New research from the Regional Australia Institute, RAI, has found Wimmera-southern Mallee is one of the most productive regions in the country, but  the wages, business investment and services that should come with it keep landing elsewhere. 

The RAI has found Australia is trying to solve its productivity crisis without measuring where much of the nation’s productivity is created, leaving policymakers ‘flying blind’ when designing economic policy. 

The research found that official productivity measures rely on national and state averages, which mask how individual regions are performing, making it harder to see where productivity is growing, where it’s lagging, and where investment could deliver the greatest returns.

The Wimmera-southern Mallee region, which includes Buloke, Hindmarsh, Horsham, Northern Grampians, West Wimmera and Yarriambiack municipalities, has a gross regional product per person sitting at 23 per cent above the Victorian state average. 

The combined category of agriculture, forestry and fishing directly account for 28 per cent of the region’s economic output. 

The Wimmera and Mallee regions grow about 60 per cent of Victoria’s wheat and a broader nine-council region – which includes WSM – generates 18 per cent of regional Victoria’s export value from just six per cent of its output base. 

Yet, that productivity success has not yet translated into growth, with five of the six municipalities experiencing population decline since 2006.

Yarriambiack Shire population has been in decline since 2001 and median household incomes sit below state averages. 

Wimmera Southern Mallee Development chief executive Chris Sounness said there were practical reasons for the productivity paradox, and ways to close the gap. 

“The benefits of productivity are draining away from the Wimmera Southern Mallee with economic value captured where the product is traded and not where it is made,” he said. 

“Commodity production creates real economic value, but the opportunity is building the local trading, processing and financing capability to unlock even more productivity, generating more economic growth right here.”  

Mr Sounness said policy makers need to establish the right settings to give people the certainty to invest, citing energy and water as the two biggest constraints across the region. 

“We need infrastructure to keep pace with growth instead of trailing it,” he said.

“Right now, businesses with real potential can’t get off the ground because they can’t affordably access critical resources like energy and water.

“Instead of waiting for demonstrated demand, we must plan for it and create the right conditions to set up shop.” 

Agricultural value-adding is one pathway to keep more of what the region already produces, and one of its most direct routes to retaining local wealth. 

Associated ag sector businesses include bioenergy made from grain and crop residue, protein innovation, or food processing.

Across the nine-council study area that includes WSM, capital expenditure equivalent to more than four years of the area’s $5.4-billion annual economic output is set to arrive over the next five-plus years, layered on top of the region’s existing industries and the workforce and housing capacity urgently needed. 

There is $24.3-billion in confirmed and near-confirmed investment across renewable energy and mining projects in the nine council footprint, forecast to sustain 2300 ongoing positions. 

Construction alone will demand 3800 workers at its peak – which Mr Sounness said the region needed to plan for now.  

Mr Sounness said the task was making sure the region was ready for the associated needs that would come with the projects – building the housing, workforce and planning capacity.

“We need to plan for growth, not decline,” he said. 

“The WSM is capable of showing what’s possible when regional productivity and major capital investment are backed with the settings to make it last. 

“It’s time to give the region a greater share of the value it’s already creating so we can unlock even more growth for the region – and the nation.”

The findings come as Australia’s productivity growth has slowed to just 0.3 per cent a year over the past decade, weighing on wages, living standards and the nation’s long-term economic growth.  

Despite facing ongoing infrastructure, workforce and climate challenges, regional Australia recorded higher labour productivity than metropolitan Australia in 2024, generating $129.70 in output per hour worked compared with $103.10 in metropolitan areas. 

RAI chief executive Liz Ritchie said Australia cannot fix its productivity problem without first understanding where productivity was being generated. 

“Australia is trying to solve a productivity crisis without measuring where productivity is being created,” she said.

“We don’t have a clear picture of how productivity varies across regional economies, even though many of the industries driving our national economy are based there.

“Every region has its own mix of industries, workforce and infrastructure. National averages mask that, and policy misses the mark as a result.” 

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