Australia vs the UK: How do mid-size cities perform?

The Gold Coast, Queensland. Image: Getty.

In late June, the Regional Australia Institute (RAI) published two new reports analysing the recent performance of Australia’s regional cities, and outlining a plan for future growth based on the City Deals model currently in use in the UK. As the chief executive of the RAI, Jack Archer, pointed out, big and small cities face different challenges and have different needs:

“In the big cities it’s all about big licks of cash to try to reduce congestion; in small cities it’s all about smart investment to enable new business and population growth.”

This is true on both sides of the globe, for countries with a federal system – and for those that are highly centralised, like the UK.

Focusing on policies that are tailored to the different needs of different cities to drive growth in more places can lead to high returns. While extensive data is more readily available for larger cities, it is equally important to understand the performance of small and mid-sized ones. It can also be helpful to compare the performance of cities internationally.

So what does the data on economic growth and industrial structure show for those smaller cities within Australia, compared with the UK?

1. Proximity to large cities is good for smaller ones, but not sufficient for growth

Although using two different time frames and slightly different metrics makes it hard to compare cities from the two countries, it is clear that mid-sized cities both in Australia and in the UK benefit from connections with expanding large cities. But is it enough to drive medium city growth?

Mid-sized cities close to London perform better than other cities. Between 2009 and 2013, cities like Oxford, Reading, Crawley and Chatham all had an average GVA growth rate above 15 per cent, and it is plausible to believe their success is at least partly related to their proximity to the capital. GVA growth rates were positive everywhere in the country, with the exception of Luton (-1.36 per cent). The national average was just above 11 per cent, but cities outside of the South East tended to see slower growth rates.

GVA growth and population in small and medium sized UK cities. Image: Centre for Cities.

Contrarily, Australian mid-sized cities are spread across the nation, and while many of the bigger cities in this group (e.g Gold Coast, Newcastle and Geelong) are located close to capital cities, they did not all experience strong economic growth. The cities with the highest growth rate in Australia are those experiencing a mining investment or ‘sea-change’ boom.

Despite being pictured as lagging behind metropolitan cities, the 31 Australian regional cities actually perform as well as the larger cities. Looking at Gross Value Added (GVA) growth rates between 2001 and 2013, only one city (Latrobe) had negative growth, and most cities experienced growth in line with the national average of approximately 40 per cent from 2001-2013.

But the real growth winners were cities in Northern Australia including Gladstone (110 per cent) and Mackay (95 per cent), which have seen high growth rates driven by the mining investment boom; and the cities close to high performing metropolitan cities like Perth and Brisbane.

GVA growth and population in small and medium sized Australia cities. Image: Centre for Cities.

2. Cities on both sides of the globe have seen a growth in services, and a decline in manufacturing

A common trend among Australian and UK mid-sized cities is the shift towards new economy industries (finance, education, health and professional services). Growth in services has been consistent across urban Australia, accompanied by a decline in importance of manufacturing.

This is similar to the UK experience, particularly for cities in South East England, where the percentage of private knowledge intensive business services in 2013 was, in most cases, above 15 per cent.


Although all cities are shifting towards new industries, each city is still unique in its nature. As these findings show, specialisation and proximity to big successful metropolitan cities have an impact on the success of mid-sized city economies.

And these are only two examples: many other factors such as demographic make-up, size and industrial composition will also affect cities’ economic growth.

All these differences underline the importance of having a city-based approach at the heart of domestic economic policy. City and growth deals have given local authorities in England the powers and flexibility to address their unique needs. Following a similar approach could offer Australia the chance to unlock further economic opportunities and balance growth across the country.

To find out more about how Australia could learn from the UK experiences see the report: ‘Blueprint for Investing in City Deals: Are you Ready to Deal?’ or you can contact Dr Leonie Pearson, Great Small Cities Program Leader – Regional Australia Institute.

Elena Magrini is a researcher at the Centre for Cities, on whose website this article originally appeared.

 
 
 
 

To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”