Transition Illawarra initiative: Stage One Regional Development Australia - Illawarra FINAL REPORT 17 December 2013 Deloitte Access Economics Pty Ltd ACN: 149 633 116 Natalie Burroughs Level 1, 9 Sydney Ave Chief Executive Officer Barton ACT 2600 PO Box 6334 Regional Development Australia Illawarra Kingston ACT 2604 Wollongong NSW 2500 Tel: +61 2 6175 2000 Fax: +61 2 6175 2001 www.deloitte.com.au 17 December 2013 Dear Natalie Transition Illawarra initiative: Stage One Deloitte Access Economics has been contracted by Regional Development Australia (RDA) Illawarra to undertake a comprehensive research project of the Illawarra economy. The research forms the first stage of the Transition Illawarra Initiative. The Transition Illawarra Initiative is being led by RDA Illawarra for the purpose of identifying and promoting economic diversification in the Illawarra region. The work is guided by a Stakeholder Group, formed from the existing Illawarra Taskforce. There are seven distinct elements of this research project: a review of existing research, initiatives and strategies; a review of the Illawarra economy, including the industry structure; a competitive analysis to consider how the Illawarra economy fits in a national and global perspective; an analysis of the region’s future workforce profile; a supply chain analysis of the top two emerging and developing sectors; analysis of infrastructure requirements based on evidence-based growth opportunities; and, recommendations and strategies. This report represents the final report as part of this project. It incorporates feedback on earlier draft reports received from both RDA Illawarra and the broader Stakeholder Group. I hope this analysis will prove useful to RDA Illawarra in implementing the coming stages of the important Transition Illawarra initiative. Please do not hesitate to contact me if we can be of any further assistance. Yours sincerely, David Rumbens Director Deloitte Access Economics Pty Ltd Liability limited by a scheme approved under Professional Standards Legislation. © 2013 Deloitte Access Economics Pty Ltd Transition Illawarra initiative: Stage One Contents Glossary ...........................................................................................................................................i Executive Summary .........................................................................................................................i 1 Recommendations .............................................................................................................. 1 2 Economic and strategy review ............................................................................................ 6 2.1 Overview of the region .......................................................................................................... 6 2.2 Data review of regional economy .......................................................................................... 8 2.3 Review of existing research, initiatives and strategies ........................................................ 12 3 Competitive analysis ......................................................................................................... 14 3.1 The rise of Asia ..................................................................................................................... 14 3.2 Ageing population ................................................................................................................ 22 3.3 Technological change ........................................................................................................... 26 3.4 Business/industrial development ........................................................................................ 31 3.5 Growth in Sydney ................................................................................................................. 37 4 Workforce future needs .................................................................................................... 45 4.1 Projected population ........................................................................................................... 45 4.2 Projected employment ........................................................................................................ 48 4.3 Projected employment by occupation ................................................................................. 54 4.4 Projected qualification profile ............................................................................................. 59 5 Infrastructure analysis ...................................................................................................... 64 5.1 Transport.............................................................................................................................. 64 5.2 Utilities infrastructure .......................................................................................................... 75 5.3 Health and social services/education .................................................................................. 77 5.4 Urban amenity/public domain ............................................................................................. 81 6 Supply chain analysis ........................................................................................................ 83 6.1 Choosing an industry ........................................................................................................... 83 6.2 Current trends and demand analysis ................................................................................... 91 6.3 Overview of the supply chain............................................................................................... 99 6.4 Occupational analysis ........................................................................................................ 107 6.5 Capital intensity ................................................................................................................. 111 6.6 The indirect impact of professional, scientific and technical services ............................... 112 7 Conclusions ..................................................................................................................... 116 References ................................................................................................................................. 117 Appendix A : Population structure and trends .......................................................................... 122 Appendix B : Workforce structure and trends .......................................................................... 129 Appendix C : Industry structure ................................................................................................ 146 Appendix D : Drivers of regional development ......................................................................... 166 Transition Illawarra initiative: Stage One Appendix E : Current economic development strategies in the Illawarra ................................ 173 Appendix F : Description of existing regional strategies ........................................................... 184 Appendix G : Forecast methodology ......................................................................................... 191 Appendix H : Detailed employment forecasts .......................................................................... 196 Limitation of our work................................................................................................................... 210 Charts Chart 2.1 : Population growth by region, 2006-07 to 2011-12 ..................................................... 8 Chart 2.2 : Population growth through time, Illawarra, NSW and Australia................................. 9 Chart 2.3 : Location of workforce by age group .......................................................................... 10 Chart 2.4 : Industry intensity, Illawarra relative to NSW ............................................................ 11 Chart 2.5 : Private sector dwelling approvals, NSW and Illawarra ............................................. 12 Chart 3.1 : Average annual GDP growth, 2013-2023 .................................................................. 15 Chart 3.2 : University of Wollongong student enrolments, 2001 - 2012 .................................... 18 Chart 3.3 : Consensus forecasts for Chinese GDP growth .......................................................... 20 Chart 3.4 : NSW Coal and grain exports, 2011-12 (by volume)................................................... 21 Chart 3.5 : Spot price of coal ....................................................................................................... 22 Chart 3.6 : Qualifications of Illawarra health sector workers, 2011 ........................................... 24 Chart 3.7 : Illawarra region’s share of State employment by industry (relative to share of State population) .................................................................................................................................. 32 Chart 3.8 : Small business’ contribution to key aggregates ........................................................ 34 Chart 4.1 : Projected population growth per annum, Illawarra vs NSW..................................... 47 Chart 4.2 : Age distribution of the Illawarra’s population, 2013 and 2033 ................................ 48 Chart 4.3 : Employment growth, Illawarra vs NSW ..................................................................... 49 Chart