REGIONAL Victoria is expected to be hit hard by the downcast economy with unemployment rate expected to rise and attractive investment opportunities being shelved.
Investment in Western Victoria's mineral sands deposits and wind farms expansions is forecast to remain on the backburner, according to the National Australia Bank head of international economics Tom Taylor, who also said poor treasury estimates had contributed to the federal government $40billion deficit which was hurting growth in regional areas.
During the NAB Southern Grampians Shire Council's Greater Hamilton Economic Forum, held in Hamilton on Tuesday Dr Taylor said there were several issues that had forced big industry in regional areas to be put into "cold storage".
"The (federal government) hasn't got the money they thought because the economy is not growing at the rate they thought," he said.
"The government has a revenue problem - they've repeatedly had to revise down the price of the Australia economy.
"It's running $40billion below 2012/13 forecasts and the revenue undershoots just keep coming."
He said Global GDP growth was stuck at a below-trend pace of about 3 per cent, and was being carried by volume exports of Iron Ore and Liquefied Natural Gas (LNG) exports.
The pace of growth facing most industries was nearer to 1pc growth in domestic demand.
Dr Taylor said the remainder of the growth was due to construction in metropolitan Melbourne and Sydney, as well as housing developments in fringe suburbs of the two cities.
"Once you get out to rural and regional Victoria, there isn't a lot left over in terms of extra growth in places like Shepparton, Warrnambool, Geelong and Benalla," he said.
"The growth activity is very concentrated and we are still waiting to see the growth spread out to regional areas and for investment to take-off.
"The economy is proving weaker than the government hoped which is also being reflected in places like western Victoria so it is an environment which you wouldn't want the government to go in too hard and start slashing spending and lifting taxes because western Victoria is not the sort of place to handle that shock."
The mineral sands investment opportunities is on the back-burner due to weakened global market, according to Dr Taylor who also said unemployment would continue to rise in regional Victoria at a greater rate than it's city counterparts.
Australia's current unemployment level sits at 6.2pc while Hamilton is at 8pc and Portland at 10pc, with the national unemployment is forecast to rise to 6.7pc by the end 2015.
"That is a sign of an economy that doesn't need a tough budget," he said.
Dr Taylor said while Western Victoria and the Mallee offered the right resources for investment opportunities with wind farms and mineral sands mines, "they were falling into the doldrums".
"The Windfarm industry has been blocked - there is a list of (investors) waiting to go, a list of big nationals waiting there on ice while they sort out what will happen to renewable energy targets and what the State Government will do with planning controls on the locations of windfarms, particularly the ability for people to object if it is in the certain distance to their house," he said.
Also put into cold storage is Astron China's Donald Mineral Sands project which aims to export up to 900,000 tonnes of heavy mineral concentrate (HMC), used for construction products, exported via Portland to China.
"There are big deposits of mineral sands (in Western Victoria) but they are in cold storage waiting for the market to pick-up," Dr Taylor said.
"These resources are here so there is no reasons to think the region won't grow."
