When you’re hot, you’re hot. When you’re not, it’s a vicious cycle, says Charles Sturt University (CSU) academic Geoff Bamberry.
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A downward spiral was something that could go some way to explaining why Dubbo’s average yearly income was well below the state average and lagging behind other regional cities like his hometown of Wagga Wagga.
The associate professor is a proponent of cumulative causation, which is the economist’s way of describing the snowball effect.
Before you sigh and resign yourself to a life of poor purchasing power, Mr Bamberry said downward spirals weren’t necessarily permanent. But first the numbers.
According to the latest Australian Bureau of Statistics figures, the average Dubbo wage in 2007-08 was $38,372, or 18 per cent less than the NSW average of $46,513.
Shoot back to 2001-02 and the difference was 16 per cent, meaning there is a small but growing gap between Dubbo and the state average.
The difference between Dubbo and the capital is even more marked.
In 2001-02 the average Sydney pay packet was about $9000 more than Dubbo’s.
Over six years the difference had increased to about $12,000. In other words average wages in Sydney were outstripping those in Dubbo by about $500 a year.
But it’s not just Sydney. Even rival regional towns managed, however marginally, to nudge ahead of Dubbo when it came to overall average incomes such as Bathurst ($39,947), Orange ($41,927) and Wagga (40,032).
Mr Bamberry describes Wagga as if it’s the land of milk and honey with “doctors running everywhere” pushing up average incomes, a booming population and trades people living in “great big mansions”.
Outlining what distinguished Australia’s largest inland city from Dubbo he speculated on what might be keeping the city’s pay packets somewhat lighter.
Firstly he asked was Dubbo retaining its wealthier older population or were they moving away?
“Not only do they spend money in the community they create a lot of jobs,” he said.
Secondly he pointed to the 18 to 30-year-olds who have been leaving the bush in droves as they give up the family farm and seek higher paying and more available jobs in the cities.
Wagga has a “very large category” of 18 to 30-year-olds Mr Bamberry said, boosting dramatically the city’s retail sector.
“If you are losing those people in Dubbo ... that would have a significant effect,” he said.
To underscore the point a story in Wagga’s the Daily Advertiser had Greens’ councillor, Ray Goodlass, asking whether the city could afford to keep populating at its thriving rate.
According to the council Wagga’s population during the past five years has grown at a faster rate than the state average and is expected to increase to more than 68,300 by 2026.
Mr Bamberry said Wagga’s population was boosted by a large airforce base and a sizeable CSU campus. He also wondered whether the high Australian dollar was diverting tourists from Dubbo to overseas locations.
Lastly he pointed to Dubbo’s relatively narrow “spread of industry” compared to Wagga which has a significant manufacturing base and a growing construction industry.
“Once you get a population up to 60,000 you really start to generate a service industry. There is a huge tribe of tradespeople in Wagga ... they are the most wealthy people in town. They are all living in mansions,” he said.
“All of these things cushion the affects of the drought. If you haven’t got them that drags down (incomes).”
And once things start dragging that’s when cumulative causation kicked in.
The theory was first described by Gunnar Myrdal, a Swiss economist, who was concerned about large income gaps between poor and wealthy nations.
Myrdal described it as a vicious cycle where various forces acted to create a downward spiral.
Myrdal used the example of a poor man who, because of his inability to feed himself, loses his health which in turn reduces his ability to earn an income making him even poorer than he had been in the first place.
“If you are on the downward spiral it feeds into itself and causes even more decline,” he said.
“There’s no simple explanation, it’s a whole combination of those factors tying in with each other.”
But Myrdal also explained cumulative causation could create an upward spiral that Mr Bamberry said had been the case for Wagga via a growth spiral.
And it wasn’t too late for Dubbo to hitch a ride. The ending of the drought was a trigger which could spurt growth he believed.
“Now I think with the boost in agricultural income, with the recent rain, that will create growth,” he said. “But towns have to do their bit and encourage people to stay in town and provide opportunities for for young people to stay.”