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VICTORIA’S ECONOMY – THE IMPORTANCE OF SECTORS AND PLACE

Presentation to EDA Forum Justin Hanney, Head, Employment Investment and Trade, Department of Economic Development, Jobs, Transport and Resources 11 August 2017

CONFIDENTIAL

NOT FOR FURTHER DISTRIBUTION

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1. Economic Performance

2. Current Economic Challenges

3. Understanding Sectors

4. Understanding Place

5. DEDJTR Model

6. Examples – Energy, Regional Tourism

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VICTORIA HAS THE FASTEST POPULATION GROWTH IN AUSTRALIA, DRIVEN BY OVERSEAS MIGRATION.

(a) Rolling 12-month totals.

Source: ABS Demographic Statistics (Cat no. 3101.0)

Annual Victorian population growth by component (a)

-25,000

0

25,000

50,000

75,000

100,000

125,000

-25,000

0

25,000

50,000

75,000

100,000

125,000

Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16

Net interstate migration Natural increase Net overseas migration Total

Persons Persons

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Victoria has recorded strong economic growth, underpinned by strong population growth.

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Gross Domestic Product growth(a)

(a) Annual data. Victorian Budget (May-17), Australian Budget 2017-18 (May-17) and IMF World Economic Outlook (2017)

-3

-2

-1

0

1

2

3

4

5

1990-91 1993-94 1994-95 1998-99 1999-00 2007-08 2008-09 2015-16

Population Participation Labour productivity Real GSP/GDP growth

AUS VIC AUS

VIC

AUS VIC

AUS VIC

to to to

Contributions to Victorian real GSP growth and Australian real GDP growth

Per cent

Source: DEDJTR analysis based on ABS data

to

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2011-12 2012-13 2013-14 2014-15 2015-16

Victoria Australia Advanced economies

Per cent

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However, growth and job opportunities have varied across suburbs and regions.

(a) 12-month averages.

Source: DEDJTR analysis based on Department of Employment Small Area Labour Market data

Regional Victoria Melbourne

Victorian average = 5.7%

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Focus areas: Flexible arrangements to allow older workers to transition to retirement and mothers to return to work. Facilitating smoother transition for retrenched workers. Boosting youth employment, including pathways from study to employment. Reducing barriers to workforce participation for disadvantaged cohorts.

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Labour force participation, Victoria

Source: ABS 6202.0 Labour Force, Australia, seasonally adjusted

Per cent Participation rate of people aged 65 years and over, Victoria

Source: ABS 6291.0.55.001 Labour Force, Australia Detailed

40

45

50

55

60

65

70

75

80

85

Males Females Total

0

2

4

6

8

10

12

14

16Per cent

Increasing both productivity and participation will be critical to Victoria’s ongoing success.

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Increasing economic inclusion is important for economic and social outcomes.

Breakdown of youth population (Vic)

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Jobs Victoria Employment Network (JVEN)

• Specialist (e.g. Aboriginal, youth, retrenched workers) and multi-target group services

• Key features of JVEN model:

Flexibility: tailored to needs of jobseekers

Employer Engagement: to identify job opportunities and better meet industry needs

Complementary: addressing service gaps for jobseekers who face particular barriers

Linking employment programs to industry

need

794

523 455

38 30

224

47 0

100

200

300

400

500

600

700

800

900

Population Total labour force Employed+ Unemployed & ineducation

Unemployed &not in education

Studying & NILF NILF & not ineducation

‘000s

78,000 (around 10%) of Victorian

youths are unemployed or not in

full-time education

Working or looking for

work

Not working or

looking for work Source: ABS Labour force data (Cat 6202.0 )

Note: NILF: Not in the labour force.

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There is a need to ensure that disadvantaged cohorts can participate in the workforce, and that all Victorians are equipped with skills for the future of work.

15

0.27

0.28

0.29

0.30

0.31

0.32

0.33

0.34

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1994–95 1997–98 2002–03 2007–08 2013–14

10th percentile 50th percentile

90th percentile Gini coefficient (RHS)

Household income at top of each percentile- Australia $ per week

Gini Coefficient

Job projections by skill level

Source: DAE-DEDJTR internal projections, Source: ABS Cat. 6523.0 - Household Income and Wealth

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Megatrends

• New energy technologies, blockchain, artificial intelligence, robotics, autonomous vehicles

Technology

• Capital and labour increasingly mobile • International trade becoming increasingly

important to Victoria

Globalisation

• Strong population growth (driven by migration)

• Ageing population

Demographics Change

• Later and staged retirement • ‘Gig’ or project work VS demand for

security • Growing female workforce participation • Continued demand for work/life balance

Changing worker preferences

• 24/7 economy • Online and mobile commerce • Ethically and environmentally sustainable

economy

Changing consumer preferences

• Global agreements on carbon emissions

• Impacts on location of agriculture activities

• Extreme weather events

Climate change

• Peer to peer • Subscription services

New business models

Victoria’s economy will be shaped by a range of global and domestic megatrends.

These have broad ranging implications for Victoria’s

future

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Source: ABS SA2 population data (Cat no. 3218.0 Regional Population Growth, Australia) Note: regional city population estimates are based on SA2s that capture the urban centres of the regional city LGAs.

Victoria (June 2016) 6,069,636

(+ 1,008,370 @ + 1.8% p.a.)

Regional Victoria (June 2016) 1,428,000

(+ 127,494 @ + 0.9% p.a.)

pop = 2016 population (at June ’16) growth = 2016 – 2006 population

Over the past decade, population has shifted towards larger regional centres and peri-urban areas.

Regional Victoria - 2016

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This trend is projected to continue.

Source: VIF 2016 Estimated Resident Population by LGA

Population Growth, Regional Victoria Victoria (2031) 7,733,259

(+ 1,684,492 @ + 1.86% p.a.)

Regional Victoria (2031) 1,674,497

(+ 253,905 @ + 1.19% p.a.)

pop = 2031 predicted population (at June ‘31) growth = 2031 – 2016 predicted population

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Industry growth has largely been a population-based story centred on cities.

• Majority of business growth in population driven services within regional centres - particularly community (including health) and tourism

• While manufacturing has declined overall there is opportunity in value added food and fibre production - food manufacturing business establishments increased by 17%

Total business establishment net change - 2000 to 2015

Source: DEDJTR analysis based on Work Safe Victoria data

68,628 total businesses (2015) +5% since 2000 Business sector mix

Since 2000 +6% -1% -5%

~624,000 jobs – 2015

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Place-based risk management and response planning is critical to supporting ongoing resilience and adaptability across Victoria.

Red Cliffs 1x Wine Manufacturing (industry risk score: medium)

Maryborough 1x Bread Manufacturing (industry risk score: medium)

Heyfield 1x Timber Resawing (Industry risk score: High)

Bairnsdale 1x Fruit & Vegetable Processing (industry risk score: medium) 1x Cake & Pastry Manufacturing (industry risk score: medium)

Portland 1x Aluminium Smelting (industry risk score: medium) 1x Fabricated Metal Manufacturing (industry risk score: high) 1x Other Heavy & Civil Engineering (industry risk score: high)

Cobden 1x Cheese & Other Dairy Manufacturing (industry risk score: medium)

Example - vulnerable towns identification

Approach 1. Assess towns adaptive

capacity 2. Identify towns

dependence on few large employers

3. Industry-specific risk assessment

Shepparton 1x Fruit & Vegetable Processing (industry risk score: medium)

Informs business engagement, transition planning, and response strategies

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Victorian Government Presence – REGIONAL

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- 9 Regional Partnerships

- Over 20 offices in Regional Victoria

- Further Gov Hub Commitments in Bendigo, Ballarat and Latrobe

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Victorian Government Presence – METRO

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- 6 Metropolitan Partnerships

- 7 Metropolitan based Offices

- Agribio and Attwood facilities

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Victorian Government Presence – INTERNATIONAL

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- 21 International Offices

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FUTURE FOCUS – HIGH GROWTH SECTORS.

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EXAMPLE – FOOD AND FIBRE SECTOR

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- Direct employment of over 190,000 people in the state

- Approximately 4.9 percent of GSP or over 18bn

- Largest goods export – valued at 11.5bn

- Approximately 38,500 food and fibre businesses in the State

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EXAMPLE – VISITOR ECONOMY

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- Direct impact to the economy of $11.3 billion or 3% of GSP. Indirect impact of 12bn – TOTAL $23 Bn sector

- Direct employment of 134,000 of 4.5% and indirect of 74,200 – TOTAL employment of over 200,000

- 1 in 6 jobs in Regional Victoria

- Export value of over 5 billion

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Agriculture Food & Fibre

International Education

Medtech & Pharma

+ Health Services

New Energy Technology + Energy & Resources

Transport, Defence,

Construct. & M’facturing

Visitor Economy Retail, TDL, Postal Technology (Digital)

PROGRAMS, SMALL BUSINESS & EMP

INVESTMENT & ECO PROJECTS

TRADE VIC.& INTERNATIONAL

REGIONAL DEV’MENT VIC.

SECTOR LENS EN

AB

LER

S Professional

Services & Community

Services

GEOGRAPHIC / PLACE LENSES

METROPOLITAN MARKETS

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INTERNATIONAL MARKETS

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REGIONAL MARKETS

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Creative Industries

EIT MODEL

Enabling functions delivering Trade, Investment and

Employment outcomes at the intersection of

SECTORS and PLACE BIOSECURITY.

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Agriculture Food & Fibre

International Education

Medtech & Pharma

+ Health Services

New Energy Technology + Energy & Resources

Transport, Defence,

Construct. & M’facturing

Visitor Economy Retail, TDL, Postal Technology (Digital)

PROGRAMS, SMALL BUSINESS & EMP

INVESTMENT & ECO PROJECTS

TRADE VIC.& INTERNATIONAL

REGIONAL DEV’MENT VIC.

SECTOR LENS EN

AB

LER

S Professional

Services & Community

Services

GEOGRAPHIC / PLACE LENSES

METROPOLITAN MARKETS

Met

ro

Sou

th-e

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rth

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INTERNATIONAL MARKETS

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on

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REGIONAL MARKETS

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Creative Industries

EXAMPLE – Importance of the Visitor Economy to Regional Victoria

BIOSECURITY.

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THE VALUE OF THE VICTORIAN VISITOR ECONOMY

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The Visitor Economy contributes:

$23 bn each year to Victorian GSP

4x as much in Gross Regional Product to regional Victoria in comparison to Melbourne

3x more in terms of employment to regional Victoria in comparison to Melbourne

Regional Tourism accounts for:

1 in 6 jobs in Regional Victoria (direct and indirect)

Regional Tourism accounts for:

210,400 Victorian jobs, which is 7% of total state employment

56% of Victoria’s Tourism employment is in regional Victoria

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TOURISM EXPERIENCES

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TOURISM EXPERIENCES

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International Visitor Nights

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Agriculture Food & Fibre

International Education

Medtech & Pharma

+ Health Services

New Energy Technology + Energy & Resources

Transport, Defence,

Construct. & M’facturing

Visitor Economy Retail, TDL, Postal Technology (Digital)

PROGRAMS, SMALL BUSINESS & EMP

INVESTMENT & ECO PROJECTS

TRADE VIC.& INTERNATIONAL

REGIONAL DEV’MENT VIC.

SECTOR LENS EN

AB

LER

S Professional

Services & Community

Services

GEOGRAPHIC / PLACE LENSES

METROPOLITAN MARKETS

Met

ro

Sou

th-e

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rth

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INTERNATIONAL MARKETS

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USA

MEN

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AN

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REGIONAL MARKETS

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Creative Industries

AREAS OF FOCUS – Identify iconic features of regional locations and align marketing efforts

- Strengthen Regional Tourism Infrastructure (eg: Shipwreck Coast) including leveraging private sector investment

- Develop cultural literacy of regional tourism operators - Increase overnight stays and spend in regions

- Aviation attraction as critical to growth - Diversify international visitors – over reliance on China

-

BIOSECURITY.

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Agriculture Food & Fibre

International Education

Medtech & Pharma

+ Health Services

New Energy Technology + Energy & Resources

Transport, Defence,

Construct. & M’facturing

Visitor Economy Retail, TDL, Postal Technology (Digital)

PROGRAMS, SMALL BUSINESS & EMP

INVESTMENT & ECO PROJECTS

TRADE VIC.& INTERNATIONAL

REGIONAL DEV’MENT VIC.

SECTOR LENS EN

AB

LER

S Professional

Services & Community

Services

GEOGRAPHIC / PLACE LENSES

METROPOLITAN MARKETS

Met

ro

Sou

th-e

ast

East

No

rth

Wes

t

Ch

ina

INTERNATIONAL MARKETS

Ind

ia

USA

MEN

A

Ind

on

esia

ASE

AN

Jap

an &

Ko

rea

UK

& E

uro

pe

Lati

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REGIONAL MARKETS

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Creative Industries

EXAMPLE – Energy impact on firms and regions

BIOSECURITY.

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Agriculture Food & Fibre

International Education

Medtech & Pharma

+ Health Services

New Energy Technology + Energy & Resources

Transport, Defence,

Construct. & M’facturing

Visitor Economy Retail, TDL, Postal Technology (Digital)

PROGRAMS, SMALL BUSINESS & EMP

INVESTMENT & ECO PROJECTS

TRADE VIC.& INTERNATIONAL

REGIONAL DEV’MENT VIC.

SECTOR LENS EN

AB

LER

S Professional

Services & Community

Services

GEOGRAPHIC / PLACE LENSES

METROPOLITAN MARKETS

Met

ro

Sou

th-e

ast

East

No

rth

Wes

t

Ch

ina

INTERNATIONAL MARKETS

Ind

ia

USA

MEN

A

Ind

on

esia

ASE

AN

Jap

an &

Ko

rea

UK

& E

uro

pe

Lati

n A

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REGIONAL MARKETS

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Creative Industries

AREAS OF FOCUS - Work with direct impacted regions – Latrobe Valley example - Latrobe Valley

Authority, Worker Transfer Scheme, Worker Transition Services, diversification of economy

- Work with firms at risk due to increasing energy prices - understand risk, survey companies, face to face meetings, understand and quantify issue,

develop policy solutions - Develop programmatic response to assist impacted firms

BIOSECURITY.

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VICTORIA’S ECONOMY – THE IMPORTANCE OF SECTORS AND PLACE

Presentation to EDA Forum Justin Hanney, Head, Employment Investment and Trade, Department of Economic Development, Jobs, Transport and Resources 11 August 2017