Western Trade Coast Industries Committee WESTERN TRADE COAST INTEGRATED AUSTRALIAN MARINE COMPLEX SEPTEMBER 2013 ASSESSMENT ENVIRONMENTAL, SOCIAL AND ECONOMIC IMPACT KWINANA INDUSTRIAL AREA LATITUDE 32 INDUSTRY ZONE ROCKINGHAM INDUSTRY ZONE Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact This page intentionally left blank SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE ii Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact The authors would like to acknowledge the support and contributions to the report from: Kwinana Industries Council AMC Connect SKM, REU and the WTC Industries Committee wish to acknowledge and thank the industry participants that contributed to the study by providing commercial and process data on their WTC operations and participating in interviews. The time and effort individuals and businesses put into completing surveys was critical to the successful completion of this study. These companies are recognised more fully in Appendix A. We also wish to thank the various state and local government departments who provided input to and review of the content developed. This is an independent study. Unless otherwise stated, all opinions and values represent what was communicated to SKM and REU during engagement of both industry and government agencies. This assessment seeks to identify issues and opportunities as raised by survey respondents and interviewees and to prioritise their importance to the WTC. It does not consider Agency activities that may be underway or planned to address these matters. Lead Consultant and Lorie Jones Project Director: Lead Author: Scott Bainbridge Jonathan Thomas (Economics), Rohan Miller (Synergies), Sam Linke (Case Studies), Contributing Authors: Helen Hunt (Environmental and Social), Jordan Green (Demographics) Project Manager: Peter Gardner Recommended Document Reference: SKM & REU (2013). Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact, September 2013(Reissued September 2014). Document prepared for the Western Trade Coast Industries Committee. SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE iii Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact This page intentionally left blank SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE iv Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact Abstract This report on the Western Trade Coast (WTC) was commissioned by the WTC Industries Committee and prepared by Sinclair Knight Merz (SKM) and Resource Economics Unit (REU). It is the fourth report of its kind, with previous reports published in 1990, 2002 and 2007. The report presents and reviews environmental, social and economic performance data of WTC industries, sourced directly from these industries and supplemented by state and local government data and other published reports. Both qualitative and quantitative data were collected, with 40 interviews conducted and 27 questionnaire responses analysed. The following key findings reinforce that the WTC is the State’s premier industrial area, and has evolved a unique level of connectivity that gives strategic advantages to industry located within the WTC as well as Western Australia in general. The WTC: - 1) Is a significant contributor to the Western Australian economy with direct sales of $14.7 billion per annum. 2) Employs 11,362 people directly, of which 64% live locally within Cockburn, Kwinana or Rockingham. 3) Pays $953 million in wages and salaries directly to workers employed within the WTC. 4) Has indirect inter-industry flow-on effects amounting to an estimated $10.3 billion in output, $0.8 billion in wages and salaries paid, and 18,274 jobs. 5) Makes a positive social contribution to local communities with over $1.8 million dollars in donations reported by industries participating in the study for 2010/11, over double the value reported in 2007, in addition to the high level of local employment. 6) Has an extensive and highly integrated network of industrial symbiosis with approximately 158 synergies mapped between Kwinana cluster industries within the WTC, making the WTC a global leader in this area. 7) Has some protection from urban encroachment, though pressure does exist on the buffer, requiring further planning controls to protect both the community and industry. 8) Is a skills development centre and provides the state with a uniquely skilled workforce. The skills developed by WTC industries makes the local workforce highly valued by resource industries in the north. 9) Is committed to managing the environmental impacts of industry. Environmental issues including noise, air quality, societal risk, groundwater and the marine environment of Cockburn Sound are being well managed by industry and government, and have continued to improve over time. SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE v Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact This page intentionally left blank SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE vi Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact Executive Summary The Western Trade Coast Industries Committee commissioned Sinclair Knight Merz (SKM) to perform an environmental, social and economic impact assessment of the Western Trade Coast (WTC). This study is the fourth snapshot in time, with the original study in 1990 by Dames and Moore, and subsequent studies undertaken in 2002 and 2007 by SKM and Resource Economics Unit (REU). This iteration of the study has been expanded beyond its previous boundary of the Kwinana Industrial Area (KIA) and the Rockingham Industry Zone (RIZ) to encompass the entire WTC area, including areas such as the Australian Marine Complex (AMC) and the Latitude 32 Industry Zone. The current study seeks to address the following objectives: To quantify the direct and indirect economic and social importance of WTC industries to the local, Western Australian and Australian communities. To identify community benefits, environmental performance and sustainability initiatives of industry in the WTC. To determine the current synergies between WTC industries and report potential new synergies between industries. To identify the need for government support for existing industry and to facilitate establishment of new industries. This study was based on the collection and analysis of qualitative and quantitative data obtained from existing and proposed WTC industries, support industries, government agencies and local government authorities. The study has found that the WTC: Has a major impact on the Western Australian economy through employment and upskilling of workers, direct sales, and value adding to primary outputs. Directly produces a larger amount of income than the wages and salaries of their employees through payments of dividends, taxes and royalties. Has significant inter-industry flow-on effects. Has a strong positive contribution to the local community by providing employment, training and development, as well as sponsorship of community activities. Continues to improve environmental performance and advance sustainability initiatives which benefit the local and broader community. One of the questions asked of industry in the questionnaire and during interviews was to identify the main constraints and benefits to their operations being located within the WTC. Industry response is presented graphically in Figure ES-1. The available synergies, strategic location of the WTC adjacent to port facilities, protection of a buffer zone, and availability of process inputs are key attractive factors for WTC industries. Urban encroachment is shown as a significant negative factor, along with energy costs, labour costs, level of environmental regulation and the value of the Australian dollar. The future prosperity of the WTC should be protected by enhancing the positive attributes identified and addressing the issues of most concern to industry and other stakeholders in the region. SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE vii Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact Figure ES-1 Key benefits and constraints of the WTC identified by industry SINCLAIR KNIGHT MERZ | RESOURCES ECONOMIC UNIT Final – Sept. 2013 (Reissued Sept. 2014) | PAGE viii Western Trade Coast Integrated Assessment – Environmental, Social and Economic Impact Cumulative Synergies in the WTC The WTC is geographically isolated from other major industrial centres and the major resource regions of WA. This isolation has allowed the area to evolve a unique connectivity of heavy, fabrication, support and service industries, with utilities and infrastructure to suit. A cooperative and amicable industrial community has also developed in tandem with the growing synergies of the WTC. The growth of interacting industries and material transfers since the original 1990 study is presented in Table ES-1. Table ES-1 Trends in WTC (Kwinana cluster) synergies between 1990 and 2013 1990 2002 2007 2013 Participating 13 28 31 27 Industries Existing Interactions 27 106 145 158 New Interactions - 79 39 13 Identified Interactions No Longer Not Studied