92 Norsemens Road, Coronet Bay Preliminary Economic Benefits Assessment

92 NORSEMENS ROAD, CORONET BAY PRELIMINARY ECONOMIC BENEFITS ASSESSMENT

14 FEBRUARY 2017 PREPARED FOR AUSCO INVESTMENT GROUP

URBIS STAFF RESPONSIBLE FOR THIS REPORT WERE: Director Rhys Quick Senior Consultant Mike Zhang Project Code PER0151

You must read the important disclaimer appearing within the body of this report. urbis.com.au CONTENTS TABLE OF CONTENTS

Introduction ...... i Summary of Benefits ...... i 1. Development Summary ...... 2 2. Economic Benefits ...... 5 2.1. Methodology ...... 5 2.2. Construction Phase ...... 6 2.3. Operation Phase ...... 7 2.4. Form of Benefits ...... 8 Disclaimer ...... 9

URBIS 92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

INTRODUCTION This report summarises the economic benefits anticipated to be derived from the development proposed at 92 Norsemens Road, Coronet Bay. The development is intended to include a tourist hotel and function centre.

 Section 1 presents a summary of the components of the proposed development.

 Section 2 presents an introduction to the methodology for estimating the economic benefits, and quantifies the direct and indirect benefits anticipated from the development during construction and on an ongoing basis at capacity, at both the local Bass Coast Shire and the state levels.

 Section 3 provides a brief description of practically how the economic benefits that may brought about by the development will manifest. SUMMARY OF BENEFITS The economic benefits of the development can be summarised as:

 Private sector investment in the development will be $41.8 million including GST.

 A total of 190 jobs created during the construction phase for the equivalent of one year of employment: 35 direct jobs and a further 155 indirect jobs per annum over the construction period.

 A total of $28.6 million in Gross Value Added (GVA) during the construction period on an annual basis: $6.2 million direct and $22.4 million indirect.

 Around 42-43% of employment and GVA benefits are likely to flow to the Bass Coast Shire during the construction phase, with an estimated 74% of on-going jobs and 60% of on-going GVA benefits accruing to the local Shire during the operation phase.

 Creation of 311 on-going jobs from the operation of the development: 173 direct jobs within the facility and 138 indirect jobs, some within the Shire and the rest across the remainder of the state.

 A total of $33.7 million in GVA annually from the onsite employment at capacity: $12.8 million direct (local) and $20.9 million indirect (both local and rest of Victoria).

 The development of tourism infrastructure and supporting the balanced growth of local tourism sector through the provision of new accommodation and function facilities at a decentralised location within the Shire is an economic benefit deriving from this development. The economic benefits flowing from the private sector development of a new tourist facility at Coronet Bay will be significant. Many of the benefits will be delivering an enduring legacy for the Shire of Bass Coast.

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1. DEVELOPMENT SUMMARY The subject site at 92 Norsemens Road, Coronet Bay is situated in the north of Bass Coast Shire, around 1.5-2 hours drive from central Melbourne. Coronet Bay is along the route to the Phillip Island region, one of Victoria’s top tourist destinations, along with other coastal areas of the Shire (see Map 1.1 overleaf). The proposed development at the subject site is intended to promote local tourism and cater to Victoria’s growing tourism sector, in particular Chinese tour groups. Initial plans indicate that the development will include a new resort-style hotel, along with function facilities, car park and potentially a further ‘tourism residential’ area in later stages (see Picture 1 overleaf). The site provides direct access to Coronet Bay beach and is serviced by Bass Highway via Corinella Road. The floorspace details of the proposed development at 92 Norsemens Road, Coronet Bay are summarised in Table 1.1 below:

 The proposed development is likely to comprise a hotel of around 178 rooms with a total floorspace of 17,500 sq.m, as well as function centre totalling some 3,500 sq.m.

 At grade car park with a capacity of approximately 354 spaces.

Development Assumptions 92 Norsemens Road, Coronet Bay Table 1.1 Land Uses No. of Units Floorspace (Sq.m)

Accommodation Hotel 178 17,500 Function Centre - 3,504 Car Park (At Grade) 354 11,570 Source: Ausco Investment Group

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Local Context Map 1.1

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Picture 1 – Artist’s Impression of 92 Norsemens Road, Coronet Bay Development

Source: Bruce Henderson Architects

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2. ECONOMIC BENEFITS In this section, the quantifiable benefits of the proposed development are derived. 2.1. METHODOLOGY Analysis presented in this summary report uses REMPLAN economic modelling to assess current and potential economic impacts. REMPLAN is an Input-Output model that captures inter-industry relationships within an economy. It can assess the area-specific direct and flow-on implications across industry sectors in terms of employment, wages and salaries, output and value-added, allowing for analysis of impact at the Bass Coast Shire municipality level in this case, as well as at the state level. Key points regarding the workings or terminology of the model are as follows:

 REMPLAN uses either the value of investment or employment generation as the primary input. For this analysis, the value of total upfront investment has been used as the key input to assess the benefits of the construction phase, whereas future employment at the hotel and the function centre is the input to assessing the on-going economic benefits of the operation phase.

 Outputs from the model include employment generated through the project and economic Gross Value Added at both the local and the state level.

 Employment generated includes all full-time and part-time jobs created over the life of the construction phase; or in terms of the on-going operations, total on-going jobs generated.

 Gross Value Added or GVA is a measure of the value of goods and services produced in an area, industry or sector of an economy during a certain period of time. In this case, GVA represents the total economic contribution of the project.

 Both the direct and indirect benefits are modelled for employment and value added:

 Direct refers to the effect felt within the industry where the investment is being made. For example, during the construction phase, new direct jobs are created within the construction industry.

 Indirect effects are 1) those felt within industries that supply goods to the industries directly affected and 2) to industries that benefit from the wages that are earned and spent by those employed within the industries directly affected.

 Economic benefits are modelled for the construction and the on-going operation phases. For both phases, the employment and value added numbers are presented on an annualised basis. Construction phase benefits accrue each year when the project is under construction (or a pro-rata basis for any part year construction period). On-going benefits accrue each year of operation. The following sub-sections present a summary of benefits for these two phases.

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2.2. CONSTRUCTION PHASE The proposed development is estimated to have a total construction cost of around $41.8 million inclusive of GST over an anticipated construction timeframe of approximately 1.5 years. This equates to an annualised construction cost of some $27.87 million. As shown in Table 2.1 below, construction of the proposed development is estimated to be able to generate 35 direct jobs for the equivalent of one year as a result of construction, and 155 jobs indirectly created. Around 42% of the jobs (80 of 190) will accrue to the Shire of Bass Coast. There would be approximately $6.2 million in direct Gross Value Added (GVA) per year during the construction period, and $22.4 million in indirect GVA annually in constant 2016 dollar terms inclusive of GST. Over the 1.5-year construction period, total GVA would be around $43 million. All the direct benefits are expected to be felt within the Bass Coast Shire municipality, with the spin-off effect benefiting both the Shire and the rest of the State.

Construction Phase Benefits 92 Norsemens Road, Coronet Bay Table 2.1 Bass Coast Shire Victoria - Other Victoria Employment1 Direct Employment 35 0 35 Indirect Employment 45 110 155 Total Employment 80 110 190

Gross Value Added ($M, Constant 2016 Dollar Value) Direct Value Added 6.2 0.0 6.2 Indirect Value Added 6.1 16.4 22.4 Annual Gross Value Added 12.3 16.4 28.6 1. Total part-time and full-time jobs for the equivalent of one year during construction. Source: REMPLAN

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2.3. OPERATION PHASE Potential annual economic benefits (in jobs and GVA) as a result of the development are estimated here. The number of direct jobs for the proposed development was estimated by referring to industry benchmarks and Urbis’ experience in staffing requirements for different land uses, based on the floorspace of each of these proposed uses. Direct jobs are entered into REMPLAN to produce an estimate for indirect jobs and direct and indirect GVA. It is estimated that the proposed development would have the capacity to generate 173 direct jobs (full-time, part-time and casual) during the on-going operation period, all of which are obviously within Bass Coast Shire, given the location of the development. These direct jobs are estimated to induce a further 138 indirect jobs (full-time, part-time and casual) both within and beyond the Shire as a result of flow-on effects. Resulting from the economic activity on site, there would be an estimated $33.7 million per annum in direct and indirect GVA contribution generated from the daily operation and management of the development to the Victorian economy. This includes $12.8 million direct GVA benefit at the local level and $20.9 million indirect GVA benefit for both the Shire ($7.3 million) and elsewhere across the State ($13.6 million) (see Table 2.2 below).

Operation Phase Benefits 92 Norsemens Road, Coronet Bay Table 2.2 Bass Coast Shire Victoria - Other Victoria Employment (Total Full-time and Part-time Jobs) Direct Employment 173 0 173 Indirect Employment 56 82 138 Total Employment 229 82 311

Gross Value Added ($M, Constant 2016 Dollar Value) Direct Value Added 12.8 0.0 12.8 Indirect Value Added 7.3 13.6 20.9 Annual Gross Value Added 20.1 13.6 33.7 Source: REMPLAN; Urbis

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3. FORM OF BENEFITS The analysis in the previous section quantified the economic benefits of the proposed development. However, it is important to recognise how those benefits may manifest, particularly within the local area around Coronet Bay. Examples of how the development may benefit the area economically are summarised below: Greater Employment Opportunities This is an obvious outcome of development. During construction and operation, jobs will be created that local residents will have the opportunity to fill. Particularly during the operation phase, jobs will be available to those without formal qualifications, including large number of young workers. Support for Local Business The increased number of visitors staying longer, combined with the increased income and therefore spending capacity of workers, will enhance the size of the captive market for both surrounding and local businesses. Contribution to Local Tourism Infrastructure Compared to Philip Island, San Remo and other coastal areas to the south such as Inverloch which are the key focus of Bass Coast tourism, Coronet Bay has been considered as more of a peripheral location and is in need of investment. The proposed development, located central to the Coronet Bay/Corinella area, will provide local tourism infrastructure that can attract and retain visitors locally. Generation of New Tourism Activities As a local economy heavily dependent on the tourism sector, Bass Coast Shire Council is committed to promoting the Shire as an all-year tourism and events destination. This has been identified as a strategic focus in various local and state level policy documents and is enshrined in the Council’s Economic Development Strategy 2016-2021:

Bass Coast Shire Council will promote Bass Coast as an all year tourism destination by:

 …

 working collaboratively with event organisers to hold sustainable events and activities through education, training, streamlined processing of applications and joint promotion

 attracting new and off peak events and continuing to facilitate community events such as festivals and holiday celebrations

 promoting Bass Coast Shire to domestic and international visitors as an all year round destination

 advocating for more extensive pathway infrastructure, viewing towers and recreational infrastructure including leisure centres to attract a wider variety of visitors year round

P.25, Economic Development Strategy 2016-2021.

To this end, the proposed development at 92 Norsemens Road, Coronet Bay would have the capacity to capture new tourism activities as the Victorian tourism market continues to grow; the new function centre would also be able to attract new and potentially off peak events, contributing to the more balanced growth of the tourism sector within the Shire. The intention to cater to Chinese tour groups may promote the region to a wider market and lengthen the stay of visitors, many of whom only come for a day trip currently.

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DISCLAIMER This report is dated 14 February 2017 and incorporates information and events up to that date only and excludes any information arising, or event occurring, after that date which may affect the validity of Urbis Pty Ltd’s (Urbis) opinion in this report. Urbis prepared this report on the instructions, and for the benefit only, of Ausco Investment Group (Instructing Party) for the purpose of Preliminary Economic Benefits Assessment (Purpose) and not for any other purpose or use. To the extent permitted by applicable law, Urbis expressly disclaims all liability, whether direct or indirect, to the Instructing Party which relies or purports to rely on this report for any purpose other than the Purpose, and to any other person which relies or purports to rely on this report for any purpose whatsoever (including the Purpose). In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future events, the likelihood and effects of which are not capable of precise assessment. All surveys, forecasts, projections and recommendations contained in or associated with this report are made in good faith and on the basis of information supplied to Urbis at the date of this report, and upon which Urbis relied. Achievement of the projections and budgets set out in this report will depend, among other things, on the actions of others over which Urbis has no control. In preparing this report, Urbis may rely on or refer to documents in a language other than English, which Urbis may arrange to be translated. Urbis is not responsible for the accuracy or completeness of such translations and disclaims any liability for any statement or opinion made in this report being inaccurate or incomplete arising from such translations. Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this report, it is not responsible for determining the completeness or accuracy of information provided to it. Urbis (including its officers and personnel) is not liable for any errors or omissions, including in information provided by the Instructing Party or another person or upon which Urbis relies, provided that such errors or omissions are not made by Urbis recklessly or in bad faith. This report has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this report are given in good faith and in the reasonable belief that they are correct and not misleading, subject to the limitations above.

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