As 2025 draws to a close, it is time to reflect on whether national policy development has adequately focussed on the needs of growing and changing regional populations.
Regional Australia has assumed greater responsibility for the nation’s economic, environmental, and demographic destiny, but policy settings to support that role remain incomplete and inconsistent. Five prominent issues the Regional Australia Institute (the RAI) focussed on this year, and which will require ongoing attention, were the challenges of resolving housing provision, the energy transition, productivity growth, population planning and workforce development.
Housing provision remains a critical issue, as regional centres continue to face growing and serious shortages of housing. Regional house prices have risen faster than in cities, and rental vacancies remain extremely tight, in many places less than one per cent of all stock. Housing affordability and accessibility are becoming a major handbrake to attracting people to regions to fill essential jobs. These issues are still not getting the attention they demand.
To address this, the National Housing Accord commitment to 1.2 million houses by 2029 should have a regional target and the Housing Australia Future Fund should adopt regional sub-targets to ensure an adequate pipeline of social and affordable housing. Meanwhile, local governments face rising costs of providing enabling infrastructure, labour shortages, and planning constraints that are slowing approvals. The RAI’s recommendations for a National Regional Housing Commissioner and Offices of Regional Housing in the states are a key first step to providing targeted solutions and fix regional housing supply. The adoption of innovative models, like modular and pre-fabricated housing, requires further support.
Australia’s net zero energy transition is being realised in the regions. However, 2025 revealed a growing disconnect between the rollout of projects and their impact in regional communities. A shift is needed towards a true partnership to ensure the infrastructure rollout results in long-term regional benefits, based on genuine consultation. The RAI’s Regional Energy and Legacy Deal (the REAL Deal) framework offers governments and industry a model for pooling community benefits funding and putting regional communities in the driver’s seat for ensuring a lasting benefit for regions.
The national productivity debate featured prominently throughout 2025 but again lacked a regional focus. Lifting productivity in regional Australia is crucial to growing the many regionally-based, globally-competitive industries driving Australia’s national economy.
The RAI called for better regional productivity performance measurement and monitoring and a place-based approach to addressing the enablers and barriers to productivity and innovation. These interventions might, for instance, target labour shortages, inadequate infrastructure or the challenges of exporting to global markets. Digital technology is major enabler of regional productivity – its role can be strengthened by setting minimum standards for connectivity in all regions and pursuing the recommendation of the 2024 Regional Telecommunications Review to develop a regional, rural and remote connectivity strategy.
In addition, a coherent regional population plan for the 10 million Australians that call regional Australia home, and growing, is needed. Strong internal migration from cities to regions, coupled with overseas migration, means Australia’s regional settlement is expanding and will continue to do so. However, there are signs population growth is hitting the limits of the absorptive capacity of many regional cities and towns. Without a long-term strategy, regional population planning remains largely reactive, and many policy interventions will continue to be piecemeal.
Finally, on workforce development regions spent another year dealing with worker shortages. The regional unemployment rate of 4.0% in October was well below the national unemployment rate of 4.4%. Jobs and Skills Australia’s Regional Roadmap, released in July, provides directions for better targeted policies and more effective education, training and employment systems in regional Australia. Employers in regional industries are increasingly looking to the visa system to fill roles in key sectors. Issues with regional definitions, skilled occupation lists and visa eligibility continue to hold back regional Australia’s access to skilled migrants. There are concerns moves to statewide Designated Area Migration Agreements (DAMAs) will deny regions access to area specific workers. The release of the government’s long awaited Review of Regional Migration and associated policy reforms should aim to double regional Australia’s share of overseas migrants from around 20 per cent today to 40 per cent in the future.
So, 2025 ends with a clear message: regional Australia is central to the nation’s economic future, but policy settings have not caught up with that reality. The coming year requires greater focus on policies that respect regional diversity, support local capacity, and give communities a real stake in the economic and social transitions they are leading.
Simon Pryor
Research and Policy Director, Regional Australia Institute (RAI)