident within the qualifications indicators. Regional Cities are again the most competitive for both university and technical qualifications (see Table 2) emphasising these areas as important hubs of skilled workforce capacity in regional Australia. Table 2: Summary of average results for each type of region within each qualification indicator

Group Regional Cities Connected Lifestyle

Regions

Industry and Service

Hubs Heartland Regions

University

qualifications

Most competitive

(15.9%)

Highly competitive

(15.2%)

Less competitive

(13%)

Least competitive

(10.4%)

Technical

qualifications

Most competitive

(36.2%)

Highly competitive

(36%)

Highly competitive

(35.7%)

Least competitive

(30.5%)

Industry and Service Hubs are an exception to this trend for technical qualifications. Industry and Service Hubs are highly competitive for this indicator with the average of the LGAs only 0.5 per cent lower than that of the average for the Regional Cities LGAs. Technical qualifications are essential for Industry and Service Hubs as they play a central role in ensuring the competitiveness of the Australia’s resources industry and agriculture sector. Levels of health and English proficiency are similar across different regional areas (see Table 3).

Table 3: Summary of average results for each type of region within the health and English proficiency indicators

Group Regional Cities Connected Lifestyle

Regions

Industry and Service

Hubs Heartland Regions

Health Competitive

(59%)

Most competitive

(57.3%)

Competitive

(61.2%)

Least competitive

(63.3%)

English proficiency Competitive

(94%)

Competitive

(94.9%)

Competitive

(93.7%)

Competitive

(93.3%)

[In]Sights for Competitive Regions: Human Capital – January 2015 12

Human Capital in Regional Australia: A State Perspective

The regional areas of the southern states (including Tasmania) and Western Australia on average are

most competitive in the Human Capital theme. In comparison, regional northern Australia ranks poorly

across most of the indicators in Human Capital, especially in school education. The RAI’s work on the

future of northern Australia has previously identified that human capital is one of the most serious

bottlenecks for growth in northern Australiai.

Figure 3: Schooling and qualifications in the regional areas of each state

The southern states are currently more competitive in primary and secondary education as well as in

both qualifications indicators. Regional Victoria performs particularly well across all educational

indicators increasing the capacity for the region to respond to future changes in its industry base.

Table 4: Scores on basic educational indicators by state (regional areas only)

Group NSW Victoria QLD WA SA Tasmania NT

Lifelong

learners

Highly

competitive

(47.2%)

Competitive

(44.4%)

Less

competitive

(42%)

Least

competitive

(40.1%)

Less

competitive

(41.6%)

Less

competitive

(40.9%)

Most

competitive

(48.4%)

Early school

leavers

Less

competitive

(62.6%)

Competitive

(60.9%)

Less

competitive

(61.8%)

Most

competitive

(56.3%)

Less

competitive

(64.9%)

Least

competitive

(65.5%)

Less

competitive

(64.8%)

Early

childhood

development

Highly

competitive

(22.2%)

Most

competitive

(20.6%)

Least

competitive

(33.6%)

Less

competitive

(30.4%)

Highly

competitive

(24.2%)

Highly

competitive

(24%)

Less

competitive

(33.3%)

Primary

education

Highly

competitive

(55.7%)

Most

competitive

(61.9%)

Less

competitive

(35%)

Highly

competitive

(47.8%)

Highly

competitive

(51.1%)

Highly

competitive

(54.7%)

Least

competitive

(20.1%)

Secondary

education

Highly

competitive

(26.5%)

Most

competitive

(34.8%)

Less

competitive

(20.2%)

Highly

competitive

(28.4%)

Highly

competitive

(29.7%)

Competitive

(24.1%)

Least

competitive

(11.8%)

0%

10%

20%

30%

40%

50%

60%

70%

NSW Vic Qld SA WA Tas NT

Pro

port

ion

of

popul

ation/

stud

ent

s te

sted

Primary schoolpeformance

Secondary schoolperformance

Technicalqualifications

Universityqualifications

[In]Sights for Competitive Regions: Human Capital – January 2015 13

Regional New South Wales, regional Victoria and Tasmania are also outperforming the other states in

the presence of qualifications overall. These three states are ranked as more or highly competitive for

both technical and university qualifications (see Table 3).

The averages of the states are, however, more consistent for the technical qualifications indicator. The

exception to this is the Northern Territory which averages 14.4 per cent less than the most competitive

state (regional Victoria). This is exacerbating the need for the Northern Territory to attract labour from

outside its regions to realise the benefits of resources and other developments. Building a stronger

qualifications base is an important challenge for the Northern Territory overall.

Table 5: Average scores on qualifications indicators by state (regional areas only)

Group NSW Victoria QLD WA SA Tasmania NT

University

qualifications

Highly

competitive

(13.3%)

Most

competitive

(15.4%)

Least

competitive

(9.4%)

Less

competitive

(11%)

Less

competitive

(10.4%)

Highly

competitive

(13.5%)

Less

competitive

(10.5%)

Technical

qualifications

Highly

competitive

(35.1%)

Most

competitive

(36.4%)

Competitive

(28.8%)

Highly

competitive

(30.1%)

Highly

competitive

(32.6%)

Highly

competitive

(34.6%)

Least

competitive

(22%)

Health and English proficiency are similar across the states. Regional Victoria and Tasmania both

perform well across these indicators. The Northern Territory has low levels of English speaking

proficiency in many areas. Many of the more remote areas in the Northern Territory lack adequate

data on Health to make an accurate assessment.

Table 6: Average values on the health and English proficiency indicators by state (regional areas only)

Group NSW Victoria QLD WA SA Tasmania NT

Health

Less

competitiv

e

(64.3%)

Most

competitive

(56.3%)

Less

competitive

(61.8%)

Competitive

(60.7%)

Least

competitive

(64.5%)

Competitive

(60.6%)

(Inadequate

data)

English

language

proficienc

y

Highly

competitiv

e

(94.8%)

Competitive

(92.5%)

Competitive

(92.5%)

Competitive

(92.8%)

Highly

competitive

(94.9%)

Most

competitive

(96%)

Least

competitive

(84.3%)

[In]Sights for Competitive Regions: Human Capital – January 2015 14

Making the Most of [In]Sight

The indicators measuring Human Capital in [In]Sight allow regions to better understand their workforce

capacity now and in the future and how people in the region are contributing to competitiveness.

The RAI’s report Rethinking the future of northern Australia's regions: more than mines, dams and

development dreams found that human capital is one of the most serious bottlenecks for growth in

northern Australia.

To learn more about how people are being engaged in regional Australia support our nations

competitiveness please also check out two other papers in the [In]Sights for Competitive Regions series:

Demography: find out more about how a regions population size and dynamics provide sources

of competitive advantage.

Labour Market Efficiency: find out how we are engaging the potential workforce in different

parts of regional Australia and where are the best opportunities to maximise people’s

contribution.

Technological Readiness: find out whether regions have the infrastructure and resources they

need to develop in the digital age.

These publications and the 624 [In]Sight competitiveness profiles are available for review at

www.regionalaustralia.org.au/insight

Regional comparisons, data downloads and expert advice from the RAI are also available for anyone

interested in putting [In]Sight to work.

[In]Sights for Competitive Regions: Human Capital – January 2015 15

Appendix: Human Capital, Top Performers in Regional Australia Top Performing Regional City LGAs

LGA Rank State

Hobart 44 Tasmania

Capel 75 Western Australia

Newcastle 82 New South Wales

Greater Geelong 95 Victoria

Wollongong 96 New South Wales

Bathurst Regional 99 New South Wales

Ballarat 103 Victoria

Ballina 106 New South Wales

Wagga Wagga 109 New South Wales

Orange 110 New South Wales

Top Performing Connected Lifestyle Regions

LGA Rank State

Queenscliffe 13 Victoria

Kiama 50 New South Wales

Kingborough 54 Tasmania

Surf Coast 59 Victoria

Wingecarribee 67 New South Wales

Macedon Ranges 71 Victoria

Yass Valley 74 New South Wales

Palerang 81 New South Wales

Byron 90 New South Wales

Golden Plains 91 Victoria

Top Performing Industry and Service Hubs

LGA Rank State

Armidale Dumaresq 58 New South Wales

Busselton 112 Western Australia

Horsham 131 Victoria

Warrnambool 133 Victoria

Bega Valley 144 New South Wales

Eurobodalla 150 New South Wales

Wangaratta 153 Victoria

Albany 164 Western Australia

South Gippsland 166 Victoria

Great Lakes 191 New South Wales

[In]Sights for Competitive Regions: Human Capital – January 2015 16

Top Performing Heartland Regions LGAs

LGA Rank State

Denmark 83 Western Australia

Mansfield 89 Victoria

Conargo 97 New South Wales

Augusta-Margaret River 98 Western Australia

Snowy River 119 New South Wales

Woodanilling 126 Western Australia

Southern Grampians 134 Victoria

Alpine 142 Victoria

Cooma-Monaro 143 New South Wales

Moyne 145 Victoria

[In]Sights for Competitive Regions: Human Capital – January 2015 17

About Us

Independent and informed by both research and ongoing dialogue with the community, the Regional

Australia Institute (RAI) develops policy and advocates for change to build a stronger economy and

better quality of life in regional Australia – for the benefit of all Australians.

To find out more about the RAI contact us at info@regionalaustralia.org.au or visit

www.regionalaustralia.org.au

Disclaimer and copyright This report translates and analyses findings of research to enable an informed public discussion of

regional issues in Australia. It is intended to assist people to think about their perspectives, assumptions

and understanding of regional issues.

No responsibility is accepted by the RAI, its Board or its funders for the quality of advice or decisions

made by others based on the information presented in this publication.

Unless otherwise specified, the contents of this report remain the property of the RAI. Reproduction for

non-commercial purposes with attribution of authorship is permitted.

Contacts and Further Information To discuss [In]Sights for Competitive Regions: Human Capital further please contact:

Jack Archer

Deputy Chief Executive Officer

Jack.Archer@regionalaustralia.org.au

(02) 6260 3733

[In]Sights for Competitive Regions: Human Capital – January 2015 18

End Notes

i Rethinking the future of northern Australia's regions: more than mines, dams and development dreams (Regional Australia Institute November, 2013)