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Regional Aviation Report-FINAL-17 Sept 10-Vsn 3.Docx Evaluation of Regional Aviation Developments under the Regional Infrastructure Development Fund Department of Innovation, Industry and Regional Development Regional Development Victoria September 2010 Contents Executive summary .................................................................................................... 1 1. Introduction........................................................................................................ 8 2. Funding arrangements ...................................................................................... 12 3. Regional aviation developments ........................................................................ 15 4. Investment Logic Map and Evaluation framework ............................................... 20 5. Alignment of RIDF and the RAF with Government policy objectives ..................... 26 6. Approach to assessing regional impacts ............................................................. 29 7. Multi-criteria analysis ........................................................................................ 32 8. State wide economic impacts ............................................................................ 81 9. State wide social impacts (social capital analysis) ............................................... 85 10. Application processes ................................................................................... 91 11. Case Studies ................................................................................................. 96 12. Conclusions and recommendations .............................................................. 104 Appendix A Stakeholders interviewed ................................................................. 107 Appendix B Funding and leverage scores ............................................................ 109 Appendix C Growth in passenger movements ...................................................... 110 Regional Development Victoria Evaluation of Regional Aviation Developments under the Regional Infrastructure Development Fund Ernst & Young ÷ i Glossary DIIRD Department of Innovation, Industry and Regional Development ILM Investment Logic Map MCA Multi-Criteria Analysis RAF Regional Aviation Fund RDV Regional Development Victoria RIDC Regional Infrastructure Development Committee RIDF Regional Infrastructure Development Fund © 2010 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation. Regional Development Victoria Evaluation of Regional Aviation Developments under the Regional Infrastructure Development Fund Ernst & Young ÷ ii Executive summary Introduction and background The Regional Infrastructure Development Fund (RIDF) was established in 2000 to support key infrastructure developments in regional Victoria. Applications are assessed against published guidelines and must demonstrate an ability to meet a number of criteria including: ► Economic outcomes ► Socio-economic outcomes ► State priority areas ► Feasibility, delivery and implementation ► Financial viability. Various types of infrastructure projects are funded through RIDF including transport related projects such as aviation. In 2006, the Regional Aviation Fund (RAF) was established as a sub-program of RIDF to support aviation related programs. Prior to 2006, aviation related projects were funded directly from RIDF. Since the establishment of RIDF, 19 aviation related projects have been undertaken. At the time that this report was commissioned, a further 4 projects have been funded, bringing the total number of aviation projects funded to 23, with a RIDF contribution of $32 million. Of those 23 projects, 14 have been completed. These completed projects are, in chronological order: ► Latrobe Regional Airport Development (2000) ► Shepparton Aerodrome Improvements (2001) ► Latrobe Regional Airport Development – Industrial Estate (2002) ► Mildura Airport – Key Infrastructure Development (2002) ► Portland Airport Upgrade (2002) ► Avalon Airport Road Infrastructure (2002) ► Avalon Airport Apron Upgrade (2005) ► West Sale Aerodrome Infrastructure Upgrade (2006) ► Warrnambool Regional Airport Development (2006) ► Stawell Airport Upgrade (2007) ► Latrobe Airport Airpark Development (2007) ► Mallacoota Airport Infrastructure Enhancement (2008) ► Mildura Airport Upgrade (2009) ► Warrnambool Airport Upgrade Phase 2 (2009). Regional Development Victoria Evaluation of Regional Aviation Developments under the Regional Infrastructure Development Fund Ernst & Young ÷ 1 Approximately $13.6 million has been allocated to the 14 completed aviation related RIDF projects. The objective of this study is to evaluate the impacts that these aviation projects have had on regional Victoria. Impacts considered in this evaluation include economic and social benefits. To assess the impact of the completed aviation developments, an evaluation framework was established based on the objectives and potential changes highlighted in the Investment Logic Map (ILM). Based on the ILM and evaluation framework, a set of key evaluation criteria were established. The evaluation assessed the outcomes for each aviation development against its stated objectives. Data and inputs were collected by several means, including file reviews, telephone interviews and site visits. The key sources of data input were as follows: ► Review of RDV files. This included project applications, interim reporting and final reporting. Project inputs such as key objectives and final project expenditure (both RIDF/RAF grants and investment leveraged) ► Interviews with key departmental staff in RDV and Tourism Victoria ► Telephone interviews. A total of 6 telephone interviews were conducted with key stakeholders from local councils and airports ► Site visits. Overall, site visits were conducted in Mildura, Warrnambool and Latrobe Airports. These incorporated interviews with airport and local council staff, as well as other stakeholders such as business groups and airport users. Two of the analytical techniques used to evaluate aviation projects were a multi-criteria analysis (MCA) and social capital analysis. Limitations that became apparent when undertaking interviews with RIDF managers and funding recipients restricted the level of analysis possible. Limitations experienced and aspects of the methodology used to mitigate limitations include: ► The timing of aviation developments often made it difficult to collect relevant data. A number of developments were completed up to nine years ago and as such it was sometimes not possible to consult with airport staff or members of the local government who were part of the planning and execution of the project. Information in project files were used to fill gaps where possible ► The difficultly in quantifying benefits generated. Actual data and information on economic benefits experienced in the region was often not collected ► The nature of the benefits generated. Many of the benefits were social in nature and cannot be quantified. As such, a MCA and social capital analysis was undertaken to ensure all benefits were captured and presented. Evaluation criteria Criteria used to evaluate the impacts of completed aviation developments under RIDF can be grouped into three categories; financial, economic and social. The criteria used to assess the impacts are summarised in the table below. Regional Development Victoria Evaluation of Regional Aviation Developments under the Regional Infrastructure Development Fund Ernst & Young ÷ 2 Table 1: Evaluation criteria Financial criteria Cost of aviation developments Economic criteria Leveraged funds from public and private sources Increase in business activity or business growth (business visitors to the region – airport patronage) Increase in business investment in the region Increase in the number of tourists in the region (recreational visitors to the region – airport patronage) Job creation Social criteria Regional liveability Safety Access to services (health and human services) Information gathered during the file review and consultation phase has been used to determine the extent to which each aviation project has impacted these criteria. Multi-criteria analysis Due to the limited quantitative information available on each of the projects and for each of the criteria, a MCA was undertaken. A MCA assigns weighting to each of the criteria depending on the airports particular focus and then assigns a score (from -4 to +4) depending on whether the airport has had a positive or negative impact on the region, as determined by file reviews, interviews with relevant RIDF managers and detailed consultation with funding recipients. As each aviation development had unique objectives and had differing impacts on regional Victoria, a separate analysis was undertaken on each development. These individual assessments were then used to construct an understanding of the overall impact of RIDF and RAF supported aviation projects on regional Victoria. Observations from the MCA undertaken on each of the projects include: ► Projects had unique objectives and differing levels of success ► The majority of projects had a positive impact on the regional economy or local community ► Two projects did not have a positive impact; one due to cessations of a regular passenger service and the other as a result of not delivering the project on budget and requiring additional funds ► The most common and successful objectives were encouraging business investment or business growth, increasing tourist numbers,
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