UNCLASSIFIED 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 UNCLASSIFIED
UNCLASSIFIED 1. Economic Performance 2. Current Economic Challenges 3. Understanding Sectors 4. Understanding Place 5. DEDJTR Model 6. Examples – Energy, Regional Tourism 2 UNCLASSIFIED
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UNCLASSIFIED VICTORIA HAS THE FASTEST POPULATION GROWTH IN AUSTRALIA, DRIVEN BY OVERSEAS MIGRATION. Annual Victorian population growth by component (a) Persons Persons 125,000 125,000 100,000 100,000 75,000 75,000 50,000 50,000 25,000 25,000 0 0 -25,000 -25,000 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 (a) Rolling 12-month totals. Source: ABS Demographic Statistics (Cat no. 3101.0) 10 UNCLASSIFIED
UNCLASSIFIED Victoria has recorded strong economic growth, underpinned by strong population growth. Contributions to Victorian real GSP growth and Australian real GDP growth Gross Domestic Product growth (a) Per cent Per cent 4.0 5 VIC AUS 3.5 4 AUS VIC AUS VIC AUS 3.0 3 VIC 2.5 2 2.0 1 1.5 0 1.0 -1 0.5 -2 0.0 2011-12 2012-13 2013-14 2014-15 2015-16 -3 Victoria Australia Advanced economies 1990-91 1993-94 1994-95 1998-99 1999-00 2007-08 2008-09 2015-16 to to to to Population Participation Labour productivity Real GSP/GDP growth (a) Annual data. Victorian Budget (May-17), Australian Budget 2017-18 (May-17) and IMF World Source: DEDJTR analysis based on ABS data Economic Outlook (2017) 11 UNCLASSIFIED
UNCLASSIFIED However, growth and job opportunities have varied across suburbs and regions. Regional Victoria Melbourne Victorian average = 5.7% (a) 12-month averages. Source: DEDJTR analysis based on Department of Employment Small Area Labour Market data 12 12 UNCLASSIFIED
UNCLASSIFIED Increasing both productivity and participation will be critical to Victoria’s ongoing success. Participation rate of people aged 65 years and over, Victoria Labour force participation, Victoria Per cent Per cent 16 85 80 14 75 12 70 10 65 8 60 6 55 4 50 2 45 0 40 Males Females Total Source: ABS 6291.0.55.001 Labour Force, Australia Detailed Source: ABS 6202.0 Labour Force, Australia, seasonally adjusted 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 . 13 UNCLASSIFIED
UNCLASSIFIED Increasing economic inclusion is important for economic and social outcomes. Breakdown of youth population (Vic) Linking employment programs to industry need ‘000s 78,000 (around 10%) of Victorian 900 youths are unemployed or not in Jobs Victoria Employment Network (JVEN) 800 full-time education • Specialist (e.g. Aboriginal, youth, retrenched 700 workers) and multi-target group services 600 455 523 • Key features of JVEN model: 500 Flexibility: tailored to needs of jobseekers 400 794 Employer Engagement: to identify job 300 38 30 opportunities and better meet industry needs 200 224 Complementary: addressing service gaps for 100 jobseekers who face particular barriers 47 0 Population Total labour force Employed+ Unemployed & in Unemployed & Studying & NILF NILF & not in education not in education education Not working or Working or looking for Source: ABS Labour force data (Cat 6202.0 ) looking for work work Note: NILF: Not in the labour force. 14 UNCLASSIFIED
UNCLASSIFIED 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. $ per Gini Job projections by skill level Household income at top of each percentile- Australia week Coefficient 1,800 0.34 1,600 0.33 1,400 0.32 1,200 0.31 1,000 800 0.30 600 0.29 400 0.28 200 0 0.27 1994 – 95 1997 – 98 2002 – 03 2007 – 08 2013 – 14 10th percentile 50th percentile Gini coefficient (RHS) 90th percentile Source: DAE-DEDJTR internal projections, Source: ABS Cat. 6523.0 - Household Income and Wealth 15 UNCLASSIFIED
UNCLASSIFIED Victoria’s economy will be shaped by a range of global and domestic megatrends. Megatrends Technology Globalisation • New energy technologies, • Capital and labour increasingly mobile blockchain, artificial intelligence, • International trade becoming increasingly robotics, autonomous vehicles important to Victoria New business models These have Changing consumer preferences • Peer to peer broad ranging • 24/7 economy • Subscription services implications • Online and mobile commerce • Ethically and environmentally sustainable for Victoria’s Demographics Change economy future • Strong population growth (driven by migration) Changing worker preferences • Ageing population • Later and staged retirement Climate change • ‘Gig’ or project work VS demand for security • Global agreements on carbon • Growing female workforce participation emissions • Continued demand for work/life balance • Impacts on location of agriculture activities • Extreme weather events 16 UNCLASSIFIED
UNCLASSIFIED Over the past decade, population has shifted towards larger regional centres and peri-urban areas. Regional Victoria - 2016 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 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. UNCLASSIFIED
UNCLASSIFIED This trend is projected to continue. 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 Source: VIF 2016 Estimated Resident Population by LGA UNCLASSIFIED
UNCLASSIFIED Industry growth has largely been a population-based story centred on cities. 68,628 total businesses (2015) +5% since 2000 Business sector mix Total business establishment net change - 2000 to 2015 Since 2000 +6% -1% -5% ~624,000 jobs – 2015 • 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% Source: DEDJTR analysis based on Work Safe Victoria data 19 UNCLASSIFIED
UNCLASSIFIED Place-based risk management and response planning is critical to supporting ongoing resilience and adaptability across Victoria. Example - vulnerable towns identification Red Cliffs Approach 1x Wine Manufacturing 1. Assess towns adaptive Maryborough (industry risk score: medium) 1x Bread Manufacturing capacity (industry risk score: medium) 2. Identify towns dependence on few Shepparton large employers Portland 1x Fruit & Vegetable 1x Aluminium Smelting (industry 3. Industry-specific risk Processing (industry risk risk score: medium) assessment score: medium) 1x Fabricated Metal Manufacturing (industry risk score: high) 1x Other Heavy & Civil Engineering (industry risk score: high) Informs business engagement, Bairnsdale transition planning, and 1x Fruit & Vegetable Processing (industry risk score: medium) response strategies 1x Cake & Pastry Manufacturing (industry risk score: medium) Cobden Heyfield 1x Cheese & Other Dairy 1x Timber Resawing Manufacturing (industry risk (Industry risk score: High) score: medium) 20 UNCLASSIFIED
UNCLASSIFIED Victorian Government Presence – REGIONAL - 9 Regional Partnerships - Over 20 offices in Regional Victoria - Further Gov Hub Commitments in Bendigo, Ballarat and Latrobe 21 UNCLASSIFIED
UNCLASSIFIED Victorian Government Presence – METRO - 6 Metropolitan Partnerships - 7 Metropolitan based Offices - Agribio and Attwood facilities 22 UNCLASSIFIED
UNCLASSIFIED Victorian Government Presence – INTERNATIONAL - 21 International Offices 23 UNCLASSIFIED
UNCLASSIFIED FUTURE FOCUS – HIGH GROWTH SECTORS. 24 UNCLASSIFIED
UNCLASSIFIED EXAMPLE – FOOD AND FIBRE SECTOR - 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 25 UNCLASSIFIED
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