Acil Allen Report

REPORT TO THE UNIVERSITY OF MELBOURNE AND RMIT AUGUST 2019 FISHERMANS BEND CAMPUS DEVELOPMENTS ECONOMIC IMPACTS ON VICTORIA DRAFT REPORT ACIL ALLEN CONSULTING PTY LTD ABN 68 102 652 148 LEVEL NINE 60 COLLINS STREET MELBOURNE VIC 3000 AUSTRALIA T+61 3 8650 6000 F+61 3 9654 6363 LEVEL ONE 50 PITT STREET SYDNEY NSW 2000 AUSTRALIA T+61 2 8272 5100 F+61 2 9247 2455 LEVEL FIFTEEN 127 CREEK STREET BRISBANE QLD 4000 AUSTRALIA T+61 7 3009 8700 F+61 7 3009 8799 LEVEL ONE 15 LONDON CIRCUIT CANBERRA ACT 2600 AUSTRALIA T+61 2 6103 8200 F+61 2 6103 8233 LEVEL TWELVE, BGC CENTRE 28 THE ESPLANADE PERTH WA 6000 AUSTRALIA T+61 8 9449 9600 F+61 8 9322 3955 167 FLINDERS STREET ADELAIDE SA 5000 AUSTRALIA T +61 8 8122 4965 ACILALLEN.COM.AU SUGGESTED CITATION FOR THIS REPORT ACIL ALLEN CONSULTING (2019), FISHERMANS BEND CAMPUS DEVELOPMENTS: ECONOMIC IMPACTS ON VICTORIA, MELBOURNE, JUNE. RELIANCE AND DISCLAIMER THE PROFESSIONAL ANALYSIS AND ADVICE IN THIS REPORT HAS BEEN PREPARED BY ACIL ALLEN CONSULTING FOR THE EXCLUSIVE USE OF THE PARTY OR PARTIES TO WHOM IT IS ADDRESSED (THE ADDRESSEE) AND FOR THE PURPOSES SPECIFIED IN IT. THIS REPORT IS SUPPLIED IN GOOD FAITH AND REFLECTS THE KNOWLEDGE, EXPERTISE AND EXPERIENCE OF THE CONSULTANTS INVOLVED. THE REPORT MUST NOT BE PUBLISHED, QUOTED OR DISSEMINATED TO ANY OTHER PARTY WITHOUT ACIL ALLEN CONSULTING’S PRIOR WRITTEN CONSENT. ACIL ALLEN CONSULTING ACCEPTS NO RESPONSIBILITY WHATSOEVER FOR ANY LOSS OCCASIONED BY ANY PERSON ACTING OR REFRAINING FROM ACTION AS A RESULT OF RELIANCE ON THE REPORT, OTHER THAN THE ADDRESSEE. IN CONDUCTING THE ANALYSIS IN THIS REPORT ACIL ALLEN CONSULTING HAS ENDEAVOURED TO USE WHAT IT CONSIDERS IS THE BEST INFORMATION AVAILABLE AT THE DATE OF PUBLICATION, INCLUDING INFORMATION SUPPLIED BY THE ADDRESSEE. ACIL ALLEN CONSULTING HAS RELIED UPON THE INFORMATION PROVIDED BY THE ADDRESSEE AND HAS NOT SOUGHT TO VERIFY THE ACCURACY OF THE INFORMATION SUPPLIED. UNLESS STATED OTHERWISE, ACIL ALLEN CONSULTING DOES NOT WARRANT THE ACCURACY OF ANY FORECAST OR PROJECTION IN THE REPORT. ALTHOUGH ACIL ALLEN CONSULTING EXERCISES REASONABLE CARE WHEN MAKING FORECASTS OR PROJECTIONS, FACTORS IN THE PROCESS, SUCH AS FUTURE MARKET BEHAVIOUR, ARE INHERENTLY UNCERTAIN AND CANNOT BE FORECAST OR PROJECTED RELIABLY. ACIL ALLEN CONSULTING SHALL NOT BE LIABLE IN RESPECT OF ANY CLAIM ARISING OUT OF THE FAILURE OF A CLIENT INVESTMENT TO PERFORM TO THE ADVANTAGE OF THE CLIENT OR TO THE ADVANTAGE OF THE CLIENT TO THE DEGREE SUGGESTED OR ASSUMED IN ANY ADVICE OR FORECAST GIVEN BY ACIL ALLEN CONSULTING. © ACIL ALLEN CONSULTING 2019 CONTENTS EXECUTIVE SUMMARY I 1 INTRODUCTION 1 1.1 Background and context 1 1.2 Study objective 2 1.3 Study approach 2 1.4 Report structure 2 2 MODELLING APPROACH AND METHODOLOGY 3 2.1 Overview of approach 3 2.2 Analysis of the impact of capital expenditures 5 2.3 Analysis of the impact of increased recurrent expenditures 5 2.4 Analysis of the impact of increased student and visitor expenditures 5 2.5 Analysis of the impacts of collaborative research with industry 6 2.6 Analysis of the impact of additional graduates 8 3 MODELLINIG RESULTS: YEAR-BY-YEAR IMPACTS 15 3.1 Melbourne University impacts 15 3.2 RMIT impacts 16 3.3 Combined impacts 18 4 MODELLING RESULTS: CUMULATIVE IMPACTS 20 4.1 Melbourne University impacts 20 4.2 RMIT impacts 20 4.3 Combined impacts 21 A TASMAN GLOBAL CGE MODEL A–1 A.1 A dynamic model A–1 A.2 The database A–1 A.3 Factors of production A–3 A.4 Population growth and labour supply A–3 A.5 The Australian labour market A–3 FIGURES FIGURE 2.1 ECONOMIC IMPACT ANALYTICAL FRAMEWORK 3 FIGURE 2.2 ILLUSTRATIVE SCENARIO USING A CGE MODEL OF THE AUSTRALIAN ECONOMY 4 FIGURE 2.3 FISHERMANS BEND CAMPUSES CAPITAL EXPENDITURE BY YEAR, FY2020 TO FY2033 5 FIGURE 2.4 RESEARCH CYCLE 6 CONTENTS FIGURE 2.5 PROJECTED NUMBER OF ADDITIONAL MSE GRADUATES DUE TO FISHERMANS BEND CAMPUS, 2024 TO 2033 8 FIGURE 2.6 PROJECTED NUMBER OF ADDITIONAL MELBOURNE UNIVERSITY ABP GRADUATES DUE TO FISHERMANS BEND CAMPUS, 2024 TO 2033 9 FIGURE 2.7 PROJECTED NUMBER OF ADDITIONAL RMIT GRADUATES DUE TO FISHERMANS BEND CAMPUS, 2023 TO 2033 11 FIGURE 2.8 ENGINEERING INCOME PREMIUM BY AGE COMPARED WITH OTHER FIELDS OF STUDY AT THE SAME QUALIFICATION LEVEL 12 FIGURE 2.9 INCOME PREMIUM BY AGE FOR HIGHER ENGINEERING DEGREES, COMPARED WITH A BACHELOR OF ENIGINEERING QUALIFICATION 13 FIGURE 2.10 ARCHITECTURE AND BUILDING INCOME PREMIUM BY AGE COMPARED WITH OTHER FIELDS OF STUDY AT THE SAME QUALIFICATION LEVEL 13 FIGURE 2.11 INCOME PREMIUM BY AGE FOR HIGHER ARCHITECTURE AND BUILDING DEGREES, COMPARED WITH A BACHELOR OF ARCHITECTURE OR BUILDING QUALIFICATION 14 FIGURE 3.1 YEAR-BY-YEAR IMPACT OF MELBOURNE UNIVERSITY’S FISHERMANS BEND CAMPUS ON VICTORIA’S GROSS STATE PRODUCT, FY2018 TO FY2040 ($M, 2019 DOLLARS) 15 FIGURE 3.2 YEAR-BY-YEAR IMPACT OF MELBOURNE UNIVERSITY’S FISHERMANS BEND CAMPUS ON VICTORIA’S EMPLOYMENT, FY2018 TO FY2040 (FTE’S) 16 FIGURE 3.3 YEAR-BY-YEAR IMPACT OF RMIT’S FISHERMANS BEND CAMPUS ON VICTORIA’S GROSS STATE PRODUCT, FY2018 TO FY2040 ($M, 2019 DOLLARS) 17 FIGURE 3.4 YEAR-BY-YEAR IMPACT OF RMIT’S FISHERMANS BEND CAMPUS ON VICTORIA’S EMPLOYMENT, FY2018 TO FY2040 (FTE’S) 18 FIGURE 3.5 YEAR-BY-YEAR IMPACT OF MELBOURNE UNIVERSITY’S AND RMIT’S FISHERMANS BEND CAMPUSES ON VICTORIA’S GROSS STATE PRODUCT, FY2018 TO FY2040 ($M, 2019 DOLLARS) 18 FIGURE 3.6 YEAR-BY-YEAR IMPACT OF MELBOURNE UNIVERSITY’S AND RMIT’S FISHERMANS BEND CAMPUSES ON VICTORIA’S EMPLOYMENT, FY2018 TO FY2040 (FTE’S) 19 TABLES TABLE 2.1 LITERATURE ESTIMATES OF THE BENEFITS OF UNIVERSITY RESEARCH 7 TABLE 2.2 MSE GRADUATE DESTINATION ASSUMPTIONS – WITH FISHERMANS BEND CAMPUS AND COUNTERFACTUAL 9 TABLE 2.3 COURSES AND PLACES OF STUDY ASSUMED IN THE COUNTERFACTUAL – MELBOURNE UNIVERSITY ARCHITECTURE / BUILDING / PLANNING 10 CONTENTS TABLE 2.4 MELBOURNE UNIVERSITY ABP GRADUATE DESTINATION ASSUMPTIONS – WITH FISHERMANS BEND CAMPUS AND COUNTERFACTUAL 10 TABLE 2.5 COURSES AND PLACES OF STUDY ASSUMED IN THE COUNTERFACTUAL - RMIT 11 TABLE 2.6 RMIT GRADUATE DESTINATION ASSUMPTIONS – WITH FISHERMANS BEND CAMPUS AND COUNTERFACTUAL 12 TABLE 4.1 CUMULATIVE IMPACT OF MELBOURNE UNIVERSITY’S FISHERMANS BEND CAMPUS ON VICTORIA’S REAL GSP AND EMPLOYMENT, FY2018 TO FY2040 20 TABLE 4.2 CUMULATIVE IMPACT OF RMIT’S FISHERMANS BEND CAMPUS ON VICTORIA’S REAL GSP AND EMPLOYMENT, FY2018 TO FY2040 21 TABLE 4.3 CUMULATIVE IMPACT OF MELBOURNE UNIVERSITY’S AND RMIT’S FISHERMANS BEND CAMPUSES ON VICTORIA’S REAL GSP AND EMPLOYMENT, FY2018 TO FY2040 21 EXECUTIVE SUMMARY ACIL Allen Consulting has been commissioned by The University of Melbourne and RMIT to analyse the projected economic impacts of the universities’ planned campus developments at Fishermans Bend on Victoria. New university campuses at Fishermans Bend The co-location of RMIT University and The University of Melbourne would position Fishermans Bend as a global centre of Engineering educational and research excellence. It provides an opportunity to blend two distinct but synergistic approaches in the field of engineering: RMIT’s approach with its emphasis on application and problem-based learning across a set of undergraduate and postgraduate engineering programs and The University of Melbourne’s reflective and research-focused approach centring on a comprehensive suite of postgraduate programs. RMIT has a large market share of vocational education in Victoria, facilitating important pathways into higher education. It also maintains a very high market share of undergraduate Engineering enrolments in Victoria (approximately 38 per cent in 2016), and the engineering program was ranked in the top 100 globally in 2018 by QS. It also has a 17 per cent market share of enrolment in postgraduate coursework in Engineering in Victoria. The University of Melbourne offers engineering at the postgraduate level after students complete a generalist bachelor’s program. Its market share of postgraduate coursework engineering in Victoria was 48 per cent in 2016, and the university’s engineering program was ranked 27th globally in 2018 by QS. The co-location of The University of Melbourne and RMIT University at Fishermans Bend would facilitate increased pathways and opportunities for shared project and student/research-led initiatives. Year-by-year economic impacts ACIL Allen has assessed four key drivers of the economic impact of the planned campus developments at Fishermans Bend by Melbourne University and RMIT: 1. Impact of capital expenditure on campus infrastructure as well as the impact of increased university recurrent expenditures 2. Impact of increased student expenditure and associated visitor expenditure 3. Impact of additional research enabled by the new campuses on industry productivity and value added 4. Impact of additional university and VET graduates in enlarging the skilled workforce in Victoria. i FISHERMANS BEND CAMPUS DEVELOPMENTS ECONOMIC IMPACTS ON VICTORIA Impact on Victoria’s Gross State Product The year-by-year impact of Melbourne University’s and RMIT’s Fishermans Bend campuses on Victoria’s Gross State Product (GSP) between FY2018 and FY2040 is shown in Figure ES 1. GSP is the monetary value of all finished goods and services produced in Victoria and is equal to the sum of the gross value added of all businesses located in the state. It is the most commonly used indicator of the size of the state’s economy. By the end of the analysis period in FY2040, the two campuses at Fishermans Bend are projected to contribute $595.84 million in 2019 dollars towards Victoria’s GSP. The breakdown of the additional GSP in FY2040 is as follows: — $141.23 due to capital and additional recurrent expenditures — $26.75 million due to additional student spending — $184.00 million due to the impact of additional research on industry productivity — $242.35 million due to the additional human capital associated with the increased number of graduates working in Victoria.

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