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July 23rd 2014 print

Roger Franklin

How To Be an ‘Economics Editor’

The Age and Sydney Morning Herald are ardent advocates of sustainable living, placing a heavy emphasis on re-cycling, amongst other green virtues. Going by his latest column, Ross Gittins is the poster boy for making sure other people's words get a second airing

gittins grimNot for the first time, Fairfax Media’s Ross Gittins, economics editor of The Age and Sydney Morning Herald, has served up a column owing much to a single source. Back in March, 2012, it was an OECD report. Today, it is a Grattan Institute paper on the productivity of our major cities and their CBDs.

To Gittins’ credit he cites the report and includes a helpful link for those who wish to read it in full. Of his column’s 24 paragraphs, two are directly quoted and attributed. Below, presented in wide measure, is the latest column, minus the first three paragraphs, which are original work. The indented and underlined excerpts are from the Grattan report. While reasonable people might disagree, it could be argued that a good many more examples of transcription and close paraphrasing might also have been attributed, as were the words in quotation marks:

…..A report issued this week by the Grattan Institute finds that, these days, 80 per cent of the dollar value of all goods and services in Australia is produced on just 0.2 per cent of the nation’s land mass. Just about all of that is in our big cities, as close in as possible.

Eighty per cent of the value of all goods and services produced in Australia is generated on just 0.2 per cent of the nation’s land mass – mostly in cities. Today, cities are the engines of economic prosperity.

The report, by Jane-Frances Kelly and Paul Donegan, finds that big cities are now the engines of our prosperity. If you take just the central business districts of Sydney and Melbourne – covering a mere 7.1 square kilometres – you have accounted for almost 10 per of Australia’s gross domestic product.

This report … finds that economic activity is concentrated most heavily in the central business districts (CBDs) and inner areas of large cities. The CBDs of Sydney and Melbourne – just 7.1 square kilometres in total – generated $118 billion in 2011- 12, almost 10 per cent of all economic activity in Australia,

What do workers do in all those city offices? Nothing you can touch. That’s how much the economy’s changed.

To find the economy as many people still imagine it to be, you have to go back 50, even 100 years. About 100 years ago, almost half Australia’s population of 4 million lived on rural properties or in small towns of fewer than 3000 people.

Shortly after Federation in 1906, almost half of Australia’s population of four million lived on rural properties or in small towns of fewer than 3000 people.

Many of these would have been market towns serving the agricultural economy. Agriculture and mining accounted for a third of the workforce. And only about one in three Australians lived in a city of at least 100,000 people.

Many of these would have been market towns serving the agricultural economy. Only about one in three Australians lived in a city of at least 100,000 people.

These days, agriculture employs only 3 per cent of workers and contributes only 2 per cent of GDP. Our two biggest CBDs contribute at least four times that much.

While the agricultural sector is still a big exporter, today it employs only three per cent of the Australian workforce and contributes only two per cent of GDP

By the end of World War II, manufacturing had become Australia’s dominant industry. At its height in 1960, the report reminds us, manufacturing employed more than a quarter of the workforce and accounted for almost 30 per cent of GDP.

After World War II manufacturing rose to become Australia’s dominant industry. At its height, in around 1960, manufacturing employed more than a quarter of the workforce, and accounted for 29 per cent of GDP

The rise of manufacturing shifted much of our economic activity – our prosperity – to the big cities, but mainly to the suburbs.

With the rise of the manufacturing industry after World War II, Australia’s prosperity shifted to our big cities

Suburbs away from city centres had lower rents and less congestion.

Suburbs away from city centres had far lower rents and less congestion, making them attractive locations

Postwar growth in car ownership made possible the shift to a manufacturing economy with a strong suburban presence.

Postwar growth in car ownership made possible the shift to a manufacturing economy with a strong suburban presence

 It also led to the demise of many small towns and the rise of regional centres.

Today, however, manufacturing employs only 9 per cent of the workforce and accounts for just 7 per cent of GDP.

By 2011 manufacturing employed nine per cent of the workforce and accounted for about seven per cent of GDP

The thing to note is that this seeming decline in manufacturing has involved only a small and quite recent fall in the quantity of things we manufacture in Oz.

Similarly, the decline in agriculture’s share of employment and GDP has occurred even though the quantity of rural production is higher than ever. The trick is that these industries didn’t contract so much as other parts of the economy grew a lot faster than they have, shrinking their share of the total.

One of those other parts is mining, of course. But get this: “While Australia’s natural resource deposits are typically in remote areas, workers in cities make a critical contribution to the industry’s success,” the report says.

“For instance, in Western Australia, where the most productive mining regions are located, more than one third of people employed in mining work in Perth.”

That’s partly because of fly-in fly-out,

It is also possible that productivity figures may be inflated in some areas by highly paid fly-in fly-out mining workers who work at multiple sites and so report their primary place of work as their home address.

but mainly because many of these workers are highly skilled engineers, scientists, production managers, accountants and administrators.

Many of these workers are highly skilled engineers, scientists, production managers, accountants, and administrators

So what explains the greater and still-growing economic significance of big cities, so that Sydney, Melbourne, Brisbane and Perth now contribute 61 per cent of GDP?

Australia’s four largest cities, which together account for 61 per cent of the economy

The rise of the knowledge economy.

Increasingly, our prosperity rests not on growing, digging up or making things, but on knowing things. Our workforce is more highly educated than ever, and this is the result.

“Knowledge-intensive jobs are vital to the modern economy. They drive innovation and productivity, and are a critical source of employment growth. In the last 15 years there has been much higher growth in high-skilled, compared to low-skilled, employment,” the report says.

Knowledge-intensive activities aren’t confined to jobs in the services sector, but are also increasing in mining and manufacturing. They often involve coming up with new ideas, solving complex problems or finding better ways of doing things.

Knowledge-intensive jobs often involve coming up with new ideas, solving complex problems, or finding better ways of doing things

But here’s the trick: it suits many of the knowledge workers, and the businesses that employ them, for those workers to be crowded into big cities, as close in as possible. When you’re all packed in together, there’s more scope for the transfers of expertise, new ideas and process improvements known as “knowledge spillovers”.

Proximity to suppliers, customers and partners also helps businesses to work efficiently, to generate opportunities and to come up with new ideas and ways of working

Such spillovers come particularly through face-to-face contact.

Within cities, CBDs and inner city areas offer the most opportunities for face-to-face contact among workers, promoting knowledge spillovers

Large cities offer employers knowledge spillovers and a large potential skilled workforce. They also offer people greater opportunities to get a job, move to a better job, build their skills and bounce back if they lose their job.

Large cities offer employers knowledge spillovers and a large potential workforce. They also offer substantial benefits to employees. Indeed there are good economic reasons why most Australians live in cities. They offer people opportunities to get a job, to build their skills, to get a better job, and to bounce back if they lose their job

Roger Franklin is the editor of Quadrant Online