Western Sydney driving Australia’s growth but funding gaps hold region back
Western Sydney is one of Australia’s fastest-growing and strongest-performing regional economies, but long-standing funding inequities are holding the region back, according to new research from Western Sydney University’s Centre for Western Sydney.
The report tracks key indicators laid out in the Unlimited Potential: Economic Strategy for Western Sydney – including economic value (GRP growth), professions (the percentage of managers and professionals), qualifications (the percentage of people with Bachelor’s or higher degrees), and labour force participation. This year’s update focuses in particular on jobs and productivity, two critical factors for transforming Western Sydney into a core economy.
The research finds that while key indicators are trending positively, Western Sydney is still largely functioning as a peripheral economy, creating wealth for other parts of Sydney rather than being a core economy in its own right.
Western Sydney’s GRP has grown faster than the rest of Sydney every year since 2016, with the annual growth rate over that period averaging 3.8%, compared with 2.5% in the rest of Sydney. The past year has seen modest growth of 1.7% but this is still far greater than the rest of Sydney (0.4%) and Australia (0.9%). The growth in jobs has followed suit, increasing by 2.3% per annum compared with 1.2% in the rest of Sydney.
Despite these gains, structural and institutional issues have meant there has been no improvement in income, the jobs-to-worker ratio, or productivity.
Funding for the creative arts in Western Sydney also remains far below the region’s share of the Australian population, while the rest of Sydney receives disproportionately more. This underinvestment limits opportunities for local talent, cultural participation, and economic development, and reinforces Western Sydney’s role as a peripheral economy rather than a core economic and cultural hub.
Professor Neil Perry, Chief Economist of the Centre for Western Sydney and School of Business, said Sydney and the nation need a strong economy in Western Sydney to lift nationwide productivity and living standards.
Professor Perry highlighted that more than one in ten Australians live in the region, yet it remains a peripheral economy, with many residents commuting to high-paying jobs elsewhere while companies underinvest locally.
“There are positive trends already occurring which highlight that Australia’s growth will come from regions like Western Sydney. Economic growth is strong. Labour force participation is growing. There is stronger growth in the number of managers and professionals in Western Sydney than the rest of Sydney, and qualifications are growing quickly,” said Professor Perry.
“However, funding inequities must be corrected or Sydney, NSW and Australia will miss out on the talent, innovation and economic security that Western Sydney can offer. Social infrastructure is needed to make Western Sydney a greater place to live, work and play. Physical infrastructure is needed for agglomeration (business density) and investment, which increases productivity and income, and creates jobs that are closer to where people live.”
Professor Azadeh Dastyari, Director of the Centre for Western Sydney, emphasised the need for strategic investment to address long-standing inequities and unlock the region’s full potential.
“Governments must overcompensate for past inequities to ensure productivity growth, economic security, and the full development of the region’s workforce and innovation potential,” said Professor Dastyari.“Without bold and targeted government investment, Western Sydney will continue to play a peripheral role, meaning that the skilled and diverse workforce of Western Sydney are travelling long distances to work and creating wealth in the eastern core of the city. Now is the time to ensure the region’s workforce and industries can thrive locally.”
From the outset, Unlimited Potential has been a living strategy, tracking progress over time. This update provides a general economic overview while examining jobs and productivity, maintaining continuity with the broader strategy and highlighting key areas for growth.
For more information, read the report, Unlimited Potential: An Update on Western Sydney’s Economy, here.
ENDS
12 December 2025
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