Wide Bay Burnett –
State of the Region
Presentation for Regional Development Australia –
Wide Bay Burnett Inc
Presented by Dr Peter Brain
National Institute of Economic and Industry Research
416 Queens Parade, Clifton Hill, Victoria, 3068
Phone: (03) 9488 8444; Fax: (03) 9482 3262; Email: admin@nieir.com.au
10 April 2014
The WBBR: Four alternative factors
Bumbling along (current trends)
Moderate
1.
2.
3.
4.
5.
6.
7.
Retiree’s playground
8.
God’s waiting room
1.
2.
3.
4.
5.
6.
Strong
Economic refugees, sea change/tree change
and aged migration flows in line with historical
trends.
Some formal regional governance changes but
weak social and political regional network
integration occurs. Low proportion of foreign
migrants. Weak expansive networks.
Sea change/tree change in economic refugee
culture and values.
Not in my backyard political culture and
hegemony of established interests. Difficult to
get investment projects implemented.
Weak political leadership. Long lags in
infrastructure provision. Many growth
opportunities lost.
Convoy development regional dynamics.
Development instruments focus on major
projects (when they can be located in isolated
areas) and the lifestyle choice of the dominant
culture.
De facto regional goals are a mixture of
environmental production and fortress WBBR.
7.
8.
9.
Weak
Accelerated ageing/older aged
migrants and economic refugees
Flight of the young consumerism.
Low rates of skill formation. Many lost
investment opportunities. Local social network
isolation.
Not in my backyard or anywhere
else either. Strong conservative culture for
either selfish or environmentally driven motives.
Convoy development in the region produces
similar poor performance outcomes for most
localities.
Weak regional and sub-regional
leadership lack of regional
integration. Local area primacy.
Lifestyle choice homogeneity. Low income
lifestyle dominates.
Fortress WBBR.
Dominant public sector dependency. Weak
export growth (except tourism) and increased
import penetration further weakens existing
supply chains. Low mutual obligation.
Connecting with the world
1.
2.
3.
4.
5.
6.
7.
8.
Entrepreneurship – commercial culture/expansive
networks/mutual obligation.
High skill based migration and high rates of skill
formation.
Infrastructure provision drives economic growth,
not lags it.
Locomotion development. At any point
in time the best opportunities are
exploited irrespective of where they
are in the region.
Strong political leadership – vision driven regional
focus on a foundation of entrepreneurial culture.
Aggressive political culture.
Representative political culture. Full regional
integration and network consolidation.
Import replacement opportunities strongly
exploited.
Export driven development. Regional goals are
best practice productivity to reduce income
differentials with other regions. Weak lifestyle
choice.
Two speed development: dual economy and society
1.
2.
3.
4.
5.
6.
7.
8.
Balanced lifestyle choice. Expansive networks
coastal regions. Inland regions’ network isolation.
Increase in skills formation in
coastal regions.
Increasingly unequal regions. Households forced
out of coastal regions as cost pressures impact
who migrant to inland regions.
Strong political leadership vision driven but subregional focus on coastal regions. Inland weak
leadership.
Some optimal design in sub-regional integration in
coastal regions.
Partial connecting with the world strong in coastal
regions weak in inland regions.
Inland regions become relatively more public
sector dependent. Inland inter-governmental
relationship more important than regional
networks.
Locomotion development coastal/ convoy
development inland.
Export intensity strong
The vicious cycle of low growth and ageing
Low productivity/
Low exports
Low per capita
growth and
productivity
Accelerated
ageing
Low income of
working age
population
Lack of regional
vision/low
entrepreneurship/
low investment
Immigration of
retirees
Low housing
affordability
Out-migration of
skilled/young
Low rents/housing
costs
The WBBR region: Key features of the 2006
NIEIR report
On a current trends basis it is one of Australia’s most rapidly
ageing regions:

average age increasing by 0.3 years per annum;

the share of population aged 65 will increase from 17% in
2006 to 27% by 2020;

two-thirds of the population change will be people aged 65
and over.
Population growth rates fall from 2.5% in 2006 to less than 1%
per annum by 2020.
Per capita GDP growth rate: 2006 to 2030:

existing trends
1% per annum

aggressive restructure
2% per annum
Population indicators
Population 65 and over share
2006
2014
Population growth
rate 2006 to 2014
(% per annum)
Gympie (R)
15.0
20.7
1.7
North Burnett (R)
16.9
22.2
-0.1
South Burnett (R)
15.6
20.5
1.3
Fraser Coast (R)
19.0
23.6
2.2
Bundaberg (R)
16.9
21.5
1.5
WBBR
17.1
22.0
1.7
2014: Is WBBR on track with expectations?
Demographics
Share of population aged 65+ - mid 2014
22.4
Expected mid 2014 – 2006 report
22.7
Rate of 65+ population change to total population change – trend
2006
2008
2010
2012
Expected share 2006 report
30%
40%
72%
95%
65%
Population growth – trend
Early 1990s
2002
2006
2008
2010
2012
2014
3.0
1.5
2.6
2.3
1.3
1.2
1.1
Region gross product indicator
Per cent of region gross product at market prices
2001
2006
2010
2013
Average
annual gross
product
growth rate
2006-2013
(%/annum)
18.4
16.6
16.5
16.3
0.7
North Burnett (R)
6.4
5.2
5.2
6.0
3.0
South Burnett (R)
17.0
14.6
14.4
13.8
0.1
Fraser Coast (R)
27.6
31.4
30.9
30.1
0.4
Bundaberg (R)
30.6
32.2
32.9
33.8
1.7
100.0
100.0
100.0
100.0
1.0
12.4
11.7
10.7
10.3
2.9
Gympie (R)
WBBR
Brisbane
WBBR as % of Brisbane
WBBR: Sources of gross product growth – 2006 to 2012
Per cent per annum
Property income
0.3
Cash benefits
0.1
Government expenditure
0.8
Exports
0.1
Investment
1.1
Imports and other
-1.5
GDP
0.9
Conclusion: Public sector dependency high.
Central themes of the 2006 report
(i)
Export growth was the key for enhanced productivity
growth and overall growth.
(ii) The scenarios would be almost totally defined by the per
capita growth of exports.
Per capita
GDP growth
2006 to 2036
0.8 – 1.2
1.7 – 2.5
Outcomes
Low scenarios
High scenarios
Outcomes
Low scenarios
High scenarios
Per capita
GDP growth
0.8 – 1.2
1.7 – 2.5
Per capita
export growth
0.7 – 1.5
2.0 – 3.2
Exports growth is a driver of both overall
growth and productivity growth
The reasons are:
(i)
more than 50% of total gross product;
(ii)
allows workers to apply skills
productivity and efficiency that are not
available from domestic demand
opportunities; and
(iii)
allows the generation of economies of
scale and scope.
SEQ SA2 regions: Gross product growth versus export
share growth - 2001 to 2011
3.0
Log of change in SEQ export share
2.5
-2.0
2.0
1.5
1.0
0.5
0.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
-0.5
-1.0
-1.5
Log of gross product growth
2.0
2.5
3.0
3.5
SEQ SA2 regions: Scale versus export share 2011 –
The bigger the scale the higher the productivity
12
Log of gross product
10
8
6
4
2
0
-12
-10
-8
-6
-4
-2
Log of SEQ export share
0
2
4
Export indicators
Average annual export
growth rate – %
2006 to 2012
Export share in WBBR
gross product – %
2001
64.2
Gympie (R)
0.5
2006
57.1
North Burnett (R)
4.5
2012
54.6
South Burnett (R)
-1.3
Fraser Coast (R)
-2.6
Bundaberg (R)
1.9
WBBR
0.2
The adverse trend in unemployment rates is to be
expected given the poor economic growth
Average annual growth
2006 to 2013
total hours of work
Gympie
North Burnett
South Burnett
Fraser Coast
Bundaberg
WBBR
0.4
-0.3
-0.1
0.5
0.7
0.5
Brisbane
2.0
Unemployment rates are high in WBBR:
One of the highest in Australia
2008
2013
Headline unemployment
rates (%)
5.6
8.0
NIEIR unemployment rate (%)
11.8
16.4
Working age social security
take-up rate (%)
19.2
23.4
Productivity indicators
Productivity gross product at market prices per hour worked ($ 2011)
2001
2006
2010
2013
Average
annual
productivity
growth rate
2006-2013
(%/annum)
Brisbane (C)
$ of GRP/hour worked
63
67
69
71
0.8
Gympie (R)
Relative to Brisbane – %
97
89
85
86
0.3
North Burnett (R)
Relative to Brisbane – %
110
110
115
131
3.4
South Burnett (R)
Relative to Brisbane – %
87
86
83
82
0.2
Fraser Coast (R)
Relative to Brisbane – %
80
86
83
81
-0.1
Bundaberg (R)
Relative to Brisbane – %
89
93
91
93
1.0
WBBR
Relative to Brisbane – %
88
90
87
88
0.5
QLD Wide Bay Burnett - Housing
Housing Indicator
Annual
1997.3 2013.2 growth
1991.3 1997.3 2001.3 2006.3 2010.2 2012.2 2013.2 Rank Rank 1997-13
Average value of dwellings ($cvm
'000s)
174.5
197.2
187.0
339.4
390.2
341.1
332.1
43
48
3.4%
Average dwelling prices to
household disposable income (%)
4.7
3.3
3.1
4.8
5.4
4.7
4.6
31
23
2.1%
Mortgage burden on average
dwelling purchase (%)
n/a
26.3
24.6
38.6
43.3
37.8
36.7
31
23
2.1%
Greenfield construction costs to
average dwelling price (%)
108.0
100.8
125.2
93.6
92.1
102.3
109.6
32
21
0.5%
Catchment dwelling purchase
income support ($cvm)
36587 41784 45603 53404 52942 60806 64335
65
63
2.8%
Dwelling affordability – average
mortgage on existing dwelling to
catchment income support (%)
n/a
37.7
32.7
50.7
58.8
44.8
41.2
21
25
0.6%
Dwelling affordability – average
mortgage on new dwelling to
catchment income support (%)
n/a
38.0
41.0
47.5
54.1
45.8
45.1
11
12
1.1%
For WBBR to attract younger migration:
1.
local productivity must be increases;
2.
to produce high enough $/hour full time
employment, to provide;
3.
the income necessary to support the
mortgage burden on new dwelling
construction.
Otherwise:
4.
the only migration which can afford new
construction will be the older age migrants
with capital gain wealth from elsewhere.
Examples of necessary export initiatives
to lift WBBR economic performance
1.
Significantly weaker multiplier than having an
actual mine in the region but significantly better
than nothing.
2.
Make available high income employment.
3.
Attract younger age migrants with sufficient
income to construct a dwelling.
4.
Attract additional population.
5.
Generate additional expenditures in transport
services and government services.
For each additional 100 fly-in/fly-out workers
1.
Population increase of between 200 and 300
persons.
2.
Total industry employment will increase by 60 from
income-expenditure flow-on effects of the fly-in/flyout workers and the increase in demand for
government services and transport services.
3.
Total resident increase in employment by 160
persons.
4.
Total longer term increase in gross product of
$7 million annually.
5.
In the short-term, $14 million increase in gross
product from construction impacts increasing
industry employment and resident employment
by a further 75.
Fly-in/Fly-out: Conclusion
For every 400 additional fly-in/fly-out workers total
resident hours of work will:

increase by just under 1% in the short-term,
allowing for construction effects; and

increase by 0.6% to 0.7% over the longer term.
Conclusion:
It would go a long way towards restoring
satisfactory economic performance outcomes.