Margaret River SuperTown Combined Report South West Development Commission Final Draft Report April, 2012 Margaret River SuperTown Economic Development Plan Final Draft Document Control Job ID: 16132 Job Name: SWDC ED Plans for Three SuperTowns in SW WA Client: South West Development Commission Client Contact: Richard Oades Project Manager: Michael Campbell Email: [email protected] Telephone: 0409 349 256 Document Name: AECgroup Report - Margaret River SuperTown Combined Report Final Draft Last Saved: 5/4/2012 3:50 PM Version Date Reviewed Approved Draft Report 20 February 2012 MC SS Draft Report V2.0 24 February 2012 MC SS Final Draft 7 March 2012 MC SS Combined Report 5 April 2012 MC SS i Margaret River SuperTown Economic Development Plan Final Draft Executive Summary Introduction SuperTowns (Regional Centres Development Plan) is a Royalties for Regions initiative to encourage regional communities in the southern half of the state to plan and prepare for the future so they can take advantage of opportunities created by Western Australia’s population growth to 2050. Western Australia's population is predicted to more than double over the next 40 years to 4.9 million people. The SuperTowns' vision is to have balanced communities, with lifestyle options and access to services. They will have affordable, quality housing and a diverse range of job opportunities. The towns will offer more choices for people to live in regional areas and an attractive alternative to living in the metropolitan area. Nine SuperTowns were selected throughout Western Australia to achieve this vision and accommodate future population growth. Within the South West Development Commission (SWDC) Region the areas Manjimup, Collie and Margaret River were selected as SuperTowns under the Royalties for Regions program. This document provides the Economic Development Plan for the Shire of AugustaMargaret River. Population & Demographics Under the SuperTowns growth plan, the aspirational growth target for Margaret River is a doubling of the town's population by 2031. Figure ES.1 shows Margaret River’s anticipated growth trend of 3.4% per annum to 11,098 residents by 2031. This is equivalent to an additional 264 residents each year, significantly more than the 189 residents the town has attracted per year since 2001. Figure ES.1: Margaret River SuperTown Population Target, 2010-2031 12,000 6.0% 5.0% 9,000 4.0% 7,500 6,000 3.0% 4,500 2.0% Annual % Change Margaret River Population 10,500 3,000 1.0% 1,500 0 0.0% Margaret River Township Margaret River Township Source: Shire of Augusta-Margaret River (2011) Disclaimer: The and Augusta-Margaret River LGA’s in population has risen at 2.3% annum Whilst all care diligence have been exercised the preparation of thissteadily report, AEC Groupper Limited doesover not the past 10ofyears, recordingcontained a population 12,509 in no 2010. Thefor LGA’s population growth warrant the accuracy the information withinof and accepts liability any loss or damage that rate was theinformation, broader SWDC Region River may be suffered as aslightly result ofslower reliancethan on this whether or not(2.5%). there hasAugusta-Margaret been any error, omission or negligence theapart of AEC Group Limited orthan theirthe employees. Any state forecasts or projections in the alsoon has slightly older population SWDC and averages, due toused having a analysis can be affected by a of number of unforeseen variables, and as such no warranty is given that a smaller proportion residents aged 19 years and under. particular set of results will in fact be achieved. ii Margaret River SuperTown Economic Development Plan Final Draft Augusta-Margaret River has a smaller proportion of families with children and a greater proportion of families with no children than the SWDC and Western Australian averages, which is consistent with the relatively fewer number of residents aged 19 and under in the LGA. A significantly higher proportion of the Augusta-Margaret River working age population has completed year 12 relative to the SWDC average. Augusta-Margaret River also has higher proportions of its residents holding certificates, diplomas and advanced diplomas, bachelor degrees, graduate diplomas and graduate certificates and postgraduate degrees, highlighting that the LGA has attracted and retained a more diverse range of qualified workers than the SWDC average. Subsequently, Augusta-Margaret River has a proportionally larger white-collar workforce than the SWDC average, although the LGA workforce is still primarily blue collar. Augusta-Margaret River is a low-income area, recording lower average incomes across every occupational category compared to the SWDC region and Western Australian averages. Housing prices in Augusta-Margaret River are also particularly expensive relative to the LGA’s median household income compared to the SWDC and Regional WA ratios. Employment & Business Activity Augusta Margaret River had a labour force of 7,127 in the June 2011 quarter and an unemployment rate of 3.7%. The LGA has had a consistently lower unemployment rate than both the SWDC and Western Australian averages since the September quarter 2008, although the LGA’s unemployment rate has been steadily increasing in recent quarters. The accommodation and food services, retail trade and construction industries were the largest employers in Augusta-Margaret River, accounting for just under 40% of employment. A total of 1,736 businesses were in operation in the LGA in 2009, with the majority of businesses being recorded within the agriculture, forestry and fishing and construction industries. Investment & Major Projects Residential and non-residential approvals have been volatile since the year ended June 2002, with the value of both residential and non-residential approvals peaking in the year ended June 2010. Rapids Landing, a residential community located towards the southern end of the Margaret River, is the most recently developed major project within Augusta-Margaret River. The community comprises approximately 680 lots and provides educational, commercial and recreational opportunities for residents. Economic Growth Augusta-Margaret River’s estimated Gross Regional Product (GRP) has grown by an average of 8.4% per annum since 2006-07 to a value of $691.4 million in 2010-11. Approximately 41.0% of Augusta-Margaret River’s industry value-add is generated by its construction, manufacturing and agriculture, forestry and fishing industries. The viticulture and tourism industries are also significant for the region. The opportunity for the Augusta-Margaret River LGA in the future is diversification. iii Margaret River SuperTown Economic Development Plan Final Draft Figure ES.2: Industry Structure Foundation Industries Current Leading Industry •Tourism & Viticulture •Construction Opportunity • Leverage strength in current leading industry to create a more diversified economy Source: AECgroup There is a strong relationship between the Augusta-Margaret River’s two foundation industries, tourism and viticulture. Synergies exist between wine and tourism that allow for the promotion of wine regions and events through tourism, increased cellar door sales to tourists, added value to regional production, and new wine tourism business opportunities. Subsequently, assisting the wine industry through this tourism promises to return benefits to the tourism industry itself, and the entire regional economy. The SuperTown Target Under the SuperTowns’ growth plan, the aspirational growth target for Margaret River is a doubling of the population by 2031. In the case of Margaret River, achieving this goal would see a population of 11,098 by 2031 (or 3.4% per annum growth). Figure ES.3 shows this anticipated growth trend versus the historical growth rate. Achieving this target will require proactive action in order to develop an economy to support this growth. iv Margaret River SuperTown Economic Development Plan Final Draft 12,000 3.4% 10,500 3.3% 9,000 3.2% 7,500 3.1% 6,000 3.0% 4,500 2.9% 3,000 2.8% 0 2.7% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1,500 Annual % Change Margaret River Population Figure ES.3: Margaret River SuperTown Population Target, 2010-2031 Margaret River Township Margaret River Towhship SuperTown Growth Rate Margaret River Township Historical Growth Rate Source: Shire of Augusta-Margaret River (2011) Key Economic Drivers There are five key economic growth drivers for Margaret River: Global Food Security: By some estimates, global food production will have to increase 70% to feed the population of the world in 2050. Some parts of the globe, particularly Southern Asia, have very little land available for future food production. The Margaret River Brand: Margaret River is fortunate to have a strong existing brand and is a well-known tourist and wine region. Maintaining (and expanding) the value of the brand will assist in growing the town and its economy. Tourism Industry: The tourism sector is important to Margaret River as a key existing industry. Broadening and deepening the industry to ensure its future growth and vibrancy will be important. Wine Industry: Margaret River is a premium wine region and grape growing and wine manufacturing make up a large part of the economy. The continued growth of the sector will be important for the future economic growth of the town. Internet: The internet has changed the way that people work and live as well as the way in which business is conducted. Ensuring that Margaret River can take advantage of the internet through broadband technology will be important for the future economic development of the town. Issues & Challenges The area faces several key issues which can constrain local population and economic growth that will need to be proactively addressed in order to create an environment of growth and prosperity. Economic diversification is needed to reduce the reliance on tourism and wine. Importantly, the issue of housing affordability will need to be addressed if the region is to reach its population target, as will the aforementioned economic diversification which will bring year-round employment opportunities. Broadband access will also be critical to unlock the economic potential in Margaret River, particularly around the creative industries. Additionally, the brand of ‘Margaret River’ will need to support strong food and agricultural products and assist in penetrating overseas markets, which can be difficult for small to medium sized businesses. v Margaret River SuperTown Economic Development Plan Final Draft Opportunities Margaret River is fortunate to have a variety of opportunities to build its future economy, including: Agriculture and Growing (including niche global exports and food security services) Food Processing (including fresh made food and local value added) Creative Industries (including internet/software based, arts and professional services) Lifestyle Changes (including pre-retirement and post-retirement) Tourism (including events, business travellers and leisure travellers) Health & Retirement (including health services, aged care services, allied health services) Education (including high quality schooling, industry-oriented tertiary education and student housing) Retail (including food retailing and other retailing) The Economic Development Plan Clearly defined and targeted action (as identified by the Economic Development Framework and both Strategic and Economic Development Initiatives) will assist in attracting new business investment into the region creating new employment opportunities and greater skills development in Margaret River, benefitting the community as a whole. The key Strategic Initiatives are transformational projects which are inextricably linked to the Economic Development Initiatives. These projects will provide a solid base for future economic and residential growth. This Economic Development Plan will provide for a long-term foundation on which to achieve the goals of the SuperTown initiative. vi Margaret River SuperTown Combined Report Final Draft Figure ES.4: Margaret River Economic Development Plan SuperTowns Vision: “To have balanced, well-connected regional communities, with lifestyle options and access to services – SuperTowns will have affordable, quality housing and a growing and diverse range of job opportunities. They will offer more choices for people living in regional areas and an attractive alternative to living in the metropolitan area ” Economic Development Plan What Does it Take to Become a SuperTown? •Diversify the economy. Strategic Projects 1. Redevelopment of the Margaret River Townsite: Realignment of the Perimeter Road, creation of a town square and revitalisation of the town centre. Outcomes •Increased economic prosperity. •Improved economic capacity. •Address growing social divide. 2. Surfers Point and Rivermouth: Regeneration and investment in this iconic tourism precinct. •Increased retention of economic benefits in the local region. •Improve positioning on the national and international stage. 3. Margaret River Foreshores & Gloucester Park: Improvements to the entry of the town, foreshore precincts and various community infrastructure. •Increased opportunities. 4. Margaret River Cultural & Events Centre: Major upgrade to cultural and events centre to facilitate larger business events. •Improved sustainability. •Increased service provision. Economic Development Initiatives 1. Support Existing Business: Develop programs to proactively engage with and assist the growth of local companies. 2. Market the Shire: Marketing the Shire as a dynamic and creative business hub. 3. Attract and Facilitate New Investment: through pro-active business attraction and support. 4. Develop the Local Workforce: Develop and attract new skills in the region. Source: AECgroup vii Margaret River SuperTown Combined Report Final Draft Economic Growth Influences Margaret River has an enviable position, given its existing brand and its competitive position in wine, tourism, food production, agriculture and creative industries. In particular, its high amenity can be very attractive to future residents and businesses, if certain requirements are met. There are some areas of weakness which will need to be addressed in order to support desired economic and population growth in Margaret River. These include: Accessibility of the region (for both tourism and business) can be challenging. Expansion of the Busselton Airport could assist and provide the ability to significantly increase accessibility of the region, particularly for domestic and international tourists. Identifying viable markets for food products, including breaking into overseas export markets will be important for the agriculture and food sectors in Margaret River. While there are a number of possible food products in the region, products that can achieve a premium price and guaranteed volumes are required, which will require export markets. Entering overseas markets can be expensive and time consuming. Community perception of development can often be negative and community spirit can often negatively impact future development. While certain developments do not align with the brand of Margaret River, some development is required to realise the future aspirations of the SuperTown initiative. Cost of living and housing affordability can be issues in Margaret River given the nature of the location and the attraction for absentee home owners (holiday homes), which can drive up prices for local residents, who often work in the tourism sector and receive relatively low wages. Seasonality of tourism and picking seasons, which causes an issue of providing year round employment opportunities. Creation of a society of ‘haves’ and ‘have nots’ based on the reliance on tourism, which does not always offer long-term, high income employment, and the attraction of the area to high net worth individuals. These contrasting groups could create a community of people that can afford to live here and the people that service them. Reliance on wine and tourism as core industries, which provides a future risk to a down turn in each industry or both (as they are heavily linked). Lack of high-speed internet connections, which can discourage many new residents and businesses from moving to the area. Lack of sufficient transport links, including a local airport that can handle regular passenger transport (RPT) from the East Coast and overseas as well as road infrastructure necessary to grow the town and allow the easy access and transport of people and goods. Future Direction of Margaret River Economy Margaret River must evolve and move beyond wine, agriculture and tourism (and the inter-related links between these industry clusters) to create a more diversified, deeper and more sustainable economy. Fortunately, Margaret River has considerable advantages and opportunities to work with. The future Margaret River economy will be just as well known for its creative enterprises and diversity of food products as it is today for wine and tourism. Food and beverage products of Margaret River contribute significantly to the State’s exports and are sent all around the world, particularly to discerning customers in Asia. Investments into infrastructure (including broadband internet, roads and tourism infrastructure) have been made in a conscious and long-term oriented manner, which has provided the foundation for considerable growth. Creative industries have thrived, creating a culture that pervades new and existing industries. This culture has attracted more businesses and a highly skilled workforce, which has contributed greatly to the diversification of the economy. viii Margaret River SuperTown Combined Report Final Draft Traditional industries of agriculture, wine and tourism are still important facets of the economy and provide considerable value not only through their direct activities by through the flow-on impacts of continuing to build into the Margaret River brand. The tourism industry in particular is well known for its ingenuity and innovation, having developed new products and marketing avenues to drive visitation, length of stay and spending. The population has grown as the economy has expanded. The area has attracted not only creative businesses and people but older, retired Australians. These new arrivals thoroughly enjoy the area in the summertime, with its natural beauty, events and wine. To support the population growth, education and health facilities have grown, including new facilities to support the ageing population. These new facilities continue to contribute to community wellbeing. Education providers are well linked with local industries, which is another factor that attracts new business and helps create a steady stream of new workers. ix Margaret River SuperTown Combined Report Final Draft Table of Contents DOCUMENT CONTROL ....................................................................................... I EXECUTIVE SUMMARY .................................................................................... II TABLE OF CONTENTS ....................................................................................... X 1. INTRODUCTION ....................................................................................... 1 1.1 1.2 1.3 BACKGROUND .............................................................................................. 1 PROJECT OVERVIEW ....................................................................................... 1 GEOGRAPHY ................................................................................................ 2 2. POPULATION AND DEMOGRAPHIC PROFILE.............................................. 3 2.1 2.3 POPULATION & DEMOGRAPHICS .......................................................................... 3 2.1.1 HISTORICAL POPULATION ........................................................................ 3 2.1.2 POPULATION PROJECTIONS ...................................................................... 3 2.1.3 AGE STRUCTURE ................................................................................. 7 2.1.4 FAMILY/HOUSEHOLD TYPES ..................................................................... 9 2.1.5 HOUSEHOLD & DWELLING GROWTH ........................................................... 10 SOCIO-ECONOMIC CHARACTERISTICS ................................................................... 11 2.2.1 EDUCATION/QUALIFICATIONS .................................................................. 11 2.2.2 OCCUPATION .................................................................................... 12 2.2.3 INCOME .......................................................................................... 13 2.2.4 HOUSE PRICES .................................................................................. 13 KEY FINDINGS ............................................................................................ 15 3. EMPLOYMENT & BUSINESS ACTIVITY ..................................................... 16 3.1 3.2 3.3 LABOUR FORCE & UNEMPLOYMENT ...................................................................... 16 EMPLOYMENT & BUSINESS ............................................................................... 16 3.2.1 EMPLOYMENT BY INDUSTRY ..................................................................... 16 3.2.2 BUSINESS BY INDUSTRY ........................................................................ 17 3.2.3 BUSINESSES BY EMPLOYMENT SIZE ............................................................ 18 3.2.4 BUSINESSES BY TURNOVER ..................................................................... 19 3.2.5 SMALL BUSINESS ............................................................................... 19 KEY FINDINGS ............................................................................................ 20 4. INVESTMENT & MAJOR PROJECTS .......................................................... 21 4.1 4.2 BUILDING APPROVALS & PROPERTY MARKET ........................................................... 21 4.1.1 RESIDENTIAL APPROVALS ....................................................................... 21 4.1.2 NON-RESIDENTIAL APPROVALS ................................................................ 21 MAJOR PROJECTS ......................................................................................... 22 5. ECONOMIC GROWTH .............................................................................. 24 5.1 5.2 5.3 CURRENT GROSS REGIONAL PRODUCT .................................................................. 24 FOUNDATION INDUSTRIES – TOURISM & VITICULTURE ................................................ 25 5.2.1 TOURISM VISITATION ........................................................................... 25 5.2.2 TOURIST ATTRACTIONS ......................................................................... 27 5.2.3 TOURISM ACTIVITY .............................................................................. 28 5.2.4 VITICULTURE .................................................................................... 30 5.2.5 RELATIONSHIP BETWEEN FOUNDATION INDUSTRIES .......................................... 33 KEY FINDINGS ............................................................................................ 33 6. ECONOMIC OUTLOOK ............................................................................. 35 6.1 6.2 6.3 FUTURE ECONOMIC DRIVERS............................................................................. 35 6.1.1 INTERNAL DRIVERS ............................................................................. 35 6.1.2 EXTERNAL DRIVERS ............................................................................. 36 6.1.3 REGIONAL & LOCAL DRIVERS .................................................................. 37 POTENTIAL FUTURE ECONOMIC GROWTH PATH ......................................................... 39 KEY FINDINGS ............................................................................................ 40 7. REGIONAL GAP ANALYSIS...................................................................... 41 2.2 x Margaret River SuperTown Combined Report Final Draft 7.1 7.2 7.3 7.4 7.5 IMPORT & EXPORT ANALYSIS ............................................................................ 41 SUPPLY CHAIN ANALYSIS................................................................................. 43 COMPARATIVE ASSESSMENTS ............................................................................ 50 JOURNEY TO WORK ....................................................................................... 51 KEY FINDINGS ............................................................................................ 52 8. OPPORTUNITIES ASSESSMENT............................................................... 54 8.1 8.2 8.3 8.4 LOCATION QUOTIENTS.................................................................................... 54 COMPETITIVE ASSESSMENT .............................................................................. 57 8.2.1 COMPETITIVE EDGE ............................................................................. 58 8.2.2 AREAS FOR IMPROVEMENT ...................................................................... 58 CLUSTER MAPPING ........................................................................................ 60 KEY FINDINGS ............................................................................................ 64 9. INDUSTRIAL LAND ASSESSMENT............................................................ 65 9.1 9.2 9.3 EXISTING DEMAND & SUPPLY ............................................................................ 65 FUTURE DEMAND FOR LAND .............................................................................. 65 KEY FINDINGS ............................................................................................ 66 10. RETAIL ASSESSMENT ............................................................................. 67 10.1 CATCHMENT ANALYSIS ................................................................................... 67 10.2 POPULATION GROWTH .................................................................................... 67 10.2.1 POPULATION PROJECTIONS ..................................................................... 68 10.3 RETAIL SUPPLY ............................................................................................ 69 10.3.2 RETAIL SUPPLY OUTSIDE THE CATCHMENT .................................................... 71 10.3.3 FUTURE SUPPLY ................................................................................. 72 10.4 RETAIL EXPENDITURE ..................................................................................... 73 10.4.1 AVERAGE HOUSEHOLD RETAIL EXPENDITURE ................................................. 73 10.4.2 FORECAST HOUSEHOLD RETAIL EXPENDITURE POTENTIAL ................................... 73 10.4.3 MARKET SHARE ANALYSIS ...................................................................... 75 10.4.4 ESTIMATED HOUSEHOLD RETAIL EXPENDITURE WITHIN THE CATCHMENT ................... 76 10.4.5 ESTIMATED VISITOR RETAIL EXPENDITURE WITHIN THE CATCHMENT ....................... 77 10.4.6 ESTIMATED TOTAL RETAIL EXPENDITURE WITHIN THE CATCHMENT .......................... 78 10.5 RETAIL DEMAND .......................................................................................... 79 10.6 CURRENT DEMAND VS SUPPLY ........................................................................... 80 10.7 FUTURE DEMAND VS SUPPLY ............................................................................. 81 10.8 KEY FINDINGS ............................................................................................ 82 11. COMMERCIAL & GOVERNMENT OFFICE ................................................... 83 11.1 11.2 11.3 11.4 11.5 METHODOLOGY ............................................................................................ 83 OFFICE SUPPLY ........................................................................................... 84 OFFICE DEMAND .......................................................................................... 84 OFFICE DEMAND VS SUPPLY ............................................................................. 85 KEY FINDINGS ............................................................................................ 85 12. FUTURE OPPORTUNITIES FOR GROWTH ................................................. 86 12.1 ECONOMIC OPPORTUNITIES .............................................................................. 86 12.2 POTENTIAL IMPEDIMENTS................................................................................. 89 13. KEY ECONOMIC DRIVERS & IMPORTANT TRENDS ................................... 90 13.1 13.2 13.3 13.4 13.5 GLOBAL FOOD SECURITY ................................................................................. 90 THE MARGARET RIVER BRAND ........................................................................... 91 TOURISM INDUSTRY ....................................................................................... 91 WINE MARKET ............................................................................................ 91 INTERNET .................................................................................................. 92 14. ECONOMIC ISSUES & CHALLENGES ........................................................ 93 14.1 14.2 14.3 14.4 14.5 14.6 ECONOMIC RELIANCE ON WINE & TOURISM ............................................................ 93 EMPLOYMENT SEASONALITY .............................................................................. 94 COST OF LIVING & HOUSING AFFORDABILITY .......................................................... 95 HIGH-SPEED INTERNET .................................................................................. 96 ACCESSIBILITY & TRANSPORT LINKS .................................................................... 97 IDENTIFYING MARKETS FOR FOOD PRODUCTS .......................................................... 97 xi Margaret River SuperTown Combined Report Final Draft 15. ECONOMIC DEVELOPMENT PLAN ............................................................ 99 15.1 OVERVIEW ................................................................................................. 99 15.2 STRATEGIC INITIATIVES ................................................................................ 101 15.3 ECONOMIC DEVELOPMENT INITIATIVES................................................................ 103 15.3.1 SUPPORT EXISTING BUSINESS ............................................................... 103 15.3.2 MARKET THE SHIRE ........................................................................... 103 15.3.3 ATTRACT & FACILITATE NEW INVESTMENT .................................................. 103 15.3.4 DEVELOP THE LOCAL WORKFORCE ........................................................... 104 16. IMPLEMENTATION PLAN ...................................................................... 105 REFERENCES ............................................................................................... 110 APPENDIX A: MODELLING APPROACH .......................................................... 113 APPENDIX B: JOURNEY TO WORK DETAILS .................................................. 115 APPENDIX C: DETAILED LOCATION QUOTIENTS ........................................... 117 APPENDIX D: GRP METHODOLOGY ............................................................... 119 xii Margaret River SuperTown Combined Report Final Draft 1. Introduction 1.1 Background In recent years, a combination of robust migration-led population growth and increasingly constrained metropolitan housing markets has led to an increase in median house prices across the Perth urban area and a significant deterioration in housing affordability. The lack of population decentralisation in Western Australia limited the capacity for the State as a whole to accommodate new residents without rapid price growth, due to limited genuine alternate residential centres outside of the metropolitan area. To provide greater levels of residential housing choice for a growing population, capitalise on existing infrastructure and capture a greater share of increased business investment in primary industries, the Government of Western Australia, through the Royalties for Regions program, established the Regional Centres Development Plan. In this Plan, nine regional centres or “SuperTowns” were identified - one of these being Augusta-Margaret River. The SuperTowns’ vision is to have balanced communities, with lifestyle options and access to services, with affordable, quality housing and a diverse range of job opportunities, offering an attractive alternative to living in the metropolitan area. Each SupterTown has a population target to double its population by 2031. Augusta-Margaret River is one of the twelve LGAs located in the South West Development Region1 in Western Australia. Collie and Manjimup were also named as SuperTowns within the South West Development Region. Augusta-Margaret River is a popular tourist destination within the South West Development Region that is best known for its wines and vineyards, scenic forests, national parks, art galleries and coastal scenery. Local industries include beef and dairy farming, sheep, deer, fishing, timber, market gardens, viticulture, tourism, crafts and furniture making, arts, cultural and cottage industries. 1.2 Project Overview Each SuperTown is required to prepare an Economic Development Growth Plan to assist guide the town during this growth phase. The Economic Development Growth Plan will build on the existing strategic framework of each Shire and identify specific opportunities for economic development. This will complement, stimulate and strengthen the Growths Plans for the region. A key component of the plans will be an implementation framework comprising strategies and programs to align delivery partners, attract funding and facilitate action and investment to achieve a local vision for growth. In the development of an Economic Development Growth Plan for the Shire of Augusta-Margaret River, the following reports will be developed: Socio-Economic Profile Opportunities and Gap Analysis Economic Development Plan All of these reports, which were originally delivered separately, have been combined into this single report. 1 The South West Development Region is comprised of the LGAs of Bunbury, Augusta-Margaret River, Boyup Brook, Bridgetown-Greenbushes, Busselton, Capel, Collie, Dardanup, Donnybrook-Balingup, Harvey, Manjimup and Nannup. 1 Margaret River SuperTown Combined Report Final Draft 1.3 Geography Data in this report is presented for the Local Government Area (LGA) of AugustaMargaret River, which primarily comprises the urban areas of the townships of Margaret River, Augusta and surrounding areas. In order to compare the area’s profile to other regions, and better understand its key features and strengths, statistics are benchmarked against Western Australia. In addition, where relevant, figures are also benchmarked against South West Development Commission (SWDC), which comprises the LGAs Bunbury, Augusta-Margaret River, Boyup Brook, Bridgetown-Greenbushes, Busselton, Capel, Collie, Dardanup, DonnybrookBalingup, Harvey, Manjimup and Nannup. This approach recognises the strong interrelationship that currently exists (and will continue to exist) between AugustaMargaret River and the surrounding South West region and the need for the benefits of Augusta-Margaret River’s evolution to a SuperTown to flow through to surrounding townships and areas. 2 Margaret River SuperTown Combined Report Final Draft 2. Population and Demographic Profile This section provides an overview of historical and current population, demographic and socio-economic trends in Augusta-Margaret River and the impact of achieving aspirational population target for Augusta-Margaret River in the future. 2.1 Population & Demographics 2.1.1 Historical Population Since 2006 the Augusta-Margaret River LGA’s population has grown by 2.9% per annum (an average of approximately 341 additional residents each year), recording a total of 12,509 residents in 2010. This growth resulted in the expansion of the Margaret River Town population from 4,943 to 5,549 residents over the period, equating to 44.4% of the LGA’s population. The recent growth in the Margaret River Town’s population is below the growth of the broader SWDC region (average annual growth of 3.2% p.a.) which has been driven in large by population growth of other coastal regions including Busselton (4.2% p.a.), Capel (5.6% p.a.), Dardanup (4.7% p.a.) and Harvey (3.0% p.a.). Figure 2.1: Population Growth Comparison, 2006-2010 14,000 Margaret River Population 12,000 10,000 8,000 6,000 4,000 2,000 0 2006 2007 Margaret River Township 2008 2009 2010 Remainder Margaret River LGA Source: ABS (2007), ABS (2011) 2.1.2 Population Projections Population projections for Augusta-Margaret River LGA are presented from three different sources – the Federal Government Department of Health and Ageing, the Western Australia Planning Commission and more recently from the Augusta-Margaret River Shire Council. Commonwealth Government Department of Health & Ageing The Commonwealth Government Department of Health and Ageing projections were published in 2007 and are based on 2006 Census and Estimated Resident Population (ERP) figures (Figure 2.2). As such, these projections do not take into account the recent population growth in the Augusta-Margaret River Region (2.9% since 2006) and instead estimates a steady growth trend of 1.9% per annum to 18,404 by 2031 (a gain of 281 3 Margaret River SuperTown Combined Report Final Draft people each year). These projections are based primarily on a consideration of demographic drivers, reflecting the use of the projections nationally for the purposes of health and aged care funding. 3.0% 17,500 2.5% 14,000 2.0% 10,500 1.5% 7,000 1.0% 3,500 0.5% 0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 21,000 Annual % Change Augusta-MR LGA Population Figure 2.2: Augusta-Margaret River LGA Projections, Federal Government Department of Health and Ageing, 2010-2031 Augusta-MR (S) Augusta-MR (S) SWDC Perth SD Western Australia Source: Federal Government Department of Health and Ageing (2007) Western Australia Planning Commission The Western Australia Planning Commission (WAPC) projections were released in 2005 and are also based on older population data, and do not take into account the recent growth trends of the Augusta-Margaret River LGA. As a result, these projections are also expected to underestimate future growth. Similar to the Commonwealth Government Department of Health and Ageing projections, the WAPC projections indicate a growth trend of 2.1% p.a. to 19,434 persons by 2031 (refer to Figure 2.3). 4 Margaret River SuperTown Combined Report Final Draft 3.0% 17,500 2.5% 14,000 2.0% 10,500 1.5% 7,000 1.0% 3,500 0.5% 0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 21,000 Annual % Change Augusta-Margaret River LGA Population Figure 2.3: Augusta-Margaret River LGA Projections, Western Australia Planning Commission 2010-2031 Augusta-MR (S) Augusta-MR (S) SWDC Perth SD Western Australia Source: Western Australia Planning Commission (2005) Margaret River SuperTown Growth Target Under the SuperTowns growth plan, the aspirational growth target for Margaret River is a doubling of the population by 2031. Figure 2.4 shows Margaret River’s anticipated growth trend of 3.4% per annum to 11,098 residents by 2031. This is equivalent to an additional 264 residents each year. This is above the historical and projected growth rates for the South West Development Region, Perth SD and Western Australia. In order for the SuperTown population projection target to be achieved in Margaret River there is an immediate need to continue recent population growth trends at a significantly higher rate (where Margaret River is currently attracting an average of 189 residents per year since 2001). Proactive planning schemes, infrastructure and community services will be required to support population growth. Investment attraction, industry growth and diversification of the economic base will also be critical to support job creation and the overarching sustainability of the economy. 5 Margaret River SuperTown Combined Report Final Draft 4.0% 10,500 3.5% 9,000 3.0% 7,500 2.5% 6,000 2.0% 4,500 1.5% 3,000 1.0% 1,500 0.5% 0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 12,000 Annual % Change Margaret River Population Figure 2.4: Margaret River SuperTown Population Target, 2010-2031 Margaret River Township Margaret River Township Source: Shire of Augusta-Margaret River (2011) Margaret River Service Population As a popular tourist destination, the Margaret River region needs to consider infrastructure developments which will not only service the permanent population, but also the impact of tourists. It is therefore important that the service population is expanded to include these transient residents of the Margaret River. The service population has been estimated using annualised projections of visitor nights in the region. These figures should be used with caution and are provided as guidance only. Figure 2.5: Margaret River SuperTown Service Population, 2010-2031 18,000 Margaret River Township 16,000 Total Service Population 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 0 Source: Shire of Augusta-Margaret River (2011) 6 Margaret River SuperTown Combined Report Final Draft 2.1.3 Age Structure Augusta-Margaret River has an older population than the SWDC and Western Australia. In 2010, the Augusta-Margaret River average age was estimated to be 37.6 years. The Augusta-Margaret River population is also ageing at a faster rate than the broader SWDC Region (up 0.6 years) and the State (up 0.4 years), with the average age of the area having increased by one year since 2005. Augusta-Margaret River's higher average age is due to a lower proportion of children under the age of 19 years (25.1%) compared to the SWDC (27.7%) and Western Australia (26.3%). Augusta-Margaret River's aged population (over 60 years) is slightly above that of Western Australia (17.5% compared to 17.3%, respectively) and below that of the broader SWDC region (18.7%). Interestingly, Augusta-Margaret River has higher proportions of persons aged between 20 years and 30 years (27.7%) than the SWDC region (25.4%), highlighting that the region is more attractive to younger to middle age adults than other areas of the SWDC. However, this is below the average of Western Australia (29.4%). Figure 2.6: Age Distribution, Augusta-Margaret River LGA, 2005-2010 80 and over 2.7% 70 to 79 5.0% 60 to 69 7.6% 50 to 59 2005 3.1% 2010 5.0% 9.4% 12.9% 13.5% 40 to 49 17.1% 16.3% 30 to 39 17.0% 16.2% 20 to 29 10 to 19 0 to 9 20.0% 11.2% 11.5% 13.5% 12.1% 13.0% 15.0% 13.0% 10.0% 5.0% 0.0% 5.0% 10.0% Augusta-Margaret River (S) 15.0% 20.0% Source: ABS (2011) The Margaret River township had 61.9% of the population aged under 40 in 2006, a young residential population relative to the Augusta-Margaret River LGA average of 54.3% of residents. 7 Margaret River SuperTown Combined Report Final Draft Figure 2.7: Age Distribution, Margaret River, 2006 80 and over 2.6% 70 to 79 4.0% 60 to 69 4.0% 50 to 59 Female 3.3% 4.3% 11.5% 40 to 49 30 to 39 Male 1.4% 10.9% 18.3% 15.8% 18.9% 18.2% 20 to 29 12.1% 10 to 19 14.3% 0 to 9 14.3% 13.4% 17.1% 15.5% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Margaret River Township, 2006 Source: ABS (2011) Figure 2.8 and Figure 2.9 show the age distribution for the SWDC Region and Western Australia. Comparison of 2005 to 2010 average age changes show that Augusta-Margaret River has aged at a faster rate than the regional and State trends over the past five years. Figure 2.8: Age Distribution, South West Development Region, 2005-2010 80 and over 3.0% 70 to 79 5.5% 60 to 69 2010 5.5% 8.6% 50 to 59 2005 3.3% 9.9% 13.2% 13.5% 40 to 49 15.9% 30 to 39 14.1% 20 to 29 10 to 19 14.9% 13.5% 10.9% 11.9% 15.1% 0 to 9 20.0% 14.1% 13.8% 15.0% 13.5% 10.0% 5.0% 0.0% 5.0% SWDC Region 10.0% 15.0% 20.0% Source: ABS (2011) 8 Margaret River SuperTown Combined Report Final Draft Figure 2.9: Age Distribution, Western Australia, 2005-2010 80 and over 2.9% 70 to 79 5.2% 60 to 69 30 to 39 2010 9.0% 12.9% 12.6% 15.1% 14.4% 14.7% 20 to 29 10 to 19 2005 5.1% 8.1% 50 to 59 40 to 49 3.2% 14.3% 13.8% 15.1% 14.3% 0 to 9 13.3% 13.0% 20.0% 12.9% 15.0% 10.0% 5.0% 0.0% 5.0% 10.0% Western Australia 15.0% 20.0% Source: ABS (2011) 2.1.4 Family/Household Types Similar to the SWDC region and Western Australia, Augusta-Margaret River's highest proportion of family types are couple families with children (42.5%). However, this is below the proportion for the SWDC region (43.3%) and the State (45.1%). Augusta-Margaret River has a higher proportion of couples without children (41.8%) than the SWDC (41.4%) and State (38.3%) averages. This is consistent with AugustaMargaret River’s relatively older population and the presence of "empty-nesters", retiree households, as well as younger couple families. Figure 2.10: Family/Household Type, Margaret River Urban Centre, 2006 Margaret River Urban Centre Other family Augusta-MR (S) SWDC Perth SD Single Parent Family Western Australia Couple Family w/ children Couple Family w/ no children 0.0% 10.0% 20.0% 30.0% 40.0% Margaret River Urban Centre, 2006 50.0% Source: ABS (2007) 9 Margaret River SuperTown Combined Report Final Draft Household & Dwelling Growth Future demand for dwellings in the Margaret River Town will be dependent upon the growth in permanent resident households based upon population growth expectations as well as the expectation for future dwelling demand to support the local tourism market (visitor population). The sections below provide dwelling/household projections for both residents and the estimated 'permanent visitor' population over the next 20 years. Resident Population & Household Growth The total number of dwellings in the Augusta-Margaret River LGA has grown from 1,901 dwellings in 2006 to 2,285 in 2011, an increase of 20.2%. The proportion of these dwellings that are classified as detached dwellings has fallen slightly over that time period, down from 89.8% of total dwellings in 2006 to 82.7% of total dwellings in 2011. The average household size in the Margaret River Town was estimated to be 2.6 persons per household in 2006. If Margaret River Town's average household size decreases at the rate of regional WA projections (ABS, 2010) to 2.3 persons per household by 2031, there would a requirement for an additional 2,605 dwellings to be built between 2010 and 2031 to support the SuperTowns population growth target of 11,097 residents. Figure 2.11: Forecast Household Growth, Margaret River Township, 2006-2031 5,000 4,500 4,000 No. of Households 3,500 3,000 2,500 2,000 1,500 1,000 500 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 0 2006 2.1.5 Margaret River Township Source: ABS (2007, 2010) Forecast Permanent Tourism Visitor Household Growth In addition to the permanent resident population, Augusta-Margaret River also attracts a large visitor population. In 2010, there were approximately 1.5 million visitor nights spent in the Augusta-Margaret River region or a permanent2 visitor population of 4,108 persons in 2010. The Margaret River Town services the majority of the permanent visitor population, where the sum of both permanent residents and the estimated permanent visitors is equal to the total service population in the Town of Margaret River. In 2010, the Margaret River region had an estimated 2.4 permanent visitors per household, equating to a total requirement for 1,689 permanent visitor rooms or an additional 657 rooms on top of the existing supply of hotels, motels and serviced apartments in the Margaret River Region (1,032 rooms). Figure 2.11 shows that over the 2 The permanent visitor population is calculated based on visitor nights spent and divided by the number of days per year (365 days). This gives an estimate of the permanent visitor population that the Margaret River Region services on an annual basis. 10 Margaret River SuperTown Combined Report Final Draft next 20 years there will be a requirement for an additional 1,258 dwellings (or rooms) to be added to the Margaret River accommodation supply to support growth in the permanent tourism visitor market - this will be on top of dwelling supply required to support the permanent resident population identified in Figure 2.10. Figure 2.12: Forecast Permanent Visitor Dwelling Requirement, Augusta-Margaret River LGA, 2010-2031 2,500 Dwelling Demand 2,000 1,500 1,000 500 0 Total Existing Rooms Total Dwellings Required (minus existing rooms) Source: ABS (2007, 2010) 2.2 Socio-Economic Characteristics August-Margaret River has a unique set of socio-economic characteristics that differentiate it from other regional centres. Key indicators presented in this section include education and qualifications, occupation, income and house price-based wealth and affordability. 2.2.1 Education/Qualifications The Augusta-Margaret River region has a higher proportion of its working age population that have completed year 12 compared to the SWDC region (47.3% compared to 36%, respectively). This is in line with Western Australia trends which indicate a year 12 completion rate of 47.5%. The Augusta-Margaret River region is also characterised by higher proportions of postschool qualified workers than the SWDC for certificates, advanced diplomas/diplomas, bachelor's degrees, graduate diplomas/certificates and post-graduate degrees. This highlights that Augusta-Margaret River has attracts a diverse range of qualified workers within the broader context of the SWDC workforce. Further comparison with Western Australian trends indicates that Augusta-Margaret River also has higher proportions of its working age population with certificates, advanced diplomas/diplomas and graduate certificate/diplomas. The nature of industry in the region is likely to attract workers with these types of qualifications to Augusta-Margaret River with key industry strengths being in viticulture and wine making, tourism and agricultural industries. Augusta-Margaret River also has South West Institute of Technology Campus which offers certificates and diplomas in other key industry areas. 11 Margaret River SuperTown Combined Report Final Draft Figure 2.13: School & Post-School Qualifications, 2006 % Finished Year 12 Certificate Advanced Diploma and Diploma Bachelor Degree Graduate Diploma and Graduate Certificate Postgraduate Degree 0.0% Margaret River Urban Centre 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Collie Augusta-Margaret River SLA (S) SWDC Perth SD Western Australia Source: ABS (2007) Occupation Augusta-Margaret River is a predominantly blue-collar area, however, it has a slightly more balanced representation of blue to white collar workers than the broader SWDC region - which strongly favours blue collar workers. In 2008-09, 39.8% of AugustaMargaret River's workers were employed in blue-collar jobs, slightly below the SWDC region average (43.5%), but higher than Western Australia (33.6%). Almost 22% of the Augusta-Margaret River workforce is employed in labouring work, this is compared to the Western Australia average of 11.9% of the workforce. This higher representation of labourers is likely due to the demand for labourers in the local agriculture, horticulture and wine making industries that are present in the Augusta-Margaret River region. Figure 2.14: Employment by Occupation, 2008-2009 60.0% 50.0% % of Workforce 2.2.2 40.0% 30.0% 20.0% 10.0% 0.0% Blue Collar Augusta-Margaret River (S) White Collar SWDC Perth SD Service Workers Western Australia Source: ABS (2011a) 12 Margaret River SuperTown Combined Report Final Draft 2.2.3 Income Augusta-Margaret River is a low-income area, recording lower average incomes across every occupational category compared to the SWDC region and Western Australia averages. In 2008-09, the average wage in Augusta-Margaret River was $37,898, well below both the SWDC ($45,274) and Western Australia ($50,438) average wages. Managers in Augusta-Margaret River have the greatest level of income disparity, earning almost $6,000 less than the average across the region and over $20,000 less than the statewide average. Higher earning occupations in Augusta-Margaret River include: Machinery operators and drivers ($59,545) Managers ($53,379) Technicians and trade workers ($52,538) Figure 2.15: Average Income by Occupation, 2008-2009 Labourers Machinery Operators & Drivers Sales Workers Clerical & Administrative Workers Community & Personal Service Workers Tecnhicians & Trade Workers Professionals Managers $$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 Augusta-Margaret River (S) SWDC Perth SD Western Australia Source: ABS (2011a) 2.2.4 House Prices In Australia, household wealth is dominated by the family home. This is particularly the case for older generations, who have not had the benefits of exposure to long-term compulsory superannuation. During the last few years, and especially between 2005 and 2008, Western Australia generally, and Perth specifically, experienced one of the largest increases in house prices. Augusta-Margaret River has experienced a volatile housing price market over the past five years, similar to what the broader SWDC region and Perth markets also experienced. Median house prices in Augusta-Margaret River are down 10.4% compared to four years ago, while the SWDC region and Perth median housing prices are up 1.1% and 15.9%, respectively. Property in Augusta-Margaret River is some of the least affordable in the SWDC region, recording a median house price of $430,000 in 2010-11. This is 34.1% higher than the median prices for the SWDC and 14.7% higher than median prices for regional Western Australia. 13 Margaret River SuperTown Combined Report Final Draft Figure 2.16: Median Dwelling Prices Median Dwelling Prices ($) 600,000 500,000 400,000 300,000 200,000 100,000 2006-07 2007-08 Augusta-Margaret River LGA 2008-09 2009-10 Regional WA 2010-11 SWDC Source: REIWA (2011) Despite recording lower than average income levels in Augusta-Margaret River relative to the SWDC average, Augusta-Margaret River has substantially more expensive property than the average across the region. Comparison of household incomes to house prices shows that the average household would require 8.4 years worth of income on average to purchase a house of median price outright. This is very unaffordable when compared to the SWDC average 3.9 years worth of household income and 5.5 years worth in regional Western Australia. Figure 2.17: Ratio of Median House Prices to Median Household Incomes, 2008/2009 9 8 Median Multiple 7 6 5 4 3 2 1 0 Augusta-Margaret River LGA SWDC Regional WA Source: ABS (2011a), REIWA (2011) and AECgroup 14 Margaret River SuperTown Combined Report Final Draft 2.3 Key Findings Augusta-Margaret River population in 2010 was 12,509 having experienced steady population growth of 2.3% per annum over preceding 10 years, consistent with other coastal areas within the SWDC region. The area’s population is older relative to both the region and the State, a result of lower proportions of families with children and higher proportions of "empty-nesters" and retirees. Despite being a well educated and qualified population relative to the rest of the SWDC region, the area is predominantly working class with all occupations receiving less income per annum relative to SWDC and State averages Housing and property is also highly unaffordable in Augusta-Margaret River, with the median house price costing 8.4 years worth of the average household income, twice as expensive as the rest of the SWDC region. To reach the SuperTown target of doubling the Margaret River population by 2031, Margaret River will need to record an average population growth rate of 3.4% per annum over the next 20 years. Margaret River’s annual population growth rate from 2001 to 2010 was approximately 4.2% however the rate decreased to 2.9% per annum from 2006 to 2010. This suggests that achieving the SuperTown population target is a realistic stretch target. Achieving this goal will, however, require significant economic development planning to ensure the town remains attractive to new residents. 15 Margaret River SuperTown Combined Report Final Draft 3. Employment & Business Activity This section profiles the employment and business characteristics of the Shire of Augusta-Margaret River including labour force and unemployment trends, employment by industry and occupation and business size, growth and formation. 3.1 Labour Force & Unemployment Augusta-Margaret River has had a very low unemployment rate since March Quarter 2009 where it reached a low of 2.3%. Over the past year the Augusta-Margaret River unemployment rate increased to 3.7%. This increase in the local unemployment rate was due to the number of unemployed rising by over 20% the past year, as a result of labour force growth outstripping growth in employment. Unemployment rates in AugustaMargaret River are still low by Western Australian standards which recorded an unemployment rate of 4.4% in the June Quarter 2011. Over the past year employment in Augusta-Margaret River has grown by 0.4%, half the pace of the SWDC region (0.8%) and a fraction of the average growth in employment across Western Australia (3.2%). 9,000 6.0% 7,500 5.0% 6,000 4.0% 4,500 3.0% 3,000 2.0% 1,500 1.0% 0 0.0% Augusta-MR (S) Augusta-MR (S) SWDC Region Perth Unemployment Rate Labour Force Figure 3.1: Labour Force & Unemployment Rate, 2006-2011 Western Australia Source: DEEWR (2011) 3.2 Employment & Business 3.2.1 Employment by Industry The accommodation and food services, retail trade and construction sectors are AugustaMargaret River's largest employing sectors, employing just over 38% of the local workforce. This is over 10% more than the proportion of people employed in these sectors throughout the rest of the region and the State. Accommodation and food services (13.7%) is a major employer in the area due to the tourism generated through the Margaret River’s numerous world renowned wineries. Compared to the State, Augusta-Margaret River also employs higher proportions of workers in agriculture, forestry and fishing, finance and insurance services, arts and recreation and rental, hiring and real estate services. 16 Margaret River SuperTown Combined Report Final Draft Figure 3.2: Employment by Industry, 2010-11 (Place of Work) Accommodation and food services Retail trade Construction Agriculture, forestry and fishing Education and training Manufacturing Other services Health care and social assistance Professional, scientific and technical services Public administration and safety Wholesale trade Administrative and support services Transport, postal and warehousing Financial and insurance services Arts and recreation services Rental, hiring and real estate s ervices Information media and telecommunications Electricity, gas, water and waste services Mining 0.0% Augusta-Margaret River 3.0% SWDC 6.0% Perth SD 9.0% 12.0% 15.0% Western Australia Source: AECgroup (2011) 3.2.2 Business by Industry In June 2009, there were 1,736 registered businesses in Augusta-Margaret River, of which 22.5% were a part of the agricultural, forestry and fishing industry. This was over twice the State average and also slightly greater than the proportion found in the agriculturally intensive SWDC region. The construction industry had the next highest proportion of businesses in Augusta-Margaret River, accounting for 19.7% of the area’s businesses, consistent with the proportion found across the state (19.3%). Given that the agricultural and construction industries are generally made up of many smaller independent farms and tradesmen, these results are unsurprising and reinforce the LGA’s reliance on these industries. Due to the high concentration of businesses in the agricultural and construction industries, Augusta-Margaret River has a lower proportion of businesses in almost all other industries than the regional and Western Australia averages. 17 Margaret River SuperTown Combined Report Final Draft Figure 3.3: Business Counts by Industry, % of Total Businesses, June 2007 to June 2009 Agriculture, Forestry and Fishing Construction Rental, Hiring and Real Estate Services Retail Trade Professional, Scientific and Technical Services Accommodation and Food Services Manufacturing Other Services Financial and Insurance Services Health Care and Social Assistance Administrative and Support Services Transport, Postal and Warehousing Wholesale Trade Education and Training Arts and Recreation Services Mining Information Media and Telecommunications Electricity, Gas, Water and Waste Services Public Administration and Safety Augusta-MR (S) 0.0% SWDC 5.0% 10.0% Perth SD 15.0% 20.0% Western Australia 25.0% Source: ABS (2011b) 3.2.3 Businesses by Employment Size Approximately, 65.0% of Augusta-Margaret River’s businesses are non-employing, greater than the proportion of non-employing businesses in the broader SWDC (62.2%) and Western Australian economies (61.1%). This is due to rural nature of the region with a large proportion of businesses being ‘owner operated’ agricultural businesses. Approximately 83.4% of Augusta-Margaret River businesses employ less than five people, showing that the local economy is dominated by small business which is consistent with both regional (82.5%) and state (83.5%) averages. Figure 3.4: Business Counts by Industry by Number of Employees, June 2007 to June 2009 Augusta-Margaret River (S) 200+ SWDC Perth SD 100-199 Western Australia 50-99 20-49 5-19 1 to 4 Non employing 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Source: ABS (2011b) 18 Margaret River SuperTown Combined Report Final Draft 3.2.4 Businesses by Turnover The largest revenue category in Augusta-Margaret River is businesses that earn more than $200,000 but less than $500,000, with 20.2% of the area’s businesses falling within this turnover range, slightly greater than the proportion of region (17.6%) and state (18.1%) businesses. Augusta-Margaret River also has a higher proportion of businesses that earn between $25,000 and $150,000 (40.8%) compared to the SWDC (39.0%) and Western Australia (37.1%). This can be put down to the high proportion of agricultural businesses in the LGA, a generally low turnover industry. Figure 3.5: Business Counts by Industry by Turnover Size Ranges, June 2007 to June 2009 $200m or more Augusta-Margaret River (S) $50m to less than $200m SWDC $20m to less than $50m Perth SD $10m to less than $20m Western Australia $5m to less than $10m $2m to less than $5m $1m to less than $2m $500k to less than $1m $200k to less than $500k $150k to less than $200k $100k to less than $150k $75k to less than $100k $50k to less than $75K $25k to less than $50k Zero to less than $25k 0.0% 5.0% 10.0% 15.0% 20.0% Augusta-Margaret River (S) 25.0% Source: ABS (2011b) 3.2.5 Small Business Small business incomes in Augusta-Margaret River were slightly lower than the average across the SWDC region and much lower than the Western Australian average. In 200809, the average income of small unincorporated businesses in Augusta-Margaret River was $14,797 relative to the SWDC average of $16,499 and Western Australia average of $25,857. 19 Margaret River SuperTown Combined Report Final Draft Figure 3.6: Average Unincorporated Small Business Income, 2008-09 $30,000 $25,000 Income ($) $20,000 $15,000 $10,000 $5,000 $Augusta-Margaret SWDC Perth SD Western Australia River (S) Unincorporated Small Business Income Source: ABS (2011a) 3.3 Key Findings Despite the unemployment rate trending upwards in Augusta-Margaret River over the past two years, the unemployment rate is still very low at 3.7%, below both the SWDC and Western Australian unemployment rates. Labour force and employment growth has been slow in recent years, growing at a fraction of the rate of the rest of the state, whilst the number of unemployed has grown over 20% the past year. Augusta-Margaret River is heavily reliant on the tourism and agricultural industries for jobs, drawing tourists by virtue of the region’s world renowned vineyards. The accommodation and food services, construction, retail trade and agricultural sectors employ the bulk of the area’s workforce. The majority of businesses in Augusta-Margaret River are non-employing, with a large proportion turning over less than $500,000 per annum compared to regional and state averages. Small business incomes are relatively low compared to State and regional averages. 20 Margaret River SuperTown Combined Report Final Draft 4. Investment & Major Projects This section profiles activity and investment in the Augusta-Margaret River economy. It includes review of residential and commercial building approvals, land releases and development and major proposed investments in the region. 4.1 Building Approvals & Property Market 4.1.1 Residential Approvals The number and value of residential building approvals recorded in Augusta-Margaret River have fluctuated over the past 10 years. The value of approvals grew steadily from 2002 to 2005, however the number of approvals actually decreased from 262 in 2002 to 158 in 2006 before again building to a peak of 270 approvals at a total value of $74.5 million in 2010. 320 $80.0 280 $70.0 240 $60.0 200 $50.0 160 $40.0 120 $30.0 80 $20.0 40 $10.0 0 Dwelling Approvals - Houses Value of Approvals ($'M) Number of Residential Approvals Figure 4.1: Residential Approvals (No.) and Value ($ ‘M), Augusta-Margaret River LGA $- Dwelling Approvals - Other Residential Value of Approvals Source: ABS (2011c) 4.1.2 Non-Residential Approvals Augusta-Margaret River has seen more consistent non-residential building activity than other areas within the SWDC region, recording over $5 million of approvals each of the past 10 years. The 2005 and 2010 financial years were stand outs, recording $18.9 million and $21.7 million dollars, respectively. 21 Margaret River SuperTown Combined Report Final Draft Figure 4.2: Non-Residential Building Approvals ($ ‘M) Value of Non-Residential Approvals ($'M) $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 Augusta-Margaret River (S) Source: ABS (2011c) 4.2 Major Projects A number of major projects are planned for the Augusta-Margaret River region. Two of the larger projects include the West Cowaramup Townsite Strategy and the Witchcliffe Village Strategy. Cowaramup is a town of 988 people located 12 km north of Margaret River along the Bussell Highway. Cowaramup has been identified as a town with the potential for a permanent population between 500 – 2,000 people. In 2003, the Townsite Strategy identified residential expansion areas within the town capable of accommodating an additional 200 residential lots on top of the 150 existing lots. The expansion is planned to be undertaken in stages, with stage one being the development of a lot comprising the village centre and surrounding residential lots. Further development will be preceded by separate rezoning proposals (Thompson McRobert Edgeloe, 2003). Witchcliffe Village has also been identified as a town capable of accommodating future population growth. Subsequently, a 20 year planning strategy was put in place acting as a guide for future residential, commercial, and tourism development in the area. Witchcliffe is a small town of around 400 people located 8km south of Margaret River along the Bussell Highway. The strategic plan aims to increase the town’s permanent population to approximately 1,900 residents whilst also aiming to not jeopardise the existing values and characteristics of the townsite. The following five precincts are planned for the town: Historic Precinct (2.8ha) comprising retail, tourist accommodation and shops, offices and a car park. Future Village Core Precinct (8,000m²) comprising local shopping including post office, newsagent, general store, shops, cafe, day care centre, offices and car parking. Other Commercial Precinct (1.8ha) which will be appropriate for light industry and a showroom/trade display centre. Residential Precinct (2.3ha) encouraging home businesses and studios. Cultural Precinct (4ha) comprising places for interaction, festivals and other events. In addition six residential cells have been identified totalling approximately 121.4ha and accommodating 700 new residential lots. These lots are predicted to be able to 22 Margaret River SuperTown Combined Report Final Draft accommodate the desired estate population of 1,900 residents (Shire of AugustaMargaret River, 2007). 23 Margaret River SuperTown Combined Report Final Draft 5. Economic Growth This section presents estimates of Augusta-Margaret River's Gross Regional Product and economic activity and also provides a foundation industry profile of Augusta-Margaret River's leading sectors – tourism and viticulture. Gross Regional Product (GRP) estimates have been developed using AECgroup's proprietary GRP model. Estimates were generated for the entire SWDC region and Augusta-Margaret River to understand the value of the economy, as well as the contribution of key industries over time. The GRP methodology can be found in Appendix A. Current Gross Regional Product In 2010-11, Augusta-Margaret River had an estimated Gross Regional Product (GRP) of $691.4 million. This was an average annual growth of 8.4% since 2006-07, behind that average annual growth of the Western Australia economy (11.9%) over the four year period. Despite strong growth in both 2007-08 (26.2%) and 2010-11 (11.5%), the Augusta-Margaret River economy contracted slightly in 2008-09 (-0.8%) and 2009-10 (1.0%). Figure 5.1: Gross Regional Product (GRP), 2006-07 to 2010-11 $700 30.0% $600 25.0% $500 20.0% $400 15.0% $300 10.0% $200 5.0% $100 0.0% $0 % Annual Change Augusta-Margaret River GRP ($M) 5.1 -5.0% 2006-07 2007-08 Augusta-Margaret River GRP 2008-09 2009-10 2010-11 Augus ta-Margaret River GRP % annual change Western Australia GRP % annual change Source: AECgroup (2011) Gross Value Added (GVA) is the measure of the value of goods and services produced in an industry. Augusta-Margaret River's leading sector (by GVA) in 2010-11 was the construction sector which generated 21.7% of Augusta-Margaret River's total industry value-add. Manufacturing and agriculture, forestry and fishing are also leading sectors of Augusta-Margaret River's economy, generating 10.8% and 8.5% of industry value add respectively, almost identical to the proportion of value-add provided to the SWDC economy and over twice the proportion provided to the Western Australian economy. 24 Margaret River SuperTown Combined Report Final Draft Figure 5.2: Augusta-Margaret River GVA by Industry, 2010-11 Construction Manufacturing Agriculture, forestry and fishing Professional, scientific and technical services Retail trade Financial and insurance services Ownership of dwellings Transport, postal and warehousing Accommodation and food services Education and training Rental, hiring and real estate services Administrative and support services Health care and social assistance Wholesale trade Public administration and safety Electricity, gas, water and waste services Other services Information media and telecommunications Arts and recreation services Mining 0.0% Augus ta-Margaret River 9.0% SWDC Perth SD 18.0% 27.0% 36.0% Western Australia Source: AECgroup (2011) 5.2 Foundation Industries – Tourism & Viticulture The Margaret River region is a highly attractive holiday destination. Visitation, both domestic and international, to the region is dominated by holiday or leisure tourists (as compared to the average visitor to WA as a whole). This appears to be due to the region’s: 5.2.1 Largely mild, Mediterranean-style climate Breathtaking, diverse and often untouched landscape and scenery Rich and fascinating history Variety of activities and events in which to participate Tourism Visitation The figure below illustrates domestic overnight and international visitor nights to the Augusta-Margaret River LGA from the year to June 1999 (this year excludes international data) to the year to June 2011. Over this period, domestic overnight visitor nights has undergone significant volatility, fluctuating between a low of just over 1,000,000 in the year to June 1999, and a high of 2,179,000 in the year to June 2005. However, it appears to be trending flat since 2006. 25 Margaret River SuperTown Combined Report Final Draft Figure 5.3: Domestic Overnight and International Visitor Nights, 2000-2011, AugustaMargaret River LGA 2,500,000 Visitor Nights 2,000,000 1,500,000 1,000,000 500,000 0 June 2000 June 2001 June 2002 June 2003 June 2004 Domestic June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 June 2011 International Source: TRA (2011), and AECgroup International visitor nights, on the other hand, do have a clear upward trend over the period, fluctuating between 135,923 in the year to June 2000, and 408,407 in the year to June 2011. But despite this growth in international visitor nights, domestic visitor nights were on average almost 5 times higher over this period, reflecting the current reliance on local visitors by the tourism industry. Figure 5.4: Total Visitor Nights, by Reason, 2000-2011, Augusta-Margaret River LGA 2,500,000 Total Visitor Nights 2,000,000 1,500,000 1,000,000 500,000 0 June 2000 June 2001 Holiday or leisure June 2002 June 2003 June 2004 Visiting friends and relatives June 2005 June 2006 Business June 2007 Other June 2008 June 2009 June 2010 June 2011 Purpose of visit not asked Source: TRA (2011), and AECgroup Over the past decade, total visitor nights have been dominated by holiday and leisure visitors, accounting for the majority of visitor nights in every year. Volatility in holiday 26 Margaret River SuperTown Combined Report Final Draft and leisure, particularly past 2005, has been a primary driver of overall visitor night volatility in recent years. Visiting friends and relatives was the second most common reason given for visitor Augusta-Margaret River over the past decade, reflecting the existing critical mass of population in Margaret River. It is expected that this segment of the market will experience strong growth in the future in line with the targeted doubling of the population. Business investment has generally been low, with the exception of large numbers of visitors in 2005 associated with strong conference activity. Business visitor night numbers since then have average higher levels than earlier in the decade, suggesting some growth off a very low base. 5.2.2 Tourist Attractions The Margaret River region is full of “natural wonders, beautiful vineyards, picturesque rolling farm lands and glorious pristine coastline” (Augusta Margaret River Tourism Association 2011). Along the coast, one can see the contrasts between large granite pebbles that have been strewn and smoothed over time by the ocean, reefs and jagged limestone cliffs protecting the beaches, and the white sandy beaches and blue waters of places such as Gracetown, Hamelin Bay and Prevelly. One can also visit the majestic karri and jarrah forests and wildflowers along the Leeuwin Naturaliste ridge. The trees of Karrinup’s Boranup Forest, once used to pave the streets of London, now constitute 100 years of regrowth since milling stopped in the late 1800s. Cape Leeuwin, near the southern town of Augusta, represents the place where the Indian and Southern Oceans meet. This gives the area a “last frontier” feel and even attracts whale-watchers to view the migration of Humpback, Southern Right and endangered Blue Whales between May and December. There are also stunning limestone caves in the area along the Leeuwin Naturaliste ridge. And the annual Augusta River Festival highlights the diversity and attraction of Augusta’s Blackwood River. Furthermore, the Leeuwin National Park has mountain bike trails, exploratory walking trails, and horse riding. The coastline along the Margaret River region includes some of WA’s best surf and beaches, including Redgate Beach, and the above-mentioned Gracetown and Hamelin Bay. Furthermore, they are perfect for swimming, diving, snorkeling, kitesurfing and windsurfing, sailing and fishing. And naturally, surfing is an integral part of Margaret River culture, with the region playing host to the annual Margaret River Classic and the Margaret River Pro (formerly the Masters, held at Prevelly because of its internationally recognized surf conditions). In fact, Yallingup, with its own ideal surf beaches of Yallingup Beach, Rabbit Hill, Smiths and Super Tubes, has bred some of the world’s best surfers. Furthermore, surfing lessons and board hire facilities are available from a number of local businesses. The region also is home to the Boranup Maze, plays host to annual concerts such as the Leeuwin Concert, provides for golf enthusiasts with the Margaret River Golf Course and the Chilli Waters Super Golf Course, and boasts world class art galleries (e.g. Karrinup). Much of the Margaret River region is also steeped in historical significance. For example, Augusta is the third oldest settlement in WA, with the first white settlers arriving in 1830. Karridale was also the hub of the entire south west during the timber rush at the turn of the 20th century. But since then (and since a destructive bushfire past through the town in 1961), it became just a quaint little town. However, the chimney is still visible in Karridale memorial park on Caves Road, and the Arumvale and old Boranup Mill still remain. Hamelin Bay’s wooden jetty still remains as a piece of historically significant infrastructure, once being used to service sailing ships out of Karridale. Witchcliffe is home to several gift shops and buildings that date back to early settlement times. Furthermore, there is a significant timber history in Witchcliffe, including the mill in East Witchcliffe, and the train line to Busselton that was constructed during the timber boom times. And of course, the Margaret River region is home to numerous world-class wineries, transforming from little more than a struggling dairy industry 30 years ago into a winegrowing “mecca”. The town of Cowaramup, located about five minutes north of Margaret River, is right in the centre of the Margaret River wine region and as such, is the ideal location for the annual Margaret River Wine Festival, where local wines can be showcased. This industry will be discussed in more detail in the following section. 27 Margaret River SuperTown Combined Report Final Draft And to complement the wine industry, the region has many gourmet food and drink offerings, including fine cheeses, port (The Grove, The Berry Farm), beer (Bootleg Brewery, Colonial Brewery, Cowaramup Brewery), chocolate (The Margaret River Chocolate Company), coffee (Yahava KoffeeWorks), and gourmet delicacies and fresh local produce (Margaret Riviera). In addition to this, the region is home to a number of award-winning restaurants and cafes, a growing number of which are within wineries themselves. And within Margaret River town and Busselton, there is plenty of shopping, retail and facilities. The region also has a “stunning array of accommodation options (for every traveller, including) luxury retreats, hip hotels, group or family accommodation, budget lodgings, bountiful bed and breakfasts, caravan and camping grounds, holiday houses and rentals and corporate accommodation” (Augusta Margaret River Tourism Association 2011). Furthermore, the Augusta-Margaret River Tourism Association is made up of 465 tourism operators, ranging from B&Bs to luxury resorts, tour companies, artisans, wineries, confectionery outlets, animal exhibitions and specialist shops. 5.2.3 Tourism Activity The Augusta-Margaret River region is a popular tourism destination. For the past five years the region has received on average just under 700,000 visitors a year (day, domestic overnight and international overnight) (DRET, 2011). Figure 5.5 shows that the Augusta-Margaret River LGA has experienced a small decrease in its level of tourism activity in recent years. Guest arrivals have decreased 2.9% over the past year and 3.2% between the year ending September 2007 and the year ending September 2011. Similarly, room occupancy rates have fallen from 53.5% during the year ending September 2007 to 51.1% in the most recent year ending September 2011. The 65% occupancy level is generally considered to be the benchmark for assessing if an area would be able to sustain new entrants into the tourism accommodation market. The declining trend in occupancy rates in Augusta-Margaret River over recent years suggests that the market is currently in oversupply with 11 establishments in the region offering 410 rooms (ABS, 2011). Statistics collected by the Australian Bureau of Statistics refer solely to establishments of 15 rooms or more. A recent audit of the region suggests supply of 1,000 rooms in the Augusta-Margaret River region (Augusta-Margaret River Shire, 2011). Despite the fall in guest arrivals and occupancy rates within the LGA, takings from accommodation have risen 19.1% over the past year and 7.0% from the year ending September 2007 to the year ending September 2011 (ABS, 2011). 28 Margaret River SuperTown Combined Report Final Draft 28,000 80.0% 24,500 70.0% 21,000 60.0% 17,500 50.0% 14,000 40.0% 10,500 30.0% 7,000 20.0% 3,500 10.0% 0 Guest Arrivals Room Occupancy Rate (%) Guest Arrivals Figure 5.5: Guest Arrivals and Room Occupancy Rates, December 2006 – September 2011 0.0% Room Occupancy Rate Sept YE Occupancy Rates Source: ABS (2011d) Figure 5.6 highlights the seasonal nature of tourism employment in the Augusta-Margaret River LGA. The December and March quarters are traditionally the quarters with the highest levels of employment, with the December 2008 (216 persons) and March 2009 (213 persons) quarters being the highest employing quarters over the past five years. The number of persons employed in hotels, motels and serviced apartments with 15 or more rooms has grown steadily at an average annual rate of 3.3% until the year ending September 2011 and at 3.4% between September 2010 and September 2011. Figure 5.6: Quarterly Employment in Hotels, Motels and Serviced Apartments with 15 or More Rooms, December 2006 – September 2011 Persons Employed (Quarter) 250 200 150 100 50 0 Augusta-Margaret River (S) Source: ABS (2011d) 29 Margaret River SuperTown Combined Report Final Draft 5.2.4 Viticulture Margaret River’s current reputation as an internationally renowned wine region was not always envisaged. The following table provides a brief timeline outlining the main events that established the Margaret River viticulture industry. Table 5.1: Timeline of the Margaret River Viticulture Industry Margaret River Viticulture Industry History Olmo (1956) Paper dismissed region as only suitable for table grapes, highlighting problems with Margaret River’s high rainfall, cloud cover and disease risk relative to existing operations in Pemberton and Manjimup, and potential areas south and east of Bridgetown, and areas south of Bunbury Late 1950s1967 First successful plantings in Mount Barker in 1967 (following Olmo’s recommendations) This move came from Charles Court and the Department of Industrial Development, in spite of (and because of) the State Agricultural Minister’s reluctance to be seen to promote alcohol Margaret River’s potential finally promoted in 1965 and 1966 papers by John Gladstones (in spite of Olmo’s recommendations), highlighting: o Region’s suitable soils; o Already-successful stone fruit crops near Karridale; o Growing and ripening season climate similar to Bordeaux (maybe even warmer) and drier and more complete than Mount Barker, allowing for varieties with wide range of maturities, and a lower Spring frost risk; and o Only potential problem was need for drainage management due to ample rainfall Spring 1965 Dr. Kevin Cullen contacted Gladstones for advice on growing lupins in the area, who told Cullen to dismiss lupins and focus on vines July 1966 Cullen organized public meeting in Busselton, generating huge public response, given: o Region’s depressed economy; o Its once-booming timber industry was now a distant memory; and o Its chronically unprofitable butterfat industry Despite suitable soils and climate, reaction from Department of Agriculture and WA media was more guarded, given lack of local winery or outlet Spring 1966 Cullens’ first experimental plantings, despite such negative reactions, followed by first main plantings in 1971 Winter 1967 Dr. Tom Cullity established Vasse Felix, region’s first commercial winery, after coming across Gladstones’ papers while growing vines NE of Bunbury in Darling Range 1972 Vasse Felix brought first Margaret River wine to public notice, winning Gold and Silver medals at the Perth Royal Show Margaret River “brand” being established through its European and coastal characters, compared to SE Australia, and in spite of relatively inexperienced vignerons and winemakers By 1990, vines had matured and equipment and expertise vastly improved, allowing for penetration of eastern and overseas markets Late 1970s Uniqueness of “brand” gave rise to calls to officially define region’s boundaries Gladstones approached by MRWIA for the task, defining the boundaries as everything within the Margaret River and Busselton shires west of longitude 115o18, including all land east of Margaret River to the State Forest, and the controversial Carbanup-Jindong area Source: Gladstones (2005) The region’s western extent of Cape Leeuwin to Cape Naturalist was obvious enough. It was the eastern extent that proved more difficult, given the broadly similar landscapes, soils and climates that exist as far as 15-18km inland. Furthermore, MRWIA had already accepted vineyards in the northern areas of Carbanup and Jindong (near Busselton) into the region and therefore, they had to be included. This was a source of dispute, given the flat alluvial and intermediate soils that occur here as the Cape ridge grades away to the northeast. Many argued this type of soil was less conducive to quality viticulture compared to the gravelly soil of the ridge itself. Carbanup and Jindong also had access to underground water for irrigation, unlike the rest of the region, and experienced slightly drier winters and warmer summers, resulting in up to four weeks difference in maturity times. Even so, these boundaries allowed for diversity within the region because, while fame for quality, small boutique production was valuable, the region had to be large enough to be the basis of an entire industry. This is where the Carbanup-Jindong area was useful: larger-scale commercial production was more common in this area than elsewhere, and the climate was still suitably comparable to the rest of the region. Also, an effort was made not to exclude well-located wineries from the region. 30 Margaret River SuperTown Combined Report Final Draft Even so, there is on-going debate as to whether the Carbanup-Jindong area should, in fact, be included in the neighbouring Geographe area. And since the late 1990s, there has even been a call for sub-regions to be established to better reflect the varying characteristics within the Margaret River region (Gladstones suggested six potential subregions: Carbanup, Yallingup, Wilyabrup, Treeton, Wallcliffe and Karridale). Indeed, northern sub-regions (especially Wilyabrup) have a strong reputation for success in Bordeaux-style red wine, while the cooler south sub-regions appear to generate better white wines (at least for the moment; some, including Tom Cullity, believe the south has great red wine potential, given the longer, milder ripening periods they enjoy). However, these sub-regions were not officially registered, for fear they would dilute the Margaret River brand without compelling reason. More recently, the “arrival of large-scale, investment-driven plantings and steep increases in production have placed downward pressure on prices” (Gladstones 2005), causing a significant glut by 2006. This has focused competitive pressures on the midpriced sector of the market. Interestingly, similar gluts had already been experienced in California and France in earlier years, with Californian viticulture responding by plowing excess grapes into super-budget brands, and French viticulture (other than complaining to the government) responding by distilling wine into industry alcohol. However, some (including the MRWIA) have stated that Margaret River actually weathered the recent glut quite well because its reputation as a premium and boutique wine region is its “mainstay rather than the icing on the cake”. In fact, according the Margaret River Online, while the region accounts for only 3% of the country’s grapes, it accounts for 20% of its premium wine emphasisng the value-adding nature of local production. This is as compared to the more dominant bulk, heavily-marketed wine of South Australia, New South Wales and Victoria, which were more affected by the glut. This approach is reflected in overall production volumes, with the Eastern States producing higher tonnages of wine grapes compared to the more boutique production of Western Australia. This is illustrated in the figure below. Figure 5.7: Net Total Wine Production, by State 600,000 Net Total Wine Production (000s Litres) 500,000 400,000 300,000 200,000 100,000 NSW/ACT Vic SA WA Source: ABS (2010) This is not to say that a region can only produce one of two extremes: branded commodity wines of anonymous irrigated origin, or high cost “terroir” wines from limited select sites. This is arguably a false dichotomy, especially given the acceleration of the industry’s globalisation. Indeed, many believe the industry is more like a continuum between the two extremes, with regions able to produce wines along the entire extent of the continuum. And the greatest advantage for Margaret River may actually be in the middle ground, providing the most profitable part of exports, and a stepping stone for consumers to higher-priced wines. 31 Margaret River SuperTown Combined Report Final Draft This is where Margaret River (and indeed, Australia) has an advantage over Old World wines, which are kept above this intermediate area by unpredictable climates, competition from other land uses, and restrictive practices that stifle innovation. Not only does Margaret River have the advantages of irrigation (allowing for economies and scale and mechanisation), a safe and secure water supply, high yields, low disease levels, and minimal spring frosts or ripening-period rains, it also has the potential to capture this mid-market without fear that this will trend towards the “featureless, anonymous commodity wines from anywhere that are hardly likely to inspire further interest or inquiry” (Gladstones 2005). Such a continuum is arguably needed to downgrade wines from young vines and the occasional bad season into cheaper commercial blends (even cross-regional blends), but not total obscurity. Moreover, the entire continuum can benefit from building on the location-specific strengths of the high cost terroir wines, modern production technology, and economies of scale. And the importance of Margaret River’s warmer areas is still recognized for its ability to allow for reliable ripening and lower frost risk. The Margaret River wine industry is also responsible, directly and indirectly, for facilitating the dissemination of research, education and training in the region. For example, the South West Institute of Technology campus located in the region contributes to the region’s wine industry, as well as its creative industries, including tourism and hospitality. The campus, opened in May 2004, is a collaborative initiative between: South West Institute of Technology Curtin University of Technology Edith Cowan University Margaret River Senior High School Department of Education and Training It incorporates a Centre of Wine Excellence that provides world-class training for the practical and theoretical elements of wine grape growing, cellar operations, cellar door sales, and wine tourism industries. Furthermore, the teaching winery, chemistry, computer and research laboratories, sensory evaluation, and resource centre “makes this the premier provider of wine industry training for the cultivation, manufacture and bottling, as well as the promotion of wine sales at the cellar door” (Curtin University 2011). Figure 5.8: South West Institute of Technology Source: Curtin University (2011) 32 Margaret River SuperTown Combined Report Final Draft 5.2.5 Relationship between Foundation Industries There is a curious relationship between tourism and the wine industry. Wine tourism includes the areas of wine, food, tourism and the arts, extending beyond merely the cellar door to virtually the entire regional economy. Wine tourism destinations have the potential to provide “wine tourists” with extraordinary lifestyle packages and experiences that they seek from enjoying wine at its source. This includes wine, food, landscape and cultural activities. Synergies exist between wine and tourism that allow for the promotion of wine regions and events through tourism, increased cellar door sales to tourists, added value to regional production, and new wine tourism business opportunities. A large number of micro and small-to-medium wine producers stand to benefit greatly from increased cellar door sales generated by wine tourism. This is especially true given the massive increases in recent wine production, increase global competition, and tighter retail margins as a result of the greater bargaining power of distributors and retail organisations. And subsequently, assisting the wine industry through this tourism promises to return benefits to the tourism industry itself, and the entire regional economy. However, as shown in the below figure, wine and tourism are actually at opposite ends of the industrial spectrum. Wine is a primary industry led by supply factors, occupied by price-taking, cost-minimising producers, producing a homogenous product, and growing through capital accumulation. Tourism, on the other hand, is a tertiary industry driven by demand factors, occupied by price-making, profit maximizing producers, producing heterogeneous products, and growing through profit-generation. Table 5.2: A framework for wine tourism research Primary Industry Secondary Industry Wine Industry Tertiary Industry Tourism Industry Supply-led – subject to seasonal, temporal, global, technical and agricultural factors that set the supply of grapes and wine. Demand-driven – subject to economic, consumptionled, competitive, demonstrative and demographic forces that determine demand for wine tourism. Price takers – single price is determined by wine producers, global wine prices, price of other alcoholic beverages (substitutes). Price-makers – price range is determined by nature of product/service offered, seasonal demand, valueadding to experiences. Homogenous product – highest quality standard varietals or blends, long lead times for changes in production, consistent over time. Heterogeneous product/service – a range of options and offerings and short lead times to develop new products, changing over time. Cost Minimisers – seek more efficient production methods, technology intensive, innovate to maximize yield. Profit maximisers – seek maximum returns through extensive marketing, labour intensive, imitate, renovate or renew rather than innovate. Wealth creation through capital growth in value of land and buildings in the long-term. Wealth creation through profits and return on investment in the short-term. Source: Carlsen (2004) Furthermore, there are concerns that tourism operators would actually benefit more than the wine industry, through “mobile drunks” and large tour buses crowding out desirable wine tasters in small cellar door settings. There is also the potential for conflicting land use options that could subsume vineyard land with tourism developments. And the notion that a discrete wine tourism market exists is questionable, given the fact that only a part of most holidays in and around wine regions actually constitutes visiting wineries. Moreover, wine tourists tend to be within older generations, limiting the extent of the tourism market into which the wine industry can tap. But one final area of convergence exists in the ease of entry and exit that producers have in both industries. This has resulted in intense local and international competition in both. As a result, recognizing more synergies between the two industries could be the key to transitioning Margaret River from a service economy to an experience economy. 5.3 Key Findings The Augusta-Margaret River economy grew by 11.5% for the 2010-11 financial year, after contracting slightly over the two preceding years. Since 2006-07, the area’s economy has expanded by 8.4% per annum, in line with the SWDC average and slightly below the average across Western Australia (11.9%). 33 Margaret River SuperTown Combined Report Final Draft The leading sectors in the Augusta-Margaret River economy are the construction, manufacturing and agricultural sectors, responsible for over 40% of the area’s Gross Regional Product. Tourism and viticulture are defining characteristics of the Margaret River economy and area. 34 Margaret River SuperTown Combined Report Final Draft 6. Economic Outlook The economic outlook for Augusta-Margaret River is an integral component to identifying future growth opportunities and industries for development. Though the future is uncertain, socio-demographic changes and other macro-influences (positive and negative) can, to some extent, be planned for in order to stabilise local economic dynamics. This chapter examines the key economic drivers of the local region and as provides an overview of the expected path for the local economy under a range of population-growth scenarios over the next 20 years. 6.1 Future Economic Drivers Future economic drivers are sourced internally and externally. Internal factors are, to some extent, able to be influenced and manipulated by the Shire of Augusta-Margaret River. External factors, however, tend to be of a macro nature and are outside of the control of the Shire. Whilst external drivers are outside of their control, strategic planning ahead of these potential opportunities and challenges can assist in amplifying or reducing their impact on the local economy. 6.1.1 Internal Drivers 6.1.1.1 Population Growth Population growth provides support for infrastructure and services demand. Australia's population increased by an average 0.3% per quarter between June 1981 and March 2011. The State of Western Australia has also experienced solid population growth over this time frame, of an average 0.7% per quarter (ABS, 2011). Western Australia has benefited from both natural population growth (i.e. more births than deaths) and interState and overseas inward migration. Since March 2004, two thirds of Western Australia's population growth (65.8%) has been sourced from inter-state and overseas migration. Several factors have contributed to this performance, including the strong performance of the Western Australian mining industry. Augusta-Margaret River population has grown by 2.3% per annum since 2001, recording a total of 12,509 residents in 2010 (ABS, 2011). This growth is below the growth of the broader South West Development Commission (SWDC) region (average annual growth of 2.5% p.a.), however, is above that of Western Australia (2.1%). Augusta-Margaret River has benefited from a population migration trend over the past 10 years toward coastal regions of Western Australia, consistent with population growth seen in other coastal regions within the SWDC region including Busselton (3.6% p.a.), Capel (7.3% p.a.), Dardanup (4.3% p.a.) and Harvey (3.0% p.a.). As a Supertown, it is anticipated that the town of Margaret River will double in size by 2031. This will present a significant change for the region and will need to be adequately planned for. Through the achievement of this goal, demand for key services and sectors of the economy are expected to increase substantially. 35 Margaret River SuperTown Combined Report Final Draft Population growth is a key factor in supporting the local economy. Population growth tends to support several sectors of the economy, including: Retail trade Construction Education Health Care and Social Assistance 6.1.2 External Drivers 6.1.2.1 Ageing Population The Australian population is ageing. According to the 2006 Census, the number of persons aged over 65 had increased by 11% between 2001 and 2006 (ABS, 2007). The impact of an ageing population is felt in various sectors of the economy, particularly by increased strain on the health sector and a fall in the labour market participation rate. According to the Australian Government in the 2010 edition of the Inter-Generational Report, in 1970 “…there were 7.5 people of working age to support every person aged 65 and over. By 2010 this has fallen to an estimated 5 people of working age for every person aged 65 and over. By 2050 the number is projected to decline to 2.7 people of working age to support every person aged 65 and over”. To some extent, the impact of the “baby boomers” leaving the work force has been delayed because of the negative impact on superannuation balances caused by the Global Financial Crisis. But this is only a short-term abatement of an acute pressure, with labour and skills shortages anticipated over the coming 20 years. Whilst Australia has experienced strong population growth over the past decade, due to increased life expectancy and immigration, the increase in the population is likely to be insufficient to reverse the trend of an ageing population. Augusta-Margaret River has an older population than the SWDC region and Western Australia. In 2010, the Augusta-Margaret River average age was estimated to be 37.6 years. The Augusta-Margaret River population is also ageing at a faster rate than the broader SWDC region (up 0.6 years) and the State (up 0.4 years), with the average age of the area having increased by one year since 2005. The ageing of the population is expected to create some economic opportunities for Augusta-Margaret River LGA. Increased demand for health services is projected by Commonwealth and State governments over the next two decades which has already seen health and social assistance overtake retail as the largest employing industry in Australia. Demand for age specific housing is also expected to grow, with retirement villages and aged care facilities expected to play a greater role in accommodating and caring for older Australians. An ageing population tends to result in: 6.1.2.2 Lower labour force participation rates Higher economic dependency on those in the labour force Lower disposable incomes Lower taxation revenues Growth in demand for healthcare and social assistance services Increased requirement for retirement villages and aged care facilities State & National Growth Outlook Economic activity is contagious. Economic growth from one sector or geographical area tends to infiltrate other areas of the economy. The broader economic outlook is, therefore, often important in determining future growth sectors in smaller regions. 36 Margaret River SuperTown Combined Report Final Draft On a national scale, economic growth in Australia was estimated by the Commonwealth Department of Treasury (2011) in December to plateau over the coming years. The unemployment rate was expected to remain low, fuelling wages price growth. In recent months, the Reserve Bank of Australia has lowered interest rates - towards neutral settings - and highlighted the worsening in global economic sentiment and outcomes could, through trade relations, impact on the Australian economy (RBA, 2011). Concerns about inflation have eased also. Table 6.1: Australian Economic Indicators, Estimates Indicator 2011-12 2012-13 2013-14 Real GDP 3.25% 3.00% 3.00% Unemployment rate 5.50% 5.00% 5.00% CPI 3.25% 2.50% 2.50% Wages Price Index 3.75% 3.75% nf Note: Estimates are percentage change on preceding year. nf = not forecast Source: Department of Treasury (2011) The Western Australia Department of Treasury (2011) is also bullish on the economy, expecting firm economic growth outcomes and low unemployment. These economic outcomes are likely to fuel further growth in the State's regions, including AugustaMargaret River. Table 6.2: Western Australian Economic Indicators, Estimates Indicator 2010-11 2011-12 2012-13 GSP 4.00% 4.50% 4.00% Unemployment rate 4.50% 4.50% 4.25% CPI 2.75% 3.00% 3.25% Wages Price Index 4.00% 4.25% 4.50% Note: percentages are annual grow over the year. Source: Western Australia Department of Treasury (2011) Economic developments at the State and National level are outside of the control of local economic development teams. However, planning for and accommodating expected shifts in the state and national economies could assist in stabilising the economic cycle. 6.1.3 Regional & Local Drivers 6.1.3.1 Demand for Tourism Margaret River is a key tourism destination for Western Australia. In 2010, the region benefited from over 1.5 million visitor nights, which provide significant economic benefits to the region (in terms of expenditure). The majority of visitors to the Margaret River region visit the area for holiday or leisure. In particular, the Margaret River area is an internationally-recognised surfing destination and the host of the annual Telstra Drug Aware pro championships which attracts professional surfers from around the world. The annual competition is one the largest and best well known events in the South West region. Margaret River is one of the iconic surfing locations and attracts tourists from around the world. Due to the iconic nature of surfing, many tourists and the flow-on impacts in retail and accommodation come to the area. The tourism industry is currently experiencing difficult times as the high Australian dollar dissuades both domestic and international visitors from visiting the region and global economic conditions remain uncertain. Key forecasters for the tourism industry have been revising down their estimates for future visitation, nationally (Tourism Research Australia, 2011). According to Tourism Research Australia (2011) annual growth in holiday visitors (the core visitor group to the Margaret River region) to Western Australia is estimated to grow by an annual rate of 0.9% between 2010 and 2020, providing some support to the local tourism industry. Numerous planned infrastructure projects for the Margaret River, including the enhancements to the main street, are expected to be transformational 37 Margaret River SuperTown Combined Report Final Draft projects, providing support to the future tourism and retail industries, as well as improving amenity and attractiveness to visitors. Diversifying the economy and developing strategies to smooth the fluctuations in visitation to the Augusta-Margaret River region will be essential to managing economic growth into the future. Tourism visitation can provide a vast number of economic benefits to the region and capturing the growth in the number of holiday visitors to the State is likely to also provide positive influences on the local economic outlook. Broadening the base of visitors to the Margaret River area can also assist in stabilising the local economy. Expansion of the brand to include conferences and business events could assist in this manner, attracting business travellers who (on average) tend to have higher expenditure than holiday visitors. Attracting investment for accommodation developments which will meet the demands of business travellers will be important in the realisation of this goal. 6.1.3.2 Viticulture Outlook Margaret River is a well-established wine region with a history dating back to the mid 20th century. Experts have noted the region has withstood a reported glut in the wine market better than similar regions globally because its reputation as a premium and boutique wine region that is “mainstay rather than the icing on the cake”. Forecasters (IBISWorld, 2011) estimate that employment in wine manufacturing, nationally, will ease in excess of 10% over the coming five years but that total industry value add will increase by 11% over the same time frame (reflecting prices). Maintaining the Margaret River's resilience to global and national wine industry fluctuations will be essential to ensuring the longevity of the region's industry. The focus on premium wines and export markets will be key to achieving this goal. The Augusta-Margaret River benefits from a well-regarded and sophisticated high-level brand which encompasses its viticulture and wine manufacturing industry. This brand is essential to the region and must be further established and developed. this brand supports underlying demand for local produce and its continued promotion will assist in providing support to the local economy into the future. 6.1.3.3 Broadband Internet Infrastructure Beyond core industries locally, internet infrastructure and access to broadband internet will be critical for the future. Use of the internet has infiltrated most aspects of day to day living as well as business operations. Currently, ADSL services are provided over the existing Telstra copper network, which does not offer the same speed as a broadband connection over fibre optics. Speeds and availability also vary with the existing 3G mobile network. Given that Telstra has a current monopoly, there is no competition and incentive to invest in new infrastructure and offer better services at lower costs. Access to broadband internet will be a key infrastructure development that will drive economic growth and increasing residential amenity across the LGA. A recent report commissioned by the South West Development Commission3 identified that the National Broadband Network (NBN) would have a significant economic impact on the region, including: Increased average industry revenue of 21%. Increased average industry employment of 5%. Increased average industry productivity of 6.3%. 3 Impact Assessment of the National Broadband Network in the South West Region (April 2011) 38 Margaret River SuperTown Combined Report Final Draft Modelling of the NBN in the South West region suggests between 2010 and 2030 the economy will benefits from (on average): 6.1.3.4 Increased output growth by 0.9 percentage points per annum. Increased Gross Value Add growth by 0.8 percentage points per annum. Increased wages and salaries growth by 0.5 percentage points per annum. Increased employment growth by 0.6 percentage points per annum. Busselton Airport Upgrade The Busselton Airport is currently undergoing an upgrade in line with Commonwealth regulations to allow for regular passenger traffic (RPT) and the continuation of fly-in/flyout (FIFO) operations. As the airport grows, it provides easier access to and from the region (including the Shire of Augusta-Margaret River). 6.2 Potential Future Economic Growth Path The potential future growth path of the Augusta-Margaret River LGA has been estimated using AECgroup's proprietary economic growth model (see Appendix A). Three growth scenarios have been developed for comparison. These scenarios are based on population growth in the region, specifically: Low: Assumes population growth aligns with estimates from the Department of Health and Ageing for average annual growth in the population of 1.8% per annum to 2031. Medium: Assumes population growth aligns with the estimates from the Western Australian Planning Commission for average annual growth in the population of 2.1% per annum to 2031. High: Assumes population growth aligns with the Supertowns target of a doubling in the population of Margaret River Town and continued historical trends for the remainder of the LGA, resulting in an average annual 2.8% expansion of the population. Employment in Augusta-Margaret River LGA is expected to expand under each scenario, supporting the LGA's ability to attract new residents. Employment in the LGA is estimated to range between 12,000 and 19,000 across the population-based scenarios. Key sectors of the economy which are estimated to generate significant employment growth over the forecast horizon include mining (FIFO), health care and social assistance, and financial and insurance services. 39 Margaret River SuperTown Combined Report Final Draft Figure 6.1: Estimated Employment, 2011 to 2031, Augusta-Margaret River LGA 25,000 Low Medium High Employment 20,000 15,000 10,000 5,000 0 2011 2016 2021 2026 2031 Source: ABS (2010a, 2010b, 2011g, 2011h, 2011i), DHA (2007), WAPC (2005), AEC group The Augusta-Margaret River economy recorded an estimated Gross Regional Product (GRP) of $694 million in 2010-11. Over the coming 20 years, it is estimated that the local economy could expand to between $1.7 billion and $2.7 billion. Key sectors of economic growth are estimated to include mining, information, media and telecommunications and financial and insurance services. The tourism and viticulture industries will continue to play an important role in the future Augusta-Margaret River economy as will the premium status of the Margaret River brand. Figure 6.2: Estimated Real GRP, 2011 to 2031, Augusta-Margaret River LGA ($M) 2031 2026 2021 High 2016 Medium Low 2011 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $M Source: ABS (2010a, 2010b, 2011g, 2011h, 2011i), DHA (2007), WAPC (2005), AEC group 6.3 Key Findings The Augusta-Margaret River economy is expected to grow over the coming 20 years. The extent to which it will expand will depend on a range of factors, some of which the Shire will be able to influence, and others which the Shire will need to proactively plan for and accommodate. The extent to which the region attracts the desired population growth will have fundamental impacts on its expected growth path. Strategically guiding the economy through proactive economic development is likely to assist the region in reaching the SuperTown target and stronger economic outcomes. 40 Margaret River SuperTown Combined Report Final Draft 7. Regional Gap Analysis Gap analysis provides an understanding of where existing services and infrastructure are short of estimated demand. This may be apparent in the high level of imports into a region or in the underperformance of a region against benchmarking regions. In order to develop an understanding of the gaps in the Augusta-Margaret River LGA, the gap analysis undertaken involved: 7.1 Import and Export Analysis: Understanding which products and services are imported into the region (suggesting a lack of local supply) and which products or services are exported out of the region (after having met local supply). Supply Chain Analysis: Understanding where in the supply chain the AugustaMargaret River LGA lies and which local industries add significant value. Comparative Assessments: Analysing the composition of Augusta-Margaret River LGA in comparison with three key benchmarking regions. Journey to Work: Analysing where local residents work and where local workers are sourced from. Import & Export Analysis Prominent imports into a region can represent opportunities, where skills and labour can be easily sourced. This could improve local industry supply chains and provide additional job opportunities for locals. Prominent imports into the Augusta-Margaret River LGA include: Professional, scientific and technical services ($23.6 million or 8.7% of total imports). Other agriculture ($13.7 million or 5.1%). Wholesales trade ($13.7 million or 5.1%). Oil and gas extraction ($12.4 million or 4.6%). Key imports into the region are support services for the viticulture industry and also reflect some lack of skilled labour in the region (in terms of professional, scientific and technical services). As demand for local wine production increases into the future, it is essential that key support industries (both manufacturing and services) are available locally to encourage growth and retail local economic incomes. 41 Margaret River SuperTown Combined Report Final Draft Figure 7.1: Key Imports into Augusta-Margaret River LGA, 2007-08 Professional, Scientific and Technical Services Other Agriculture Wholesale Trade Oil and gas extraction Basic Chemical Manufacturing Auxiliary Finance and Insurance Services Polymer Product Manufacturing Telecommunication Services Finance Rental and Hiring Services (except Real Estate) Road Transport Paper Stationery and Other Converted Paper Product… Insurance and Superannuation Funds Other Repair and Maintenance Building Cleaning, Pest Control, Administrative and Other… Other Food Product Manufacturing Petroleum and Coal Product Manufacturing Transport Support services and storage Electricity Generation Professional, Scientific, Computer and Electronic… Construction Services Structural Metal Product Manufacturing Soft Drinks, Cordials and Syrup Manufacturing Motor Vehicles and Parts; Other Transport Equipment… Other Wood Product Manufacturing Specialised and other Machinery and Equipment… Sheep, Grains, Beef and Dairy Cattle Air and Space Transport Publishing (except Internet and Music Publishing) Other Fabricated Metal Product manufacturing $23.6 $13.7 $13.7 $12.4 $11.8 $10.2 $9.5 $9.0 $8.8 $7.0 $6.3 $6.3 $5.6 $5.3 $5.0 $4.7 $4.5 $4.2 $4.0 $4.0 $3.9 $3.8 $3.6 $3.4 $3.3 $3.2 $3.2 $3.2 $3.2 $3.1 $0 $5 $10 $15 $20 $25 Imports of Goods and Services by Industry ($M) Source: ABS (2010a, 2011h), AECgroup Key exports out of a region tend to be reflective of its competitive advantage and can represent opportunities for further growth and expansion. Prominent exports from the Augusta-Margaret River LGA include: Wine ($139.5 million or 33.5% of all exports). Accommodation ($32.5 million or 7.8%). Sheep and Dairy Cattle ($32.2 million or 7.7%). Other agriculture ($22.5 million or 5.4%). Key exports from Augusta-Margaret River reflect the strength of the region's viticulture, tourism (wine and accommodation) and agriculture industries. These industries are the region's competitive advantages and will be instrumental in its economic development going forward. 42 Margaret River SuperTown Combined Report Final Draft Figure 7.2: Key Exports out of Augusta-Margaret River LGA, 2007-08 Wine, Spirits and Tobacco Accommodation Sheep, Grains, Beef and Dairy Cattle Other Agriculture Residential Building Construction Construction Services Non-Residential Property Operators and Real Estate… Retail Trade Heavy and Civil Engineering Construction Dairy Product Manufacturing Building Cleaning, Pest Control, Administrative and Other… Beer Manufacturing Wholesale Trade Food and Beverage Services Agriculture, Forestry and Fishing Support Services Non Metallic Mineral Mining Fishing, hunting and trapping Basic Non-Ferrous Metal Manufacturing Professional, Scientific and Technical Services Petroleum and Coal Product Manufacturing Non-Residential Building Construction Oils and Fats Manufacturing Electricity Transmission, Distribution, On Selling and… Road Transport Education and Training Rental and Hiring Services (except Real Estate) Meat and Meat product Manufacturing Clothing Manufacturing Finance Transport Support services and storage $0 $139.5 $32.5 $32.2 $22.5 $22.1 $22.0 $20.2 $14.5 $12.2 $9.7 $8.5 $8.0 $4.5 $4.4 $4.4 $3.6 $3.3 $3.3 $3.1 $2.9 $2.9 $2.8 $2.7 $2.7 $2.5 $2.4 $2.1 $1.9 $1.9 $1.8 $50 $100 $150 Exports of Goods and Services by Industry ($M) Source: ABS (2010a, 2011h), AECgroup 7.2 Supply Chain Analysis The following tables provide a summary of the key upstream (imports and local purchases) and downstream (local sales to industry and consumption, as well as exports) markets for each industry. Care should be taken in interpreting these results as the values presented in the tables are indicative estimates only, and are designed to broadly identify the key inputs for each industry and potential targets for regional development rather than the specific quantum of each component. The supply chain assessment has been conducted using Input Output transaction tables developed specifically for the Augusta-Margaret River LGA, based on the 2007-08 National Input Output Tables developed by the Australian Bureau of Statistics (2011g) and employment by industry estimates provided by the Australian Bureau of Statistics (2010a). The method used for regionalising the national tables to the Augusta-Margaret River LGA economy is consistent with the approach outlined in West (1993). Key points of note: Each of the key local industries (presented below) has a relatively even distribution of locally-sourced and imported inputs. Overall, the economy imports less than half of total inputs (41.7%), with the remainder being sourced from local producers. The wine, spirits and tobacco industry provides essential down-stream supply chain activity to key exports sectors of the Augusta-Margaret River. 43 Margaret River SuperTown Combined Report Final Draft Interpreting the Supply Chain Assessment Flow Diagram The supply chain assessment identifies both the upstream and downstream activities engaged in by an industry, which can be classified as: Upstream inputs to production: o Sourced locally, or o Imported to the region. Downstream sales of product: o Sold direct to local industry (and used elsewhere in value adding production) o Consumed by the local economy (population based consumption), or o Exported from the region. The following diagrams show the supply chain for three key sectors in the AugustaMargaret River economy: Agriculture, Forestry and Fishing, Food and Beverage Manufacturing and Accommodation, Cafes and Restaurants. Agriculture, Forestry and Fishing More than half of all inputs into the agriculture, forestry and fishing inputs are sourced locally. Over 15% of imports are business services (wholesale trade and professional, scientific and technical services). Import replacement could assist in diversifying the economy and providing key support to this major industry in the LGA, particularly from manufacturing support and services industries. Food and Beverage Manufacturing Wine is the primary export for the region at 139.5 million (33.5% of all exports). Though the majority of grapes used in the wine industry are sourced locally (58%) the remainder are imported. Accommodation, Cafes and Restaurants The accommodation, cafes and restaurants industry appears to have solid up and down stream supply chains. The majority of inputs are sourced locally (55.9%), leveraging the local wine industry and meat products. 44 Margaret River SuperTown Combined Report Final Draft Figure 7.3: Supply Chain, Agriculture, Forestry and Fishing (part A), 2007-08 UPSTREAM INPUTS TO PRODUCTION IMPORTS DOWNSTREAM SALES OF PRODUCT LOCAL PURCHASES SECTOR OF INTEREST SALES TO LOCAL INDUSTRY Industry $M Industry $M Industry $M Basic Chemical Manufacturing $6.1 $11.6 Wine, Spirits and Tobacco $22.1 Wholesale Trade $3.1 Agriculture, Forestry and Fishing Support Services Other Agriculture $6.8 $10.8 Other Food Product Manufacturing Professional, Scientific and Technical Services Petroleum and Coal Product Manufacturing $2.9 Sheep, Grains, Beef and Dairy Cattle Wholesale Trade $4.2 Sheep, Grains, Beef and Dairy Cattle Other Agriculture Dairy Product Manufacturing $6.3 $2.2 Petroleum and Coal Product Manufacturing $2.1 Meat and Meat product Manufacturing $5.1 Other industries $19.9 Other industries $11.7 Other industries $8.5 Total $36.6 Total $38.6 Total $62.7 Veterinary Pharmaceutical and Medicinal Product Manufacturing Basic Chemical Manufacturing $1.7 $4.3 Dairy Product Manufacturing $6.2 $1.1 Wholesale Trade $0.8 Meat and Meat product Manufacturing Sheep, Grains, Beef and Dairy Cattle Wine, Spirits and Tobacco $3.8 $1.5 Agriculture, Forestry and Fishing Support Services Sheep, Grains, Beef and Dairy Cattle Other Agriculture Other industries $6.4 Other industries $4.9 Other industries $2.8 Total $12.3 Total $16.3 Total $19.7 Other Food Product Manufacturing Professional, Scientific and Technical Services Veterinary Pharmaceutical and Medicinal Product Manufacturing Transport Support services and storage $0.4 Poultry and Other Livestock $0.3 $1.2 $0.1 Agriculture, Forestry and Fishing Support Services Transport Support services and storage Sheep, Grains, Beef and Dairy Cattle $0.1 Meat and Meat product Manufacturing Poultry and Other Livestock Other Agriculture $0.2 $0.1 Retail Trade $0.1 Other industries $0.4 Other industries $0.4 Other industries $0.4 Total $1.0 Total $1.0 Total $2.2 Basic Chemical Manufacturing Wholesale Trade Petroleum and Coal Product Manufacturing Finance $3.2 $1.4 $1.2 $5.9 $3.4 $1.1 Wine, Spirits and Tobacco Other Agriculture Sheep, Grains, Beef and Dairy Cattle Agriculture, Forestry and Fishing $18.9 $3.4 $2.8 $1.1 Agriculture, Forestry and Fishing Support Services Other Agriculture Petroleum and Coal Product Manufacturing Wholesale Trade Other industries $9.0 Other industries $4.5 Other industries $2.2 Total $15.7 Total $27.9 Other Food Product Manufacturing Professional, Scientific and Technical Services $2.5 $1.7 $0.1 $0.1 Total $15.8 Source: ABS (2010a, 2011h), AECgroup $2.1 AGRICULTURE, FORESTRY AND FISHING $3.6 $2.8 $0.1 $0.9 Sheep, Grains, Beef and Dairy Cattle Poultry and Other Livestock Other Agriculture LOCAL EXPORTS CONSUMPTION $M $M $10.0 $3.6 $3.6 $65.3 $0.1 $32.2 $0.3 $1.8 $2.6 $22.5 $3.2 $0.3 $0.7 45 Margaret River SuperTown Combined Report Final Draft Figure 7.4: Supply Chain, Agriculture, Forestry and Fishing (part B), 2007-08 UPSTREAM INPUTS TO PRODUCTION IMPORTS DOWNSTREAM SALES OF PRODUCT LOCAL PURCHASES SECTOR OF INTEREST SALES TO LOCAL INDUSTRY Industry $M Industry $M Industry $M Specialised and other Machinery and BasicEquipment Chemical Manufacturing $0.2 $0.1 $0.2 $0.1 $0.1 Petroleum and Coal Product $0.1 $0.1 Sawmill Product Manufacturing Agriculture, Forestry and Fishing Support Services Other Wood Product Manufacturing Forestry and Logging $0.4 $0.1 Other Repair and Maintenance Agriculture, Forestry and Fishing Support Petroleum andServices Coal Product Manufacturing Automotive Repair and Maintenance Wholesale Trade Other industries $0.3 Other industries $0.2 Other industries $0.1 Total $0.6 Total $0.7 Total $0.8 Specialised and other Machinery and Equipment Petroleum andManufacturing Coal Product Manufacturing Wholesale Trade Finance $0.2 $0.1 $0.2 $0.1 Food and Beverage Services Accommodation $0.2 $0.1 $0.1 $0.1 Agriculture, Forestry and Fishing Support Petroleum andServices Coal Product Manufacturing Wholesale Trade Finance Retail Trade Other Agriculture $0.0 $0.0 Other industries $0.6 Other industries $0.2 Other industries $0.0 Total $1.0 Total $0.6 Total $0.5 Basic Chemical Manufacturing Rental and Hiring Services (except Real Estate) Wholesale Trade Professional, Scientific and $1.1 $1.0 Agriculture, Forestry and Fishing Other Agriculture $0.8 $0.7 $5.9 $4.3 $0.5 $0.4 Rental and Hiring Services (except Wholesale Trade $0.5 $0.3 Other Agriculture Sheep, Grains, Beef and Dairy Cattle Agriculture, Forestry and Fishing Forestry and Logging Other industries $2.8 Other industries $1.8 Total $4.1 Total $5.7 Source: ABS (2010a, 2011h), AECgroup $0.1 $0.1 $0.0 Forestry and Logging Fishing, Hunting and Trapping Agriculture, Forestry and Fishing Support Services $0.1 LOCAL EXPORTS CONSUMPTION $M $M $0.1 $1.1 $0.2 $3.3 $0.2 $4.4 $0.0 $0.8 $0.2 Other industries $0.4 Total $11.6 46 Margaret River SuperTown Combined Report Final Draft Figure 7.5: Supply Chain, Food and Beverage Manufacturing (part A), 2007-08 UPSTREAM INPUTS TO PRODUCTION IMPORTS DOWNSTREAM SALES OF PRODUCT LOCAL PURCHASES SECTOR OF INTEREST SALES TO LOCAL INDUSTRY Industry $M Industry $M Industry $M Other Agriculture Paper Stationery and Other Converted Paper Product Manufacturing Wholesale Trade Soft Drinks, Cordials and Syrup Manufacturing Professional, Scientific and Technical Services $13.5 $4.5 Other Agriculture Sheep, Grains, Beef and Dairy Cattle $19.4 $15.0 Wine, Spirits and Tobacco Food and Beverage Services $11.5 $4.7 $3.8 $3.4 Wine, Spirits and Tobacco Food and Beverage Services $10.3 $3.0 Retail Trade Accommodation $2.3 $2.3 $3.1 Dairy Product Manufacturing $2.8 Dairy Product Manufacturing $1.9 Other industries $33.1 Other industries $19.3 Other industries $4.2 Total $61.4 Total $69.7 Total $26.9 Road Transport $0.1 $3.8 Retail Trade $1.7 Paper Stationery and Other Converted Paper Product Manufacturing Wholesale Trade $0.1 Sheep, Grains, Beef and Dairy Cattle Poultry and Other Livestock $1.2 Food and Beverage Services $1.2 $0.6 Accommodation $0.7 Electricity Generation $0.0 Meat and Meat product Manufacturing Road Transport Meat and Meat product Manufacturing $0.6 Other industries $0.3 Other industries $0.6 Other industries $0.8 Total $0.6 Total $6.8 Total $5.0 Polymer Product Manufacturing $0.9 $6.2 Dairy Product Manufacturing $1.8 Paper Stationery and Other Converted Paper Product Wholesale Trade Road Transport $0.4 Sheep, Grains, Beef and Dairy Cattle Dairy Product Manufacturing Food and Beverage Services $0.7 $0.3 $0.3 Road Transport Wholesale Trade $0.3 $0.3 Wine, Spirits and Tobacco Accommodation $0.4 $0.3 Other industries $1.6 Other industries $0.8 Other industries $1.2 Total $3.5 Total $9.4 Total $4.4 Oils and Fats Manufacturing Wholesale Trade $0.2 $0.2 $0.7 $0.6 Oils and Fats Manufacturing Food and Beverage Services $0.7 $0.3 Polymer Product Manufacturing Road Transport $0.1 $0.1 Oils and Fats Manufacturing Sheep, Grains, Beef and Dairy Cattle Dairy Product Manufacturing Wholesale Trade Bakery Product Manufacturing Accommodation $0.0 $0.0 Other industries $0.6 Other industries $0.4 Other industries $0.1 Total $2.0 Total $1.2 $0.1 Total $1.1 Source: ABS (2010a, 2011h), AECgroup $0.5 $1.8 $0.2 $0.1 FOOD AND BEVERAGE MANUFACTURING Meat and Meat product Manufacturing Dairy Product Manufacturing Oils and Fats Manufacturing LOCAL EXPORTS CONSUMPTION $M $M $12.2 $163.4 $2.2 $2.1 $2.5 $9.7 $0.4 $2.8 47 Margaret River SuperTown Combined Report Final Draft Figure 7.6: Supply Chain, Food and Beverage Manufacturing (part B), 2007-08 UPSTREAM INPUTS TO PRODUCTION IMPORTS DOWNSTREAM SALES OF PRODUCT LOCAL PURCHASES SECTOR OF INTEREST SALES TO LOCAL INDUSTRY Industry $M Industry $M Industry $M Grain Mill and Cereal Product Manufacturing Other Food Product Manufacturing Fruit and Vegetable Product Manufacturing Wholesale Trade $0.4 $0.3 Food and Beverage Services $0.4 $0.2 Meat and Meat product Manufacturing Wholesale Trade $0.1 Retail Trade $0.2 $0.2 Dairy Product Manufacturing $0.1 Accommodation $0.1 $0.1 Sugar and Confectionery Manufacturing $0.1 Dairy Product Manufacturing $0.1 Other industries $0.5 Other industries $0.5 Other industries $0.2 Total $1.3 Total $1.1 Total $1.0 Other Food Product Manufacturing Polymer Product Manufacturing Sugar and Confectionery Manufacturing Wholesale Trade $0.1 $0.1 $0.1 $0.3 $0.2 $0.2 Wine, Spirits and Tobacco Food and Beverage Services Sugar and Confectionery Manufacturing Bakery Product Manufacturing $0.3 $0.2 $0.2 $0.1 Other Agriculture Dairy Product Manufacturing Sugar and Confectionery Manufacturing Wholesale Trade Other industries $0.3 Other industries $0.4 Other industries $0.2 Total $0.6 Total $1.3 Total $0.9 Polymer Product Manufacturing Metal Containers and Other Sheet Metal Product manufacturing Paper Stationery and Other Converted Paper Product Manufacturing Soft Drinks, Cordials and Syrup $0.3 $0.1 Soft Drinks, Cordials and Syrup Manufacturing Food and Beverage Services $0.2 $0.2 Wine, Spirits and Tobacco Food and Beverage Services $0.7 $0.2 $0.1 $0.1 Soft Drinks, Cordials and Syrup Manufacturing $0.2 $0.1 Building Cleaning, Pest Control, Administrative and Other Support Services Wholesale Trade Other industries $0.5 Other industries $0.4 Total $1.1 Total Grain Mill and Cereal Product Manufacturing Paper Stationery and Other Converted Paper Product Manufacturing Metal Containers and Other Sheet Metal Product manufacturing $0.5 $0.4 Sheep, Grains, Beef and Dairy Cattle Services Food and Beverage $0.3 Finance $0.2 $0.1 $0.1 Bakery Product Manufacturing Sugar and Confectionery Manufacturing Soft Drinks, Cordials and Syrup Manufacturing Retail Trade $0.1 $0.1 $0.9 Total $1.1 $1.1 $0.3 Food and Beverage Services Accommodation $0.7 $0.5 Sports and Recreation $0.0 Finance $0.3 Road Transport $0.2 Beer Manufacturing $0.0 Other industries $2.1 Other industries $0.8 Other industries $0.0 Total $3.6 Total $2.6 Total $1.2 Other Agriculture Paper Stationery and Other Converted Paper Product Soft Drinks, Cordials and Syrup Wholesale Trade $13.5 $3.5 Other Agriculture Wine, Spirits and Tobacco $18.9 $10.2 Wine, Spirits and Tobacco Food and Beverage Services $10.2 $1.0 $3.3 $2.9 Sheep, Grains, Beef and Dairy Food and Beverage Services $3.2 $2.5 Accommodation Other Agriculture $0.5 $0.1 Other industries $26.3 Other industries $10.8 Other industries $0.2 Total $45.7 Total $12.0 Total $49.5 Source: ABS (2010a, 2011h), AECgroup Wine, Spirits and Tobacco $2.1 $0.6 $1.0 $0.4 $1.8 $0.3 $1.1 $8.0 $1.1 $139.5 $0.1 Other industries Beer Manufacturing LOCAL EXPORTS CONSUMPTION $M $M 48 Margaret River SuperTown Combined Report Final Draft Figure 7.7: Supply Chain, Accommodation and Food Services, 2007-08 UPSTREAM INPUTS TO PRODUCTION IMPORTS DOWNSTREAM SALES OF PRODUCT LOCAL PURCHASES SECTOR OF INTEREST SALES TO LOCAL INDUSTRY Industry $M Industry $M Industry $M Building Cleaning, Pest Control, Administrative and Other Support Services Wholesale Trade $2.0 Building Cleaning, Pest Control, Administrative and Other Support Services Meat and Meat product Manufacturing $4.1 Wine, Spirits and Tobacco $2.7 $1.9 $0.6 Professional, Scientific and Technical Services Broadcasting (except Internet) $0.9 Wine, Spirits and Tobacco $1.5 $0.8 $1.3 Meat and Meat product Manufacturing $0.8 Non-Residential Property Operators and Real Estate Services Wholesale Trade Building Cleaning, Pest Control, Administrative and Other Support Services Professional, Scientific and Technical Services Wholesale Trade $1.2 Retail Trade $0.3 Other industries $10.6 Other industries $10.8 Other industries $2.8 Total $16.4 Total $20.8 Total $7.4 Building Cleaning, Pest Control, Administrative and Other Support Services Wholesale Trade $2.0 $3.0 Wholesale Trade $0.2 $0.7 $0.5 Sheep, Grains, Beef and Dairy Cattle Wine, Spirits and Tobacco $0.1 Meat and Meat product Manufacturing Professional, Scientific and Technical Services Building Cleaning, Pest Control, Administrative and Other Support Services Meat and Meat product Manufacturing Wine, Spirits and Tobacco $0.5 Beer Manufacturing $0.5 Retail Trade $0.1 Other industries $5.6 Other industries $4.3 Other industries $0.9 Total $9.2 Total $9.0 Total $1.5 Wholesale Trade Processed Seafood Manufacturing $0.6 $0.5 $1.2 $1.1 $0.5 $0.5 Wine, Spirits and Tobacco Building Cleaning, Pest Control, Administrative and Other Support Professional, Scientific and Beer Manufacturing $2.5 $0.5 Grain Mill and Cereal Product Fruit and Vegetable Product Meat and Meat product Building Cleaning, Pest Control, Administrative and Other Support Wine, Spirits and Tobacco Non-Residential Property Other industries $5.2 Other industries $7.6 Other industries $2.0 Total $11.8 Total $5.9 $1.3 $0.7 Total $7.2 Source: ABS (2010a, 2011h), AECgroup $0.5 $1.0 $0.9 ACCOMMODATION AND FOOD SERVICES Accommodation Food and Beverage Services $0.6 LOCAL EXPORTS CONSUMPTION $M $M $25.0 $36.9 $3.2 $32.5 $21.8 $4.4 $0.4 $0.1 $0.5 $0.3 49 Margaret River SuperTown Combined Report Final Draft 7.3 Comparative Assessments The comparative assessment is a benchmarking approach which compares the AugustaMargaret River LGA to three regions of similar nature: Sunshine Coast (Sunshine Coast Regional Council): Comprised of the major coastal centres of Mooloolaba, Caloundra, Maroochydore and Noosa and an agricultural and tourism oriented hinterland region, Sunshine Coast located approximately 113km, or 1 hour and 27 minutes drive, north of Brisbane. Major population region in its own right, the Sunshine Coast is home to 330,934 people in 2010. It has a well established tertiary education and health care systems, and increasingly diversified economy and is a popular day-trip and overnight tourism destination in South East Queensland. Barossa (Barossa DC): Regional centre in South Australia, located approximately 83km, or one hour and 23 minutes drive, north west of Adelaide. One of Australia’s largest wine producing regions, with strong national and international recognition. Established tourism visitation trends linked to wine and lifestyle attractors. Population of 22,908 in 2010. Surf Coast (Shire of Surf Coast): Comprised of coastal centres of Torquay, Anglesa, Lorne and Apollo Bay, the Surf Coast region is located 141km or one hour and fiftyfour minutes drive south-west of Melbourne and 64.4km or one hour drive south west of Geelong. Surfing and coastal lifestyle tourism destinations population with intra and interstate visitors. Population of 26,173 in 2010. These locations were selected as they represent examples of the potential growth profile of Margaret River as it becomes a SuperTown and continues to grow beyond 2031. As such, this comparative assessment analyses potential gaps in the current Margaret River community and economy that must be addressed if future growth is to be facilitated. The comparative assessment works by comparing Augusta-Margaret River LGA to each of the selected benchmark regions across the following key indicators: GRP per capita Number of businesses per capita Unemployment rates Average house price as a proportion of household income Average income Proportion of workers in white collar employment Proportion of residents aged over 15 years with University qualifications Percentage of households that are young families Percentage of population aged 65+ Average annual population growth These indicators cover population, demographic, socio-economic, investment, employment and economic characteristics of Margaret River, as summarised in the Socio-Economic Profile. For each of these indicators, Margaret River is compared to the average across all four regions, thereby helping to address issues of the relative size of each region’s population and economy and local specific variable being smoothed, allowing for more fundamental gaps to be identified. As such, a result above 0% means that Augusta-Margaret River LGA is currently performing better than the average of its peers, while a result below 0% means it is worse than its peers. The outcomes of the assessment are outlined in the figure below. 50 Margaret River SuperTown Combined Report Final Draft Figure 7.8: Comparative Assessment, Augusta-Margaret River LGA GRP per capita (2009-10) Number of Businesses per Capita (2009) Unemployment Rate (September Q 2011) Housing Affordability - Median Multiple (2008-09) Average Individual Income (2008-09) Share of Workers in White Collar employment (2009) Share of Residents (15+) with a University Degree (2006) Share of Families with young children (2006) Share of Population Aged 65+ (2010) Annual Population Growth Rate (2001 to 2011) -30% -20% -10% 0% 10% Difference to Average 20% 30% Source: ABS (2007, 2011, 2011a, 2011f, 2011i), realestate.com.au (2011), Homepriceguide.com.au (2011), NSW Housing (2011), Department of Employment, Education and Workplace Relations (2011) Figure 7.8 reveals a mixture of positive and negative scores for Margaret River when compared with the benchmarked regions. Areas of underperformance include: Margaret River has an underrepresentation of white collar workers. Income levels in Margaret River are lower than comparison regions. Population growth is slower. However, Margaret River performed well against the benchmarked regions attractive to residents over time: Number of businesses per capita is significantly higher than the comparison region average, suggesting a more entrepreneurial and supportive business environment. Population aged 65+ is lower, meaning the negative implications of the ageing of the baby boomer generation are unlikely to impact Margaret River as significantly as the benchmarked regions. However, this means that the benefits of this ageing in terms of health and social assistance employment growth are also likely to be less significant. The Margaret River economy also has a marginally lower unemployment rate, highlighting that there could be existing unmet skilled labour demand in the economy. Existing unmet demand in the Margaret River labour market could provide job opportunities for new skilled residents over the short term, incentivising migration. Housing affordability, while poor in the context of the South West, is marginally favourable in comparison to other tourism-dominated regions in Australia. Overall, Margaret River’s performance in the comparative assessment against potential benchmarks of its future growth profile reinforces key messages from other assessments in this gap analysis. 7.4 Journey to Work In 2006, the Augusta-Margaret River LGA was a marginal exporter of labour (on a net basis). Key regions which attract workers out of Augusta-Margaret River LGA include 51 Margaret River SuperTown Combined Report Final Draft Busselton LGA, Bunbury LGA and Collie LGA. However, Some workers are attracted into the Augusta-Margaret River LGA from Harvey, Nannup and Manjimup. Table 7.1: Journey to Work Movements by LGA, 2006 LGAs Lives in AugustaMargaret River and works in... Works in AugustaMargaret River and Lives in... Difference 42 19 -23 4,003 4,003 0 0 0 0 Bunbury Augusta-Margaret River Boyup Brook Bridgetown-Greenbushes 0 0 0 545 294 -251 Capel 3 11 8 Collie 3 0 -3 Dardanup 0 0 0 Donnybrook-Balingup 0 0 0 Harvey 0 3 3 Manjimup 0 6 6 Busselton Nannup 3 22 19 Other 329 120 -209 Total 4,929 4,478 -451 Source: ABS (2007), AECgroup Residents of Augusta-Margaret River leave the LGA each day to work in a large number of industries. Further development of these industries in the Augusta-Margaret River, through economic expansion and diversification could assist in bringing about greater labour retention in the region. Industries for which Augusta-Margaret River attracts workers include wholesale trade, finance and insurance and transport and storage. Table 7.2: Journey to Work Movements by Industry, 2006 Industry Agriculture, Forestry and Fishing Mining Manufacturing Electricity, Gas and Water Supply Lives in AugustaMargaret Rivers Works in Margaret River Difference 592 555 -37 79 11 -68 650 612 -37 27 24 -3 Construction 590 386 -204 Wholesale Trade 125 145 21 Retail Trade 730 726 -4 Accommodation, Cafes and Restaurants 544 529 -15 Transport and Storage 138 142 5 Communication Services 25 25 0 Finance and Insurance 62 71 9 Property and Business Services 368 338 -30 Government Administration & Defence 150 150 0 Education 318 282 -36 Health and Community Services 316 276 -40 81 79 -2 Cultural and Recreational Services Personal and Other Services Total 133 124 -8 4,929 4,478 -451 Source: ABS (2007), AECgroup 7.5 Key Findings The Margaret River economy is dominated by viticulture, agriculture and tourism-related economic activity, which is reflected in the region’s export profile. These industry sectors play a critical role to play in establishing, maintaining and reinforcing Margaret River’s 52 Margaret River SuperTown Combined Report Final Draft national and international profile and supports strong residential construction and real estate activity. Augusta-Margaret River and Busselton form a labour supply chain for each other. Compared to other peer regions, Augusta-Margaret River has lower incomes and slower population growth while having an older population. These factors indicate that the region is likely even more favoured by older, retirement aged people and that the economy lacks sufficient jobs in various industries outside of wine, agriculture and tourism to drive wage and income increases. Addressing these factors will be a goal of the Economic Development Growth Plan. 53 Margaret River SuperTown Combined Report Final Draft 8. Opportunities Assessment Industry growth opportunities for Augusta-Margaret River LGA have been identified by undertaking a desktop economic development opportunity assessment (refer to Appendix C for the detailed assessments). This assessment employs a number of analytical tools to draw out the economic strengths, strategic assets and opportunities for a region in the context of national industry growth trends in order to determine specific industry sector targets for future economic development activities. The desktop assessment tools used include: Location Quotient Analysis: Assesses the degree of labour specialisation in an economy (a competitive advantage) and is used to identify industry areas of relative strengths and weaknesses. Competitive Assessment: Utilising a diamond assessment framework4, strengths and weakness of the Augusta-Margaret River economy are considered. Cluster Mapping Analysis: Allows for the identification of growth opportunities in specific industry sectors, where a natural competitive advantage already exists. The outcome of the assessment is a list of identified target areas for economic development activities. These target areas focus on high value-adding, knowledge based activities that will drive and deliver real economic benefits to the community for the future and provide for sustainable economic development and employment growth over time. When identifying key industry sectors for growth, it is important to keep in mind the need for high value development (i.e. business activities that bring a high degree of knowledge and generate products and services of a high value). At the same time, it is important that future development results in sustainable business, both in terms of their environmental responsibilities but also in terms of the competitiveness and feasibility of their operations in the long term. By focusing on these areas, economic development can generate greater economic returns for the community. 8.1 Location Quotients In order to demonstrate the specialisation of the economy, location quotients based on employment have been calculated. The location quotients demonstrate the degree to which a local or regional economy is specialised by examining the proportion of employment (by industry sub-sector) compared to a larger economy (Australian economy). Location quotients can be used to indicate the relative strengths or weaknesses of a local or regional economy (i.e., a natural competitive advantage or disadvantage). For the analysis, Augusta-Margaret River LGA, the SWDC region, Perth SD and Western Australia were compared against employment for Australia. Depictions of the Location Quotients for Augusta-Margaret River LGA, Barossa, Byron and Upper Hunter Shire are contained in Appendix C. A location quotient of “1” means that the economies being compared have an equal share of employment (compared to Australia) for a specific industry sector, thus no potential advantage or disadvantage. A location quotient above “1” indicates a specialisation of labour and therefore an area of potential competitive advantage. If the location quotient is below “1”, the area is under-represented compared to the national economic structure in this particular industry sector. Figure 14.1 shows the Location Quotients across the 19 sectors of the economy. Figure 8.2, Figure 8.3 and Figure 8.4 provide a detailed assessment of the agriculture forestry and fishing, mining, manufacturing and business and professional services sectors, respectively. 4 As opposed to a traditional SWOT assessment, AECgroup has modified the diamond assessment framework, originally developed by Dr. Michael Porter, Harvard University, for examining the competitiveness (strengths and weaknesses) of nations. Dr. Porter has used this framework in advising numerous national and state government agencies and has won numerous awards for his contribution to economic development. 54 Margaret River SuperTown Combined Report Final Draft Figure 8.1: Location Quotients, 2006, 1-Digit ANZSIC Agriculture, forestry and fishing Accommodation and food services Rental, hiring and real estate services Manufacturing Retail trade Construction Administrative and support services Arts and recreation services Education and training Other services Electricity, gas, water and waste services Wholesale trade Health care and social assistance Public administration and safety Professional, scientific and technical services Transport, postal and warehousing Financial and insurance services Information media and telecommunications Mining Augusta-Margaret River SWDC Perth SD WA 0.0 1.0 2.0 3.0 4.0 Source: ABS (2007), AECgroup Figure 8.2: Location Quotients, 2006, 2-Digit ANZSIC, Agriculture, Forestry and Fishing, and Mining Agriculture Agriculture, Forestry and Fishing Support Services Fishing, Hunting and Trapping Augusta-Margaret River SWDC Perth SD Non-Metallic Mineral Mining and Quarrying WA Forestry and Logging 0.0 1.0 2.0 3.0 4.0 5.0 Source: ABS (2007), AECgroup 55 Margaret River SuperTown Combined Report Final Draft Figure 8.3: Location Quotients, 2006, 2-Digit ANZSIC, Manufacturing Beverage and Tobacco Product… (25.8) Furniture and Other Manufacturing Non-Metallic Mineral Product… Food Product Manufacturing Petroleum and Coal Product Manufacturing Textile, Leather, Clothing and Footwear … Wood Product Manufacturing Primary Metal and Metal Product… Augusta-Margaret River Printing (including the Reproduction of … Fabricated Metal Product Manufacturing SWDC Pulp, Paper and Converted Paper Product… Basic Chemical and Chemical Product… Perth SD Machinery & Equipment Manufacturing WA Transport Equipment Manufacturing Polymer Product and Rubber Product … 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Note :Beverage and Tobacco Product manufacturing includes wine. Source: ABS (2007), AECgroup Figure 8.4: Location Quotients, 2006, 2-Digit ANZSIC, Business and Professional Services Real Estate Services Building Cleaning, Pest Control and Other … Rental and Hiring Services (except Real Estate) Administrative Services Motion Picture and Sound Recording Activities Finance Library and Other Information Services Professional, Scientific and Technical Services … Broadcasting (except Internet) Computer System Design and Related Services Auxiliary Finance and Insurance Services Publishing (except Internet and Music … Telecommunications Services Insurance and Superannuation Funds Internet Service Providers, Web Search … Internet Publishing and Broadcasting 0.0 Augusta-Margaret River SWDC Perth SD WA 0.5 1.0 1.5 2.0 Note: Includes Professional Scientific Services, Financial and Insurance Services, Information Media and Telecommunications, Administration and Support Services. Source: ABS (2007), AECgroup Key findings: Alongside the expected industries of labour specialisation (agriculture, forestry and fishing, accommodation and food services and manufacturing), the LGA also holds labour specialisations in rental, hiring and real estate services, retail trade and construction, reflecting relatively strong population growth in the region. In addition to beverage and tobacco manufacturing, the Augusta-Margaret River LGA holds labour specialisations in the manufacturing sectors of furniture and other manufacturing and non-metallic mineral product manufacturing (such as glass and ceramics). Key business services, such as finance and professional, scientific and technical services are underrepresented in the region. 56 Margaret River SuperTown Combined Report Final Draft 8.2 Competitive Assessment A diamond assessment framework was used to assess the competitiveness of AugustaMargaret River LGA (HBS, 2010). The diagram below highlights the four key points (factor conditions, demand conditions, supporting industry and firm strategy and rivalry) that form the basis for the diamond, with each one of these factors influencing and relying on the other and providing the foundation for a region’s competitiveness. The role of government is to influence all of these points and is represented by the ring around the diamond. Innovation has been placed at the centre of the diamond to demonstrate its importance for economic development and the impact it can have on the four key points and the overall competitiveness of a region. Figure 8.5: Competitive Assessment (Diamond) Framework Firm Strategy & Rivalry - Vigorous competition between locally based rivals - A local context that encourages sustained investment in upgrading Factor Conditions -High quality specialised inputs such as: - Workforce - Education - Knowledge - Capital - Physical infrastructure Innovation - Presence of specialised -Research centres -Talent base -Training and education institutions Supporting & Related Industry - A critical mass of capable local suppliers - Clusters instead of isolated industries Demand Conditions - A core group of demanding local customers - Unusual local demand in specialised segments that can be served globally - Customers whose needs anticipate those elsewhere. Role of Government - Encourage companies to raise their performance - Stimulate early demand for advanced products - Focus on specialised factor creation; and - Stimulate local rivalry by limiting direct cooperation of firms Source: NCC (2010) The main components of the diamond model are listed and explained below. Factor (input) Conditions: High quality specialised inputs to the economy such as workforce, education, capital and physical infrastructure. Factor inputs are characterised by their dynamic nature and their ability to become continuously upgraded and specialised. Demand Conditions: Level of local demand for specific products and/or services. Demand influences the process of creating and improving products and services through the presence of sophisticated customers that demand the improvement of products. Supporting & Related Industry: A critical mass of capable local suppliers and clusters instead of isolated industries to support key industry (supply chain). This element also includes the important role of clusters for economic development. Firm Strategy & Rivalry: Economic environments which promote vigorous competition among locally based rivals and a local context that encourages sustained investment and upgrade of product and resources. Role of Innovation: Innovation is influenced mainly by the presence of institutions that are often sought by business and industry for collaboration such as Universities, 57 Margaret River SuperTown Combined Report Final Draft TAFE’s, research institutes and other education and training providers. Partnerships with these institutions facilitate creative flow of knowledge and information which facilitate research and development investment, create new products or services and generally allow a region to generate knowledge. Innovation is critical to the successful development of sustainable industry clusters. Role of Government: Within the Diamond Model the role of government is to: o Encourage companies to raise their performance o Stimulate early demand for advanced products o Focus on specialised factor creation (i.e. specific infrastructure, workforce programs, investments) o Stimulate local rivalry by limiting direct cooperation and enforcing antitrust relationships The results of a high level SWOT analysis have been analysed against the elements of the Diamond Framework. The results are outlined in Figure 8.6. 8.2.1 Competitive Edge The Augusta-Margaret River LGA has a number of competitive strengths which will need to be leveraged in order to generate meaningful economic development and employment outcomes. These include: 8.2.2 Advantageous location, climate and national economic conditions, with relatively strong water security supporting its agricultural and timber activities. Potential for international market access and exploitation. Strong existing brand recognition and established wine and tourism destination. Ageing population and FIFO workers could drive local health care, education and other population-serving sectors. Educational institutions support agricultural diversification. Areas for Improvement The competitive assessment also highlights some relative weaknesses, where improvement could increase the Margaret River’s overall competitiveness. These include: A lack of labour force critical mass is driving shortages in skills and professional service workers, and undermining tertiary education viability. Limited local competition and a high exchange rate that undermines international market access. LGA hindered by flat/negative recent population growth, strong competition in the South West, and a risk-averse community. Lack of internet connectivity capacity. Access and transportation issues (for business and tourism), including expanded air services from Busselton Airport. Seasonality of tourism industry and associated impacts on local population (i.e. housing affordability, 12 month employment and limited career pathways). 58 Margaret River SuperTown Combined Report Final Draft Figure 8.6: Competitive Assessment of Augusta-Margaret River LGA Competitive Element Competitive Edge Regional Issues • High amenity location with temperate climate and coastal access • Service–oriented workforce due to tourism sector prominence in industry structure. • Low unemployment presenting opportunities for existing and new workers • Improved connectivity to Perth through Forrest Highway development • Existing labour force lacks critical mass and experiencing skills shortages. • Lack of population undermines full-spectrum tertiary education viability. • Lack of affordable housing supply will impact residential attraction, particularly for service workers • Lack of intra-regional transport options Firm Strategy & Rivalry • Strong economic climate (Australia) • Existing and well-established viticulture and tourism sectors with State, national and international profiles • Existing opportunities to service growth industries are emerging and taking place. • Little competition between firms due to limited supply (small market) • Local business should seek to transition supply to national and global markets • High exchange rates are impacting international competitiveness of Australia in foreign markets (impacts on tourism and wine industries). Demand • Comparatively strong population growth in recent years accelerating demand for education, health care and personal services. • Aging population, lifestyle residents and young families increasing health care demands and education (at all levels). • Increased business and international visitor exposure in tourism reducing impact of depressed domestic tourism market. • Economically demonstrated mining resources exist within broader region. • Currently lacking critical mass of population to attract diverse services, such as childcare and school options. • Strong competition from major centres of Busselton and Bunbury in providing regional services to South West. • Need to further diversify tourism visitation to business , interstate and international visitors • Negative perception of the Carbon Tax and its implications for the regional domestic tourism activity • Leveraging of agricultural sciences from university and TAFE institutions with local agricultural and viticulture industries. • Environment/climate attractive for semi-retirement/lifestyle workers in professional services sectors. • Strong existing industry clusters in agriculture, food, wine and tourism. • Below average proportion of professional services industry (property and business, finance, insurance, etc.) • Supply chain opportunities in agriculture • Need to control “Margaret River” brand in national and global markets • Strong international expertise and innovation in viticulture with South West Institute of Technology and premium wine production status. • Existing industry-specific higher education facilities • Limited scope of tertiary education and research offering undermines whole-of-economy innovative. • Internet connectivity lacks capacity and can negatively impact future growth of business and population. Factor Conditions Supporting & Related Industry Innovation Source: AECgroup 59 Margaret River SuperTown Combined Report Final Draft 8.3 Cluster Mapping Cluster mapping builds on the location quotient analysis by portraying the regional location quotients against national industry estimated employment growth over time (from 2011 to 2016). By incorporating industry growth, cluster mapping allows for the identification of growth opportunities in specific industry sectors, where a natural competitive advantage already exists against a backdrop of an expanding sector nationally. Industry clusters located above the “1” on the vertical axis indicate an existing industry concentration (strength or competitive advantage, as discussed previously) within the region being examined. The national industry employment growth estimate for 2011-12 to 2016-17 (IBIS World, 2011) is plotted along the horizontal axis, with 0% growth over the five years creating a midline. The further to the right of this central horizontal axis, the faster the industry is expected to expand. Similarly, the farther to the left of the zero percent midline, the faster it is expected to shed jobs during this five year period. The size of the cluster in the map demonstrates the size of the local workforce in that industry sector. The key industries of labour specialisation for Augusta-Margaret River, agriculture, forestry and fishing and beverage and tobacco manufacturing, are expected to grow minimally (in terms of employment) over the coming five years, at the national level. However, these competitive advantages of the region have the potential to outperform the national trend as has been experience in the region in previous years. The LGA also holds labour specialisation in key industries of growth, such as accommodation and food services, retail trade and construction. Industries which are currently underrepresented in the Augusta-Margaret River LGA and are expected to experience solid growth rates over the coming five years include: Health care and social assistance Transport, postal and warehousing Professional, scientific and technical services Education and training 60 Margaret River SuperTown Combined Report Final Draft Figure 8.7: Augusta-Margaret River Cluster Map, 1-Digit ANZSIC & Selected 2-Digit Manufacturing Cluster Concentration 2006 (Comparison with Australia) 30.0 25.0 Well-represented/Low Growth Well-represented/High Growth Beverage and Tobacco Product Manufacturing = 100 employees 20.0 15.0 10.0 5.0 0.0 Manufacturing Arts and recreation services Under-represented/Low Growth -5.0 -10.0% -5.0% Note: Agriculture, forestry and fishing Construction Accommodation and food services Retail trade Wholesale trade Information media and telecommunications Education and training Transport, postal and warehousing Professional, scientific andhiring technical Rental, and real estate services services Flour Mill and Oil and Fat Cereal Food Manufacturing Manufacturing 0.0% Public administration and safety Under-represented/High Growth 5.0% 10.0% 15.0% % Estimated Industry Employment Growth 2011-12 to 2016-17 Please Mining 20.0% 25.0% refer to 63 Margaret River SuperTown Combined Report Final Draft Figure 8.8 for details on the boxed area. Source: ABS (2007, 2010a), IBIS World (2011), AECgroup 62 Margaret River SuperTown Combined Report Final Draft Figure 8.8: Augusta-Margaret River Cluster Map, 1-Digit ANZSIC & Selected 2-Digit Manufacturing (Zoomed In) 5.0 Cluster Concentration 2006 (Comparison with Australia) Well-represented/Low Growth Well-represented/High Growth = 100 employees Agriculture, forestry and fishing 4.0 3.0 Accommodation and food services Rental, hiring and real estate services Manufacturing 2.0 Construction Retail trade Education and training Transport, postal and warehousing 1.0 Health care and social assistance Arts and recreation services 0.0 Information media and telecommunications Other services Wholesale trade Oil and Fat Manufacturing Mining Financial and insurance services Public administration and safety Professional, scientific and technical services -1.0 -2.0 -5.0% Under-represented/Low Growth 0.0% Under-represented/High Growth 5.0% 10.0% 15.0% 20.0% 25.0% % Estimated Industry Employment Growth 2011-12 to 2016-17 Source: ABS (2007, 2010a), IBIS World (2011), AECgroup 63 Margaret River SuperTown Combined Report Final Draft 8.4 Key Findings Location quotients in the Augusta-Margaret River region unsurprisingly reveal the prominence of the viticulture, tourism (displayed through high representations of employment in accommodation and food services and retail trade) and food and beverage manufacturing industries (predominantly wine) in the region. However, the region also shows high representation in business services, such as rental, hiring and real estate services and population-driven services such as construction. These are areas of specialisation and competitive advantages can contribute to future growth. The competitive assessment of the Augusta-Margaret River region reinforces the strength of the region in the industries of agriculture (particularly viticulture) and food and beverage manufacturing (which is primarily wine manufacturing). Whilst these industries are expected to remain important in Augusta-Margaret River, it is important that economic diversification leverages these strengths to provide a range of employment opportunities for local residents and to minimise the volatility of the local business cycle. Cluster mapping has assisted in identifying industries of future growth which could be leveraged in the region, including food manufacturing, agriculture and professional services (creative industries). Additionally, the results support future growth of the tourism sector (through retail trade and accommodation sectors), through deepening and diversifying the market (i.e. business travellers, conferences and events). 64 Margaret River SuperTown Combined Report Final Draft 9. Industrial Land Assessment Industrial Land estimates have been developed using the GRP model and based on employment per hectare estimates for the industries of manufacturing, wholesale trade and transport and logistics (see Appendix A). This chapter provides an overview of the findings. 9.1 Existing Demand & Supply In 2006, an audit of existing industrial lands was conducted for the South West region, including Augusta-Margaret River. Key assumptions of the study included mild population growth in Augusta-Margaret River and an assumption of greater intensity of jobs per hectare by 30% to 2030. The audit found a total of 47ha of industrial land in Augusta-Margaret River, spread across six separate industrial land estates. Almost half (18.6ha) of this land is located in the town of Margaret River. Figure 9.1: Industrial Land Supply, Augusta-Margaret River, 2006 20 Total Occupied Total Vacant Land Industrial Land (Ha) 15 10 5 0 Augusta Industrial Cowaramup 1 Cowaramup 2 Margaret River Stweart St Witchcliffe Source: Syme Marmion & Co. (2010) 9.2 Future Demand for Land Estimates of future industrial land demand have been developed assuming Augusta Margaret River achieves its population target and pursues the industries of opportunity. The land demand results are aligned with the GRP and Employment estimates outlined in Section 6.2. The figure below assumes vacant industrial land is unchanged from 2006 and demonstrates a total net new demand for industrial land of 41ha. Demand for industrial land is expected to be sourced from the wholesale trade and transport sectors. It should be noted that supplies of industrial land should always exceed demand in order to offer investors choice and flexibility. 65 Margaret River SuperTown Combined Report Final Draft Figure 9.2: Industrial Land Supply and Demand (ha), Augusta-Margaret River LGA, 2011 to 2031 90 Industrial Demand for Land Supply 80 70 60 50 40 30 20 10 0 2011 2016 2021 2026 2031 Source: AECgroup 9.3 Key Findings Expanded economic activity in Augusta-Margaret River is expected to result in increased industrial land demand, to 84ha by 2031. Current supply industrial land is estimated to be insufficient to meet the needs and requirements of future industry and excess demand is estimated to take effect before 2016. Identifying new industrial land precincts to meet future demand is required to ensure the region has adequate industrial land to support and attract future economic activity. 66 Margaret River SuperTown Combined Report Final Draft 10. Retail Assessment This section identifies potential retail gaps and future retail needs by assessing current and future demand for retail floorspace and reconciling it with current and future supply. 10.1 Catchment Analysis The Township of Margaret River is located approximately 270km south of Perth and is Margaret River Shire’s (Margaret River LGA) population, services and administrative centre. Retail services and facilities within the Township primarily cater for households within the LGA. The retail catchment has been defined taking into consideration the following: Current and future depth of retail offering within the Township Location and distance of competing centres Retail offering available at competing centres Typical travel flows of local households Likely expenditure trends of local households. The retail catchment has been defined as the following: Primary catchment – Margaret River Township Secondary catchment – Remainder of Margaret River LGA Margaret River, however, is also an important tourism region, with numerous domestic and international tourists visiting the region each year, attracted by the region’s natural beauty and its famous wining and dining scene. Margaret River Township represents a key getaway for visitors to the region, and it is also an important retail centre for visitors to the region. Therefore, visitor expenditure has also been taken into account to determine overall retail expenditure, and hence supportable floorspace. 10.2 Population Growth Margaret River LGA, and in particular Margaret River Township, experienced significant growth over the 1996 to 2010 period, with an average annual growth rate of 2.3% and 4.3% respectively, although population growth has somewhat slowed over the period. In comparison, the broader Vasse SSD grew at an annual rate of 3.8%, while WA’s annual growth was significantly lower (1.9%). As such, the catchment’s growth rate largely exceeded that of WA in general over the last 15 years. Population in the LGA increased from approximately 8,100 people in 1996 to approximately 12,500 people in 2010. Most of this growth occurred within Margaret River Township, where population increased by nearly 2,500 people over the same period to reach approximately 5,500 people in 2010 (Figure 5.1). 67 Margaret River SuperTown Combined Report Final Draft Figure 5.10.1: Catchment Population Growth, 1996-2010 14,000 6.0% 12,000 10,000 Population Growth 4.0% 8,000 3.0% 6,000 2.0% 4,000 Annual Growth Rate (%) 5.0% 1.0% 2,000 0 0.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Margaret River Township Remainder Margaret River LGA Vasse SSD Annual Growth (%) WA Annual Growth (%) 2006 2007 2008 2009 2010 Margaret River LGA Annual Growth (%) Source: ABS (2011i) 10.2.1 Population Projections In forecasting population projections (Table 5.1), it has been assumed that: Margaret River Township’s population will double between 2010 and 2031. Remainder of Margaret River LGA’s population will increase at the average annual growth rate that was recorded across Margaret River LGA recently (2000 to 2010 period) between 2010 and 2031. This yields an annual growth rate of 3.4% for Margaret River Township and 2.4% for Remainder Margaret River LGA between 2010 and 2031, or a combined rate of 2.8% for the LGA over the 20 year period. Such growth rate is comparable (although slightly lower) to the annual growth rate for the LGA (3.1%) over the 1996 to 2010 period. Therefore, it is assumed that Margaret River LGA will reach approximately 22,500 people by 2031, nearly double its 2010 population level, with a population approximately equally distributed between the two catchments (Figure 5.2). Given the growth rate differential, the proportion of people living within Margaret River Township itself is expected to increase substantially from its 2010 levels. Table 5.1: Catchment Population Projections Indicator 2011 2016 2021 2026 2031 Margaret River Township 5,735 6,764 Remainder Margaret River LGA 7,127 8,021 7,978 9,409 11,097 9,028 10,161 12,862 11,436 14,785 17,005 19,570 22,533 Margaret River Township Remainder Margaret River LGA 2.46 2.44 2.42 2.40 2.38 2.38 2.36 2.34 2.32 2.30 Margaret River Township 2,331 2,772 3,296 3,920 4,663 Remainder Margaret River LGA 2,995 3,399 3,858 4,380 4,972 Margaret River LGA 5,326 6,171 7,155 8,300 9,635 Population Margaret River LGA Average Household Size Households Source: ABS (2011i), AECgroup 68 Margaret River SuperTown Combined Report Final Draft Figure 5.2: Catchment Population Projections 25,000 5.0% 22,500 20,000 4.0% 15,000 3.0% 12,500 10,000 2.0% 7,500 5,000 Annual Growth Rate (%) Population Growth 17,500 1.0% 2,500 0 Margaret River Township 0.0% Remainder Margaret River LGA Margaret River LGA - Average Annual Growth Rate Source: ABS (2011i), AECgroup 10.3 Retail Supply The Property Council of Australia classifies retail centres according to the following retail hierarchy (PCA, 2010): Super Regional Centre: A major shopping centre incorporating two full line department stores, one or more full line discount department stores (DDS), two supermarkets and around 250 or more specialty shops, with a total Gross Lettable Area (GLA) of more than 85,000m2. Super Regional Centres provide a comprehensive coverage of the full range of retail needs, including a number of entertainment and leisure attractions. Major Regional Centre: A major shopping centre comprising at least one full line department store, one or more full line DDS, one or more supermarkets and around 150 specialty shops, with a total GLA between 50,000-85,000m2. Such centres provide an extensive coverage of the full range of retail needs. Regional Centre: A shopping centre comprising one full line department store, a full line DDS, one or more supermarkets and around 100 or more specialty shops, with a GLA between 30,000-50,000m2. Such centres provide a broad range of shopper facilities and amenities. Sub-Regional Centre: A medium-sized centre with at least one full line DDS, a major supermarket and approximately 40 or more specialty shops, with a GLA between 10,000 and 30,000m2. Neighbourhood Centre: A local centre comprising a supermarket and up to 35 specialty shops, with a GLA typically under 10,000m 2. Neighbourhood centres are generally located in residential areas and cater for day-to-day retail needs. The Department of Planning and Infrastructure conducted a Commercial Land Use Survey in 2006. AECgroup reviewed the survey, and adjusted it to include only tenancies and retailers that were deemed to be within one of the retail categories described below. In particular, tenancies occupied by other activities, such as light industrial businesses, were excluded given that such floorspace would generally not be suited for retail tenancies. 69 Margaret River SuperTown Combined Report Final Draft Margaret River Township comprises a neighbourhood centre: The Margaret River Shopping Centre. It is a 3,000m2 neighbourhood centre anchored by a full-line Coles supermarket and comprising 6 specialty shops (PCA, 2010). In addition, there are approximately 120 retail tenancies, as identified by the survey. Some of the largest tenancies include an IGA (1,000m 2), a Mitre 10 (1,200m2), a Home Hardware store (975m2), a furniture store, and a Target Country. Margaret River Township comprises a broad retail offering that caters for local residents and visitors alike, with retail specialty shops ranging from music stores to antique shops, clothing and apparel stores, galleries and groceries shops. 10.3.1.1 Summary Existing Retail Supply Total catchment retail supply floorspace has been grouped into the following categories: Groceries and Specialty Food – includes food expenditure at supermarkets, delis, bottle shops, butchers, bakers, convenience stores and greengrocers, and tobacco products. Food and Liquor Catering – includes expenditure on alcoholic beverages and meals in restaurants, hotels, clubs, fast foods, taverns and bottle shops. Clothing and Accessories – includes expenditure on clothing, footwear and clothing and footwear services. Furniture, Housewares and Appliances – includes expenditure on furniture, floor and household coverings, appliances, glassware and tableware. Recreation and Entertainment Equipment – includes expenditure on recreational equipment such as audio-visual, home computer equipment, books and newspapers, and other equipment such as cameras, toys and camping equipment. Garden and Hardware Goods – includes expenditure on gardening tools, accessories and products, hand and power tools, hardware products and cleaning products. Other Goods Personal and Services– includes expenditure on personal care services (such as hair services, manicure services), stationary equipment, animal products, medicines, lottery tickets, and miscellaneous goods. Retail expenditure can be generally grouped into two broad categories: food expenditure and non-food expenditure. Food expenditure comprises spending within the groceries and specialty food and food and liquor catering categories, while non-food expenditure is included in the remainder categories. It is estimated that there is approximately 23,900m2 of retail floorspace, with 36.0% taken up by food retailers. The majority of this is taken up by food and liquor catering (4,500m2). This is not surprising given the significant number of visitors to the region, and that many retailers within this category cater primarily for visitors. A floorspace of 15,400m2 (64.5% of total retail floorspace) was identified across non-food retailers, the majority of it distributed across the categories of: clothing and accessories; furniture, houseware and appliances and other goods and personal services. Similarly, it is expected that a significant proportion of retailers within these categories cater primarily for visitors to the region. Non-food expenditure is typically spread across specialty shops, department stores, discount department stores and bulky goods retailers. In particular, bulky goods retailers account for a large proportion of spending within the furniture, houseware and appliances, and garden and hardware goods categories. As such, the approximate quantum of supportable bulky goods floorspace within a specific location can be estimated by analysing overall retail spending within the latter two categories. A total supply of approximately 5,900m2 is identified across these two categories. The audit also identified a total of 8 vacant premises, totalling approximately 2,500m 2. It is expected that only a portion of these vacant premises were previously tenanted by retailers, while others were previously occupied by other tenancies, such as office, or light industrial businesses. As such, it is expected that only a portion of these vacant premises would be tenanted by retailers in the future. Nonetheless, this equates to a 70 Margaret River SuperTown Combined Report Final Draft potential retail vacancy rate of up to 9% (if including all vacancies), indicating that the local market has the capacity to absorb additional future retail floorspace demand. Table 5.2: Summary of Existing Retail Supply, Catchment Lots (no) Floorspace (m2) Floorspace (%) 7 3,985 16.7% Food and Liquor Catering 33 4,500 18.8% Clothing & Accessories 28 3,430 14.3% Furniture, Houseware & Appliances 13 3,775 15.8% Recreation & Entertainment Equipment 15 2,615 10.9% 2 2,175 9.1% Retail Type Groceries & Specialty Food Garden & Hardware Goods Other Goods & Personal Services Total Vacant 26 3,440 14.4% 124 23,920 100.0% 8 2,475 Source: AECgroup, Department of Planning and Infrastructure (2006) 10.3.2 Retail Supply Outside the Catchment Larger population centres outside the catchment, comprising larger shopping centres and a broader variety of goods and stores compared to what is available in the catchment, also service local households’ retail needs. In particular, such centres appeal for non-food shopping or comparison shopping, for which households typically visit a number of stores before committing to a purchase. This is particularly the case for more expensive goods (i.e. white goods and electronics). The closest major retail centres outside the catchment include Bunbury, Busselton and Mandurah. 10.3.2.1 Bunbury Bunbury, approximately 100km north of Margaret River Township, is the closest major retail, business and services centre to catchment households, and comprises two subregional centres and three neighbourhood centres. The Bunbury Forum Shopping Centre, a sub-regional shopping centre of approximately 21,700m2, is located within Bunbury. It is anchored by a Discount Department Stores (DDS): Big W (8,300m2). It also comprises two full-line Supermarkets, Woolworths (3,800m2) and a SUPA IGA (3,000m2), in addition to over 50 specialty stores. The other sub-regional shopping centre in Bunbury is the Bunbury Centrepoint Shopping Centre, which comprises a floorspace of approximately 16,800m2. It is anchored by Target (7,100m2) and a Coles supermarket (4,100m2) and includes approximately 50 retail specialty shops. Other smaller retail centres, or neighbourhood centres include5: Parks Centre – 10,000m2 centre anchored by Kmart (3,900m2) and Coles (2,900m2), with around 20 specialty shops. Australind Shopping Centre – 6,200m2 centre located in Australind, approximately 8km north of Bunbury and anchored by Coles (3,300m2), with approximately 30 specialty shops. Bunbury City Plaza Shopping Centre – neighbourhood centre of approximately 4,300m2, anchored by Woolworths (2,000m2) and comprising 18 specialty shops. Various bulky goods retailers and a broad range of retail specialty, community and commercial services are dispersed throughout Bunbury. Bunbury therefore is the closest major retail centre for catchment residents, providing a broad retail offering, including tree major DDS. Accordingly, Bunbury is expected to 5 Source: Property Council of Australia, Australian Shopping Centre Database, 2010 71 Margaret River SuperTown Combined Report Final Draft attract the largest proportion of catchment households’ retail expenditure outside the catchment, and in particular non-food expenditure. 10.3.2.2 Busselton Busselton is located approximately 50km north of Margaret River Township, or approximately halfway to Bunbury, and has a somewhat broader retail offering compared to the catchment. It comprises a few neighbourhood centres, which include Busselton Central Shopping Centre (7,300m2), anchored by a SUPA IGA (4,500m2); Busselton Shopping Centre (5,000m2), anchored by Woolworths (2,800m2) and Busselton Boulevard (4,800m2), anchored by Coles (3,100m2). Even though Busselton is located at half the distance of Bunbury, it is not expected to attract as much retail expenditure from catchment households as Bunbury, given the broader retail offering, and in particular non-food offering, available in Bunbury. 10.3.2.3 Mandurah Mandurah is located 200km north of Margaret River Township, and is a major population and services centre, with a regional centre (Centro Mandurah) and various smaller centres. Mandurah is the closest regional centre to catchment households and provides a larger retail offering than Bunbury. Centro Mandurah is a 34,000m2 regional centre anchored by two DDS stores, Kmart (7,000m2), Big W (6,500m2) and two supermarkets, Woolworths (4,000m2) and Coles (3,200m2). In addition, the centre comprises over 100 retail specialty shops. There are also other smaller centres within Mandurah and its vicinity, such as Meadow Springs Boulevard (9,700m2), which is anchored by a Target (3,300m2) and Coles (3,000m2); Centro Halls Head (6,000m2); Erskine Central Shopping Centre (5,000m2); Smart Street Mall (3,100m2). Aside from the presence of three major DDS (such as Bunbury), Mandurah is home to an even larger number and variety of retailers, including bulky goods stores than Bunbury. Therefore, a proportion of catchment households’ retail expenditure, and non-food expenditure in particular, is expected to escape to Mandurah. Nonetheless, despite a broader retail offering, the overall catchment households’ retail expenditure that escapes to Mandurah is not expected to be as large as that escaping to Bunbury. This is primarily related to Mandurah’s larger distance from the Township (200km). 10.3.2.4 Perth CBD & Perth Metropolitan Area The Perth CBD and Perth Metropolitan Area draw residents from a broad catchment, including Margaret River, despite the Perth CBD being located at approximately a three hour driving distance from Margaret River Township. The Perth CBD and Perth Metropolitan Area will continue to attract a proportion of catchment households’ retail expenditure as a result of the numerous specialty shops, unique retail shops, the presence of major regional centres, in addition to the entertainment, tourism and leisure attractions that are available. However, Bunbury is expected to retain the largest proportion of catchment households’ retail expenditure that escapes outside the catchment, thanks to a significantly broader and more diverse retail offering compared to Margaret River Township, and its convenient location, at a relatively short driving distance from the Township. 10.3.3 Future Supply A supermarket based centre of approximately 5,800m2 is currently under construction in the Township of Margaret River. It is to comprise a full-line Woolworths supermarket (3,800m2), and a number of specialty shops, including approximately 530m2 of commercial/non-retail floorspace. 72 Margaret River SuperTown Combined Report Final Draft With the addition of the Woolworths supermarket, Margaret River Township households will avail themselves of two full line supermarkets, therefore further limiting food expenditure leakage to outside the catchment. 10.4 Retail Expenditure 10.4.1 Average Household Retail Expenditure Average household expenditure for catchment households was derived using AECgroup’s Retail model based on data from the 2006 Census and the ABS 2009-10 Household Expenditure Survey (ABS, 2011e). Household retail expenditure has been grouped into the following categories: Groceries and Specialty Food –food expenditure at supermarkets, delis, bottle shops, butchers, bakers, convenience stores and greengrocers, and tobacco products. Food and Liquor Catering –expenditure on alcoholic beverages and meals in restaurants, hotels, clubs, fast foods, taverns and bottle shops. Clothing and Accessories –expenditure on clothing, footwear and clothing and footwear services. Furniture, Housewares and Appliances –expenditure on furniture, floor and household coverings, appliances, glassware and tableware. Recreation and Entertainment Equipment –expenditure on recreational equipment such as audio-visual, home computer equipment, books and newspapers, and other equipment such as cameras, toys and camping equipment. Garden and Hardware Goods –expenditure on gardening tools, accessories and products, hand and power tools, hardware products and cleaning products. Other Goods Personal and Services–expenditure on personal care services (such as hair services, manicure services), stationary equipment, animal products, medicines, lottery tickets, and miscellaneous goods. Average weekly household retail expenditure of catchment households was compiled for each of the abovementioned categories (Table 5.3), with Regional WA and WA figures also included for comparison. Estimates are expressed in 2011 dollar values. It is estimated that the average weekly household retail expenditure within Margaret River Township is $490, which is equivalent to that within the Remainder of Margaret River LGA. Average retail expenditure figures for the catchment are approximately 5% below those of regional WA ($513) and WA ($523). Table 5.3: Weekly Household Retail Expenditure 2011, Catchment ($2011) Margaret River Township Remainder Margaret River LGA Regional WA WA $187 $187 $188 $182 Food and Liquor Catering $75 $76 $79 $84 Clothing & Accessories $47 $47 $51 $52 Furniture, Houseware & Appliances $57 $57 $62 $57 Recreation & Entertainment Equipment $47 $47 $50 $62 Garden & Hardware Goods $21 $21 $22 $23 Other Goods & Personal Services $56 $56 $61 $62 $490 $490 $513 $523 Expenditure Type Groceries & Specialty Food Total Weekly Expenditure Source: AECgroup Retail Model 10.4.2 Forecast Household Retail Expenditure Potential It is estimated that at June 2011 catchment households generated approximately $135.7 million in retail sales potential, with groceries and specialty food comprising the largest expenditure category ($51.9 million). The majority of retail expenditure potential is 73 Margaret River SuperTown Combined Report Final Draft generated by households within the remainder Margaret River LGA, given its overall larger population share. It has been conservatively assumed that real household retail expenditure will increase by 1.0% per annum between 2011 and 2031. Total catchment retail expenditure potential is forecast to increase to over $200 million by 2021 (2011 dollar values) and to approximately $300 million by 2031 (Table 5.4). More than half of the increase in retail expenditure potential is generated by increase in food expenditure, and groceries and specialty food expenditure in particular. Margaret River Township households are forecast to account for the majority of the increase in retail expenditure potential for the 2011-2031 period, given the higher population growth rate assumed for the Township compared to the remainder of the LGA. Table 5.4: Total Retail Expenditure Potential, Catchment Households (2011 $ values) Margaret River Township Remainder Margaret River LGA Total $22.7 $29.2 $51.9 Food and Liquor Catering $9.2 $11.8 $20.9 Clothing & Accessories $5.6 $7.3 $12.9 Furniture, Houseware & Appliances $6.9 $8.8 $15.7 Recreation & Entertainment Equipment $5.7 $7.3 $12.9 Garden & Hardware Goods $2.5 $3.3 $5.8 Other Goods & Personal Services $6.8 $8.8 $15.6 $59.4 $76.4 $135.8 Groceries & Specialty Food $28.4 $34.8 $63.2 Food and Liquor Catering $11.4 $14.0 $25.5 Clothing & Accessories $7.1 $8.7 $15.7 Furniture, Houseware & Appliances $8.6 $10.5 $19.1 Recreation & Entertainment Equipment $7.1 $8.7 $15.8 Garden & Hardware Goods $3.2 $3.9 $7.1 Other Goods & Personal Services $8.5 $10.5 $19.0 $74.2 $91.1 $165.3 Groceries & Specialty Food $35.5 $41.5 $77.0 Food and Liquor Catering $14.3 $16.7 $31.0 $8.8 $10.3 $19.2 $10.7 $12.6 $23.3 Recreation & Entertainment Equipment $8.8 $10.4 $19.2 Garden & Hardware Goods $4.0 $4.6 $8.6 $10.7 $12.5 $23.2 $92.8 $108.7 $201.5 Groceries & Specialty Food $44.3 $49.5 $93.9 Food and Liquor Catering $17.9 $20.0 $37.8 Clothing & Accessories $11.0 $12.3 $23.4 Furniture, Houseware & Appliances $13.4 $15.0 $28.4 Recreation & Entertainment Equipment $11.0 $12.4 $23.4 $5.0 $5.5 $10.5 $13.3 $14.9 $28.3 $116.0 $129.7 $245.6 $55.4 $59.1 $114.6 Expenditure Type 2011 Groceries & Specialty Food Total 2016 Total 2021 Clothing & Accessories Furniture, Houseware & Appliances Other Goods & Personal Services Total 2026 Garden & Hardware Goods Other Goods & Personal Services Total 2031 Groceries & Specialty Food 74 Margaret River SuperTown Combined Report Final Draft Margaret River Township Remainder Margaret River LGA Total Food and Liquor Catering $22.3 $23.8 $46.2 Clothing & Accessories $13.8 $14.7 $28.5 Furniture, Houseware & Appliances $16.7 $17.9 $34.6 Recreation & Entertainment Equipment $13.8 $14.7 $28.6 $6.2 $6.6 $12.8 $16.7 $17.8 $34.5 $145.0 $154.7 $299.7 Groceries & Specialty Food $32.7 $29.9 $62.7 Food and Liquor Catering $13.2 $12.1 $25.3 Clothing & Accessories $8.1 $7.5 $15.6 Furniture, Houseware & Appliances $9.9 $9.1 $18.9 Recreation & Entertainment Equipment $8.1 $7.5 $15.6 Garden & Hardware Goods $3.7 $3.3 $7.0 Expenditure Type Garden & Hardware Goods Other Goods & Personal Services Total Increase 2011-2031 Other Goods & Personal Services Total $9.8 $9.0 $18.9 $85.6 $78.4 $163.9 Source: AECgroup Retail Model 10.4.3 Market Share Analysis Relevant market shares have been assigned for each retail category to estimate the proportion of total retail expenditure potential that is retained within the catchment. Market shares have been estimated based on a number of factors, such as: the existing supply and range of retail shops and services within the catchment, the location and function of competing centres, their distance from catchment households, and their retail offering. Typical shopping and travel patterns have also been taken into account, such as the propensity for local residents to travel to larger centres outside the catchment for larger purchases, especially non-food shopping (Table 5.5). Table 5.5: Estimated Catchment Market Shares by Category Margaret River Township Remainder Margaret River LGA Total Groceries & Specialty Food 90% 75% 82% Food and Liquor Catering 85% 80% 82% Clothing & Accessories 30% 25% 27% Furniture, Houseware & Appliances 20% 20% 20% Recreation & Entertainment Equipment 40% 30% 34% Garden & Hardware Goods 40% 35% 37% Other Goods & Personal Services 80% 70% 74% 67% 58% 62% Market Share Total Source: AECgroup Market share of overall retail expenditure potential that is retained within the catchment is estimated at approximately 62%. The market share is expected to be higher for Margaret River Township households (67%). The smaller overall market share captured from remainder Margaret River LGA households (58%) is expected to be a function of households located further away from the Township having a larger propensity to travel outside the catchment. Market shares however vary considerably between retail categories, and in particular are estimated to be significantly higher for food categories compared to non-food categories. Over 80% of catchment households’ food expenditure potential is expected to be retained within the catchment itself, given that there are two full-line supermarkets within Margaret River (once the Woolworths centre is completed). However, centres outside the catchment, are still expected to capture a small proportion of catchment households’ 75 Margaret River SuperTown Combined Report Final Draft expenditure potential within this category, as local residents often combine food shopping with non-food shopping when travelling to larger centres such as Bunbury. With comparatively limited non-food retail offering within the catchment, local residents travel to centres outside the catchment for most non-food retail expenditure, where a larger variety and depth of goods and services is available. Therefore, a significant proportion of catchment households’ expenditure within clothing and accessories, furniture, housewares and appliances and recreation and entertainment equipment is expected to escape to centres outside the catchment. Non-food expenditure market share is expected to be approximately 39%, implying that approximately 61 cents out of every dollar that is spent by catchment households on non-food retail items is spent in centres outside the catchment. Bunbury in particular is expected to attract a significant proportion of such expenditure. 10.4.4 Estimated Household Retail Expenditure within the Catchment Multiplying the estimated market shares with the available retail expenditure potential of catchment households yields the estimated household retail expenditure that is captured within the catchment (Table 5.6). Table 5.6: Estimated Household Retail Expenditure Captured within the Catchment (2011 $ values) Expenditure Type Margaret River Township Remainder Margaret River LGA Total 2011 Groceries & Specialty Food $20.4 $21.9 $42.3 Food and Liquor Catering $7.8 $9.4 $17.2 Clothing & Accessories $1.7 $1.8 $3.5 Furniture, Houseware & Appliances $1.4 $1.8 $3.1 Recreation & Entertainment Equipment $2.3 $2.2 $4.4 Garden & Hardware Goods $1.0 $1.1 $2.2 Other Goods & Personal Services $5.5 $6.2 $11.6 $40.0 $44.4 $84.4 Total 2016 Groceries & Specialty Food $25.5 $26.1 $51.7 Food and Liquor Catering $9.7 $11.2 $20.9 Clothing & Accessories $2.1 $2.2 $4.3 Furniture, Houseware & Appliances $1.7 $2.1 $3.8 Recreation & Entertainment Equipment $2.8 $2.6 $5.4 Garden & Hardware Goods $1.3 $1.4 $2.6 Other Goods & Personal Services $6.8 $7.3 $14.2 $50.0 $52.9 $102.9 Groceries & Specialty Food $31.9 $31.1 $63.1 Food and Liquor Catering $12.1 $13.4 $25.5 Clothing & Accessories $2.6 $2.6 $5.2 Furniture, Houseware & Appliances $2.1 $2.5 $4.7 Recreation & Entertainment Equipment $3.5 $3.1 $6.6 Garden & Hardware Goods $1.6 $1.6 $3.2 Other Goods & Personal Services $8.5 $8.8 $17.3 $62.5 $63.1 $125.7 Groceries & Specialty Food $39.9 $37.2 $77.1 Food and Liquor Catering $15.2 $16.0 $31.2 Clothing & Accessories $3.3 $3.1 $6.4 Furniture, Houseware & Appliances $2.7 $3.0 $5.7 Total 2021 Total 2026 76 Margaret River SuperTown Combined Report Final Draft Margaret River Township Remainder Margaret River LGA Total Recreation & Entertainment Equipment $4.4 $3.7 $8.1 Garden & Hardware Goods $2.0 $1.9 $3.9 Expenditure Type Other Goods & Personal Services $10.7 $10.4 $21.1 $78.2 $75.3 $153.5 Groceries & Specialty Food $49.9 $44.3 $94.2 Food and Liquor Catering Total 2031 $19.0 $19.1 $38.0 Clothing & Accessories $4.1 $3.7 $7.8 Furniture, Houseware & Appliances $3.3 $3.6 $6.9 Recreation & Entertainment Equipment $5.5 $4.4 $9.9 Garden & Hardware Goods $2.5 $2.3 $4.8 $13.3 $12.5 $25.8 $97.7 $89.9 $187.6 Other Goods & Personal Services Total Source: AECgroup Retail Model It is estimated that total household retail expenditure retained within the catchment is $84.4 million (2011 dollar values) in 2011, approximately equally distributed between Margaret River Township households and Remainder Margaret River LGA households. Retail expenditure is expected to increase to over $125 million by 2021 (2011 dollar values) and approximately $187 million in 2031. By 2031, Margaret River Township households will account for the majority of retail expenditure retained within the catchment, given the relatively higher assumed annual growth rate for the Township. 10.4.5 Estimated Visitor Retail Expenditure within the Catchment Margaret River is an important tourism destination, attracting a large number of visitors annually. As such, alongside locally generated expenditure, comprehensive retail expenditure is also generated by domestic and international visitors alike that come to the region. Considerable visitor retail expenditure is generated within the Township itself, with Margaret River Township being the key gateway centre to the Margaret River Tourism Region. To accurately determine total current and future supportable retail floorspace within the catchment, it is important to incorporate current and future visitor expenditure into overall retail expenditure levels. Data has been sourced from Tourism Research Australia publications. It is estimated that there were approximately 1.7 million visitor nights in the catchment in 2011, which is forecast to increase to approximately 2.1 million visitor nights by 2031, with international visitor nights accounting for the great majority of growth over the period (Table 5.7). Table 5.7: Forecast Visitor Nights, Catchment Indicator Domestic Visitor Nights International Visitor Nights Total Visitor Nights Increase 2011-2031 2011 2016 2021 2026 2031 1,355,000 1,369,300 1,378,100 1,390,000 1,402,000 47,000 408,400 466,600 518,900 585,000 661,000 252,600 1,763,400 1,835,900 1,897,000 1,975,000 2,063,000 299,600 Source: AECgroup, TRA (2011a), TRA (2011b) It is estimated that in 2011 visitors generated approximately $80.5 million in retail expenditure in the catchment. Future visitor retail expenditure has been calculated by multiplying forecast visitor nights by the average retail expenditure per visitor night. In doing so, it has been assumed that the average real retail expenditure per visitor night will increase by 1.0% per annum 77 Margaret River SuperTown Combined Report Final Draft between 2011 and 2031, in line with growth in real household retail expenditure over the period. Forecast visitor retail expenditure is expected to increase to $92.0 million by 2021 and $105.7 million by 2031. As such, visitors generate considerable retail expenditure in the catchment, with such expenditure ‘supporting’ a significant proportion of retail floorspace within Margaret River Township and the overall catchment. This is especially the case for food related floorspace - with food and liquor catering comprising 58% of visitor retail expenditure, followed by groceries and specialty food (24% of visitor retail expenditure). Table 5.8: Estimated Visitor Retail Expenditure, Catchment (2011 $ values) Expenditure Type 2011 2016 2021 2026 2031 Groceries & Specialty Food $19.8 $20.8 $21.8 $23.0 $24.3 Food and Liquor Catering $46.2 $48.6 $51.0 $53.7 $56.7 Clothing & Accessories $8.7 $10.1 $11.5 $13.1 $14.8 Furniture, Houseware & Appliances $1.1 $1.3 $1.4 $1.6 $1.9 Recreation & Entertainment Equipment $1.4 $1.7 $1.9 $2.2 $2.5 Garden & Hardware Goods $1.1 $1.3 $1.4 $1.6 $1.9 Other Goods & Personal Services $2.2 $2.5 $2.9 $3.3 $3.7 $80.5 $86.3 $92.0 $98.5 $105.7 Total Source: AECgroup, TRA (2011a), TRA (2011b), TRA (2011c) 10.4.6 Estimated Total Retail Expenditure within the Catchment Total retail expenditure is the sum of household expenditure that is retained within the catchment and visitor expenditure (Table 5.9). Total retail expenditure within the catchment is expected to nearly double over the 2011 to 2031 period, to reach approximately $293 million in 2031 from $164 million in 2011, as a result of the significant population growth that is forecast over the period (and hence growth in household retail expenditure), as well as the forecast increase in visitor numbers to the region (and hence growth in visitor retail expenditure). Visitor retail expenditure is estimated to account for approximately half of the overall retail expenditure within the catchment in 2011. However, it reduces to approximately 36% of retail expenditure by 2031, given the relatively higher growth in population compared to growth in visitation numbers over the period. Therefore, visitor expenditure is a major component of retail expenditure within the catchment, and a key determinant of the overall quantum of supportable retail floorspace within the catchment. Not surprisingly, visitor expenditure within food and liquor catering comprises nearly 73% of total retail expenditure within the category. Table 5.9: Estimated Total Retail Expenditure within the Catchment (2011 $ values) Margaret River Township Remainder Margaret River LGA Visitor Expenditure Total $20.4 $21.9 $19.8 $62.1 Food and Liquor Catering $7.8 $9.4 $46.2 $63.4 Clothing & Accessories $1.7 $1.8 $8.7 $12.2 Furniture, Houseware & Appliances $1.4 $1.8 $1.1 $4.2 Recreation & Entertainment Equipment $2.3 $2.2 $1.4 $5.9 Garden & Hardware Goods $1.0 $1.1 $1.1 $3.2 Other Goods & Personal Services $5.5 $6.2 $2.2 $13.8 $40.0 $44.4 $80.5 $164.9 $25.5 $26.1 $20.8 $72.5 Expenditure Type 2011 Groceries & Specialty Food Total 2016 Groceries & Specialty Food 78 Margaret River SuperTown Combined Report Final Draft Margaret River Township Remainder Margaret River LGA Visitor Expenditure Total Food and Liquor Catering $9.7 $11.2 $48.6 $69.6 Clothing & Accessories $2.1 $2.2 $10.1 $14.4 Furniture, Houseware & Appliances $1.7 $2.1 $1.3 $5.1 Recreation & Entertainment Equipment $2.8 $2.6 $1.7 $7.1 Garden & Hardware Goods $1.3 $1.4 $1.3 $3.9 Other Goods & Personal Services $6.8 $7.3 $2.5 $16.7 $50.0 $52.9 $86.3 $189.2 Groceries & Specialty Food $31.9 $31.1 $21.8 $84.9 Food and Liquor Catering $12.1 $13.4 $51.0 $76.5 Clothing & Accessories $2.6 $2.6 $11.5 $16.7 Furniture, Houseware & Appliances $2.1 $2.5 $1.4 $6.1 Recreation & Entertainment Equipment $3.5 $3.1 $1.9 $8.6 Garden & Hardware Goods $1.6 $1.6 $1.4 $4.6 Expenditure Type Total 2021 Other Goods & Personal Services $8.5 $8.8 $2.9 $20.2 $62.5 $63.1 $92.0 $217.6 Groceries & Specialty Food $39.9 $37.2 $23.0 $100.1 Food and Liquor Catering $15.2 $16.0 $53.7 $84.9 Clothing & Accessories $3.3 $3.1 $13.1 $19.5 Furniture, Houseware & Appliances $2.7 $3.0 $1.6 $7.3 Recreation & Entertainment Equipment $4.4 $3.7 $2.2 $10.3 Garden & Hardware Goods $2.0 $1.9 $1.6 $5.6 Total 2026 Other Goods & Personal Services $10.7 $10.4 $3.3 $24.4 $78.2 $75.3 $98.5 $252.0 Groceries & Specialty Food $49.9 $44.3 $24.3 $118.5 Food and Liquor Catering Total 2031 $19.0 $19.1 $56.7 $94.7 Clothing & Accessories $4.1 $3.7 $14.8 $22.6 Furniture, Houseware & Appliances $3.3 $3.6 $1.9 $8.8 Recreation & Entertainment Equipment $5.5 $4.4 $2.5 $12.4 Garden & Hardware Goods Other Goods & Personal Services Total $2.5 $2.3 $1.9 $6.6 $13.3 $12.5 $3.7 $29.5 $97.7 $89.9 $105.7 $293.2 Source: AECgroup Retail Model 10.5 Retail Demand Demand for retail floorspace within the catchment has been calculated by applying benchmark turnover rates (Table 5.10) to expenditure captured within the catchment for each retail category (Table 5.9). Table 5.10: Benchmark Turnover Rates - $/m2 (2011 $ values) Category $/m2 Groceries & Specialty Food $9,125 Food and Liquor Catering $8,000 Clothing & Accessories $6,500 Furniture, Houseware & Appliances $5,500 Recreation & Entertainment Equipment $5,500 Garden & Hardware Goods $4,500 Other Goods & Personal Services $7,000 Source: AECgroup 79 Margaret River SuperTown Combined Report Final Draft There is an estimated demand for approximately 21,100m 2 of retail floorspace within the catchment (Table 5.11), with the majority of supportable floorspace (approximately 14,700m2) in food categories, and in particular in food and liquor catering (approximately 7,900m2). Therefore, food and liquor catering is estimated to comprise over 37% of supportable retail floorspace within the catchment. Nearly the entire quantum of supportable floorspace within food and liquoring catering is attributable to visitor expenditure. Visitor expenditure also supports a significant proportion of retail floorspace within the groceries and specialty food category as well as the clothing and accessories category. Demand for retail floorspace is expected to nearly double by 2031, in line with significant retail expenditure growth, reaching approximately 28,000m2 by 2021 and 37,800m2 by 2031. The largest growth in floorspace requirements is expected to be within the food categories, and groceries and specialty food in particular. Assuming that the majority of bulky goods floorspace is contained within the categories of furniture, houseware and appliances and garden and hardware goods, it is estimated that there is demand for approximately 1,500m2 of bulky goods floorspace in 2011. This is expected to increase to approximately 3,100m2 by 2031. However, retail demand modelling has been based on household expenditure, and as such, does not include business to business transactions, which can make up a relatively large proportion of trade in the Garden and Hardware category. As such, bulky goods floorspace requirements are expected to be underestimated. Bulky goods retailers typically have different storage, locational, parking and accessibility requirements compared to traditional retailers. For example, they often demand large storage areas, premises with sufficient load access, adequate car parking. They also differ from traditional retailers as they are often located in clusters, either within homemaker centres or in out-of-centre developments, allowing customers the opportunity to easily compare prices and products in one location. As such, when planning for the future provision of bulky goods within the catchment, it is important to take into account such requirements. Table 5.11: Demand for Retail Floorspace (m2), Catchment Category 2011 2016 2021 2026 2031 Increase 2011-2031 Groceries & Specialty Food 6,808 7,945 9,306 10,968 12,988 6,180 Food and Liquor Catering 7,923 8,698 9,564 10,606 11,841 3,917 Clothing & Accessories 1,878 2,210 2,574 2,996 3,482 1,603 768 923 1,108 1,329 1,595 827 1,072 1,293 1,556 1,874 2,258 1,185 721 865 1,033 1,235 1,477 755 1,970 2,384 2,881 3,483 4,215 2,245 21,142 24,318 28,022 32,491 37,855 16,713 Furniture, Houseware & Appliances Recreation & Entertainment Equipment Garden & Hardware Goods Other Goods & Personal Services Total Source: AECgroup 10.6 Current Demand Vs Supply The catchment is currently well served by existing retailers, with approximately 2,700m2 of retail floorspace supply above the estimated retail floorspace requirements. However, this figure should be read with caution as it does not necessarily imply an oversupply of retail floorspace within the catchment. In particular, such surplus may be overstated for a number of reasons, such as: A number of stores are likely to operate at lower than expected productivity levels. There are a number of reasons for this: some shops may not open every day, others may not open throughout the whole year; rents can also be relatively inexpensive, allowing tenants to have below average productivity levels. This is particularly the case for regions with significant visitor patronage, such as Margaret River, where a number of shopkeepers may operate a shop as a ‘lifestyle choice’ rather than as a profit maximizing activity. 80 Margaret River SuperTown Combined Report Final Draft A number of retailers are located in non-traditional retail premises i.e. industrial areas or sheds, which would not be suitable for other retail tenancies. Such floorspace therefore should not be technically included in the retail inventory, hence lowering potential retail floorspace surplus within the catchment once these tenancies are excluded. This is particularly the case for some of the larger non-food retailers. The retail demand model has been based on household expenditure, and as such, does not include business to business transactions, which can make up a relatively large proportion of trade in certain retail categories. This is particularly the case for the Garden and Hardware category, where household trade only comprises a relatively small component of their overall trade. As such, overall retail floorspace demand in this category in particular, and other non-food categories as well, are expected to be understated. The audit undertaken by the Department of Infrastructure and Planning did not take into account the numerous restaurants, wineries, food retailers and food specialty shops that are dispersed throughout the region, hence the large discrepancy between demand and supply across food categories. Nonetheless, figures overall indicate that the market is currently well supplied and has the capacity to absorb additional retail floorspace requirements, which are to be generated by the population growth that is forecast within the catchment. The analysis above did not take into account vacant floorspace (2,500m 2), some of which is likely to be taken up by retailers in the future. However, the impact of vacant space is likely to be minimal, as not all vacant floorspace is expected to be tenanted by retailers. For example, premises may be vacant as they are of below-average standard; are too large for retail specialties; or are better suited for other uses (commercial/light industrial) given their location and exposure. Table 5.9: Current Retail Floorspace (m2) Variance, Catchment Category 2011 Groceries & Specialty Food -2,823 Food and Liquor Catering -3,423 Clothing & Accessories 1,552 Furniture, Houseware & Appliances 3,007 Recreation & Entertainment Equipment 1,543 Garden & Hardware Goods 1,454 Other Goods & Personal Services Total 1,470 2,778 Source: AECgroup 10.7 Future Demand Vs Supply Future retail floorspace demand has been reconciled with retail supply to provide an indication of future retail floorspace requirements within the catchment. In doing so, the Woolworths centre that is under construction has been included in future retail supply. The analysis, however, did not take into account existing vacant floorspace. The Woolworths centre will provide significant additional retail floorspace within the Township (comprising over 20% of existing supply). Such centre will therefore meet some of the forecast retail floorspace requirements. Taking into account the construction of the Woolworths centre, it is forecast that there will be an overall shortage of retail floorspace after 2021. Given significant population growth that is forecast for the catchment, and hence growth in floorspace demand, by 2031, an estimated retail floorspace deficit of approximately 8,600m2 is forecast. Nearly all of the floorspace deficit by 2031 is expected to occur in food categories. However, the audit undertaken by the Department of Infrastructure and Planning did not take into account the numerous restaurants, wineries, food retailers and food specialty shops that are dispersed throughout the region. Therefore, such deficit is likely to be overstated, and in particular for the food and liquor catering category. 81 Margaret River SuperTown Combined Report Final Draft The expected surplus of floorspace in non-food categories is to be interpreted with caution, for the reasons outlined above. In particular, this figure is likely to underestimate demand (i.e. no business to business transactions included in the demand model) and overestimate supply (some large tenancies were included in the retail supply even though the premises would likely better suit other uses, such as light industrial). As such, a potential retail floorspace deficit may occur by 2031 across non-food categories. However, as the great majority of future floorspace demand is to be generated by food retailers, as indicated in Section 5.5, no major floorspace deficit is forecast across non-food retailers. Table 5.10: Future Retail Floorspace (m2) Variance, Catchment Category 2011 2016 2021 2026 2031 Groceries & Specialty Food -2,823 262 -1,099 -2,761 -4,781 Food and Liquor Catering -3,423 -3,584 -4,450 -5,492 -6,727 Clothing & Accessories 1,552 1,220 856 434 -52 Furniture, Houseware & Appliances 3,007 2,852 2,667 2,446 2,180 Recreation & Entertainment Equipment 1,543 1,522 1,259 941 557 Garden & Hardware Goods 1,454 1,310 1,142 940 698 Other Goods & Personal Services 1,470 1,325 828 226 -506 2,778 4,907 1,203 -3,266 -8,630 Total Source: AECgroup 10.8 Key Findings The audit identified a total of 23,900m2 of retail floorspace in Margaret River (and 3,300m2 of commercial office space), with a retail offering that includes a Coles, IGA, Target Country and a couple of larger format hardware stores. The Margaret River Shopping Centre is a 3,000m2 neighbourhood centre anchored by a Coles, while a new shopping centre under construction (5,800m2) is to comprise a full-line Woolworths supermarket and numerous specialty shops. The vacancy rate for the combined retail and commercial premises is 8% (2,400m2). Future demand for retail floorspace has been modelled against a doubling of Margaret River Township’s population and a continuation of recent annual growth for the remainder of the Shire to 2031. These figures indicate that there is a current oversupply of retail space of 2,800m2. This likely explains the high vacancy rate, and is a result of the seasonality of the tourism sector, which is a large part of the retail expenditure. Additionally, Margaret River is a lifestyle location, with many business owners potentially forgoing profit in order to facilitate living in the area. In view of this, as well as the delivery of the new shopping centre in 2012, there is likely to be sufficient supply to cater for growth over the next ten years (to 2021), with an anticipated retail floorspace oversupply of 1,200m2 in 2021. As a result of a significant increase in forecast retail demand (resulting from population growth) it is anticipated that an additional 8,600m2 of retail floorspace will be needed by 2031. This figures should be used as a guide only as some retail users require specific types of space (i.e. bulky goods retailers), which may not be available as part of the existing supply. 82 Margaret River SuperTown Combined Report Final Draft 11. Commercial & Government Office This chapter assesses the market for commercial and Government office floorspace in Augusta-Margaret River over the next 20 years. It uses a labour force-based methodology to estimate the amount office floorspace required to accommodate current and future office workers. 11.1 Methodology In this assessment, future commercial and government office floorspace demand over the next 20 years is forecasted. The methodology utilised for projecting commercial floorspace demand is comprised of the following steps. Figure 11.1: Commercial Office Demand Methodology Population •Estimates of population based on various sources. Working Age Population •Estimate of Local Working Age Population (15+) based on population estimates and assumed ageing profile Labour Force Size •Application of a labour force participation rate to working age population based on historical labour force participation rates for the area Office-Based Workers •Application of assumed share of labour force in core office-based occupation based on previous census data Office-Based Jobs •Adjustment of local office labour force to office jobs through application of assumed office-specific employment self-sufficiency ratio Core Office Floorspace •Conversion of office empoyment to floorspace based on assumed workspace ratio (sqm per worker) of 20sqm Source: AECgroup Note that this methodology applies only to commercial office floorspace and does not take into consideration office demand for Government tenants. 83 Margaret River SuperTown Combined Report Final Draft The methodology for projecting government floorspace demand is comprised of the following steps. Figure 11.2: Government Office Demand Methodology Population •Estimates of population based on various sources. Government Employment •Estimate the number of government sector employees based on previous census data Office-Based Workers •Application of assumed share of government workers in core office-based occupation based on previous census data Total Office Floorspace •Sum of Core Office Floorspace Core Office Floorspace •Conversion of office empoyment to floorspace based on assumed workspace ratio (sqm per worker) of 15sqm Source: AECgroup Two separate methodologies have been used to gauge commercial and Government office floorspace requirements as the factors driving demand for each are assumed to be quite different. The major variation lies behind the lack of application of a labour force participation rate to calculate demand for Government office space. This is based on the idea that the demand for Government office space, and hence demand for Government employment grows more directly in-line with population. This is assumed to be the case due to the need for Government employment to act as a service to the population. 11.2 Office Supply The commercial survey undertaken by the Department of Planning and Infrastructure indicates that there are 25 commercial office tenancies in Margaret River, totalling approximately 3,300m2. No survey of government offices was undertaken in Margaret River but the Shire is likely to be the single largest government tenant. Table 6.1: Office Floorspace Supply Floorspace Supply (GFA m2) 2011 Commercial Office 3,270 Government Office Total Office N/A 3,270 Source: AECgroup, Department of Planning and Infrastructure (2006) 11.3 Office Demand Demand for commercial space in Augusta-Margaret River is estimated at 10,060 m2 and is estimated to treble over the coming 20 years to 30,806m2 as economic activity in Augusta-Margaret River expands. 84 Margaret River SuperTown Combined Report Final Draft Table 6.2: Office Floorspace Demand Floorspace Demand (GFA m2) 2011 2016 2021 2026 2031 Commercial Office 8,393 11,392 15,277 20,523 27,579 Government Office Total Office 1,667 1,966 2,319 2,735 3,226 10,060 13,358 17,596 23,259 30,806 Source: AECgroup 11.4 Office Demand vs Supply Reconciling current commercial office demand with current supply indicates that there is a significant undersupply of office floorspace, with demand largely exceeding supply. Part of the undersupply could be explained through many professionals working from home as opposed to in traditional office space. Given the nature of Margaret River, home offices are likely to be prominent with many professionals that have made to the move to the area for lifestyle reasons. It is forecast that there is a requirement for an additional 27,000m2 of office space by 2031 in Margaret River (taking into account the 530m2 of office space as part of the Woolworths centre under construction). Table 6.3: Future Office Floorspace Variance (m2) Floorspace Supply (GFA Sqm) 2011 2016 2021 2026 2031 Commercial Office -5,123 -7,592 -11,477 -16,723 -23,779 Government Office -1,667 -1,966 -2,319 -2,735 -3,226 Total Office -6,790 -9,558 -13,796 -19,459 -27,006 Source: AECgroup, Department of Planning and Infrastructure (2006) 11.5 Key Findings There is estimated to be existing undersupply of commercial space in Augusta-Margaret River. Retail and commercial activities can occupy similar spaces, suggesting that commercial activities may be currently occupying retail space (currently in over supply) in the area. However, estimated existing oversupply of retail space in the area is insufficient to total absorb excess demand of office space. Over the coming 20 years, undersupply of commercial space is expected to intensify. Accommodating current and future commercial space demand is essential to achieving the SuperTowns growth target. 85 Margaret River SuperTown Combined Report Final Draft 12. Future Opportunities for Growth This chapter outlines the opportunities for growth in Margaret River, to support its transformation into a SuperTown over the next two decades as well as the associated impediments that must be managed. 12.1 Economic Opportunities Findings from each stage of the opportunities assessment have informed the identification of economic opportunities for Augusta-Margaret River. These opportunities enable the LGA to grow and support existing industries whilst also diversifying into new industries. These opportunities are outlined in Error! Reference source not found.. 86 Margaret River SuperTown Combined Report Final Draft Table 12.1: Economic Opportunities for Augusta-Margaret River Opportunity/Growth Sector High Value-Adding Activity Point of Differentiation Why Augusta-Margaret River? Agriculture and Growing Niche global exports (with focus on South East Asian markets and higher value products) Food security services (providing market and logistical support for overseas and domestic buyers). General security of production within global environment of increased food uncertainty. Proximity to South East Asia Strong water security: compared to other national agricultural locations Increased diversity of production: increased emergence of niche products and growth of fruit and other more sustainable plantationbased crops Demonstrated international focus: with exports to South East Asian markets already occurring. Existing Brand: Margaret River has an established and well respected brand that provides for product differentiation and premium pricing. Food Processing Fresh made food (packed fresh produce, packed snacks, prepared foods) Local value added (conversion of local production) Existing brand Strong existing cluster: Augusta-Margaret River already has an established food processing cluster providing an existing workforce, supply chains and specialised services. Existing Brand: Margaret River has an established and well respected brand that provides for product differentiation and premium pricing. Proximity to Asia: compared to eastern states, the South West has greater proximity to Asian markets. Creative Industries Internet/software based (games development, animation, media production) Arts (sculpture, graphic arts, crafts, fine furniture) Professional services (architecture, graphic design, fashion) Amenity and natural environment as well as existing creative industries help to build existing environment, which is conducive to creative industries High Amenity: Margaret River has high amenity for residents, including many natural elements that inspire creative minds Existing Creative Industries: there is an existing creative industries cluster in Margaret River, which helps to build conducive environment Residential Attraction: Margaret River is a destination that can attract creative professionals that are not tied to a specific location for the purposes of their work (if sufficient internet speeds exist) Lifestyle Changes Pre-Retirement (professionals in Bunbury or Perth that can run their business from Margaret River and plan to retire in the short-term) Post-Retirement (active retirees that seek a residential location with amenity to spend part of the year in) Amenity and natural environment High Amenity: Margaret River has high amenity for residents New Demographic: there is a new demographic emerging in Australia that includes 55-70 year olds with high disposable incomes that are very active and tend to travel between residential areas Tourism Events (focus on key events to extend traditional tourism season and draw consideration visitation over a short time period) Business travellers (business events, conferences, corporate retreats) Leisure travellers (product diversification to extend length of stay and increase expenditure) Existing brand and wine/food tourism products Existing Brand: Margaret River is a well-known tourism destination that can assist in attracting participants for events and business conferences Existing Infrastructure: Margaret River has an existing stock of hotel rooms and various dining facilities to cater for events and business conferences 87 Margaret River SuperTown Combined Report Final Draft Opportunity/Growth Sector High Value-Adding Activity Point of Differentiation Why Augusta-Margaret River? Health & Retirement Health services (public and private hospitals, general practitioners (GPs)) Aged care services (retirement villages, respite and hospice care, in-home care services) Allied health services (physiotherapy, general practitioners, diagnostic facilities, occupational therapy, dentists, mental health care) Existing and future population growth. Existing facilities. Ageing demographic: The ageing population trend will result in increased demand for health services, particularly aged care. In addition, the ageing of existing healthcare practitioners is expected to leave a gap in the provision of services. Affordable Housing: providing prospective retirees with the ability to cash-out of the family home in metropolitan Perth or other major cities. Critical mass: As the population of Augusta-Margaret River LGA increases, demand for additional healthcare services will increase, resulting in a shift of demand away from Bunbury to the town. Education High quality secondary schooling (including student accommodation) Industry-oriented tertiary education (including further investment into the existing facilities) Existing and future population growth. Growing population base: The Augusta-Margaret River LGA population is expected to increase over time, supporting demand for local education facilities. Growing demand for skilled workers: As the structure of the economy changes, demand for new skills will be required, supporting demand for higher education in the region. Collocation with Major Industries: opportunities to support agriculture, hospitality and viticulture. Retail Food retailing (supermarkets, greengrocers, farmers markets) Other Retailing (clothes, outlets for local art, local shops, etc) Existing and future population growth. Large tourism sector Growing population base: The Augusta-Margaret River LGA population is expected to increase over time and visitor numbers are expected to increase, supporting demand for all retailed goods. Consumerism: Consumerism remains strong in Australia, supporting the long-term trends in retail sales growth. Centralised Catchment: Margaret River is located sufficient far from major regional centres for significant expenditure to be captured locally. Extended Trading Hours: recent approval of extended trading hours in Margaret River will support its role as a major retail centre. Source: AECgroup 88 Margaret River SuperTown Combined Report Final Draft 12.2 Potential Impediments As identified in the analysis contained in this report, there are numerous potential impediments that could prevent Margaret River from achieving the aspirations of the SuperTown initiative. Effectively managing and overcoming these impediments or economic gaps will assist Margaret River in leveraging the identified economic opportunities. The identified impediments or gaps include: Accessibility of the region (for both tourism and business) can be challenging. Expansion of the Busselton Airport could assist and provide the ability to significantly increase accessibility of the region, particularly for domestic and international tourists. Identifying viable markets for food products, including breaking into overseas export markets will be important for the agriculture and food sectors in Margaret River. While there are a number of possible food products in the region, products that can achieve a premium price and guaranteed volumes are required, which will require export markets and entering overseas markets can be expensive and time consuming. Community perception of development can often be negative and community spirit can often negatively impact future development. While certain developments do not align with the brand of Margaret River, some development is required to realise the future aspirations of the SuperTown initiative and community acceptance of change can be difficult. Cost of living and housing affordability can be issues in Margaret River given the nature of the location and the attraction for absentee home owners (holiday homes), which can drive up prices for local residents, who often work in the tourism sector and receive relatively low wages. Seasonality of tourism and picking seasons, which causes an issue of providing year round employment opportunities. Creation of a society of ‘haves’ and ‘have nots’ based on the reliance on tourism, which does not always offer long-term, high income employment, and the attraction of the area to high net worth individuals. These contrasting groups could create a community of people that can afford to live here and the people that service them. Reliance on wine and tourism as core industries, which provides a future risk to a down turn in each industry or both (as they are heavily linked). Lack of high-speed internet connections, which can discourage many new residents and businesses from moving to the area. Lack of sufficient transport links, including a local airport that can handle RPT from the East Coast and overseas as well as road infrastructure necessary to grow the town and allow the easy access and transport of people and goods. 89 Margaret River SuperTown Combined Report Final Draft 13. Key Economic Drivers & Important Trends Key economic trends are expected to have an impact on the economic development of Augusta-Margaret River. This chapter outlines these key trends and their potential implications for the economic development of Augusta-Margaret river. Key trends analysed include: 13.1 Global Food Security The Margaret River Brand Diversification of the Tourism industry Wine Market Fluctuations The National Broadband Network Global Food Security Global food security is a prominent and developing trend in the global economy. Two primary factors influence global food consumption: global population growth and global incomes growth. Research suggests that as individuals earn greater wealth, their food consumption patterns shift (and tend to increase). This is particularly prominent as populations shift from poverty into middle class. In 2012, Bayer Australia identified the need for a 70% increase in global food production to feed the population of 2050. Compounding the impact of growing food consumption, is the reducing capacity for increased food growing. As the population grows, the amount of vacant land for agricultural production reduces. In 2011, the United Nation's Food and Agriculture Organisation found that the provision of adequate arable lands, particularly in South Asia and East Asia is limited (UN, 2011). Figure 13.1: Potential For World Cropland Expansion 1200 1000 800 600 400 200 0 Latin America Sub-Saharan Near South Asia East Asia Industrial Transition Africa East/North Countries Countries Africa Additional land with rainfed crop production potential Arable land in use, 2005 Source: FAO (2009) As an existing food-growing region of Australia, Augusta-Margaret River has the ability to play a key role in global food production into the future. As a result, global food security will be a fundamental economic driver for AugustaMargaret River into the future. 90 Margaret River SuperTown Combined Report Final Draft 13.2 The Margaret River Brand Margaret River has a broadly recognised brand both nationally and internationally (in niche markets). This brand attracts national and international oenophiles to the region as well as travellers. Protecting the brand ‘Margaret River’ and ensuring brand value will be essential for the town to achieve the goals of the SuperTown initiative. Increasing brand awareness in new markets as well as ensuring a sophistication that can increase the brand value will pay large dividends to the town over the long-term and contribute positively to its economic development. The brand will be intrinsically linked between wine, tourism, creating industries and retail. The brand ‘Margaret River’ will hold a significant role in the attraction of new residents and economic growth of the area over the coming 20 years. What is a brand? A brand identity is a name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of a client and differentiate them from competitors and others. Strong brands evoke an emotional or psychological impact on consumers. Ensuring strong brand value can increase marketing penetration, product value and maintain a strong reputation. 13.3 Tourism industry Tourism is a foundation industry in Augusta-Margaret River, attracting, on average, just under 700,000 visitors per year. The region benefits from a well-established brand. Employment in retail sales and accommodation and food services (two of the industries most aligned with the tourism sector) forms over 25% of total employment in the area. Similarly, economic activity in these two sectors forms over 10% of total economic activity. As such, the tourism industry is fundamentally important to the local economy and is expected to remain so over the coming 20 years. The future for the local industry will be built on diversification, into broadening and deepening its markets. Activities to attract business travellers with events and conferences and increasing visitation from international visitors (with strong linkages into the wine industry) are avenues Augusta-Margaret River should explore. On a national level, tourism conditions are expected to recover (Tourism Research Australia, 2011) as economies in Asia (particularly China and India) continue to expand and eventual stabilisation the European economy and a return of the Australian dollar to normal levels. The tourism industry will be a key driver of the Augusta-Margaret River economy going forward. 13.4 Wine Market Augusta-Margaret River is a renowned wine region of Australia. Wine manufacturing and grape growing in Augusta-Margaret River employ 12% of the local labour force. As outlined in section Error! Reference source not found., the local viticulture industry is a prominent tourism attraction for the region as well as a primary contributor to the national wine production market. Whilst there has been a global glut in the wine market in recent years, the local wine industry has managed to outperform this trend due to its position as a premium wine brand. Estimates from ABARES (2011) suggest that the tonnage of grape production in the South West Australia region (including AugustaMargaret River) is expected to maintain steady growth over the coming years, despite some greater volatility in the Australian market. 91 Margaret River SuperTown Combined Report Final Draft 62,000 15% 61,000 12% 60,000 8% 59,000 5% 58,000 2% 57,000 -2% 56,000 Annual Growth Grape Production (t) Figure 13.2: Grape Production, Estimates, 2010-2013 -5% 2009-10 2001-11 2011-12 2012-13 South West Premium South West Total South West Total Growth Australia Total Growth Source: ABARES (2011) Forecasts (IBISWorld, 2011) estimate that employment in wine manufacturing, nationally, will ease in excess of 10% over the coming five years but that total industry value add will increase by 11% over the same time frame (reflecting prices). With Margaret River’s strong existing premium brand, the wine industry will continue to drive economic growth. 13.5 Internet The internet has changed the way we live, work and play. The internet has changed how we communicate with others, how we purchase goods and services and how we conduct our business. The influences of the internet are expected to continue to infiltrate our every-day lives into the future, providing greater amounts of information at faster speeds. The internet has already enabled businesses to growth their product target market exponentially. As highlighted in the table below (Table 13.1), the pace at which the internet has infiltrated all aspects of our lives is tremendous. Accessing this technology will be important for future economic growth. Table 13.1: Technology Adoption Timelines Comparison Technology/Application Years to Reach 50 Million Users Electricity 50 Telephone 50 Radio 38 Personal Computers 16 Televisions 13 Sony Walkmans 10 Video Cassette Recorders 10 Digital Cameras 9 eBay 6 DVD players 5 iPods 5 Internet 4 Skype 2 MySpace 1 Source: Pollen Strategy (2006) 92 Margaret River SuperTown Combined Report Final Draft 14. Economic Issues & Challenges There are numerous issues and challenges that must be addressed in order achieve a vibrant economy that supports the SuperTown initiative. The identified impediments or gaps include: 14.1 Accessibility of the region (for both tourism and business) can be challenging. Expansion of the Busselton Airport could assist and provide the ability to significantly increase accessibility of the region, particularly for domestic and international tourists. Identifying viable markets for food products, including breaking into overseas export markets will be important for the agriculture and food sectors in Margaret River. While there are a number of possible food products in the region, products that can achieve a premium price and guaranteed volumes are required, which will require export markets and entering overseas markets can be expensive and time consuming. Community perception of development can often be negative and community spirit can often negatively impact future development. While certain developments do not align with the brand of Margaret River, some development is required to realise the future aspirations of the SuperTown initiative and community acceptance of change can be difficult. Cost of living and housing affordability can be issues in Margaret River given the nature of the location and the attraction for absentee home owners (holiday homes), which can drive up prices for local residents, who often work in the tourism sector and receive relatively low wages. Seasonality of tourism and picking seasons, which causes an issue of providing year round employment opportunities. Creation of a society of ‘haves’ and ‘have nots’ based on the reliance on tourism, which does not always offer long-term, high income employment, and the attraction of the area to high net worth individuals. These contrasting groups could create a community of people that can afford to live here and the people that service them. Reliance on wine and tourism as core industries, which provides a future risk to a down turn in each industry or both (as they are heavily linked). Lack of high-speed internet connections, which can discourage many new residents and businesses from moving to the area. Lack of sufficient transport links, including a local airport that can handle RPT from the East Coast and overseas as well as road infrastructure necessary to grow the town and allow the easy access and transport of people and goods Economic Reliance on Wine & Tourism The Issue: The Augusta-Margaret River economy is heavily reliant on the local wine industry and tourism. Lack of economic diversification can lead to a lack of employment opportunities for new and potential residents. It can also lead to greater volatility in the economic cycle. The Evidence: The manufacturing and agriculture industries, which are dominated by wine, are both in the top three industries (by value contribution to the economy) in the Augusta-Margaret River LGA. Between them, they formed almost a fifth of the local economic activity in 2010-11. In 2006, over 12% of the local workforce was employed in either grape growing or wine manufacturing. Similarly, the local economy is heavily reliant on the tourism industry. In 2010-11, it was estimated that almost 14% of the local workforce was employed in accommodation and 93 Margaret River SuperTown Combined Report Final Draft food services, a significantly higher representation than in the broader SWDC region (7.2%) and Western Australia (5.8%). Figure 14.1: Location Quotients, 2006, 1-Digit ANZSIC Agriculture, forestry and fishing Accommodation and food services Rental, hiring and real estate services Manufacturing Retail trade Construction Administrative and support services Arts and recreation services Education and training Other services Electricity, gas, water and waste services Wholesale trade Health care and social assistance Public administration and safety Professional, scientific and technical services Transport, postal and warehousing Financial and insurance services Information media and telecommunications Mining Augusta-Margaret River SWDC Perth SD WA 0.0 1.0 2.0 3.0 4.0 Source: ABS (2007), AECgroup Due to their natures, the wine industry and tourism industry are highly volatile. Both are dependent, to a large extent, on consumer confidence and spending. The current trough in the national tourism industry and persistent fears for a glut in the wine market heighten the risks for the local economy from a lack of economic diversification. Building on a region's unique competitive advantages is fundamental in supporting sustainable economic growth, however, an overreliance on two industries of high seasonality and extreme economic cycles is not ideal. The Response: Ensuring that economic development activities can provide a diversity of economic activities. Proactive investment attraction and industry development can contribute positively to diversifying the economy. 14.2 Employment Seasonality The Issue: Due to the town's reliance on wine and tourism as core industries, employment in Margaret River can be extremely volatile. The risk is that seasonal employment hampers wealth building in the town and can create numerous social issues. The Evidence: The local tourism activity peaks in the summer months with general declines in visitor numbers in the June and September quarter. On average, since 2006, occupancy rates are over 10 percentage points higher in the December and March quarters than the June and September quarters. Similarly, the number of persons employed in accommodation provision tends to be 12% higher in these peak periods (ABS, 2011d). Fluctuations in activity and employment relating to viticulture and wine production also have significant influences on the local economy and labour force, with the picking season seeing large swings in employment. 94 Margaret River SuperTown Combined Report Final Draft Seasonal employment can contribute to the lack of housing affordability in the region (through the lack of constant incomes) and can negatively impact on the attractiveness of a region for potential residents. Figure 14.2: Quarterly Employment in Hotels, Motels and Serviced Apartments with 15 or More Rooms, December 2006 – September 2011 Persons Employed (Quarter) 250 200 150 100 50 0 Augusta-Margaret River (S) Source: ABS (2011d) The Response: Increasing economic diversity and investment attraction will recruit full-time positions that provide year round employment and increase incomes. Ensuring effective education and career pathways can assist in increasing incomes. 14.3 Cost of Living & Housing Affordability The Issue: As a lifestyle destination, Margaret River receives significant residential investment from absentee owners, including holiday homes. In addition, the region has relatively low average incomes due to its current economic structure. These factors have caused local housing to be relatively unaffordable. The Evidence: In 2010-11, house prices in the Augusta-Margaret River LGA (with a median of $430,000) were 34.1% higher than the average in SWDC and 14.7% higher than the median for regional Western Australia, despite having fallen 10.4% over the preceding four years. In terms of housing affordability, the average house price in Augusta Margaret River equated to 8.4 times the average annual household income - far exceeding the average of the SWDC (3.9 times) and Regional WA (5.5 times). 95 Margaret River SuperTown Combined Report Final Draft Figure 14.3: Ratio of Median House Prices to Median Household Incomes, 2008/2009 9 8 Median Multiple 7 6 5 4 3 2 1 0 Augusta-Margaret River LGA SWDC Regional WA Source: ABS (2011a), REIWA (2011) and AECgroup Housing in affordability and mortgage and rental stress can have significant impacts on the local society and economy. Economically, high house prices and unaffordable housing can be a deterrent to potential new residents and can be the impetus for existing local residents to leave the area. Rising mortgage stress and rental stress can result in lower levels of local wealth and standard of living. A key risk is then creating a community of ‘haves’ and ‘have nots’. The Response: Efforts need to be made to address the issue of housing affordability in the region. Economic diversification and the provision of year-round employment opportunities are likely to assist in increasing local income opportunities, reducing rates of mortgage stress and increasing housing affordability. At the same time, ensuring adequate levels of supply (and a diversity of supply) will help improve housing affordability. 14.4 High-Speed Internet The Issue: In today's modern world, internet connectivity is viewed as being essential by the majority of Australians. Regions with a lack of high-speed internet may be less desirable to potential new residents. The Evidence: In 2006, 43% of all households in the town of Margaret River had a broadband internet connection (ABS, 2007). Whilst this is above the State average (of 41%), the speed of connectivity remains an issue. Currently, ADSL services are provided over the existing Telstra copper network, which does not offer the same speed as a broadband connection over fibre optics. Speeds and availability also vary with the existing 3G mobile network. Given that Telstra has a current monopoly, there is no competition and incentive to invest in new infrastructure and offer better services at lower costs. In 2009-10, 90.1% of businesses had internet access and 40% had a web presence (ABS, 2011). Ensuring that local businesses are well connected can lead to increased productivity and increased access to larger markets, particularly for retailers. Ensuring that existing and new businesses in Margaret River are adequately serviced will ensure the region is able to attract a diverse range of economic activities. In particular, creative industries and some businesses services require exceptional bandwidth in order to 96 Margaret River SuperTown Combined Report Final Draft undertake their day-to-day work and activities. These businesses will only come to the region if internet connectivity is assured. The Response: Ensuring the NBN is rolled out to the region as soon as possible will assist in unlocking some of these economic opportunities. While the NBN will provide higher speeds over its fibre network, the NBN also opens the market up to more competition, which will lower costs and encourage further investment in infrastructure. 14.5 Accessibility & Transport Links The Issue: Accessibility and transport routes are fundamental to business and tourism. Direct access to air, land and sea transport is essential for export oriented businesses. The Perth International Airport is the closest major airport and the Port of Bunbury is the closest export terminal with containers likely to be exported from Fremantle. This distance can increase costs, particularly for exporters. The Evidence: In 2010, a regular survey of key corporate decision makers, including companies with overseas investments, rated highway accessibility as the most important factor in their site selection. Over 97% of all respondents cited this factor as a key issue when considering an area for investment. Inbound/outbound shipping costs, proximity to markets and accessibility of major airport were also mentioned (Area Development, 2011). Margaret River’s location places additional costs on exporters, given the additional distance that products must travel. The Response: Ensuring a high brand value in products will assist by translating to higher prices, which can assist in the higher transportation expenses. Improving the transport linkages for both bulk and containerised freight will also assist. The expansion of the Busselton airport will also increase accessibility to the area both business and tourism. 14.6 Identifying Markets for Food Products The Issue: Building the local agriculture and food processing industries is required to build a more sustainable economy. However, identifying new markets for these products can be time consuming and difficult. In order to provide scale, sustainable export markets must be found for local products (i.e. markets that are willing to pay a premium for the goods), which will ensure future sustainable trade for businesses in Margaret River. The Evidence: Augusta-Margaret River has inherent opportunities in the agriculture and food manufacturing sectors. As population growth continues, not just locally, but also nationally and internationally, the region has an opportunity to become a part of the global food solution. In particular, the Augusta-Margaret River area has an opportunity to capitalise on its existing brand as a specialised wine region with the development of specialised and niche food products, which attract a higher price. Understanding the markets for these products is required to enable local businesses to tap into new markets, domestically and internationally. Local markets are not of a sufficient size to sustain growth in these areas. Accessing export markets can be an expensive exercise, both in terms of financial cost and time. 97 Margaret River SuperTown Combined Report Final Draft The Response: Working with partners to identify and undertake research into key areas of interest will be fundamental to the expansion of the local food products industry. Assisting local businesses to access this information will assist in building the local economy and supporting their business pursuits. 98 Margaret River SuperTown Combined Report Final Draft 15. Economic Development Plan This chapter provides a detailed overview of the Economic Development Plan for Augusta-Margaret River. An overview of the strategy is provided followed by a detailed assessment of each step of the process. 15.1 Overview The Economic Development Plan for Margaret River is outlined in Figure 15.1. The plan is informed by the SuperTowns’ vision and the specific needs of Margaret River in order to become a SuperTown. The Economic Development Plan is enacted through a series of Strategic Initiatives which include transformational projects which act as a catalyst for the town to achieve the desired outcomes. Each of these transformational projects is closely linked with the Economic Development Initiatives which will provide for the long-term economic development of the Augusta-Margaret River Shire. 99 Margaret River SuperTown Economic Development Plan Final Draft Figure 15.1: Economic Development Plan Overview SuperTowns Vision: “To have balanced, well-connected regional communities, with lifestyle options and access to services – SuperTowns will have affordable, quality housing and a growing and diverse range of job opportunities. They will offer more choices for people living in regional areas and an attractive alternative to living in the metropolitan area ” Economic Development Plan What Does it Take to Become a SuperTown? •Diversify the economy. Strategic Projects 1. Redevelopment of the Margaret River Townsite: Realignment of the Perimeter Road, creation of a town square and revitalisation of the town centre. Outcomes •Increased economic prosperity. •Improved economic capacity. •Address growing social divide. 2. Surfers Point and Rivermouth: Regeneration and investment in this iconic tourism precinct. •Increased retention of economic benefits in the local region. •Improve positioning on the national and international stage. 3. Margaret River Foreshores & Gloucester Park: Improvements to the entry of the town, foreshore precincts and various community infrastructure. •Increased opportunities. 4. Margaret River Cultural & Events Centre: Major upgrade to cultural and events centre to facilitate larger business events. •Improved sustainability. •Increased service provision. Economic Development Initiatives 1. Support Existing Business: Develop programs to proactively engage with and assist the growth of local companies. 2. Market the Shire: Marketing the Shire as a dynamic and creative business hub. 3. Attract and Facilitate New Investment: through pro-active business attraction and support. 4. Develop the Local Workforce: Develop and attract new skills in the region. Source: AECgroup 100 Margaret River SuperTown Economic Development Plan Final Draft 15.2 Strategic Initiatives The identified strategic projects will act as a catalyst for future activity and assist in addressing many of the key tasks that Augusta-Margaret River must undertake for Margaret River to become a SuperTown (i.e. diversify the economy and improve positioning on the national and international stage). Each of these projects individually and collectively will provide support for Augusta-Margaret River to transform its economy, as highlighted in the diagram below. Figure 15.2: Linkages of Strategic Projects Critical Factors Strategic Projects Economic Opportunities Agriculture and Growing Redevelopment of Townsite Food Processing Economic Diversity Surfers Point Improving Brand Value Creative Industries Lifestyle Changes Margaret River Foreshores & Gloucester Park Tourism Improving Social Divide New Cultural and Events Centre Health & Retirement Education Retail Source: AECgroup 101 Margaret River SuperTown Economic Development Plan Final Draft Table 15.1: Strategic Project Overview, Augusta-Margaret River Strategic Project Description Strategic Importance Relation to Long-term Economic Development Re-Development of the Margaret River Townsite Project includes: Realignment of the Perimeter road Creation of a new town square Revitalisation of the town centre This project will play a fundamental role in the future attraction of residents and investment into the region. Improving the retail and residential amenity of the town centre and creating a town square which will serve as the heart of the city will assist in ensuring future residents have a wide range of retail, food and amenity options in the city centre. The redevelopment of the town will also have an important impact on the brand ‘Margaret River’ as well as play a role in increasing tourism. The realignment of the perimeter road will help to streamline transport accessibility for industry (i.e. agriculture, wine, food processing). This project acts as a catalyst by increasing the amenity of the town, which will assist in attracting new residents as well as help to facilitate the development of creative industries, business owners making lifestyle changes as well as other commercial/professional businesses. Surfers Point and Rivermouth The $6 million upgrade to the Surfers Point precinct will include: A new viewing deck Retaining walls and seating New toilet block and change rooms Pathways Parking areas Community amenities Public artworks Interpretive signage Rehabilitation and protections zones This project will build upon an existing tourism attraction creating greater amenity which will assist in improving the region's position on the national and international stage. The project is likely to assist in supporting existing tourism businesses which surround the region through the attraction of greater numbers of visitors to the precinct. The project, particularly when televised through the annual Pro Surf Championships, will assist in marketing the region to potential visitors, residents and businesses, resulting in increased business attraction and skills development in the region. This project acts as a catalyst to build greater brand value for Margaret River. These upgrades will allow for a wider broadcast of the annual Pro Surf Championships and allow residents and visitors to enjoy the precinct more. Building greater brand value will assist in achieving the long-term vision of the SuperTowns initiative. Margaret River Foreshores & Gloucester Park The project includes: Improvements to the entry of Margaret River Improvements to the foreshores Community infrastructure improvements This project will assist in delivering required infrastructure to the region to improve the liveability and tourism attractiveness. This will assist in broadening the brand of the region as both a great place to holiday and a great place to live. The new entry will assist in supporting the Margaret River brand. This project supports the long-term growth of Margaret River through increasing and supporting its brand. Margaret River Cultural & Events Centre This project includes a major expansion of the Cultural and Events Centre The new Cultural and Events Centre will provide economic diversity through providing infrastructure to facilitate business events and a diversification of the tourism sector. The new Cultural and Events Centre will provide critical infrastructure to diversify the tourism industry in Margaret River. Source: AECgroup 102 Margaret River SuperTown Combined Report Final Draft 15.3 Economic Development Initiatives 15.3.1 Support Existing Business Objective: To develop programs to proactively engage with and assist the growth of local companies in Augusta-Margaret River. Rationale: In most developed economies, existing businesses provide between 60%80% of new investment and jobs. Focusing on ways to assist local businesses, particularly small and medium sized businesses, would allow these companies to grow locally, employ more people and contribute successfully to the diversification of the economy. Supporting local businesses is a key function of local government. Key Initiatives: Key initiatives to support existing businesses include: 15.3.2 Engage regularly with existing businesses of all sizes in order to stay abreast of key issues, industry trends, opportunities and needs. This interaction is a critical element to deliver economic development and provides a strong basis on which to understand the needs of business to facilitate and support growth. At their place of business, over lunch or for coffee. Work with local businesses to identify opportunities to broader regional, state or Federal business support programs which may assist local businesses to expand and diversify. Particular programs to assist businesses to export should be explored. Hold regular events (i.e. breakfasts and lunches) with partners to act as a convener of local businesses. Events can assist business networking and ensure that as much business spending as possible stays in the region. Market the Shire Objective: To market the Margaret River area as a dynamic and creative business hub. Rationale: Marketing and attracting investment into the Augusta-Margaret River will assist in diversifying the economy and attracting new skills into the area. Marketing will broaden knowledge of Augusta-Margaret River as a place to live and do business, highlighting the area's key attributes and competitive advantages. Marketing should also assist in building greater brand awareness and value. Marketing efforts should extend beyond Australia. Key Initiatives: Key initiatives to market Augusta-Margaret River include: 15.3.3 Develop and maintain a comprehensive suite of marketing materials which can be used as tools to attract businesses and residents to the Margaret River. These tools should highlight the benefits of living and working in the Margaret River and provide a range of statistics which will inform readers of existing industries and opportunities in the town. These tools should be focused on the economic opportunities highlighted above, professionally presented and should be updated regularly to ensure their accuracy. Tools should include brochures, websites and email newsletters. Undertake, with partners, a range of marketing programs which will raise the profile of the Margaret River as a destination for new business investment and residents. These marketing programs are likely to include raising the profile of the region as an investment destination in Perth, Sydney and Melbourne as well as overseas targets to support export activities. Attract & Facilitate New Investment Objective: To attract new investment into Augusta-Margaret River through pro-active business attraction and support. Rationale: Attracting new investment into Augusta-Margaret River will be important to diversify the economy away from its dependence on the viticulture, wine manufacturing and tourism industries. Recruiting new businesses to establish in Margaret River will provide investment into the community as well as new employment opportunities for local workers and create year long employment opportunities. Increasing investment in infrastructure will also play a fundamental role in the diversification of the local economy. 103 Margaret River SuperTown Combined Report Final Draft Key Initiatives: Key initiatives to attract and facilitate new investment into Margaret River include: 15.3.4 Develop and execute a proactive business development program. This program should comprehensively outline all activities required to develop Augusta-Margaret River, a should include: o Market research into identified industries of opportunity with an aim to identify potential future investors in Augusta-Margaret River, existing and anticipated market trends and locational requirements of these industries. o Business trips to Perth and other key centres to meet with selected potential new investors. Facilitate public sector investments in the Augusta-Margaret River (i.e. perimeter road realignment and Cultural and Events Centre), through providing detailed information and assistance to assist businesses that are considering investment in the Margaret River. Develop the Local Workforce Objective: To develop the local workforce in order to meet the requirements of existing and new industry in Augusta-Margaret River. Rationale: In order to attract new business ventures into Augusta-Margaret River and to ensure their ability to grow and prosper it is important that the local workforce is able to be up-skilled to meet the needs and requirements of these new industries. Key Initiatives: Key initiatives to develop the local workforce in the Margaret River include: Participate pro-actively in encouraging on-going interaction and discussions between industry and education providers to facilitate long-term career pathways for local residents. Develop student accommodation to house students and work towards creating a centre of excellence in hospitality and culinary arts (building on existing competency in viticulture). Indentify key gaps in the local skills supply and proactively seeking to attract new residents who are able to fill these gaps. 104 Margaret River SuperTown Combined Report Final Draft 16. Implementation Plan The following implementation plan has been established to carry out the Economic Development Plan and link together with the Margaret River Growth Plan. Table 16.1: Economic Development Implementation Plan, Margaret River Economic Development Initiative Support Existing Business Scope Recommended Actions Shire Appoint a Business Development Officer to spearhead the majority of the marketing, brand management and investment attraction activities. Shire Engage regularly with existing businesses of all sizes in order to stay abreast of key issues, industry trends, opportunities and needs. This interaction is a critical element to deliver economic development and provides a strong basis on which to understand the needs of business to facilitate and support growth. Key Agency / Lead Responsibility Timeframe for Delivery Funding Source Contingency Funding Population Threshold (where relevant) Estimated Costs Delivery Mechanism Key Agency Consultation Short 0-5 years Medium 5-10 years Long 1020 years SoAMR / Margaret River Marketing Collective $130,000 pa Royalties for Regions (ST) SoAMR NA In house with consultant assistance as required. SWDC RDL Private Sector SoAMR $10,000 SoAMR SWDC NA Implement through the Economic Development role. SWDC Chamber of Commerce 105 Margaret River SuperTown Combined Report Final Draft Economic Development Initiative Scope Recommended Actions Shire Work with local businesses to identify opportunities to broader regional, state or Federal business support programs which may assist local businesses to expand and diversify. Particular programs to assist businesses to export should be explored. Shire Hold regular events (i.e. breakfasts and lunches) with partners to act as a convener of local businesses. Events can assist business networking and ensure that as much business spending as possible stays in the region. Key Agency / Lead Responsibility Timeframe for Delivery Funding Source Contingency Funding Population Threshold (where relevant) Estimated Costs Delivery Mechanism Key Agency Consultation Short 0-5 years Medium 5-10 years Long 1020 years SoAMR $20,000 SoAMR SWDC NA Implement through the Economic Development role. SWDC Chamber of Commerce SoAMR / Chamber of Commerce / Augusta-Margaret River Tourism Association $20,000 SoAMR SWDC NA Implement through the Economic Development role. SWDC Chamber of Commerce Augusta Margaret River Tourism Association 106 Margaret River SuperTown Combined Report Final Draft Economic Development Initiative Market the Shire Scope Recommended Actions Shire Develop and maintain a comprehensive suite of marketing materials which can be used as tools to attract businesses and residents to Margaret River. These tools should highlight the benefits of living and working in the Margaret River and provide a range of statistics which will inform readers of existing industries and opportunities in the town. These tools should be focused on the economic opportunities highlighted above, professionally presented and should be updated regularly to ensure their accuracy. Tools should include brochures, websites and email newsletters. Shire Undertake, with partners, a range of marketing programs which will raise the profile of the Margaret River as a destination for new business investment and residents. These marketing programs are likely to include raising the profile of the region as an investment destination in Perth, Sydney and Melbourne as well as overseas targets to support export activities. Key Agency / Lead Responsibility Funding Source Contingency Funding Population Threshold (where relevant) $45,000 SoAMR SWDC NA Target marketing to new residents and new and existing businesses to invest in Margaret River. SWDC Chamber of Commerce Augusta Margaret River Tourist Association $100,000 Royalties for Regions (ST) SoAMR SWDC NA Implement Targeted Marketing program to new residents and businesses. SWDC Timeframe for Delivery Short 0-5 years Medium 5-10 years Long 1020 years SoAMR/ Chamber of Commerce / Augusta-Margaret River Tourism Association SoAMR/ Chamber of Commerce / Augusta-Margaret River Tourism Association / Margaret River Marketing Collective Estimated Costs Delivery Mechanism Key Agency Consultation 107 Margaret River SuperTown Combined Report Final Draft Economic Development Initiative Attract and Facilitate New Investment Develop the Local Workforce Key Agency / Lead Responsibility Timeframe for Delivery Long 1020 years Funding Source Contingency Funding Population Threshold (where relevant) Estimated Costs Delivery Mechanism Key Agency Consultation Scope Recommended Actions Shire Develop and execute a proactive business development program to ensure economic diversification, investment, and job growth. This program should comprehensively outline all activities required to develop Augusta-Margaret River, including market research to identify prospective investors, engaging with prospective investors, and networking with partners to identify prospective investors and facilitate investment. SoAMR $90,000 Royalties for Regions (ST) SoAMR SWDC NA Implement through the Economic Development Plan. SWDC Chamber of Commerce Shire Facilitate public sector investments in the AugustaMargaret River (i.e. perimeter road and Cultural and Events Centre), through providing detailed information and assistance to assist businesses that are considering investment in the Margaret River. SoAMR $20,000 SoAMR SWDC NA Implement through the Economic Development role. SWDC Shire Participate proactively in encouraging on-going interaction and discussions between industry and education providers to facilitate long-term career pathways for local residents. SoAMR / MREC / Local Industry / DET / Chamber of Commerce $10,000 SoAMR DET NA Implement through the Economic Development role SWDC MREC Chamber of Commerce DET Short 0-5 years Medium 5-10 years 108 Margaret River SuperTown Combined Report Final Draft Economic Development Initiative Key Agency / Lead Responsibility Timeframe for Delivery Long 1020 years Funding Source Contingency Funding Population Threshold (where relevant) Estimated Costs Delivery Mechanism Key Agency Consultation Scope Recommended Actions Shire Investigate options and develop investor materials for student accommodation to house students and work towards creating a centre of excellence in hospitality and culinary arts (building on existing competency in viticulture). SoAMR / DET / MREC $35,000 SoAMR DET NA Implement through the Economic Development role. DET MREC Chamber of Commerce Shire Identify key gaps in the local skills supply and proactively seek to attract new residents who are able to fill these gaps. SoAMR $20,000 SoAMR SWDC NA Target Marketing to new residents. SWDC Chamber of Commerce Short 0-5 years Medium 5-10 years Source: AECgroup 109 Margaret River SuperTown Combined Report Final Draft References ABARES (2011). Australian Wine Grape Production Projections to 2012-13. ABARES, Canberra AECgroup (2011). Impact Assessment of the National Broadband Network in the South West Region. Prepared for the South West Development Commission. April 2011. Area Development (2011). Site Selection Factors, Corporate Survey 2010. Area Development, New York. Augusta-Margaret River Shire (2011). Unpublished Data. Augusta-Margaret River Shire, Augusta Margaret River. Augusta Margaret River Tourism Association (2011). Margaret River – A very special place. Accessed from: http://www.margaretriver.com/. Last accessed 29th November 2011. Australian Bureau of Statistics. (2007). Census of Population and Housing, 2006. Cat. No. 2068.0 ABS, Canberra. Australian Bureau of Statistics (2010). 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Western Australian Western Australia Planning Commission (2005), Population Projections 2004-2031, Perth. 112 Margaret River SuperTown Combined Report Final Draft Appendix A: Modelling Approach Projections of labour demand by industry for the Manjimup LGA have been developed utilising projections of Gross Regional Product (GRP) based on expected real industry growth rates, using 2010-11 as a base. In developing industry growth rates, industries are classified into one of three categories: Leading Economic Drivers (LEDs): LEDs are the industries that are either expected to be a focus for economic growth in the region or that are drivers of growth in other industries; Population Driven (PDs): PDs are industries that are driven almost entirely by population growth and consumption; and Business Activity and Population Driven (BAPDs): BAPDs are industries that are driven by some combination of activity in other sectors and household consumption. The following types of information will be used to develop growth estimates for each industry within the three types of industry categories: LEDs: Expected real growth rates for LEDs have been developed based on a combination of historic national growth and performance, industry consultation, desktop research regarding growth potential for each LED in the Manjimup LGA from published sources and the professional judgment of AECgroup staff; PDs: Projections of population growth from Department of Health and Ageing, Western Australian Planning Commission and the Supertowns population growth targets for Manjimup LGA all have been used to identify low, medium and high population growth rates for the Manjimup LGA. Industry growth rates for PDs have then been developed based on the historic relationship between population growth in Western Australia (ABS, 2011) and overall growth in Gross State Product (ABS, 2011g). This modelling approach supports the assumption that, as the Manjimup LGA economy expands, it will trend towards the State economic structure; and BAPDs: Expected real growth rates for BAPDs are developed based on a combination of growth in demand from households (population) and business activity in other sectors that demand goods and services from BAPDs. The relationship between BAPDs, other industry and household demand has been estimated using an Input Output table specifically developed for the Manjimup LGA (described below), and this relationship has been applied to growth projections of industry and population to develop individual BAPD industry growth rates. Input-Output Transaction Table Development An Input Output transaction table specific to the Manjimup LGA economy has been developed for this project. The process of developing a regional transaction table involves the development of regional estimates of gross production and the development of purchasing patterns based on a parent table, in this case the 2007-08 Australian transaction table (ABS, 2011h). Estimates of gross production (by industry) for the Manjimup LGA economy were developed based on the percent contribution to employment (by place of work) of the Manjimup region to the Australian economy (ABS, 2010a), and applied to Australian gross output identified in the 2007-08 Australian table. Industry purchasing patterns within the Manjimup LGA were then developed using cross industry location quotients and demand-supply pool production functions, consistent with the approach outlined in West (1993). Employment projections by industry are developed based on GRP projections by industry and historic estimates of value added production per employee from the transaction tables developed specifically for the Manjimup LGA, with consideration of any potential changes in productivity in line with historic multi-factor productivity growth (ABS, 2010b). The figure below summarises the modelling approach utilised to estimate employment by occupation requirements in the Manjimup LGA to 2031. Employment projections in key industrial sectors were then used to calculate industrial land demand assuming a 20 employee per hectare standard, incorporating productivity gains over time. 113 Margaret River SuperTown Combined Report Final Draft Figure A.1: Manjimup LGA Economic Modelling Approach Vision/ Industry Growth Scenarios Low Population Growth -Uses Department of Health and Ageing population estimates over the forecast horizon. Medium Population Growth -Assumes the Manjimup Town's populatoion doubles by 2031 and the remainder of the LGA continues along historical trends. High Population Growth -Assumes the Manjimup Town's populatoion grows by 4.2%pa to 2031 and the remainder of the LGA continues along historical trends. Economic Drivers Leading Economic Drivers (LEDs) Industries that are expected to be a focus for economic growth in the region or that are drivers of growth in other industries, e.g.: -Agriculture -Manufacturing -Wholesale trade -Transport, postal and warehousing Business Activity & Population Driven (BAPDs) Industries that are driven by some combination of activity in other sectors and population, e.g.: -Electricity, gas, water and waste services -Construction -Financial and insurance services -Professional, scientific and technical services Population Driven (PDs) Industries that are driven almost entirely by population growth and consumption, e.g.: -Retail trade -Accommodation and food services -Education and training -Health care and social services Outputs Gross Regional Product & Employment Projections Economic drivers and growth expectations will be used to develop gross regional production projections by industry through to 2031. Employment projections can then be calculated based on value added activity per employee, factoring in labour productivity improvements. Industrial land demand estimates were calculated based on average amployee per hectare benchmarks in key industries. Population Growth Projections Source: AECgroup 114 Margaret River SuperTown Combined Report Final Draft Appendix B: Journey to Work Details Table B. 1: Journey to Work Movements by LGA, Agriculture, Forestry and Fishing, 2006 LGAs Bunbury Augusta-Margaret River Boyup Brook Lives in Manjimup and Works in... Works in Manjimup and Lives in... Difference 15 0 -15 0 0 0 0 0 0 11 16 6 Busselton 0 8 8 Capel 0 0 0 Collie 0 0 0 Dardanup 0 0 0 Donnybrook-Balingup 0 0 0 Harvey 0 4 4 727 727 0 -11 Bridgetown-Greenbushes Manjimup Nannup 11 0 Other 42 25 -17 Total 806 781 -25 Source: ABS (2007), AECgroup Table B. 2: Journey to Work Movements by LGA, Manufacturing, 2006 LGAs Lives in Manjimup and Works in... Works in Manjimup and Lives in... Difference Bunbury 6 0 -6 Augusta-Margaret River 4 0 -4 Boyup Brook 0 0 0 10 16 7 Busselton 0 0 0 Capel 0 0 0 Collie 0 0 0 Dardanup 0 0 0 Donnybrook-Balingup 0 0 0 Harvey 0 3 3 434 434 0 0 0 0 Bridgetown-Greenbushes Manjimup Nannup Other 14 14 0 Total 467 467 0 Source: ABS (2007), AECgroup Table B. 3: Journey to Work Movements by LGA, Construction, 2006 Works in Manjimup and Lives in... Difference 10 3 -7 Augusta-Margaret River 0 0 0 Boyup Brook 0 0 0 Bridgetown-Greenbushes 7 0 -7 Busselton 0 0 0 Capel 0 0 0 Collie 0 0 0 Dardanup 0 0 0 Donnybrook-Balingup 7 0 -7 0 0 0 132 132 0 LGAs Bunbury Harvey Manjimup Lives in Manjimup and Works in... 115 Margaret River SuperTown Combined Report Final Draft LGAs Nannup Lives in Manjimup and Works in... Works in Manjimup and Lives in... Difference 0 0 0 Other 39 3 -36 Total 196 138 -58 Source: ABS (2007), AECgroup 116 Margaret River SuperTown Combined Report Final Draft Appendix C: Detailed Location Quotients Figure C.1: Location Quotients, 2006, 1-Digit ANZSIC Agriculture, forestry and fishing Public administration and safety Accommodation and food services Education and training Manufacturing Retail trade Rental, hiring and real estate services Health care and social assistance Transport, postal and warehousing Wholesale trade Other services Administrative and support services Arts and recreation services Construction Financial and insurance services Electricity, gas, water and waste services Professional, scientific and technical services Information media and telecommunications Mining (6.2, 6.8) Manjimup Lockyer Valley Gympie Casino/Lismore 0.0 1.0 2.0 3.0 4.0 5.0 Source: ABS (2007), AECgroup Figure C.2: Location Quotients, 2006, 2-Digit ANZSIC, Agriculture, Forestry and Fishing, and Mining Forestry and Logging Aquaculture Agriculture Manjimup Agriculture, Forestry and Fishing Support Services Lockyer Valley Gympie Non-Metallic Mineral Mining and Quarrying Casino/Lismore 0.0 5.0 10.0 15.0 Source: ABS (2007), AECgroup 117 Margaret River SuperTown Combined Report Final Draft Figure C.3: Location Quotients, 2006, 2-Digit ANZSIC, Manufacturing (11.7) Wood Product Manufacturing Beverage and Tobacco Product… Basic Chemical and Chemical Product… Furniture and Other Manufacturing Non-Metallic Mineral Product Manufacturing Fabricated Metal Product Manufacturing Machinery & Equipment Manufacturing Food Product Manufacturing Textile, Leather, Clothing and Footwear … Primary Metal and Metal Product … Manjimup Printing (including the Reproduction of … Transport Equipment Manufacturing Lockyer Valley Polymer Product and Rubber Product… Gympie Petroleum and Coal Product Manufacturing Casino/Lismore Pulp, Paper and Converted Paper Product … 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Source: ABS (2007), AECgroup Figure C.4: Location Quotients, 2006, 2-Digit ANZSIC, Business and Professional Services Library and Other Information Services Real Estate Services Internet Service Providers, Web Search … Building Cleaning, Pest Control and Other … Rental and Hiring Services (except Real … Administrative Services Finance Professional, Scientific and Technical … Auxiliary Finance and Insurance Services Telecommunications Services Insurance and Superannuation Funds Publishing (except Internet and Music … Computer System Design and Related … Internet Publishing and Broadcasting Broadcasting (except Internet) Motion Picture and Sound Recording … 0.0 Manjimup Lockyer Valley Gympie Casino/Lismore 0.5 1.0 1.5 2.0 Note: Includes Professional Scientific Services, Financial and Insurance Services, Information Media and Telecommunications, Administration and Support Services. Source: ABS (2007), AECgroup 118 Margaret River SuperTown Combined Report Final Draft Appendix D: GRP Methodology This document briefly outlines AECgroup’s methodology for developing 2010-11 Gross Regional Product (GRP) estimates for Manjimup. Gross Domestic Product (GDP) and Gross State Product (GSP) figures are produced on a regular basis and published by the Australian Bureau of Statistics and the relevant State and Territory Government departments. However, regular official estimates of production for sub-State regions do not exist (Gross Regional Product, GRP6). The Australian Bureau of Statistics (ABS) use three approaches to calculate GDP / GSP (Australian Bureau of Statistics, 2000): Value added approach: represents the difference between taking the market value of the goods and services produced by an industry (gross output) and deducting the cost of goods and services used up by the industry in the productive process (intermediate consumption); Income approach: calculates the cost of producing GRP by summing the incomes accruing from domestic production. These income components can be viewed as the market costs of production consisting of the compensation of employees (wages, salaries and supplements), provision for the consumption of fixed capital (depreciation), net operating surplus, and net indirect taxes; and Expenditure approach: sums all final expenditures (ignoring expenditure on intermediate consumption) on goods and services, add on the contribution of exports and deduct the value of imports. Final expenditures are known as final demand and include final consumption expenditure by households, gross fixed capital expenditure by producers (i.e. durable assets), investment stocks and exports to the rest of the world. Due to data limitations it is not possible to calculate GRP using the same approach as national or State values. As such, a different approach is required that effectively utilises national or State figures and attempts to apportion these estimates to the constituent regions. There are a number of different “top-down” approaches that can be employed to disaggregate national or State estimates. AECgroup estimate GRP at factor cost using an indirect, top-down approach to disaggregate official State GSP totals from the State Accounts, utilising a number of data sources to apportion GSP to sub-regions. AECgroup’s approach is discussed in further detail below. All GRP estimates, regardless of the approach, will be subject to a combination of any errors in the national/ State GSP estimates as well as those introduced by the methodology and data limitations used to allocate GSP to the constituent regions. To allocate a State’s GSP to its constituent regions, a number of data sources are used, including State Accounts (ABS, 2010a), National Input-Output transaction tables (ABS, 2010b), the Census of Population and Housing (in particular employment by industry estimates by place of work) (ABS, 2010c), the Australian Labour Force Survey (ABS, 2011) and Small Area Labour Market data (DEEWR, 2011). Disaggregation is undertaken through the following process: Transaction tables for each region and the State of interest were generated from the 2006-07 national Input-Output transaction table to develop preliminary gross production estimates for each region. Estimates of gross production (by industry) in the study areas were developed based on the percent contribution to employment (by place of work) of the study areas to the Australian economy, and applied to Australian gross output identified in the 2006-07 Australian table. This provides gross 6 GRP at factor cost is that part of the cost of producing the gross regional product which consists of gross payments to factors of production (labour, land, capital and enterprise). It represents the value added by these factors in the process of production and is equivalent to gross regional product less indirect taxes plus subsidies. 119 Margaret River SuperTown Combined Report Final Draft value added and gross product estimates across 111 industries, which are then aggregated to the 19 major ANZSIC categories plus ownership of dwellings. 2006-07 regional estimates developed from the transaction tables were equalized to State Account estimates of gross value added production by industry for the corresponding year (i.e., estimates were inflated/ deflated by an appropriate multiplier to ensure that aggregating each region would equate to the State figure for 2006-07). Preliminary growth rates for the State and Statistical Divisions to 2010-11 for each industry were taken from the State Accounts figures (for the State) and regional differences in growth in employment by industry as outlined in the Labour Force Survey7 (for the SDs). Preliminary growth estimates for each local government area of interest is generated based on growth in employment estimates between 2006-07 and 2010-11 as outlined in the Small Area Labour Market Data, with industry structure assumed to change from 2006-07 to 2010-11 in line with estimated change in structure for the SD in which it is located (i.e., if the SWDC region is estimated to have doubled its presence of construction since 2006-07, then this factor was applied to the 2006-07 industry contribution of construction to Manjimup). All preliminary 2010-11 estimates were then equalized to the State Account estimates of gross value added production by industry using an appropriate multiplier to ensure that aggregating each region would equate to the State figure for 2010-11. AECgroup’s methodology for estimating GRP is subject to the following key limitations: The use of the transaction tables provides preliminary 2006-07 estimates across 111 industries which allows for a greater richness in industry composition (and differences in value add by industry) than the traditional 19 sector approach. However, this approach does assume that production functions for each of the 111 industries are the same across all regions. The relative difference between each regions’ value add per employee and that of the State is assumed to remain relatively constant across regions and over time, which may not be an accurate reflection of regional differences and changes in the actual economy. Annual employment counts in the Labour Force Survey and Small Area Labour Market data are based on usual place of residence, not place of work, which can misrepresent the actual level of employment in some regions and industries. To overcome this issue to some degree, AECgroup apply growth rates in these data sets only, rather than using these data sets to understand actual employment in each region. These limitations can act to artificially inflate (or deflate) a region’s or industry’s GRP contributions. As such, the GRP estimates provided in this report should be used with caution, and are intended as a guide to the level of economic activity and growth in the region relative to other areas and the State. 7 A smoothing technique using a Henderson Moving Average is applied to the Labour Force Survey to remove some of the volatility in this data series. 120 Economics, Planning & Development Business Strategy & Finance Community Research & Strategy Design, Marketing & Advertising Information & Knowledge Management
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