[In]Sights for Competitive Regions: Human Capital

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

[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 CapitalThe 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

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IntroductionThis 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]SightIndicators 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.

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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

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.

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Human Capital and Competitiveness in Regional AustraliaRegional 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 CapitalSource: [In]Sight: Australia’s regional competitive index

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

Indicators of Education Across Life StagesEarly 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 QualificationsRegional 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

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

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.

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Human Capital in Different Types of RegionsOverall 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 communitiesSource: 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.

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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.

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

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

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 CitiesConnected 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 13

Human Capital in Regional Australia: A State PerspectiveThe 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.

NSW Vic Qld SA WA Tas NT0%

10%20%30%40%50%60%70%

Primary school pe-formanceSecondary school per-formanceTechnical qualificationsUniversity qualifications

Prop

ortio

n of

pop

u-la

tion/

stud

ents

te

sted

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 competit

ive(47.2%)

Competitive

(44.4%)

Less competiti

ve(42%)

Least competit

ive(40.1%)

Less competit

ive(41.6%)

Less competiti

ve(40.9%)

Most competitiv

e(48.4%)

Early school leavers

Less competit

ive(62.6%)

Competitive

(60.9%)

Less competiti

ve(61.8%)

Most competit

ive(56.3%)

Less competit

ive(64.9%)

Least competiti

ve(65.5%)

Less competitive (64.8%)

Early childhood developm

ent

Highlycompetit

ive

Most competiti

ve

Least competiti

ve

Less competit

ive

Highly competit

ive

Highly competiti

ve

Less competitiv

e

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

(22.2%) (20.6%) (33.6%) (30.4%) (24.2%) (24%) (33.3%)

Primary education

Highly competit

ive(55.7%)

Most competiti

ve(61.9%)

Less competiti

ve(35%)

Highly competit

ive(47.8%)

Highlycompetit

ive(51.1%)

Highly competiti

ve(54.7%)

Least competitiv

e(20.1%)

Secondary education

Highly competit

ive(26.5%)

Mostcompetiti

ve(34.8%)

Less competiti

ve(20.2%)

Highly competit

ive(28.4%)

Highly competit

ive(29.7%)

Competitive

(24.1%)

Least competitiv

e(11.8%)

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 qualificati

ons

Highly competitiv

e(13.3%)

Most competit

ive(15.4%)

Least competiti

ve(9.4%)

Less competit

ive(11%)

Less competit

ive(10.4%)

Highly competit

ive(13.5%)

Less competiti

ve(10.5%)

Technical qualificati

ons

Highly competitiv

e(35.1%)

Most competit

ive(36.4%)

Competitive

(28.8%)

Highly competit

ive(30.1%)

Highly competit

ive(32.6%)

Highly competit

ive(34.6%)

Least competiti

ve(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

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

Health

Less competi

tive(64.3%)

Most competiti

ve(56.3%)

Less competiti

ve(61.8%)

Competitive

(60.7%)

Least competiti

ve(64.5%)

Competitive

(60.6%)(Inadequate data)

English langua

ge proficie

ncy

Highlycompeti

tive(94.8%)

Competitive

(92.5%)

Competitive

(92.5%)

Competitive

(92.8%)Highly

competitive

(94.9%)

Most competiti

ve(96%)

Least competiti

ve(84.3%)

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

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.

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

LGA Rank StateHobart 44 TasmaniaCapel 75 Western Australia

Newcastle 82 New South WalesGreater Geelong 95 Victoria

Wollongong 96 New South WalesBathurst Regional 99 New South Wales

Ballarat 103 VictoriaBallina 106 New South Wales

Wagga Wagga 109 New South WalesOrange 110 New South Wales

Top Performing Connected Lifestyle RegionsLGA Rank State

Queenscliffe 13 VictoriaKiama 50 New South Wales

Kingborough 54 TasmaniaSurf Coast 59 Victoria

Wingecarribee 67 New South WalesMacedon Ranges 71 Victoria

Yass Valley 74 New South WalesPalerang 81 New South Wales

Byron 90 New South WalesGolden Plains 91 Victoria

Top Performing Industry and Service HubsLGA Rank State

Armidale Dumaresq 58 New South WalesBusselton 112 Western AustraliaHorsham 131 Victoria

Warrnambool 133 VictoriaBega Valley 144 New South WalesEurobodalla 150 New South WalesWangaratta 153 Victoria

Albany 164 Western AustraliaSouth Gippsland 166 Victoria

Great Lakes 191 New South Wales

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

Top Performing Heartland Regions LGAsLGA Rank State

Denmark 83 Western AustraliaMansfield 89 VictoriaConargo 97 New South Wales

Augusta-Margaret River 98 Western Australia

Snowy River 119 New South WalesWoodanilling 126 Western Australia

Southern Grampians 134 VictoriaAlpine 142 Victoria

Cooma-Monaro 143 New South WalesMoyne 145 Victoria

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About UsIndependent 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 copyrightThis 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 InformationTo discuss [In]Sights for Competitive Regions: Human Capital further please contact:

Jack ArcherDeputy Chief Executive OfficerJack.Archer@regionalaustralia.org.au(02) 6260 3733

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End Notes

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