Through this chapter I have argued that regional development in Australia is hampered by the outcomes of our system of federalism, by political ideologies grounded in neo-liberalism that are wary of direct interventions in regional economies, and by an emphasis on short-term political responses, rather than longer term strategic interventions. As the case study of the response to the loss of employment at MMAL has shown, governments often choose to act at scales that do not coincide with the scale of need: the closure of the Lonsdale plant and the loss of jobs at Tonsley Park generated challenges for the southern region of Adelaide, but the major response was directed to all of South Australia. This mismatch resulted in the leakage of a considerable percentage of assistance out of the region, often to localities where governments had other priorities. In large measure this failure of scale reflects a flawed understanding of regional issues and regional policies. In the case study presented here, the failure of either the Australian or State government to articulate regional policies that embraced both metropolitan and non-metropolitan regions meant there was no formal structure in place to serve as a mechanism for the delivery of assistance, and gave governments room to manoeuvre in directing assistance to where funding would best suit their political ends, rather than the real needs of affected regions.

Australian federalism lies at the heart of the failure to develop appropriate regional policies. As noted above, the Australian Government has the funding that would empower an effective regional development framework, the State and Territory governments have the constitutional power, and local governments have neither the funding or the power, but have the commitment needed to bring about change. As the discussion of the response to job losses at Mitsubishi Motors has shown, the division of powers between the three tiers of government contributes to a clouding of the lines of responsibility and accountability. While leader of the Opposition, Kim Beazley noted that:

In a similar vein, the Business Council of Australia has described our federal system as ‘chronically blurred and confused’. It would be false to expect that Australian federalism would operate more efficiently if Labor was in power nationally, because the fundamental tensions between the revenue raising powers of national government and the substantial expenditure and service provision responsibilities of state and territory governments would remain unchanged. State governments must also shoulder their share of the blame for the parlous state of regional policy in Australia. The new-style state populism pioneered by Bob Carr in NSW is dominated by slogans such as being ‘tough on crime’ and emphasises health and education expenditure over other fields. There is little scope for systematic and comprehensive regional economic development strategies – that would focus on non-metropolitan and metropolitan regions alike – within this political and policy framework.

Finally we should ask, is it possible to achieve an efficient framework for regional development in Australia? At a technical level the answer must be yes, we know that other nations have more rational and comprehensive approaches to regional development than that evident in Australia. We are also aware of the strategies and techniques that could deliver better economic development outcomes (see, for example, Beer, Haughton and Maude 2003) but such technical solutions are of little merit unless there is fundamental change within Australian federalism. We need a system of government that recognises the importance of regional development and that allocates resources and responsibilities appropriately. Until that time, Australia is likely to continue to experience the impact of partial and inadequate regional development policies.