Cities Beyond Perth. Best bets for growth in a new economic environment. Profiles of the largest regional centres in Western Australia.

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1 Cities Beyond Perth Best bets for growth in a new economic environment Profiles of the largest regional centres in Western Australia January 2015 Level 2, 53 Blackall Street Barton ACT

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3 The Regional Australia Institute Independent and informed by both research and ongoing dialogue with the community, the Regional Australia Institute (RAI) develops policy and advocates for change to build a stronger economy and better quality of life in regional Australia for the benefit of all Australians. Disclaimer and Copyright This research report translates and analyses findings of research to enable an informed public discussion of regional issues in Australia. It is intended to assist people to think about their perspectives, assumptions and understanding of regional issues. No responsibility is accepted by the RAI, its Board or its funders for the accuracy of the advice provided or for the quality of advice or decisions made by others based on the information presented in this publication. Unless otherwise specified, the contents of this report remain the property of the Regional Australia Institute. Reproduction for non-commercial purposes with attribution of authorship is permitted. RAI Research and Policy Project researcher: Annemarie Ashton-Wyatt, Senior Researcher Project supervisor: Jack Archer, Deputy CEO Contributing to research content and review: Su McCluskey, Chief Executive Officer Jennie Dwyer, Policy Advisor Morgan Rennie, Researcher Tai Nguyen, Researcher All RAI research is informed by the expertise of the RAI Research Advisory Committee. Members in 2014/15 are: Professor Sandra Harding, James Cook University (Chair) Professor Andrew Beer, University of Adelaide Professor Graeme Hugo, University of Adelaide Professor John Tomaney, University College of London Tim Shackleton, Director, Virtual Health Cities Beyond Perth (Profiles Report), January 2015 P a g e i

4 Research Partnership This research has been funded through a partnership between the Regional Australia Institute and the Department of Regional Development, Western Australia. Executive Reference Group: Tim Shackleton, Regional Development Council of Western Australia Mike Rowe, Department of Regional Development Su McCluskey, Regional Australia Institute Project Steering Committee: Ken King, Pilbara Regional Development Commission (Chair) Richard Hancock, Pilbara Development Commission Bruce Manning, Great Southern Development Commission Janine Hatch, Wheatbelt Development Commission Grant Arthur, Wheatbelt Development Commission John Acres, Department of Regional Development Denis O Donovan, Department of Regional Development Jack Archer, Regional Australia Institute Acknowledgements The RAI acknowledges the following people and organisations who have contributed feedback and ideas during the development of this report: Aboriginal Workforce Development Centre, Department of Training and Workforce Development City of Albany City of Kalgoorlie-Boulder Department of Corrective Services Goldfields Esperance Development Commission Kimberley Development Commission Fiona McKenzie, Department of Planning and Community Development, Victoria Goldfields-Esperance Development Commission Peel Development Commission Regional Development Council, Western Australia RDA Great Southern RDA Mid West Gascoyne Rio Tinto Shaddicks Lawyers South West Development Commission Wheatbelt Development Commission The Busselton Chamber of Commerce and Industry City of Busselton City of Mandurah Department of Training and Workforce Development Great Southern Development Commission FarmWorx Gascoyne Development Commission Mid West Development Commission Pilbara Development Commission RDA Goldfields Esperance RDA Kimberley RDA Peel RSM Bird Cameron Shire of Carnarvon The West Australian Regional Newspapers Workforce Education Cities Beyond Perth (Profiles Report), January 2015

5 Table of Contents Profiles of the Largest Regional Centres in Western Australia... 1 Old Towns With City-Sized Opportunities... 3 Albany Growing Southern-style Sophistication... 3 Bunbury Developing the Digital Future Busselton A City for All Seasons Geraldton From Service Centre to Regional City Places Growing Through Connected Lifestyles Mandurah The Alternative to Sprawl The Proposed Avon City: New Horizons Areas Well-Positioned for Accessing New Global Markets Broome Shifting Tides and New Opportunities Carnarvon Getting Ready to Grow Kununurra Diamonds, Droplets and Diversification Boom Towns in Transition Kalgoorlie-Boulder Building the Old and the New Karratha City The New City of the North Port Hedland Becoming More Than a Work Place Appendix C: List of Figures in the Profiles Report Contacts and Further Information References and Endnotes An Executive Summary and the Analysis of the competitive and collaborative advantages of Western Australia s largest regional centres are published separately to this report. Cities Beyond Perth (Profiles Report), January 2015 P a g e iii

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7 Profiles of the Largest Regional Centres in Western Australia This research considers the largest population centres in each region, and where twin cities are growing, the largest two centres. The Wheatbelt is an exception, as three adjacent LGAs (Northam, York and Toodyay) from the Avon sub-region are considered as a group, based on a proposed Avon City planning concept provided by the Wheatbelt Development Commission. The Cities Beyond Perth Analysis Report (published separately) considers the macro comparison level, identifying the big issues which will help to enable sustainable population growth and economic development, both at a regional level and a State level. It explores the similarities and differences between the regions, and considers those factors which will help to promote growth, and also any issues which may create a bottleneck or disincentive to investment. The Cities Beyond Perth Profiles Report (this document) provides a profile of each of the selected locations. Each place is analysed as an individual entity, in the context of its role within the region, and in comparison to similar locations within Australia. The regional profiles are organised into the four analysis groups: 1. Old towns with city-sized opportunities Albany in the Great Southern region; Bunbury in the South West region; Busselton in the South West region; Greater Geraldton in the Mid West region; 2. Places growing through connected lifestyles Mandurah in the Peel region; The proposed Avon City: Northam, Toodyay and York in the Wheatbelt region. 3. Areas well-positioned for accessing the new global markets Broome in the Kimberley region; Carnarvon in the Gascoyne region; Kununurra in the Kimberley region; 4. Boom towns in transition Kalgoorlie-Boulder in the Goldfields-Esperance region; Karratha City in the Pilbara region; Port Hedland in the Pilbara region; Cities Beyond Perth (Profiles Report), January 2015 Page 1

8 The following analysis is conducted at the LGA level unless otherwise specified. While most locations have similar names within the original Australian Bureau of Statistics (ABS) data sources, please note that Greater Geraldton is measured using Geraldton-Greenough LGA, Karratha City is measured using Roebourne LGA and Kununurra is measured using Wyndham- East Kimberley LGA. Each location is analysed as an individual entity, in the context of its role within the region, and in comparison to similar locations within Australia. This analysis is based on a range of national quantitative data sources, including data from [In]Sight: Australia s regional competitiveness index developed by the RAI. Expanded research notes on the theoretical perspective informing this research and methodologies used are available in Appendix A in Part One. The exception to this analysis pattern is the proposed Avon City, which is a synthesis of three LGAs; Northam, Toodyay and York. This is due to their close proximity within the Avon subregion of the Wheatbelt and to assess any potential benefit that may exist from a core and periphery approach to regional development. Interpretation of all data was informed by a range of qualitative information sourced through consultation undertaken by the RAI with leaders in regional development, business and community in each of the regions, with supplementary information harvested from a range of publications as referenced in endnotes. Cities Beyond Perth (Profiles Report), January 2015 Page 2

9 Old Towns With City-Sized Opportunities Albany Growing Southern-style Sophistication The City of Albany is the most southerly large city in Western Australia. It is located approximately 400 kilometres south of Perth, approximately 4½ hours driving or 1¼ hours by air. Established in 1826 as a port town, Albany has a central role in Australian history as the departure point for the ANZAC convoys in Today, Albany is still a working port, but one that is surrounded by a substantial city population with a diverse local economy. It is the central service provider for the surrounding Great Southern region. Grain, woodchips and silica sands from the wider region are exported from the port. 1 Recent investment through the Royalties for Regions scheme has realised a major redevelopment of key infrastructure in Albany, including extension of the airport and upgrades of roads and community facilities. The substantial development of the Princess Royal Harbour provides a better link between the town and the waterfront. The waterfront precinct already offers a new entertainment centre and marina, with prospects for development of further amenities in serviced commercial lots. Next to the waterfront, a new tertiary campus offers a range of undergraduate and postgraduate programs enabled by a cooperative arrangement between the University of Western Australia and Curtin University. A new research facility, the Centre for Excellence in Natural Resource Management, was opened at this tertiary complex in 2011 and is already attracting research funding for regional projects. These developments are working to create the foundations for a higher level of sophistication in the local economy, and offer strong potential for stimulating further growth. Population Profile Albany has a substantial resource available in the size of its existing population, with the LGA having a population of 33,650 in This offers an established market for goods and services, as well as a pool of employees for prospective investors. The population in Albany is notably top-heavy in older age groups (Figure 1). There is a substantial aged population with over 8,000 residents aged 60 years or more. Already five per cent of the population is aged 80 years or older, compared to three per cent in Perth. There is evidence that Albany has an inward trend for retiree migration, both from the surrounding region and from elsewhere in Western Australia. 2 The ageing population will present both opportunities and challenges for economic development in Albany in the coming decades. Cities Beyond Perth (Profiles Report), January 2015 Page 3

10 The biggest age group overall is in the 10 to 19 year age group, but this does not flow on to a large young adult population. The lower proportion of people aged 20 to 29 years and 30 to 39 years reflects the national trend for many younger people in regional areas to move to capital cities in search of education and new work opportunities. The establishment of a tertiary education campus in Albany offers a positive alternative to Perth in some academic disciplines. Expansion of the campus and sufficient regional employment demand for skilled graduates will be needed to reduce the young adult migration trend in the longer term. Figure 1: Population structure by age and sex in Albany LGA in The population of Albany is projected by the Western Australian Government to grow to between 43,000 and 47,800 by The LGA is currently tracking below this 2006 forecast, having achieved 1.3 per cent annual average growth between 2006 and The expected population for Albany would be 40,844 if growth continues at the same rate until 2026, below the low range of previous forecasts. Economic Profile The GRP for the Great Southern region in was $4,198M (1.7 per cent of the Western Australian GSP), increasing slightly from $4,177M in Regional income would have been affected by a reduced terms of trade for agricultural exports of -0.8 per cent accompanied by a rise of 3.6 per cent in the terms of trade for the mining sector. 6 The agriculture, forestry and fishing industry is the dominant exporter for the Great Southern region. Cities Beyond Perth (Profiles Report), January 2015 Page 4

11 Employment profile Despite the impact of global commodity markets on agricultural exports, Albany has a stable local economy which is reflected in its diverse employment profile (Figure 2). People who are usually resident in Albany are most likely to work in the retail trade, health care and social assistance sector, and education and training industry. Substantial labour groups are also evident in construction, manufacturing, and the agriculture, forestry and fishing industries. The agriculture forestry and fishing industry in Albany also has a small labour export component, which is likely to be comprised of people who live within the city and commute to the wider Great Southern region for work. The main export of labour occurs in the construction and manufacturing industries, followed at a lesser level by the mining industry. Figure 2: Employment profile by industry sector for Albany LGA comparing count by place of work with count by place of usual residence in Cities Beyond Perth (Profiles Report), January 2015 Page 5

12 Export labour is usually driven by two factors, better wages available in other locations for similar skills levels, and/or a lack of local employment. While Albany does not yet have the intensive level of engagement in FIFO work evident in many other regional cities, such as Busselton and Geraldton, it does have a small, regular commuter group of FIFO workers. The upgrading of the airport will enable further capacity for jet aircraft, which are favoured by mining companies for charter flights, and is expected to expand the opportunities for engagement in FIFO work. The knowledge sector is generally lacking substantial development in Albany, except for a reasonable professional scientific and technical services industry which employed four per cent of the workforce in A lack of capacity in the information, media and telecommunications services workforce is of particular concern as this may become a bottleneck for future regional growth. Business Profile Albany has a well-established and diverse business sector, reflecting both the agglomeration factors of its base population size and the length of time since first settlement. Albany also has a high level of business density, with businesses per 1,000 population in 2011, which is higher than both Perth and national density levels. 8 Despite the high business density, there was no overall growth in new business from 2007 to 2011, experiencing less than 0.1 per cent change over five years. Albany had an average of 429 business exits per year and an average of 424 business entries per year from 2007 to There is some evidence of a general slowing of both business entries and business exits since the Global Financial Crisis (GFC) in 2009, but this reflects similar trends at a national level. Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Albany compared to the rest of the Great Southern region in 2012 (Figure 3). This analysis reveals the dominance of retail and construction sectors for generating turnover in Albany, which is consistent with preceding employment by industry patterns. Other industries having higher turnover in Albany are the agriculture, forestry and fishing industry and the manufacturing industry. A level of economic diversity in local business is evident by the distribution of turnover through the knowledge and other services sectors. In contrast, the rest of the Great Southern region is underpinned by substantial local business turnover in the agriculture, forestry and fishing industry, with much less diversity evident across other sectors. Retail and construction are the next highest sectors in the wider region, followed by manufacturing, then transport, postal and warehousing services. The relationship between Albany and the wider region offers potential opportunities to drive mutual areas of future growth. Currently, relatively little revenue is currently generated by the accommodation and food services industry or the arts and recreation sector. Cities Beyond Perth (Profiles Report), January 2015 Page 6

13 Figure 3: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Albany compared to the rest of the Great Southern region 9 Location Quotient Beyond the local and regional relationship, it is important to understand how a local economy fits within the wider state economy, as this can help to identify external factors which may influence growth strategies. Local economies with a higher level of dependency on single industries have increased exposure to fluctuations in external markets. They are also more sensitive to changes in industry-wide practices, such as trends for mechanisation reducing demand for labour. The location quotient (LQ) measures the competitive importance of industry sectors to the Albany economy using the Western Australian economy as a reference point (Figure 4). The location quotient indicates the level of variation from the reference point, where the reference Cities Beyond Perth (Profiles Report), January 2015 Page 7

14 point is a value of one. A value more than one indicates an industry which is more important for providing employment in the local economy compared to the reference economy. A value which is less than one indicates an industry which is less important for the local economy compared to the reference economy. The LQ measured by workforce at place of usual residence illustrates the relative importance of sources of income from both inside and outside spatial locations which are feeding into the local economy. It is evident that changes in the agriculture, forestry and fishing industry or the retail trade are more likely to have an impact on people who are usually resident in Albany compared to the whole of the Western Australian economy (Figure 4). In contrast, Albany has little risk exposure to changes in the mining industry, the wholesale trade industry, or any of the knowledge and services sectors, except for health care and social assistance. Figure 4: Location quotient analysis comparing Albany LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 10 Cities Beyond Perth (Profiles Report), January 2015 Page 8

15 There is also little evidence of change in the LQ between 2006 and This reflects a level of stability for the local workforce, but also indicates that people usually resident in Albany may not have benefited from increased LDC employment opportunities created by the resources boom in the way that the Perth and other regional economies have. In contrast, the location quotient (LQ) calculated using a count by place of work provides an overview of the local economic structure by assessing employment within a spatial location in comparison to the Western Australian economy. This provides us with an understanding of the shape of the local economy (i.e. jobs provided by local businesses and industries) without the confounding factors of effects caused by export of labour. Figure 5: Location quotient analysis comparing Albany LGA in 2006 and 2011 relative to Western Australian economy count by place of work 11 Cities Beyond Perth (Profiles Report), January 2015 Page 9

16 The agriculture, fisheries and forestry industry again has far more significance as a provider of jobs within the Albany LGA in comparison to the Western Australian economy (Figure 5). This is followed by high importance for retail trade, accommodation and food services, health care and social assistance, and the public administration and safety industries as providers of local employment. The industries which have grown in importance as a provider of employment from 2006 to 2011 are the agricultural, forestry and fishing industry, the public administration and safety sector, and the health care and social assistance sector. In contrast, there have been small declines in the importance of the construction industry, and the financial and insurance services sector as a provider of local employment in Albany. Local Competitiveness Despite having substantial competitiveness in natural resources, Albany demonstrates only an average level of competitiveness in economic fundamentals (Figure 6). A lower than average rate of building approvals indicates an economy which is not in a period of substantial growth. Figure 6: Competitiveness in Albany LGA compared to average ranks for Perth region and regional Western Australia 12 Cities Beyond Perth (Profiles Report), January 2015 Page 10

17 A major bottleneck to growth is the low competitiveness in labour market efficiency, due to low levels of skilled labour and high rates of welfare dependence. Only 27 per cent of the workforce in 2011 were working as managers or professionals, which places Albany in the seventh decile in national comparison. Welfare dependence is much higher than the national average, with over 21 per cent of the Albany population dependent on government support as the main household income source. The other bottleneck to growth is a slightly lower than average competitiveness in business sophistication. Despite a relatively diverse local economy, there is evidence of a higher dependence on a few large employers. Over dependence can create a level of vulnerability within local economies to external economic forces. Despite the current lack of substantial growth, analysis of the competitiveness of Albany indicates strong potential for future growth due to higher than average competitiveness in the endogenous growth factors of human capital, technological readiness, innovation, and also high competitiveness in infrastructure and essential services. Human capital is above average for competitiveness in national comparison. Over 38 per cent of the working age population hold either a certificate or diploma qualification, which places Albany in the top 20 per cent for technical qualifications at a national level. Similarly, university qualifications were also above average in competitiveness, with 14.4 per cent of the working age population holding a degree level or higher qualification. Albany performs at an average level or slightly higher in all indicators related to education and child development. The one area of concern with future workforce development is that approximately 20 per cent of the children in Albany measured as developmentally vulnerable in This is an area which will need to be addressed if Albany is to maintain its competitiveness in human capital and meet the demand for a skilled workforce generated by future economic growth. Long term growth also requires competitiveness in technological readiness. This is realised through good access to internet connectivity, a skilled ICT workforce and development of a local ICT support industry. Albany is currently just above the national average for technological readiness, but there is still room to improve. Around 58 per cent of all households were connected to the internet and 64 per cent of businesses and households had a broadband connection in While 4.6 per cent of the workforce were employed in a technology related business, only 0.6 per cent were employed as an ICT and electronics specialist, which is slightly lower than the national average. Innovation reflects the investment and capacity for research and development within a spatial location. It is critical for maintaining competitiveness in global markets, particularly to differentiate one product from another on aspects other than price. Albany is slightly above average for competitiveness in innovation, with, 2.9 per cent of the adult population holding a qualification in science or technology in Additionally, 0.04 per cent of the population Cities Beyond Perth (Profiles Report), January 2015 Page 11

18 were employed as research and development managers, which is a fourth decile rank of out of all LGAs in Australia. All growth is dependent upon the infrastructure and essential services which underpin the local economy, enabling products and services to be delivered to market. Albany is in the top 30 per cent nationally for infrastructure and essential services. Albany s key strengths are in access to transport infrastructure; particularly in the presence of a port, domestic airport, both freight and passenger rail services, and good connectivity to the national highway networks. Access to education services is mostly average or above average in competitiveness. Access to health and essential services is reduced by low competitiveness in access to GPs, which is a matter for concern given the higher level of aged people in the population and higher than average rates of developmentally vulnerable children. Albany and the Great Southern region Albany is the biggest population settlement within the Great Southern region. The next largest towns are Denmark, Katanning and Plantagenet with populations from 4,000 to 5,000 in 2011 at LGA level. Each of the seven remaining LGAs has a population under 2,000, with two very small shires with less than 500 people in 2011 (Kent and Woodanilling). Figure 7: Competitiveness in Albany LGA compared to the rest of the Great Southern region (average rank) 13 Cities Beyond Perth (Profiles Report), January 2015 Page 12

19 Due to the variability in population sizes for LGAs in the Great Southern region, competitiveness in Albany is best measured against the average rank for all LGAs (Figure 7). Average competitiveness lower across all themes for the rest of the Great Southern region, except for labour market efficiency. There is higher competitiveness in skilled labour and workforce participation rates when the average of all LGAs are calculated. In analysis of other LGAs within the Great Southern region, Denmark has the strongest all round competitiveness, particularly across the endogenous growth drivers of innovation, technological readiness and human capital. There is variation across the rest of the region. Plantagenet has a lower dominance of large employers and higher percentage of employment in the export/import/wholesaler industry. Kojonup has particularly high labour market efficiency. Katanning is generally the least competitive of all LGAs, despite a population of over 4,000 in Katanning was identified as one of the SuperTowns under the Regional Centres Development Plan, and has received substantial investment under Royalties for Regions. Any effects of this funding would not yet be reflected in the available data. Low competitiveness in endogenous growth drivers will need to be addressed in each of the LGAs with very small populations, if regional growth is to flow on and benefit Albany s economy in the future. Regional Aspirations The Great Southern region has already identified opportunities for growth through the development of the following industries and projects: Further development of high quality commercial timber crops; Growth in agriculture, horticulture and viticulture (e.g. construction of the Katanning saleyards); Expansion of mining and mineral processing (e.g. future viability of the Southdown magnetite project); Tourism opportunities, generated by upgrade of existing and development of new facilities, attractions and events (including the Albany Waterfront Development, Great Southern Festival, Albany ANZAC Centenary events, and Munda Biddi Trail extension); Planning for the Albany Port transport corridor and Denmark light industrial area; Increase and upgrading of aged care housing and facilities; and Extension of the UWA Albany campus and the Centre of Excellence in Natural Resource Management. Capital investment for development of power, water and transport infrastructure has been identified as a critical threshold issue for the attraction and expansion of industry in the Great Southern Region. 16 Future growth of industry, particularly in export markets, is also dependent on factors outside of local control, such as international exchange rates, trade agreements, Cities Beyond Perth (Profiles Report), January 2015 Page 13

20 changing global demand and supply patterns, weather events (e.g. drought) and longer term climate issues, which can all change growth potential. 17 Competitive Position in Relation to Similar Australian LGAs Locations with similar population size and industry profiles to Albany are Bega Valley in New South Wales, Kingborough in Tasmania and Warrnambool in Victoria (Figure 8). Each location demonstrates the more rounded profile associated with an agglomeration economy. They also have competitive strengths in the endogenous growth drivers of human capital, technological readiness and innovation. Similar to Albany, the towns have substantial agricultural industries, plus diversity in other industries, such as tourism and the knowledge sector. Figure 8: Competitiveness in Albany compared to similar population size locations 18 Despite having a lower level of natural resources, Warrnambool is more competitive in economic fundamentals than the other locations, driven by a high value in local building approvals on a per capita basis. Expansion of the abattoir and events related tourism are the stimulus for growing areas of the local economy. Warrnambool also has substantial dairy activity, an established horse racing industry, and has a campus for Deakin University. Cities Beyond Perth (Profiles Report), January 2015 Page 14

21 Bega Valley is also predominantly a dairy region, with an established tourism industry. Bega has an older population, similar to Albany. Bega provides an opportunity for shared learning both on the development of food manufacturing industries, on services for ageing populations and on heritage/experiential tourism. In contrast to all of the other locations, Kingborough has the most competitive level of labour market efficiency. This likely reflects its proximity to Hobart, and status as a preferred lifestyle area for professional people (perhaps more similar to Denmark, than Albany). Kingborough is also home to the Australian headquarters for the Antarctic research program. Kingborough demonstrates how the development of a research centre is associated with strengths in human capital and technological readiness, as well as the more obvious impct on competitiveness in innovation. This demonstrates the positive potential that may be realised in time through Albany s establishment of a regional research facility. The Future Albany s future growth has a number of potential pathways which will continue to grow economic diversity in the town while also continuing to develop core strengths. Consultation with regional leaders in Albany has identified four main pillars to underpin future development: 1. Expansion of the tourism industry through two market focuses: a. Heritage market to become an Australian place of pilgrimage as the departure point for the ANZAC convoys in 1914; and b. Experience market to become a viable destination for food/wine, ecotourism, and activity-based holidays; 2. Agricultural market development, particularly through expansion of the port and value-added food manufacturing; 3. Further development of clean energy power generation capacity, including expansion of wind-farms and wave power technology; 4. Expansion of services and amenities for older people, driven by Albany being a preferred retirement destination; and 5. A vision to become a college town in the tradition of Oxford or Harvard; particularly through the development of research facilities linked to the very high biodiversity in the region and natural resources industry opportunities, student accommodation and amenities. Sources of Competitive Advantage for Albany Albany s primary source of competitive advantage is its proximity to highly productive agriculture, forestry and fishing resources in the wider Great Southern region and a highly bio-diverse environment. Growth will be realised through its position as a key export place for these commodities, and as a central service provider to regional industries. Cities Beyond Perth (Profiles Report), January 2015 Page 15

22 Albany has secondary competitive advantages in the following areas: Mineral development latent resources particularly in magnetite have been identified for future exploitation subject to production viability and global market demand; Wave and wind power generation scientific study of climatic and oceanic conditions have been identified as offering substantial natural advantages over other regions; Good land and water availability; Historical connection to ANZAC heritage opportunities; and New market opportunities generated by the ageing population and the attractiveness of the Great Southern as a preferred retirement destination. Albany s future development is grounded in a solid infrastructure base, with good transport connectivity, capacity currently available within the port, and established light and heavy industrial parks. There is good availability of residential and commercial land for development without the excessively high costs for building which are encountered in more remote regions. The city s size and relative economic diversity generated by an established business sector provides an advantage for future growth. The dominance of the retail sector as an employer reflects a solid demand for goods and services from the surrounding region as well as a reasonable existing local market size. Albany has sufficient distance from Perth not to experience the retail bleed that occurs in more closely located regions. Albany also has strong latent potential in human capital, underpinned by consistent competitiveness in technological readiness and innovation, which provides a base for future growth. There is anecdotal evidence of under-utilisation of the existing skills base within the current workforce. Building Competitive Advantage and Success in the Future Albany s role as a service provider will be maximised by leveraging off changes in global markets and by supporting innovation to develop the agricultural, forestry and fishing industry in the wider region. The availability of light and heavy industrial areas, combined with expansion of local science/research and development activity, provides a foundation for the development of natural resources technology industries in the future. A somewhat cheaper cost of living is likely to make labour and start up costs lower than Perth or other regions. This is likely to provide an added incentive to investors, both at a local level and linked to development in the wider region. Albany will need to develop substantial short-term accommodation facilities to meet identified goals for expansion in tourism and the tertiary education sector. These facilities will need to be supported by the expansion of the food and entertainment sector and require a much larger hospitality workforce. Cities Beyond Perth (Profiles Report), January 2015 Page 16

23 Expansion of these sectors will, in turn, offer potential for student employment, making Albany a more attractive choice for potential students from elsewhere. Development of the arts and recreation industry would also realise a higher level of usage for the new entertainment centre and increase attractiveness for visitors as well as long-term and short-term residents. The challenge for Albany s future development is the extent to which it can improve labour participation within the city, and better utilise its latent potential in human capital. This will become even more important given the ageing of the existing population. Efforts will need to be made to identify specific attractors for encouraging family migration to balance the ageing population structure and meet future workforce needs. As the aged care industry is labour-intensive and relatively low-skilled, consideration should be given to developing pathways to assist unemployed or disengaged people to get back into the workforce to help meet future demand. While opportunities do exist within the city, Albany will also need to create the growth by attracting new investment to the region. The local economy will likely benefit from diversification of the industry base and a shift from a base-commodity export focus to a higher value-added product export. This will help to reduce local vulnerability to external economic forces, such as fluctuating agricultural terms of trade and unseasonal weather events. Cities Beyond Perth (Profiles Report), January 2015 Page 17

24 Bunbury Developing the Digital Future As the largest city in the South West region, Bunbury draws together the benefits of established infrastructure and a substantial population to create key opportunities for future economic growth. Bunbury was the first regional town in Western Australia to be declared a city in It is centred on a busy bulk handling port for export of resources, particularly alumina, woodchips and mineral/silica sands, and the import of caustic soda for use in manufacturing and petroleum refinement. The port is currently undergoing development to expand the inner harbour, which is expected to provide flow-on benefits for regional growth, and allows for development of a marina for recreational boating. Bunbury has a core role as a service provider for the highly populated surrounding region. It has the only Level 2 hospital outside of Perth, regional offices for government departments, a university campus, diverse agricultural and resource industry services, and a large retail trade including substantial big box developments across several shopping districts. Despite its obvious economic strengths, many retail and entertainment attractions, good climate, beautiful beaches and friendly dolphins, Bunbury appears to be struggling to evolve from its image as an industrial port town. In recent times it has been over-shadowed by other regional growth factors, such as new housing development in Dalyellup or the establishment of Busselton as a FIFO source community. Yet, current developments in Bunbury may help to change perceptions. The development of the Marlston and Koombana Bay waterfronts, with a mixture of commercial and residential properties and the planned marina, is shifting the focus away from the industrial/port role of the city and creating a more attractive environment for both residents and visitors. Bunbury also has opportunities for substantial growth enabled by high connectivity in communications and transport infrastructure. Bunbury has the only 1GB 19 internet connection in Australia through the new world class digital facility. 20 This has enabled the establishment of a new digital animation industry in Bunbury, and offers good prospects for economic growth, already capturing a multi-million dollar contract and creating more than 50 new jobs. Population Profile The population of Bunbury LGA was over 31,300 in While growth in recent years has been steady at 1.2 per cent per annum, Bunbury has not experienced the highly accelerated growth of many surrounding regions. Large green-field housing developments in the surrounding shires of Dardanup, Capel and Harvey have built the surrounding population to over 50,000 people in 2011 with access only to much smaller levels of retail, services and business infrastructure in their local areas. Cities Beyond Perth (Profiles Report), January 2015 Page 18

25 The population structure for Bunbury presents a normal profile, similar to the national and Western Australian profile (Figure 9). There is no evidence of a drift of younger people away from the city, as evident in many other regional populations. Figure 9: Population structure by age and sex in Bunbury LGA in The population of Bunbury is projected by the Western Australian Government to grow to between 34,900 and 45,200 by The LGA is currently tracking below this 2006 forecast, having achieved 1.2 per cent annual average growth between 2006 and The expected population would be around 37,490 if growth continued at the same rate until 2026, which is within the projected range. Economic Profile The GRP for the South West region in was $15,253M (6.3 per cent of the Western Australian GSP). 23 Regional industry includes extensive agriculture and horticulture (particularly viticulture), some forestry products, fishing and aquaculture, mining and resources extraction (coal, alumina, mineral sands and silica sands), power generation, and a well-established domestic and international tourism industry. Construction has also been a boom industry in recent years, particularly driven by the extensive housing and commercial property development across the region. The City of Bunbury s local population benefits from the employment opportunities generated by an established and diverse local economy. This economy has strengths across a number of different industries, including a highly developed services sector to meet the needs of the population and industry in the Greater Bunbury and wider South West region. The region also includes three SuperTowns, the agricultural/horticultural town of Manjimup, the industrial coal mining and power generation town of Collie, and the lifestyle, winery and tourism town of Margaret River. Cities Beyond Perth (Profiles Report), January 2015 Page 19

26 Employment Profile Bunbury is predominantly an importer of labour rather than an exporter, as a substantial part of its workforce lives in the surrounding LGAs of Dardanup, Capel and Harvey. The biggest importers of labour are the retail trade, health care and social assistance, education and training, and the public administration and safety sector (Figure 10). Export of local labour is only evident in the mining, manufacturing and construction industries. Figure 10: Employment profile by industry sector for Bunbury LGA comparing count by place of work with count by place of usual residence in Business Profile Bunbury s business sector is a critical source of employment for people living in the nearby South West region. Bunbury has a business density of 99.8 per 1,000 population, which is above the national average of 93.8 per 1,000 population. Bunbury also has more mid to large size employers than small employers. It is also the only location examined in this report that had more businesses employing five or more people than businesses employing one to four people. The overall number of businesses in Bunbury has remained relatively stable, particularly compared to the post-gfc closures evident in other regional locations. There was Cities Beyond Perth (Profiles Report), January 2015 Page 20

27 a net gain of 67 businesses across 2010 and 2011 compared to a net loss of 90 businesses in the post-gfc period of 2008 and Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Bunbury compared to Busselton and the rest of the South West region in 2012 (Figure 11). This analysis reveals the diversity of locally owned and operating business in the Bunbury economy. Construction and retail trade are the biggest local business sectors, followed by the rental, hiring and real estate industry, the professional, scientific and technical services industry, manufacturing, and the health care and social assistance sector. As local economies are driven by more than locally owned and operated business, it is important to consider the whole employment market in Bunbury to assess how it varies from the Western Australian economy. Figure 11: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Bunbury compared to Busselton and the rest of the South West region 25 Cities Beyond Perth (Profiles Report), January 2015 Page 21

28 Location Quotient Analysis of the relative importance of different employment sectors to the Bunbury economy compared to the Western Australian economy (where state industry value = 1) is examined in Figures 12 and 13. For people who usually live in the Bunbury LGA, the industries of electricity, gas, water and waste services, manufacturing and construction were a more important source of employment compared to the Western Australian economy. Bunbury s employment market has a lesser level of employment engagement with the agriculture, forestry and fishing industry and the mining industry compared to a whole of state level. The industry showing the biggest growth in importance to the local economy between 2006 and 2011 is the manufacturing industry (which includes food manufacturing and processing). The information, media and telecommunications industry also grew substantially as a provider of employment to local residents. Figure 12: Location quotient analysis comparing Bunbury LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 26 Cities Beyond Perth (Profiles Report), January 2015 Page 22

29 As a place of work, Bunbury is more resilient than many other regional cities to external effects in different industries or global markets. Its employment profile is spread among a number of different industries, when compared to the Western Australian economy, rather than being highly dependent upon just a few (Figure 13). The electricity, gas, water and waste services industry, the retail trade, the rental, hiring and real estate services industry, and the health care and social assistance sectors are all providers of employment at a higher competitive level than the Western Australian economy. Figure 13: Location quotient analysis comparing Bunbury LGA in 2006 and 2011 relative to Western Australian economy count by place of work 27 Substantial growth is evident in the information, media and telecommunications industry between 2006 and High growth in the health and social assistance sector is also evident in this period. This is likely to be related to the expansion of the Bunbury hospital and creation of new employment opportunities with the establishment of specialist cardiology and oncology units, but may also reflect growing need for services due to the ageing population across the South West region. Cities Beyond Perth (Profiles Report), January 2015 Page 23

30 Local Competitiveness Bunbury s competitiveness profile indicates a local economy with key strengths in business sophistication, technological readiness and innovation (Figure 14). These strengths are underpinned by above average competitiveness in natural resources, and also for infrastructure and essential services. Consistent with the preceding analysis, Bunbury has very high competitiveness for diversity in the local economy, and is in the top twenty per cent when compared at a national level. Other economic strengths include the relatively high average wages of the residents in Bunbury, a highly competitive level of people with income source from their own business, and good local access to finance. Despite the above strengths, a low value of building approvals per capita indicates that the Bunbury economy has experienced limited growth, as this has mostly occurred in the surrounding LGAs of Capel, Dardanup and Harvey in recent years. This has led to an outward migration of working age people, particularly skilled labour, into these new housing developments. Despite this, some areas of Bunbury retain strong attractors and very high values, particularly beachfront property and prestige suburbs around the town centre in Marlston Hill and Boulters Heights. Figure 14: Competitiveness in Bunbury LGA compared to average ranks for Australia and regional Western Australia 28 Cities Beyond Perth (Profiles Report), January 2015 Page 24

31 Very low competitiveness in labour market efficiency is a key weakness in the local economy, due to high welfare dependence and low proportions of skilled labour in the workforce. Approximately 22 per cent of the Bunbury population is dependent on government support as the main household income source, which places Bunbury in the bottom thirty per cent at a national level. Future growth in the Bunbury economy will depend upon improving competitiveness in both labour market efficiency and human capital. The level of qualifications in Bunbury is competitive, as over 40 per cent of the working age population held either a certificate or diploma qualification, and a further 14 per cent held a degree level or higher qualification in In contrast, primary school performance is very low in competitiveness, and 33 per cent of the early childhood cohort in Bunbury measured as developmentally vulnerable in English proficiency is also below average in national comparison. Other endogenous growth factors are higher in competitiveness. Bunbury is above average for competitiveness in technological readiness, with 62 per cent of businesses and households having a broadband connection. Approximately five per cent of the workforce in Bunbury is employed in a technology related business and 0.8 per cent of the workforce is employed as an ICT and electronics specialist. Bunbury has average competitiveness in innovation, with three per cent of the adult population holding a qualification in science or technology, and 0.03 per cent employed as research and development managers. Bunbury and the South West region The South West region can be divided into two sub-groups based on population size. Bunbury sits alongside the larger LGAs of Busselton, Harvey, Capel, Dardanup and Augusta-Margaret River, all with populations from 11,000 to 35,000 in The remaining LGAs with populations from 1,200 to 9,200 in 2011 are Manjimup, Collie, Donnybrook-Balingup, Boyup Brook and Nannup. The South West region is characterised by large populations in the coastal towns and adjacent areas, with competitively smaller populations in the inland, agricultural areas, such as Nannup and Boyup Brook. The larger settlements in the region typically have large established agriculture and/or tourism-related industries. This has created diversity in the economic base, through development of food manufacturing, viticulture, food and accommodation services, and the retail trade. The size of local populations also creates demand for services, such as banking, health and education which further diversifies the economy. In contrast, some of the smaller communities have struggled in recent decades due to structural adjustment factors, resulting in some loss of population to larger centres with more amenities. This trend had reversed somewhat, due to the attractiveness of the South West as a retirement destination. This has meant that areas with affordable housing adjacent to the more costly coastal locations are proving popular as a tree-change destination with attractive lifestyle opportunities. Cities Beyond Perth (Profiles Report), January 2015 Page 25

32 Figure 15: Competitiveness in Bunbury compared to the rest of the South West region (average rank) 29 Despite having the largest population in the region, Bunbury has lower competitiveness in labour market efficiency and human capital compared to the average rank for the rest of the South West region, which is partially due to the growth of new lifestyle developments in surrounding LGAs (Figure 15). Bunbury s competitive strengths are in business sophistication and in infrastructure and essential services. As a whole, both Bunbury and the South West region have solid potential for future economic growth, if smaller locations within the region can overcome lower competitiveness in innovation, technological readiness and access to infrastructure which are likely to inhibit growth. Competitive Position in Relation to Similar Australian LGAs The LGAs with similar population size compared to Bunbury are Bega Valley and Kempsey in New South Wales and South Burnett in Queensland (Figure 16). Bunbury and the Bega Valley both have high competitiveness in natural resources, but are average in competitiveness for economic fundamentals. In contrast, Kempsey and South Burnett have much lower competitiveness in natural resources and also have below average competitiveness in economic fundamentals. Cities Beyond Perth (Profiles Report), January 2015 Page 26

33 The main similarity across the group is evidence of structural economic weakness in labour market efficiency, due to low participation rates and low proportions of skilled workers in the workforce. Each also has average competitiveness in infrastructure and essential services, reflecting the level of service need generated by a resident population of around 30,000. Bunbury, Bega Valley and South Burnett all have some strengths in endogenous growth factors, as innovation and technological readiness are above average in competitiveness, but Kempsey lacks competitiveness in both themes. Human capital is a challenge in all locations except for the Bega Valley. Figure 16: Competitiveness in Bunbury compared to other LGAs in Australia with similar population size 30 The Future Bunbury s future growth is likely to be driven by demand from the market in the surrounding shires of Capel, Dardanup and Harvey, and to a lesser extent from the remaining LGAs in the South West region. It will be essential for Bunbury to reduce its level of welfare dependence, and increase the skill-set in its working age population, if it is to drive long term growth from within. Leveraging the relationship with the surrounding LGAs will also be essential for driving future economic growth. Cities Beyond Perth (Profiles Report), January 2015 Page 27

34 Regional Aspirations Bunbury s priority strategy for regional development is in its growth as a service provider to populations and the industries in the surrounding region. Services to the mining and agriculture industries will be enhanced through expansion of the port capacity, development of the knowledge and business services sector, as a centralised provider of government services to the region, and continued improvement of transport infrastructure. Expansion of Bunbury s tourism industry is planned through the development of the waterfront with the associated expansion of commercial premises and accommodation facilities. Integration of better public transport links for tourists and residents in the wider region is an identified need, particularly to focus on enhanced capacity to cater to regional events. Services to the regional population are anticipated to be met through continued development of housing, health and education infrastructure. Expansion of services to meet the region s ageing population is an identified priority area. Bunbury also has an expanding creative arts industry, led by the Vue Group which secured a multi-million dollar contract for supply of animation services to a Chinese film-maker 31. These contracts alone are expected to create over 50 new jobs in the local economy. Another area of recent growth is in the ICT sector, with a local company, CipherTel, providing Australia s first 1GB per second internet link. 32 Sources of Competitive Advantage for Bunbury Bunbury s primary competitive advantage is its good transport connectivity and supporting infrastructure capacity. It is well-placed for proximity to Perth and has substantial advantage with the completion of the Forrest Highway, existing passenger and freight rail capacity, and established port infrastructure. This connectivity is enhanced by access to some of the most substantial health and education facilities existing outside of the Perth metropolitan area. Bunbury also has a competitive advantage in its available commercial infrastructure and established role as a provider of services to the agriculture, tourism, electricity generation, and mining industries in the South West region. This role could be better developed through working in partnership with other LGAs, and through the South West Development Commission and RDA South West. Strategic partnerships offer the opportunity to develop cooperative industry specialisations, identify new markets and support the regional development of innovative goods and services. Competition between LGAs and lengthy, complex planning processes are recognised bottlenecks for the development of industry in the region. Cities Beyond Perth (Profiles Report), January 2015 Page 28

35 Bunbury has high technological connectivity, which offers very good potential for growth and is probably under-recognised or under-sold to potential investors at present. This capacity is critically important to enable greater expansion of the knowledge sector, particularly the professional, scientific and technical services sector, financial services, and information, media and telecommunications industry, and for further expansion of the arts and creative industries sector. Improved leveraging of connectivity is needed to attract more investment, and offers potential for Bunbury to develop capacity as a specialist centre for ICT and digital media businesses. Building Competitive Advantage and Success in the Future Successful and sustainable long term growth in Bunbury will only be achieved through improvement of human capital, particularly the reduction of welfare dependence. Expansion of employment opportunities through the construction of the waterfront development and the subsequent establishment of new commercial, retail and accommodation ventures creates a unique opportunity to start skill-building to create a work-ready group. This will be particularly important for re-engaging groups such as older workers, the long-term unemployed, people with disability, and parents wanting to transition back into the workforce. Despite access to university and technical facilities, enrolment levels for post-secondary education are below average in competitiveness in national comparison. Consideration of ways to deliver a wider variety of courses through flexible education pathways may be useful for attracting students who would like to stay in the region, but find it necessary to relocate to Perth. Greater linkages with regional employers may also foster improved enrolment and employment of graduates. There is some anecdotal evidence that people may be working below their skill-set. Planning is needed to develop opportunities to better utilise latent professional skills and qualifications. Bunbury and Busselton would both substantially benefit from improved direct public transport connectivity between the two cities. This will help to meet the current and future needs of the expanded populations, enabling people who are dependent on public transport to move more freely between the two cities which improves their prospects for accessing education and employment opportunities. It will also assist to reduce traffic congestion on the highway. There is potential to establish a regional rail link, connecting key towns and tourism centres throughout the South West. If rail is not feasible, then more affordable intra-regional bus transport will likely be a critical need, particularly with the growing aged population in the South West region needing to access specialist medical facilities in Bunbury. Cities Beyond Perth (Profiles Report), January 2015 Page 29

36 Busselton A City for All Seasons Famous for having the longest timber-piled jetty in the Southern hemisphere, Busselton is the second largest city in the South West region. 33 Originally established as an agricultural and forestry settlement, the competitive advantage of the climate and natural environment has led to the development of an extensive tourism industry. Recent initiatives have focused on developing Busselton as the Events Capital of Western Australia supported by coordinated marketing and promotions activity, development of relevant infrastructure, and sponsorship grants from the City of Busselton. 34 The primary challenge for Busselton is to develop diversity in its local economy and to move business incomes beyond the seasonal cycle of summer influx and winter drought. Busselton has long been a popular holiday and retirement destination for many Western Australians. In recent years extensive housing development has seen the city become one of the fastest growing populations in the southern half of Western Australian. The establishment of direct commuter flights servicing Rio Tinto mines has driven some of the rapid population growth, bringing financial benefits for business through the expansion of market size and company investment in the local economy. Yet, the rate of change has also created some challenges for the community as it has adjusted to a new level of demand for community services and infrastructure. Population Profile Busselton LGA reached a population of 30,331 in 2011, experiencing an annual average growth rate of 3.6 per cent since This rate is higher than both the Perth metropolitan area and the Western Australian rate in the same period. Figure 17: Population structure by age and sex in Busselton LGA in Cities Beyond Perth (Profiles Report), January 2015 Page 30

37 Despite being a preferred retirement destination, Busselton has a reasonably well-balanced age structure at present (Figure 17). The aged population has been balanced somewhat by recent in-migration of working age families with children. Although, the substantial numbers of people currently in the near-retirement and early retirement age groups of and years will create additional demand for aged care services in the next two decades. Busselton also has a sizeable gap in the year age group, like many other regional towns and cities. This is caused by out-migration as younger people leave for Perth in search of new employment and tertiary education opportunities. The population of Busselton is projected by the Western Australian Government to grow to between 48,400 and 60,200 by The LGA is currently tracking at the mid range of this forecast, having experienced a 3.6 per cent annual average growth rate between 2006 and The expected population would be around 51,600 if growth continued at the same rate until 2026, which is within the projected range. Economic Profile The GRP for the South West region in was $15,253M which is 6.3 per cent of the Western Australian GSP. 37 Regional industry surrounding Busselton includes extensive agriculture and horticulture (particularly viticulture), some fishing and aquaculture, but is mostly focused on a well-established tourism industry. Construction has also been a boom industry in recent years, particularly driven by the extensive housing development in the city and the adjacent LGA of Augusta-Margaret River. Employment Profile Busselton is a notable exporter of labour, particularly to the mining and construction industries (Figure 18). Long distance commuting is enabled by the provision of direct charter flights to Rio Tinto mine sites in the North-West regions of Western Australia. This arrangement was established in 2007 and expanded through a formal memorandum of understanding signed between Rio Tinto and the City of Busselton in The three-year agreement establishes a number of funded activities and infrastructure to support Busselton in its role as a FIFO source community. Lower level export of labour is also evident in some other industries, including manufacturing, retail trade, accommodation and food services, and a number of knowledge and administrative industries. While some of this could be related to FIFO work, it more likely represents people living in the City of Busselton who commute to the surrounding regions for work. Cities Beyond Perth (Profiles Report), January 2015 Page 31

38 The dominant industries for people who work in Busselton are mostly the same as for the people who live in Busselton. The exceptions to this pattern are the mining industry, which provides minimal locally based employment, and the construction industry, which has a 50/50 split between local jobs and work elsewhere. Jobs in the retail trade and the accommodation and food services industry dominate locally-based employment. The next biggest industry for employment is the health and social assistance sector, followed by the construction industry, education and training, and the manufacturing industry. Figure 18: Employment profile by industry sector for Busselton LGA comparing count by place of work with count by place of usual residence in Business Profile Busselton s business sector is a critical source of employment for people living in the nearby South West region. Busselton has a business density of per 1,000 population, which is very high compared to the national average of 93.8 per 1,000 population and the second highest of all of the locations studied in this report. Cities Beyond Perth (Profiles Report), January 2015 Page 32

39 The overall number of businesses in Busselton has remained relatively stable with a net gain of just 14 businesses, despite a high churn factor. There was an average entry of 485 businesses and an average exit of 469 businesses per year from 2007 to Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Busselton compared to Bunbury and the rest of the South West region in 2012 (Figure 19). This analysis reveals a reasonable level of diversity in the locally registered and actively trading businesses. The largest sector for minimum turnover is the construction sector, followed by the retail trade and the accommodation and food services industry. Rental, hiring and real estate turnover reflects the high value and size of the local real estate market. There is also evidence of a substantial manufacturing sector, which includes food production facilities servicing the tourism trade as well as exporting produce, such as local cheese-making manufacturers, and boat building/repair services. Figure 19: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Busselton compared to Bunbury and the rest of the South West region 40 Cities Beyond Perth (Profiles Report), January 2015 Page 33

40 Location Quotient Analysis of the relative importance of different employment sectors to the Busselton economy compared to the Western Australian economy (where state industry value = 1) is examined in Figures 20 and 21. For people who usually live in the Busselton LGA, the agriculture, forestry and fishing industry followed by the accommodation and food services industry were a more important source of employment compared to the Western Australian economy (Figure 20). Reflecting the diversity in the local economy, important sectors were also evident in the construction industry, rental, hiring and real estate services and the administrative and support services sector. No industry showed any substantial growth in importance to the local economy between 2006 and 2011, but there was evidence of a reduction in importance of the construction industry as a provider of employment to local residents. Figure 20: Location quotient analysis comparing Busselton LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 41 Cities Beyond Perth (Profiles Report), January 2015 Page 34

41 The agriculture, forestry and fishing industry and the accommodation and food services industry were highly important sources of employment for jobs provided within the Busselton LGA (Figure 21). The pattern of diversity for place of work is very similar to place of usual residence, except for mining and construction. This indicates that the FIFO population is actually a very small component of the distribution of the total workforce and industry exposure, resulting in a relatively low level of exposure risk for the local economy to changes in global resource markets. A much higher level of risk is evident for the agricultural commodities and tourism markets. Figure 21: Location quotient analysis comparing Busselton LGA in 2006 and 2011 relative to Western Australian economy count by place of work 42 Cities Beyond Perth (Profiles Report), January 2015 Page 35

42 Local Competitiveness Busselton has a very strong competitiveness profile for a city of its relatively small size. It has very high competitiveness in economic fundamentals, underpinned by high competitiveness in business sophistication and natural resources (Figure 22). The average wage/labour costs in Busselton was $39,669 in 2011, which is in the fifth decile on a national comparison. The building approvals per capita rate in 2011 was in the second decile nationally. A higher than average building approvals rate indicates an economy which is currently experiencing growth. Busselton has good potential for long term growth due to high competitiveness in the endogenous growth factors of human capital, technological readiness and innovation. The level of business sophistication in Busselton is above average in competitiveness, driven by a diverse economy and a high average own unincorporated business income ($20,087 per capita in 2011). Access to local finance was also above average in competitiveness. The only area of lower than average competitiveness is infrastructure and essential services. While close to national highway routes, Busselton does not have the advantages of a port or a rail connection. Despite having an airport, the low level of paid passenger movements per year limits the potential economic benefit compared to other regional airports 43. Although the airport does provide a flow-on economic benefit to the region, this is not reflected in current national data. Information is not published on charter flights at present, so the transit of over 500 workers who regularly commute to mine sites is not reflected in national data sources. Figure 22: Competitiveness in Busselton LGA compared to average ranks for all LGAs in Western Australia and Australia 44 Cities Beyond Perth (Profiles Report), January 2015 Page 36

43 Overall, Busselton has a slightly above average participation rate of 77 per cent of its working age population active in the workforce in 2011, which is in the fourth decile in national comparison. In contrast the skilled labour component is low in competitiveness with only 27 per cent of the workforce working as managers or professionals. Despite the large aged component in the population, welfare dependence is around the national average, with 17.1 per cent of the Busselton population dependent on government support as the main household income source. Busselton and the South West region Busselton has a stronger competitiveness profile compared to the average rank for the rest of the South West region (Figure 23). This reflects the strengths of a diverse and affluent economy underpinned by substantial population numbers. Busselton outperforms the average for the rest of the South West region on each competitiveness theme, except for natural resources and infrastructure and essential services, which has a similar level of competitiveness. Figure 23: Competitiveness in Busselton compared to the rest of the South West region 45 Cities Beyond Perth (Profiles Report), January 2015 Page 37

44 Competitive Position in Relation to Similar Australian LGAs Busselton shares a similar population size with a number of other coastal LGAs in Australia, including Bass Coast in Victoria, Byron in New South Wales and Whitsunday in Queensland (Figure 24). Each of these locations is dominated by a substantial tourism industry, with a high level of agriculture in the wider region and some mining activity in the Whitsunday and South West regions. This offers the opportunity for Busselton to explore issues of common ground and share learning on regional development strategies which may be of mutual benefit. Of particular interest may be strategies for dealing with fluctuations in tourism markets, extending the tourism season, and planning for ageing populations in coastal retiree destinations. Substantial natural resources in each similar location is reflected in above average competitiveness in economic fundamentals. Variable levels of labour market efficiency are associated with reduced economic performance. High unemployment levels are a particular issue in Byron. Despite this, Byron, like Busselton, is well placed for long term economic growth due to high competitiveness in the endogenous growth drivers of innovation, technological readiness and human capital. Bass Coast and Whitsunday have below average competitiveness in innovation which, particularly when combined with low competitiveness in technological readiness in Bass Coast and low human capital in Whitsunday, may limit capacity for long term growth. Figure 24: Competitiveness in Busselton compared to other LGAs in Australia of similar population size 46 Cities Beyond Perth (Profiles Report), January 2015 Page 38

45 The Future Having weathered the recent high growth in population, Busselton recognises its need to capitalise on the potential offered by a larger population base to develop a city with less reliance on seasonal trade patterns. The strategy for developing a solid calendar of events to draw tourists from Perth, interstate, and international locations is part of this approach. Regional Aspirations Plans to improve and expand the tourism trade are core to Busselton s future plans. Funding from Royalties for Regions has enabled the redevelopment of the waterfront to create an area more suited to the needs of events. The expansion of retail opening hours was identified as a bottleneck to growth in tourism, as limited trading hours offered by many local businesses are not perceived to meet the needs and expectations of tourists. There was a perception that trade from tourists and local residents was being lost to surrounding areas who offered seven day trading and extended evening opening hours. A related aspiration included the creation of a dedicated shopping/café precinct in the high street, with the relocation of tradeorientated or manufacturing businesses (e.g. car and boat sales) to the edge of the central business district or to the light industrial area. Expansion of events potential and establishment of year-round trade opportunities is a central aspiration. Identified needs included development of an entertainment centre, a conference centre and large hotel development. A critical issue for Busselton was the need to be able to offer year-round employment in hospitality. Seasonal contracts were perceived as a barrier to attracting and retaining highly skilled workers, such as chefs and hotel managers. A skilled and stable workforce was identified as a critical challenge for Busselton, particularly a lack of apprenticeships and training positions for younger people. The expansion of the Busselton airport is a core goal for development of the city. Future regional growth would be significantly enhanced by the expansion of both passenger and air freight services within the South West region. It is likely that increasing population density in the southern half of Western Australia will generate commercially viable levels of demand for direct interstate and international flights within the near future. This will reduce need to further expand the already over-crowded facilities at the Perth domestic airport, and provide a closer alternative than Learmonth, Kalgoorlie or Adelaide in case of emergency need. For other business and industry development, leadership training and business skills development are identified areas of need. The in-migration of near or new retirees presented an opportunity for new business entry, particularly for small, boutique businesses, but the limited retail and business skills were perceived to contribute to a high failure rate and a incidents of poor customer service, which is a risk given the dependence on the tourism trade. Cities Beyond Perth (Profiles Report), January 2015 Page 39

46 Development of innovation in industry is recognised as an important factor to continue to grow the population and economy in Busselton. The community has aspirations to develop its small business supports and foster innovation, particularly in the manufacturing and agricultural sectors. The need for better technological connectivity is an identified issue for enabling innovation in industry, while new housing estates are well-serviced by fixed cable connections, the broadband coverage across much of the rest of the business district and older residential areas was slow or non-existent. Sources of Competitive Advantage for Busselton Busselton s main competitive advantage is the access to a natural environment with high biodiversity and good climate. This is supported by a range of established tourism infrastructure, such as accommodation, attractions and amenities which cement its place as a holiday favourite for many Perth people. The Busselton jetty and railway provide a unique heritage experience which is enhanced by development which offers a range of options for families and older people, which is the core tourism demographic at present. High quality land and water are available outside of the city centre enable the development of a wide variety of agricultural and horticultural ventures, particularly the viticulture industry. There is also sufficient land available for commercial and light industrial development surrounding the existing city area. Building Competitive Advantage and Success in the Future Expansion of the tourism industry will partly depend upon developing better connectivity. Increased traffic flows to the region make the case for the upgrade of the Bussell Highway to dual carriageway along its entire length. The current single lane is a notorious bottleneck for traffic flow in peak season. In addition to road upgrades, consideration will need to be given for better linkages between the Busselton airport and the railway at Bunbury. Future demand driven by the ageing population will also require a more established and affordable public transport network throughout the region. Expansion of events infrastructure and conference facilities will also widen the currently limited tourism season to enable all year round use for accommodation and food services. This will enable a more viable base for skilled hospitality employment to be developed. The growth of employment demand could provide an opportunity for increased for vocational training. Career pathways are perceived to be limited for the young people in Busselton. There is also evidence that the components of the Busselton workforce are under-employed, as the proportion of the population with post-secondary qualifications greatly exceeds the percentage of people employed in a managerial or professional level in the workforce. 47 Cities Beyond Perth (Profiles Report), January 2015 Page 40

47 The extension of the Busselton airport is a critical issue, particularly given the increase in FIFO charter flights. The population in the South West and nearby Great Southern regions is growing to sufficient density to offer a viable market for a major airport with both domestic and international services. A major airport located in the South West or Great Southern regions would help to reduce the transport pressures on roads to Perth and relieve congestion at the domestic airport created by the very dense FIFO traffic to and from the North-West. Similarly, the creation of better air freight services will open up new markets for export of regional produce. Timely export pathways is particularly important for the further developing the premium food products sector, where some products from the South West region are already recognised as world class. Cities Beyond Perth (Profiles Report), January 2015 Page 41

48 Geraldton From Service Centre to Regional City With an established population and a strong foundation as a hub for regional agriculture and mining industries, Geraldton is changing from a large regional port and service centre to become a diverse and dynamic regional city. The revitalisation of the central city area and the construction of a new waterfront precinct characterises Geraldton s shift towards greater liveability. Building Geraldton s position as a provider of quality education will be essential to enable its future development. There is existing potential to make more of Geraldton s population size and competitive advantages, but this depends on building a more skilled workforce and engaging the business community to build innovative capacity. Population Profile Geraldton is one of Western Australia s largest regional centres with a population in the LGA of 36,446 in The population structure for the LGA is very well-balanced reflecting the established nature of the city (Figure 25). The shortfall in younger people evident in many other regional locations is not as apparent in Geraldton, as the profile is very similar to the Western Australian and national population structures. Figure 25: Population structure by age and sex in Geraldton LGA in The population of Geraldton is projected by the Western Australian Government to grow to between 46,300 and 58,200 by The LGA is currently tracking just below the range of this 2006 forecast, having achieved 2.2 per cent annual average growth between 2006 and The expected population would be around 50,514 if growth continued at the same rate until 2026, which is within projected range. Cities Beyond Perth (Profiles Report), January 2015 Page 42

49 Economic Profile The GRP for the Mid West region in was $6,000M which is 2.5 per cent of the Western Australian GSP. 50 Geraldton plays an essential role in the Mid West as the main service centre for the region s population and as a key connection point for the region s major primary industries to international markets. Like the region as a whole, growth in the Geraldton economy has been led by the development of the mining industry. Over 40 per cent of estimated economic output in the Greater Geraldton LGA is provided by mining and the closely related manufacturing and construction sectors. Retail is an important contributor and leading employer with the government dominated healthcare, public administration and education making an important contribution to local economic output at about 4-5 per cent each. The port has been a long-term driver for the development of the city. Iron ore dominates exports from Geraldton with volume nearly quadrupling since 2009, bringing the port near to full capacity. Wheat remains the next most important commodity export. The suspended Oakajee development remains an important potential source of continued growth in this sector if a pathway for its development is found. Employment Profile Construction, retail and health are the biggest employers in Geraldton (Figure 26). FIFO is a source of employment for locals in the mining and construction industries, and in mining-related demand for sectors such as transport, and accommodation and food services, with a significant proportion of these workers travelling outside of the city for employment. Figure 26: Population by place of usual residence compared to place of work for Geraldton-Greenough LGA in Cities Beyond Perth (Profiles Report), January 2015 Page 43

50 Despite this, analysis of the location quotient reveals that FIFO employment in ancillary services related to the mining industry such as construction and transport are more important than mining comparative to the whole of the Western Australian economy (Figure 27). This indicates that Geraldton may be vulnerable to slowdowns in the resources sector. For people who usually live in the Greater Geraldton LGA, the transport, postal and warehousing industry and the agriculture, forestry and fishing industry and the retail trade were more important sources of employment compared to the Western Australian economy in 2011 (Figure 27). Figure 27: Location quotient analysis comparing Greater Geraldton LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 52 For people who work within the Greater Geraldton LGA, retail transport, real estate and public services are relatively important sources of employment in Geraldton compared to the whole of Western Australia (Figure 28). Mining, manufacturing, the arts and professional and scientific services are relatively weak sources of local employment relative to the Western Australia as a whole. Cities Beyond Perth (Profiles Report), January 2015 Page 44

51 Overall, labour market efficiency is slightly above the national average according to [In]Sight. Geraldton had an above average unemployment rate of 5.5 per cent in 2011and an average participation rate of 75 per cent of its working age population. Skilled labour comprises a relatively smaller component of the economy with only 24 per cent of the workforce employed as managers or professionals in Welfare dependence is low with only 12.2 per cent of the Geraldton population dependent on government support as the main household income source. Figure 28: Location quotient analysis comparing Geraldton LGA in 2006 and 2011 relative to Western Australian economy count by place of work 53 Business Profile Geraldton has a business density of 91.3 per 1,000 population, which slightly lower than the national average of 93.8 per 1,000 population. Geraldton had nearly 3300 businesses in [In]Sight shows that the economy overall is relatively diverse. Large employers are relatively important to the economy employing a relatively high 5.1 per cent of the workforce. Although since 2009, there has been a 5 per cent growth in the non-employing business sector and non-employing businesses in Geraldton also earn above average national incomes suggesting this part of the business community has been performing well. Cities Beyond Perth (Profiles Report), January 2015 Page 45

52 Figure 29: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Geraldton compared to the rest of the Mid West region 54 Calculations of minimum turnover for locally registered and actively operating businesses indicates the level of economic engagement by industry sector in Geraldton compared to the rest of the Mid West region in 2012 (Figure 29). The diversity of the local economy in Geraldton is strongly evident. Agriculture, forestry and fishing has the highest minimum turnover, followed by the construction industry and the retail trade. There is also evidence that a knowledge and services sector exists in Geraldton and likely services the needs of the region. High turnover in the financial and insurance services, the rental hiring and real estate industry, and the professional, scientific and technical services sector may relate more to the value of regional business in these sectors rather than their size as a source of employment which is relatively small compared to the Western Australian economy (see Figures 27 and 28 previously). The high level of diversity indicates a resilience in the local economy that will help it withstand changes in external markets or industry-related structural adjustments. Cities Beyond Perth (Profiles Report), January 2015 Page 46

53 Local Competitiveness The [In]Sight competitiveness profile for Geraldton is led by natural resources and infrastructure (Figure 30). Business sophistication is also strong reflecting the diversity of the economy and strong performance from micro-businesses. The economic fundamentals of the economy (wages and building approvals) have been lagging the performance of regional Western Australia as a whole. Figure 30: Competitiveness for Geraldton-Greenough LGA compared to average rank for LGAs in Western Australia and all LGAs in Australia 55 Geraldton s economic fundamentals have been relatively weak, despite the benefits it has realised as an exporter of regional mining and agricultural produce. It has relatively high average wage/labour costs at $45,555. Yet, the building approvals per capita rate in 2011 was $0.12 which is in the ninth decile in national comparison, indicating an economy which is not in a high growth phase. Human capital is also lagging the competitiveness of regional Western Australia as a whole. Low rates of university qualifications and relatively poor primary and secondary school results compared to national averages are driving this result. High levels of early school leavers and Cities Beyond Perth (Profiles Report), January 2015 Page 47

54 health risk factors also undermine the competitiveness of Geraldton s population and workforce. Geraldton is average for competitiveness in technological readiness. Connectivity was slightly above average in 2011, with 62 per cent of all households connected to the internet, but broadband connection for businesses and households was below average. This indicates that a portion of the population is still dependent upon dial-up internet, which can be a disadvantage if the internet is used for employment or education purposes. Technology business indicators were tracking slightly above average with a slightly higher presence of business and ICT professionals. The recent arrival of the NBN in the city is not reflected in these figures and has provided a new opportunity for Geraldton in this area. Strength in infrastructure is driven by highly competitive physical infrastructure (access to ports, roads, air and rail). This reflects Geraldton s role as a service provider to the Mid West region s population and industry. Access to essential services is also competitive. Education access is generally strong with the exception of tertiary where engagement is low. The establishment of the Geraldton Universities Centre has improved access to education, but evidence has not yet emerged as to a flow-on effect in improving levels of tertiary qualifications. Access to health and hospitals is strong with the exception of access to GP services. Overall, this profile suggests a generally solid foundation for future economic growth in Geraldton is being undermined by its current limitations in human capital. Geraldton and the Mid West region Geraldton is by far the largest population centre in the Mid West. Compared to other areas in the region it provides a relatively diverse economy with a range of industries and services. The endogenous growth drivers of infrastructure and essential services, innovation and technological readiness are much stronger in Geraldton, emphasising its importance as a hub for industry and services (Figure 31). The growth of Geraldton as a hub for the region is essential to the Mid West as a whole in the same way that the success of nearby regional centres and major industries is fundamental to Geraldton s future growth and development. Essentially, the city and the region are highly interdependent, and a collaborative approach to economic development and industry growth will likely prove highly beneficial to both. For example, the growth of service industries and export activity within Geraldton for new regional activity in agribusiness or food manufacturing. Similarly, the growth of quality education facilities in the city may provide an alternative to families leaving the region to access services in Perth. Cities Beyond Perth (Profiles Report), January 2015 Page 48

55 Figure 31: Competitiveness in Geraldton compared to the average rank for the rest of the Mid West region 56 Consultation with the Mid West Development Commission and other regional stakeholders indicates that Geraldton also has a growing role in providing services to the wider North West area in Western Australia. While beyond the scope of this work, the current and potential value of inter-regional economic relationships would be a valuable area of study should suitable data be available. Geraldton and Similar Regional Cities in Australia Compared to three similar sized regional cities in Australia, Geraldton has a stronger labour market and a sophisticated business base (Figure 32). However the endogenous growth driving themes (human capital, technological readiness, innovation and infrastructure) all lag the position of comparators with the differences in human capital outcomes being the most striking difference in these profiles. For the comparable regional cities of Lismore, Orange and Dubbo in New South Wales, human capital is a source of significant competitive strength. Lack of human capital will be a significant barrier to Geraldton in effectively realising its economic potential, as it works as a disincentive to investors. Cities Beyond Perth (Profiles Report), January 2015 Page 49

56 Figure 32: Competitiveness in Geraldton compared to LGAs with similar population sizes 57 The Future Geraldton has significant opportunities for future growth and prosperity which are likely to be realised through continuing the revitalisation of the city already underway. Success as a regional city will most likely be realised through development of human capital alongside the infrastructure redevelopment to better take advantage of existing technological capacity. Sources of Competitive Advantage for Geraldton While new areas of opportunity and potential are emerging for Geraldton, its core sources of competitive advantage remain its position as a service centre for the regional population and its role as a gateway for a diverse region to access international markets. This has been the driver of Geraldton s economy since it was first established and remains central to the economic future of the region. The city s ability to respond to the needs of regional industries in terms of services, infrastructure and expertise is crucial to maintaining current sources of competitive advantage. Building on this core competitive advantage is the city s size and relative economic diversity compared to many Western Australian regional cities. While mining has been the foundation of growth, its Gross Value Add (GVA) in the local economy is estimated to be only 20 per cent. This is half of the competitive contribution that mining makes to the wider regional economy and the Western Australian economy as a whole. Reflecting this is the [In]Sight Cities Beyond Perth (Profiles Report), January 2015 Page 50

57 diversification ranking of 110 which is high for any non-metropolitan region. As well as providing services to the region, Geraldton is large enough to begin to drive more of its own growth from its own resources. Regional Aspirations Recognising the limited influence the region can have on the development trajectory of its major resource industries, the City of Greater Geraldton is looking beyond the present emphasis on mineral resources to create a more diverse and sustainable economy. These aspirations are captured in the recent 2029 and Beyond 58 work and centre on perceived opportunities in: Creative industries leveraging the NBN and professional services presence in the city; Global positioning leveraging NBN, port and industrial development; Business incubation; Education; Energy; Food; and Tourism. Furthermore, the Mid West Regional Blueprint aspires to build upon current strengths in agriculture and industry, and further develop Geraldton as a core industry hub and service provider to the region. The five pillars of future regional growth are listed as: Physical infrastructure to enable growth in food production, resources, energy production and tourism industries; Digital and communications through digital literacy and business growth; Economic development through diversity of industry; Highly desirable communities with a focus on liveability; and Knowledge and learning for both the local and regional populations. 59 Building Competitive Advantage and Success in the Future The challenge for Geraldton in building competitive advantage in the future is the extent to which it can transform one or more of the opportunities identified by local leaders into a genuine source of local growth that is not solely dependent on the fortunes of the regional resources sector. The identification of pathways to increasing diversity of industry in the regional blueprint is very positive. Expansion of the knowledge economy is essential. The rollout of the NBN in Geraldton offers an advantage over other locations that needs to be grown through greater business engagement and development of digital literacy skills in the workforce.while the opportunities are there for the city, the challenge is to create the growth using existing resources or by attracting new people to the area. Improving the liveability, and updating Geraldton s image in the wider Western Australian community will be essential for attracting new settlement. Cities Beyond Perth (Profiles Report), January 2015 Page 51

58 Places Growing Through Connected Lifestyles Mandurah The Alternative to Sprawl Mandurah s competitive advantage arises from its natural environment and proximity to Perth. The challenge for Mandurah is to maintain its regional identity in the face of metropolitan expansion and build a local economy that complements and works alongside the Western Australian capital and the wider Peel region. Population Profile Mandurah is regional Western Australia s largest city with a population of over 69,900 living in the LGA in The population structure for the LGA is notable for its substantial older population, reflecting a very strong continuing trend for people in Perth and other regions to retire to Mandurah, which has been in effect since the 1980s. The population in Mandurah is no longer as heavily skewed by older residents as it has been in the past. More recent residential developments in the city have proved attractive to families along with the opening of the Perth-Mandurah rail link in 2007, creating a more balanced population structure (Figure 33). Figure 33: Population structure by age and sex in Mandurah LGA in The population of Mandurah is projected by the Western Australian Government to continue to grow rapidly to between 112,200 and 139,500 (double the current population) by The LGA is currently tracking at the higher end of this 2006 forecast, having achieved a very high 4.5 per cent annual average growth between 2006 and The expected population would be around 135,282 if growth continues at the same rate until Cities Beyond Perth (Profiles Report), January 2015 Page 52

59 Economic Profile The GRP for the Peel region in was $11,069M which is 4.6 per cent of the Western Australian GSP. 62 Mandurah has been a favourite holiday destination for families from Perth and other regional areas for more than 100 years 63. As the Perth metropolitan areas has grown southwards, lifestyle preferences have changed and infrastructure connections have been upgraded there has been rapid population growth in Mandurah which has driven the development of significant construction, retail and services industries. Wages in the city have been relatively high nationally, but the construction and development industry has been experiencing a relative downturn in recent years. The value of building approvals per capita in 2011 was $0.58, which is in the sixth decile nationally. Employment Profile Mandurah is a significant supplier of labour to the Perth metropolitan region and other parts of Western Australia (Figure 34). The majority of the population employed in mining, manufacturing and construction all work outside the city, as do many of those employed in professional services and administration. Mandurah has been a key supplier of labour to the North West resources industries as well as to mining in adjacent LGAs in the Peel and South West regions. Figure 34: Employment profile by industry sector for Mandurah LGA comparing count by place of work with count by place of usual residence in Cities Beyond Perth (Profiles Report), January 2015 Page 53

60 Compared to Western Australian as a whole, a larger proportion of local employment in Mandurah is in retail, accommodation and food services, rental hiring and real estate and education and health (Figure 35). The proportion of people in Mandurah employed in mining, manufacturing, wholesale trade and professional services who also work locally is significantly less than at the level for the Western Australian economy. Figure 35: Location quotient analysis comparing Mandurah LGA in 2006 and 2011 relative to Western Australian economy count by place of work 65 Labour market efficiency has been poor in Mandurah with an unemployment rate of 7.1 per cent in 2011, youth unemployment of 13.4 per cent and below average participation rate of 70.3 per cent of its working age population. Only 21 per cent in 2011 were skilled labour (i.e. working as managers or professionals), which is low compared to other LGAs in Australia. This employment picture reflects a city which, despite providing a home for a diverse group of workers, does not have the industrial or professional employment base that drives the Western Australian economy and is challenged in finding a point of engagement in the economy for a large part of its potential workforce. Cities Beyond Perth (Profiles Report), January 2015 Page 54

61 Business Profile Mandurah has a business density of 66.6 per 1,000 population, which is substantially below the national average of 93.8 per 1,000 population. The size of the business community contracted to 2011, with a significant number of net business exits in 2009, particularly in the non-employing micro part of the business community. Own business income is relatively high on a national basis at $22,156. Yet large employers are also relatively important to the local economy. Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Mandurah compared the rest of the Peel region in 2012 (Figure 36). Construction and the retail trade are the dominant industry sectors for locally registered and actively trading businesses. Figure 36: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Mandurah compared to the rest of the Peel region 66 Cities Beyond Perth (Profiles Report), January 2015 Page 55

62 There is evidence of wide business diversity within the local economy, with substantial minimum turnovers for local businesses in the professional, scientific and technical services industry, the manufacturing industry, the wholesale trade, the accommodation and food services industry, and the health care and social assistance sector. High turnover in the rental, hiring and real estate industry reflects both the value for property sales and rentals in the region as well as a substantial number of local businesses operating in this sector. Local Competitiveness The most competitive component of the Mandurah [In]Sight profile is in the natural resources theme, reflecting both the opportunities offered by the coastal location and the high engagement of the local workforce in the mining industry (Figure 37). This profile demonstrates how source communities with high proportions of FIFO workers may also be affected by external economic shifts. Human capital is stronger in Mandurah compared to regional Western Australia as a whole. This result reflects the fact Mandurah has a very high level (40 per cent) of the working age population holding either a certificate or diploma qualification and is relatively healthy in term of risk factors. However levels of university qualifications in the local population are low and outcomes for children from early childhood, through primary and high school are all below average nationally. Figure 37: Competitiveness in Mandurah LGA compared to average ranks for Australia LGAs and regional LGAs in Western Australia 67 Cities Beyond Perth (Profiles Report), January 2015 Page 56

63 Infrastructure, innovation and technological readiness are other areas where the city outperforms regional Western Australia. Mandurah has good access to physical infrastructure and education. Access to health services (as measured by employment in hospitals and allied services as well as GP visits) is lower for the city. In 2011, 2.6 per cent of the adult population held a qualification in science or technology, and 0.03% of the population were employed as research and development managers. This places Mandurah slightly above the national average and higher than overall levels in regional Western Australia. There is a relatively good presence of technology related business and workforce in the city which supports a better than average outcome in terms of technological readiness. Mandurah, the Peel Region and Perth The presence of Perth to the immediate north of the Peel is crucial in understanding the relationship between Mandurah and the Peel region (Figure 38). This limits the extent to which Mandurah acts as a service centre and hub for the region. It also reduces the need to base regionally targeted essential services in the city compared to the patterns in other parts of Western Australia. Figure 38: Competitiveness in Mandurah LGA compared to average ranks for LGAs in the rest of the Peel region and Perth 68 Cities Beyond Perth (Profiles Report), January 2015 Page 57

64 Competitive Position in Relation to Similar Australian LGAs Mandurah s population size and economy provides a foundation for comparison with a number of coastal cities in New South Wales (Figure 39). There is a remarkable level of similarity in these competitiveness figures between the cities. Mandurah is similarly competitive in most areas except infrastructure which partially reflects the lack of a regional airport or port (which are not needed due to its proximity to Perth airport and Fremantle port), but also a lower competitiveness in access to regional health infrastructure. This is the clearest gap in the comparison. The profile comparison also shows each of these regional cities are challenged in terms of labour market efficiency, as is Mandurah. There is also some divergence within the group in terms of human capital outcomes with Mandurah and Shellharbour ranking the lowest of the five cities. Figure 39: Competitiveness in Mandurah compared to Port Macquarie-Hastings, Coffs Harbour, Port Stephens and Shellharbour 69 Cities Beyond Perth (Profiles Report), January 2015 Page 58

65 The Future The question for Mandurah is not whether it will grow or not, but what continued rapid growth will mean for the city. The way in which population growth is accommodated in the city and the region and what this means in terms of local economic development will determine whether the city becomes another part of suburban Perth or remains as a deeply connected satellite city with its own economic future and contribution beyond its links to the metropolis. Transitional effects from softening resources industry demand for labour has potential to impact on residents, due to the high export of labour from the city. This could provide a timely source of labour for expansion of local industry. Given the inward commuter potential from the availability of the Perth-Mandurah railway, there is potential for light industry, retail or commercial developments within proximity of the station, subject to land availability and investor interest. Potential areas of industry specialisation could be identified through greater consultation with the local community and from research into new global markets. 70 Sources of Competitive Advantage for Mandurah Mandurah draws its competitive advantage from its natural environment and proximity to Perth. Both of these factors underpin the significant population growth in the region that is projected to continue over the next decade. The size of the city and its diverse economic profile add considerable potential for its future economic development. Regional Aspirations Since the Southern City Strategy in 2007, the ambition for the Mandurah region has been to maintain its regional identify despite its increasing connection to Perth and develop the city as a centre for business and commerce as well as lifestyle through the development of the CBD. This is reinforced in the latest regional plans. Complementing this is a focus on developing human capital through education and skills initiatives aligned to regional growth opportunities in health and aged care, manufacturing, construction and retail/accommodation. Building Competitive Advantage and Success in the Future The challenge for Mandurah is finding ways to resolve the current conflict between the attractors in the natural environment and the desire to build a base for economic development. The rapid population growth in Mandurah has provided a substantial potential level of market demand for locally produced goods and services. The economic strengths are built around the lifestyle, housing development and the exportation of labour to Perth and other regions. Proximity to Perth provides substantial benefit and one issue for Mandurah is whether there are more benefits for the population in Cities Beyond Perth (Profiles Report), January 2015 Page 59

66 the city retaining a separate regional identity or from becoming part of the metropolitan area. In many ways the pathway ahead for Mandurah currently lies in a choice of identity. Mandurah may wish to continue as a lifestyle community supplying housing and amenities to attract a residential population generating their income through export of labour. Alternatively, the city could change its current development pathway by investing in the development of a locally-based sector which generates income from the production of knowledge-based and/or manufacturing-based goods and services. Either pathway has its challenges and opportunities, but both will rely improving competitiveness in the endogenous factors of human capital, technological readiness and innovation. Cities Beyond Perth (Profiles Report), January 2015 Page 60

67 The Proposed Avon City: New Horizons The Wheatbelt is an extensive region located immediately to the north, east and south-east of Perth. It has 43 LGAs and covers an area of over 155,000 km The Wheatbelt has a vision to develop five sub-regional areas. The proposed Avon City is a sub-regional planning and management concept to assist with developing strategic approaches to common interests for the LGAs and sub-regional issues such as power, waste management, marketing, and industry development. This sub-regional development zone is comprised of three adjacent LGAs which contained 73 per cent of the Avon sub-region s total population in 2011: Northam, the Wheatbelt s largest population centre, with a population over 10,000; Toodyay, 27 km to the north of Northam, with a population over 4,000; and York, 36 km to the south of Northam, with a population just under 4,000. The remaining LGAs in the sub-region contained 27 per cent of the total Avon population with an aggregated count of 6,945 usual residents in The Avon City proposal aims for a population of 75,000 by Population Profile The proposed Avon City had an aggregated population of 18,339 in 2011 (Figure 40). The age structure of the population is defined by two age-related trends: population ageing and the outward migration of younger people. Figure 40: Aggregate population structure by age and sex in Northam, Toodyay and York LGAs in Cities Beyond Perth (Profiles Report), January 2015 Page 61

68 There is a comparatively large number of people in the and year age groups. This reflects a degree of ageing in place for the existing population, but also an inward migration trends of retirees or near retirees to the Avon region seeking lifestyle and affordable peri-urban living. There is an evident loss of younger adults in the and year age groups. The outward migration of young people reflects a wider regional trend for young people to seek new employment and education opportunities. The aggregated population of the three LGAs in the proposed Avon City is projected by the Western Australian Government to grow to between 23,500 and 29,400 by The proposed Avon City is currently tracking under the low range of this forecast, having achieved 1.2 per cent annual average growth between 2006 and The expected population would be around 22,000 if growth continued at the same rate until 2026, which is below the projected range. Reaching a goal of a population of 75,000 by 2050 would require the proposed Avon City to achieve a minimum annual average growth rate of 3.68 per cent each year for the next 36 years. While this is not impossible, substantial expansion in infrastructure and industry would be required to create the labour markets required to support sustained levels of high population growth. For comparison purposes, the LGAs with an annual average growth between 3.6 and 3.7 per cent from 2006 to 2011 were Busselton, Dardanup, Irwin, Laverton, and Wyndham-East Kimberley. The LGAs with higher than 3.3 per cent annual average growth in the wider Wheatbelt from 2006 to 2011 were Westonia (6.1 per cent), Chittering (4.9 per cent), Yilgarn (4.8 per cent) and Wandering (4.6 per cent). Demand for labour for the mining boom, a growing trend for relocation based on lifestyle attractors and peri-urban expansion of the Perth metropolitan area were key drivers for much of this past population growth in these locations. 75 Economic Profile The GRP for the Wheatbelt region in was $6,438M (2.7 per cent of the Western Australian GSP). 76 The Wheatbelt s main industry is agriculture. The Avon sub-region industry profile also includes the tourism, manufacturing, and transport industries. Employment Profile The employment profile for the proposed Avon City is dominated by the health care and social assistance industry, followed by the retail trade (Figure 41). This reflects the role of Northam as a service provider to the surrounding Avon sub-region, and to a lesser extent for the proximal areas of the wider Wheatbelt. Cities Beyond Perth (Profiles Report), January 2015 Page 62

69 The proposed Avon City has a substantial export of labour evident in three industries: mining, manufacturing and construction. There is also some export of labour in over half of the remaining industries of employment, indicating a strong trend for long distance commuting to external labour markets. There is no evidence of labour importation into the proposed Avon City. Figure 41: Employment profile by industry sector for the Proposed Avon City comparing count by place of work with count by place of usual residence in Business Profile The proposed Avon City has a high business density of 98.2 per 1,000 population, which is above the national average of 93.8 per 1,000 population. The overall number of businesses in the proposed Avon City has declined slightly, with a net loss of 10 businesses from 2007 to Over 65 per cent of local businesses in the proposed Avon City are sole traders, and are likely to be engaged in sub-contracting activity. This could be related to the sub-region s diverse industry, but is also likely to be related to FIFO work outside the region given the rates for export of labour, particularly in mining, construction, and the transport industry. Cities Beyond Perth (Profiles Report), January 2015 Page 63

70 Analysis of the local business profile by minimum turnover and industry reveals the importance of the agriculture, forestry and fishing industry to the proposed Avon City local economy, and its even greater importance to the rest of the Avon sub-region (Figure 42). The next largest local business sectors in the proposed Avon City are in the construction industry and the retail trade. Figure 42: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Proposed Avon City (SA2 includes Northam, Toodyay, and York-Beverley) compared to the rest of the Avon sub-region 78 Location Quotient Agriculture, forestry and fishing industry was more than four times as important to people who work in the proposed Avon City than to the whole of the Western Australian economy in 2011 (Figure 43). This industry sector had become even more important as a source of employment for people working in the region compared to This reflects the impacts of structural adjustment in the agricultural economy. The count of workers, both within the industry and in related industries in the region, has declined 79, but the importance of the sector as a source of employment to the remaining population has increased proportionally due to a redistribution of proportions. What this highlights is the higher level of dependency on agriculture for the remaining population and the need to diversify industry to reduce effects of external economic events. Cities Beyond Perth (Profiles Report), January 2015 Page 64

71 Figure 43: Location quotient analysis comparing the proposed Avon City in 2006 and 2011 relative to Western Australian economy count by place of work 80 Sectors experiencing actual growth included the electricity, gas, water and waste services, which increased in importance as a source of employment through local work or jobs available in external locations. The education and training, health care and social assistance, and the public administration and safety sectors were all slightly more important providers of local employment compared to the whole of the Western Australian economy. The growth in this sector likely reflects increased demand due to the ageing of the population. Exposure to slowdowns in the mining and construction industries would likely have less impact on the proposed Avon City than on Western Australia as a whole (Figure 44). The industries with a higher level of vulnerability to changes in external markets compared to the whole of the Western Australian economy were the agriculture, forestry and fishing industry and, to a lesser extent, the electricity, gas, water and waste services industry. Cities Beyond Perth (Profiles Report), January 2015 Page 65

72 Figure 44: Location quotient analysis comparing the proposed Avon City in 2006 and 2011 relative to Western Australian economy count by place of usual residence 81 Local Competitiveness The proposed Avon City has a competitiveness profile that is highly consistent and within the average range in national comparison. Natural resources are above average in competitiveness, indicating the area s strengths in proximity to national parks and net primary productivity. Economic gains realised from FIFO employment in the resources industry are also reflected in this theme. The only area with below average levels of competitiveness is human capital. Despite having above average competitiveness in health indicators and levels of technical qualifications, this theme s ranking is substantially lowered by very low competitiveness in primary and secondary school performance and early childhood performance, as well as low levels of English proficiency. Cities Beyond Perth (Profiles Report), January 2015 Page 66

73 The proposed Avon City generally has a similar competitiveness profile compared to the average for all regional LGAs in Western Australia (Figure 45). Higher levels of competitiveness are evident in labour market efficiency, due to lower levels of welfare dependency compared to the Western Australian regional average. Slightly lower levels of competitiveness are also evident in human capital, due to the reasons discussed above. Competitiveness in human capital is an evident challenge for much of regional Western Australia, but performance on individual indicators is highly variable at the LGA level. Figure 45: Competitiveness in the proposed Avon City compared to average rank for Australia LGAs and regional LGAs in Western Australia 82 The Proposed Avon City, the Avon Sub-Region and the Wheatbelt The proposed Avon City s competitiveness profile is quite different to the profiles of the rest of the Avon sub-region and the rest of the Wheatbelt sub-regions (Figure 46). The rest of the Wheatbelt is comprised of the Central Coast, Central Midlands, Central East and Wheatbelt South sub-regions. Higher levels of competitiveness in technological readiness and innovation are positive signs for long term growth potential in the proposed Avon City, if challenges related to low competitiveness in human capital can be overcome. Cities Beyond Perth (Profiles Report), January 2015 Page 67

74 The rest of the Avon and the remaining Wheatbelt sub-regions both have features in their profiles which are not unusual for spatial areas with small and dispersed populations: High competitiveness in labour market efficiency reflects the fact that these areas tend to have low unemployment because people who cannot find work tend to relocate to other job markets in the longer term; Low competitiveness in infrastructure and essential services illustrates the challenges faced through greater spatial distances in widespread regions, and the lack of access to essential services, such as hospitals, tertiary education institutions, and major airports due to low population numbers; Low competitiveness in innovation due to a lack of research facilities and small proportions of the workforce with qualifications or employment indicative of research and development activity; and Low competitiveness in technological readiness reflecting the nationwide tendency for the establishment of infrastructure and the development of ICT capacity in areas with larger and more concentrated populations. Figure 46: Competitiveness in the proposed Avon City compared to the rest of the Avon sub-region and the rest of the Wheatbelt in Western Australia 83 Cities Beyond Perth (Profiles Report), January 2015 Page 68

75 Competitive Position in Relation to Similar Australian LGAs The proposed Avon City has a similar population size to the LGAs of Burdekin in Queensland, Burnie in Tasmania and Mount Alexander in Victoria (Figure 47). Each of these areas also has a large part of its economy dependent on the agriculture, forestry and fishing industry. Burdekin and Mount Alexander both have a substantial ageing population, which is evident to a lesser extent in Burnie. For current economic performance, Burdekin and Mount Alexander each have a similar competitiveness to the proposed Avon City in economic fundamentals and labour market efficiency. Burnie is very low in competitiveness for each of these themes. Business sophistication is more competitive in Burnie and Mount Alexander, due to a greater diversity in the economic base and a larger proportion of exporters, importers and wholesalers in the workforce. Figure 47: Competitiveness in the Proposed Avon City compared to LGAs with similar population sizes in Australia 84 Pathways to long term growth are most likely located in the endogenous growth areas. While low competitiveness in human capital is evident in Burdekin at a rate similar to the proposed Avon City, Burnie and Mount Alexander are much higher in competitiveness, due mainly to higher post-school qualification rates (university and technical qualifications) and early childhood development performance. Cities Beyond Perth (Profiles Report), January 2015 Page 69

76 Technological readiness in the proposed Avon City is comparable to the other locations. The proposed Avon City has higher average rates of broadband connectivity compared to Burdekin, Burnie and Mount Alexander, but is less competitive than Burnie and Mount Alexander for workers in ICT and electronics. Competitiveness in innovation is much lower in the proposed Avon City than in each of the competitive locations. This reflects a strong tendency in Western Australia for research centres and scientific institutions to be located in the Perth metropolitan area. Each of the competitive locations has a higher proportion of the population employed as research and development managers. Burnie and Mount Alexander also have higher percentages of the workforce with qualifications in science and technology. There is substantial variation in competitiveness in infrastructure and essential services. Burnie is the most competitive, due to higher than average competitiveness in every indicator for both soft and hard infrastructure as well as essential services. Mount Alexander also has competitive strengths in soft infrastructure and essential services, but is less competitive in transport infrastructure. Burdekin shares a very similar profile to the proposed Avon City with challenges for access to infrastructure across most indicators. The Future: Regional Aspirations The Wheatbelt Development Commission s aspirations for growth are built upon four pillars of planned development: a diverse and adaptive economic base; higher human capital; focus on liveability in communities; and valuing the natural amenity of the region. 85 Increased participation in the knowledge economy enabled through investment in technology and innovation is a critical part of the strategy to achieve regional development goals. 86 Strategic assessment of required infrastructure, particularly in transport and technology, will be required to achieve targets for economic and population growth. This is an issue for the wider Wheatbelt, but particularly critical for the establishment of the proposed Avon City in the future. Sources of Competitive Advantage for the Proposed Avon City The proposed Avon City has substantial competitive advantages in a number of areas: Proximity to employment markets in Perth offers the opportunity for population growth through demand for peri-urban housing; Potential for population growth also exists in the area s substantial natural amenity which meets current trends for establishment of lifestyle blocks; Land and climate suitable for agricultural use with an established industry, supporting infrastructure and service networks offering opportunity for expansion; and Proximity to central road and rail transport routes. Cities Beyond Perth (Profiles Report), January 2015 Page 70

77 Building Competitive Advantage and Success in the Future Opportunity to utilise the competitive advantages in the proposed Avon City will likely be realised through the development of its human capital, improvement in technological readiness and capacity for innovation. The expansion of the knowledge sector, in particular, will be critical to longer term growth, ensuring that the region is better placed to remain competitive in external markets and can meet challenges such as climate change, salinity and soil acidity which is confronting the agricultural industry. Expansion of the workforce in the Avon region is essential for economic growth. Current limitations in infrastructure and human capital are creating substantial barriers to the development of new industry. New business will also be difficult to attract to the region without the demand created by a larger population. This creates a circular no-win situation that will require strategic intervention to create the conditions to support growth through increasing both supply and demand factors. The expansion of the AvonLink train service to the region is an initiative strengthening the commuter potential from the region. 87 It will be important that the extension of service availability is supported by local and regional strategies to increase utilisation and ensure long term continuity. Housing development has been much stronger in the peri-urban areas to the north and south of the Perth metropolitan area. There is anecdotal evidence of a negative attitude towards moving east of the hills in Perth which may impact upon the growth of an Avon City. Such negative perceptions of the inner Wheatbelt have possibly not been helped by an inflow of social housing tenants into the area due to social housing shortages in Perth during the peak of the mining boom. The establishment of an educational/research innovation centre or the relocation of State or Federal government offices would provide a much-needed stimulus for the development of a larger employment market in the region. This level of policy intervention is likely to be needed to enable an agglomerative growth pattern to develop, as there is simply not the population or industry density for this to occur within the short to medium term at present. None of these issues are insurmountable. They are well recognised in the Wheatbelt Development Commission s Regional Investment Blueprint, along with suggested solutions. Based on this analysis, workforce development, improved public transport, and broadband communications connectivity will be essential for the future development of an Avon City. Cities Beyond Perth (Profiles Report), January 2015 Page 71

78 Areas Well-Positioned for Accessing New Global Markets Broome Shifting Tides and New Opportunities Broome is one of Western Australia s top tourism destinations, attracting 146,000 domestic visitors and 28,000 international visitors in who stayed for over 1.2M nights 88 (within the wider SA2 region). 89 Alongside tourism, Broome is best known for its pearling industry, which has been in a downturn since the GFC in Broome has a central role as a service provider to the surrounding West Kimberley region, particularly in provision of services for the regional Indigenous communities, some resource sector projects and the surrounding pastoral industry. 90 Critical to Broome s recent history has been the impact of changing development plans on perceptions for economic potential in the town, in particular the decision not to proceed with onshore gas processing facilities at James Price Point and the scaling back of the Broome Boating Facility. 91 These shifting tides are continuing to impact on the town, but new opportunities are also emerging, particularly with the changing value of the Australian dollar and emerging agribusiness markets for food production. Broome is well-placed to capitalise on these opportunities. Population Profile Broome LGA had a population count of 14,997 people in Due to identified issues with undercount for the region it is usually more accurate to use the estimated resident population of 16,031 in 2011 for reporting purposes This report uses the LGA count to maintain overall consistency across the competitive advantage group, but the 1,034 population gap is considered in interpretation of data and addressed where relevant. Figure 48: Population structure by age and sex in Broome LGA in Cities Beyond Perth (Profiles Report), January 2015 Page 72

79 The Broome population is highly variable due to seasonal factors, often more than doubling at the peak of the tourism season, which can create stresses on local infrastructure and services. The population profile is also notable for the substantial lack of people aged 60 years old or more (Figure 48). Several factors are likely to contribute to this, including mortality factors, retirement choices, and availability of aged care housing, health care, and support services. Broome has a high proportion of Aboriginal people, approximately 29 per cent of the usually resident population. There are a large number of children and younger people, with substantial reduction in the population aged 50 years or more (Figure 49). Higher comparative mortality is likely to be a significant contributor to this differential, often complicated by lower access to health care in regional and remote localities. 95 The provision of health and social services to the regional Indigenous population is a substantial driver of the local economy. In contrast, the non-indigenous population in Broome has a very large working age population, reflecting a trend for employment related migration (Figure 49). Lower numbers in the 50 years or more age group reflects a combination of retirement-related migration patterns and regional/remote higher mortality patterns. Figure 49: Indigenous status by age group for Broome LGA in Cities Beyond Perth (Profiles Report), January 2015 Page 73

80 The population of Broome is projected by the Western Australian Government to grow to between 19,100 and 27,700 by The LGA is currently tracking at the low to mid range of this 2006 forecast, having achieved 2.5 per cent annual average growth between 2006 and The expected population would be around 21,720 if growth continued at the same rate until 2026, which is within projected range. Figure 50: Total weekly personal income by Indigenous status in Broome LGA in 2011 Data source: Australian Bureau of Statistics Census of Population and Housing 98 There is a level of income disparity apparent in the town and this challenges the development of the local economy. Consultations revealed a perception that people are either earning very high incomes or are completely dependent on social welfare payments, which is reflected in ABS Census data (Figure 50). The majority of the population on low incomes are Aboriginal people. The median income for non-indigenous people was $ while the median for Aboriginal people was $ for usual residents of Broome in The Yawuru people are the traditional owners of the lands where Broome is located, but there are also members of other cultural/language groups from the wider Kimberley and adjacent regions who can take up seasonal residence, and/or come into town for cultural or medical visits. Cities Beyond Perth (Profiles Report), January 2015 Page 74

81 Economic Profile The GRP for the Kimberley region in was $3,157M (1.3 per cent of the Western Australian GSP). 100 In recent years, Broome has been somewhat challenged by the impacts of the resources boom without reaping many of the benefits experienced in the wider Kimberley and adjacent Pilbara region. These negative effects include the impact of the high Australian dollar, reducing both domestic and international travel markets, the crowding out of regional travel services by FIFO demand, and siphoning of regional workforces due to high demand for labour in the resources sector. 101 Local community and business sectors consider that revitalisation of the tourism industry through development of new markets and diversification of the economic base to reduce single industry dependency are the critical factors in creating economic growth in Broome The downturn in the pearling industry has anecdotedly seen a reduction in boats, with most of the remaining fleet now operating out of Darwin. 105 A fishing and aquaculture industry continues to operate, but is not a large presence in town. Other agricultural production is mostly in pastoral grazing. Unlike Carnarvon or Kununurra, Broome does not have a large irrigated agriculture industry. Some small-scale horticulture is evident on the outskirts of town. In contrast, the Broome Port is expanding its services, achieving a record throughput of over 500,000 tonnes in 2012/ This expansion was mainly related to the import and export of materials related to the oil and gas industry in the Browse Basin. Broome Port also has capacity and receives regular visits from cruise ships. There is potential for expansion of this activity, and development of additional tourism industry to cater for demand. Furthermore, Broome does have a role as a State and Federal government administrative centre for the West Kimberley region, but this is considered to have limited prospects for stimulating growth and diversity within the local economy. 107 The cancellation of a proposed onshore natural gas processing plant at James Price Point as part of the offshore Browse Joint Venture has narrowed future options for economic development in Broome and contributed to a loss of confidence in the business community Prospects for shale gas mining and offshore resource development continue to be explored in the region, and a floating liquefied natural gas (LNG) platform in the Browse Basin is expected to commence production in Employment Profile The vast majority of people who live in Broome also work in Broome (Figure 51). There is evidence of some export of labour for the mining and construction industries, and some importation of labour in the accommodation and food services industry. Cities Beyond Perth (Profiles Report), January 2015 Page 75

82 The biggest provider of employment in Broome is the health care and social assistance sector. Accommodation and food services, followed by education and training, and then the retail trade are the next largest providers of employment. Figure 51: Employment profile by industry sector for Broome LGA comparing count by place of work with count by place of usual residence in Business Profile Broome has a business density of 92.4 per 1,000 population, which is close to the national average of 93.8 per 1,000 population. Businesses closing due to inability to attract staff is an identified issue of concern for the Broome community. 111 Despite a general lack of business confidence in recent times, there is actually evidence of growth since the peak of the post-gfc impact in There were 30 more businesses employing five or more people in , compared to the preceding financial year. 112 Business entries exceeded business exits in recent years, and the overall rate of exits has slowed by 23 per cent since the peak of the post-gfc decline in Cities Beyond Perth (Profiles Report), January 2015 Page 76

83 Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Broome compared to the rest of the Kimberley region in 2012 (Figure 52). This analysis reveals that the construction industry followed by the retail trade, and the accommodation and food services industry were the dominant sectors when calculated by number of businesses and minimum reported turnover. The next highest sector was rental, hiring and real estate services, with high turnover driven by the substantial cost associated with property rentals and sales in Broome. A substantial level of turnover related to the provision of health care and social assistance by local businesses is also evident. Figure 52: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Broome compared to Kununurra and the rest of the Kimberley region 113 Cities Beyond Perth (Profiles Report), January 2015 Page 77

84 Overall, Broome demonstrates a reasonable level of diversity for sources of local business income. Less diverse turnover is evident for local business in Kununurra and the rest of the Kimberley region, particularly in local businesses offering professional, scientific and technical services which are a more prominent contributor to the Broome local economy than elsewhere. Location Quotient Analysis of the relative importance of different employment sectors to the Broome economy compared to the Western Australian economy (where state industry value = 1) is examined in Figures 53 and 54. The dominant driver of local employment remains the accommodation and food services industry, despite a small reduction in importance since Figure 53: Location quotient analysis comparing Broome LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 114 Cities Beyond Perth (Profiles Report), January 2015 Page 78

85 Increasing diversity of employment is evident across several sectors in the Broome economy, with particular growth in employment in electricity, gas, water and waste services, and other services. The low level of activity in mining, manufacturing and professional, scientific and technical services indicates that Broome is not a substantial provider of employees to the resources sector in the wider Kimberley and adjacent Pilbara regions. The place of work analysis reveals a mostly similar picture. Sectors which have grown in importance as a provider of employment for people usually residing outside of Broome includes electricity, gas, water and waste services, transport, postal and warehousing, education and training, health care and social services, and the other services category (Figure 54). Figure 54: Location quotient analysis comparing Broome LGA in 2006 and 2011 relative to Western Australian economy count by place of work 115 Cities Beyond Perth (Profiles Report), January 2015 Page 79

86 Local Competitiveness Broome has high competitiveness in economic fundamentals, underpinned by an average wage/labour cost of $45,723 (third decile in national comparison) and building approvals of $1,350 per capita (second decile) in 2011 (Figure 55). Substantial competitiveness also exists in natural resources due to a developed fishing and aquaculture industry, and proximity to the coast and national parks. Lower than average competitiveness in infrastructure and essential services reflects some of the challenges of distance, but are generally improved by availability of airport and port facilities. Broome is average in competitiveness for skilled labour with 31 per cent of the workforce working as managers or professionals in The core challenges for Broome s economy are evident in low competitiveness in labour market efficiency, business sophistication and human capital. Broome has a very low participation rate of 69.8 per cent of its working age population. Welfare dependence is high, with 28 per cent of the Broome population dependent on government support as the main household income source. This indicates substantial disparity in the local economy, especially when considered alongside the very high average wage for Broome. Human capital is challenged by low competitiveness in health, schooling and early childhood development. Figure 55: Competitiveness in Broome LGA compared to average ranks for Australia and regional Western Australia 116 Cities Beyond Perth (Profiles Report), January 2015 Page 80

87 Broome and the Kimberley Region Broome shares its role as a regional service provider with Kununurra. The region can be roughly divided into two sub-regions, the West Kimberley and the East Kimberley. Broome LGA is adjacent to the Derby-West Kimberley LGA which contains the towns of Derby and Fitzroy Crossing, a number of small to mid-size Indigenous communities, large area pastoral stations and a large part of the Kimberley s current resources operations. Broome is more competitive than the average rank for the rest of the Kimberley region (Figure 56). This analysis demonstrates the substantial barriers faced by the region in infrastructure, and the endogenous growth drivers of human capital, technological readiness and innovation. If left unaddressed, these factors are likely to seriously inhibit the development of the Kimberley in the long term. It also indicates that the current economic gains realised by natural resources development had not resulted in any evident flow-on improvement across the economy or population at the time of measurement. Figure 56: Competitiveness in Broome compared to the rest of the Kimberley region (average rank) 117 Cities Beyond Perth (Profiles Report), January 2015 Page 81

88 Competitive Position in Relation to Similar Australian LGAs To place these results in context, Broome s competitiveness profile was compared to similar sized LGAs in Australia, Banana in Queensland, Parkes in New South Wales and Port Lincoln in South Australia (Figure 57). Each of these locations has a population of around 15,000 which is considered to be the critical mass for the establishment of an agglomeration economy. 118 Each also has a very different competitiveness profile which reflects the different resources and challenges to economic development experienced in each location. Broome, Banana and Port Lincoln all benefit from access to substantial natural resources, which is reflected in high economic fundamentals for Broome and Banana, but has not realised any substantial benefit for Port Lincoln. Yet, Port Lincoln has high competitiveness in infrastructure and essential services, and also very high competitiveness in business sophistication. Figure 57: Comparison of competitiveness in Broome to similar population size locations 119 Banana is most competitive in labour market efficiency, reflecting the very efficient utilisation of available labour by the predominant agricultural and mining industries. Again, this has not resulted in demonstrable growth in the endogenous drivers of human capital, technological readiness and innovation. Business sophistication is also low due to the economic vulnerability created by dependence on large employers. Cities Beyond Perth (Profiles Report), January 2015 Page 82

89 Parkes has the most competitive human capital of all the LGAs being compared, but is still only average in competitiveness. In comparison, Broome is more competitive in innovation and technological readiness. This indicates that it is slightly better placed than Parkes to achieve longer term growth, as long as it can overcome its current challenges in human capital and improve workforce participation. The Future of Broome and Sources of Competitive Advantage The challenge for Broome lies in realising the potential of its full range of natural assets to achieve long term economic and population growth, without compromising the environmental and lifestyle factors which make the town attractive to both tourists and residents. Sources of Competitive Advantage for Broome The primary competitive advantage for Broome is in the surrounding natural environment, the weather in the dry season, and the existing tourism businesses and infrastructure. Future development of this industry depends upon redefining core products and services to better appeal to emerging markets. The downturn in tourism post-gfc offers Broome an opportunity to step back and assess the changing tastes and desires of existing and new market groups. The majority of international tourism occurs in within a tourist s original source region (e.g. someone in Europe is most likely to visit other countries in Europe), which makes Australia s largest potential market the Asia- Pacific region, particularly the growing outbound market from China. 120 Notwithstanding this, there is also potential to target other newly affluent groups in high growth outbound markets, including Russia, India and the Middle East. 121 Broome does not currently have the combination of affordability, mass transport connectivity, large scale accommodation development, or dense entertainment infrastructure to enable it to currently compete for large group tourism markets. An exception to this is the growing economic benefit to retail, food services, and entertainment/leisure services enabled by Broome s attraction as a stop-over point for cruise ships (which do not require availability of either mass transport or accommodation). 122 Development of Broome to a scale similar to the Gold Coast to attract the mass tourism market may not be feasible or desirable for the resident population. Therefore, it may be more productive to focus on developing attractors for some key niche groups within larger markets. The growing class of Asian millionaires is one group that could be targeted, both as customers and as investors. 123 Alternatively, the growth of experiential tourism tailored to fit with particular demographic groups may also offer opportunities for development, such as ecotourism, immersive cultural tourism, or adventure tourism. Cities Beyond Perth (Profiles Report), January 2015 Page 83

90 Broome s second competitive advantage lies in resources development, both within the local area and in proximity to projects in the wider Kimberley region. There is an acknowledged tension between resource development and protection of the natural environment and amenities which are key attractors for tourism. These industries are not necessarily mutually exclusive. Expansion of rest and recreation markets for FIFO workers may also provide a viable niche market for development. Broome s third competitive advantage is in the development of aquaculture industries. The post-gfc slowdown in the global jewellery market has reduced the number of pearl fishers operating out of Broome 124. There is potential for exploration of alternative aquaculture industries, such as fish, seafood, and microalgae for bio-fuel and pharmaceuticals. The Broome Tropical Aquaculture Park has existing capacity for expansion of new industry and attraction of investors 125. Development of new domestic and international markets for aquaculture products will require access to processing facilities and air freight export pathways. Broome s agricultural industry was hit hard by the ban on live cattle export, which saw live exports drop by 37 per cent in 2013/ This industry is a core part of the agricultural profile of the region. Recent recovery in this industry includes development of an abbatoir with international export contracts for boxed beef products already in place. 127 It is important for Broome to identify areas of development that leverage existing competitive advantages rather than replicate services which are already well-established in the nearby regions. For example, services to support the scientific, mechanical and technical needs of mining or oil and gas extraction are already well-established in Perth, the Pilbara and Kalgoorlie for servicing by a FIFO pathway. Becoming a viable competitor in this market may be less productive than identifying unique niches for specialisation. Despite this, the port in Broome does have an essential role for supply of the resources industry in the region, particularly for exploration and the offshore oil and gas developments. Expansion of the port and resolution of recreational boating facilities is a matter that needs to be resolved. Regional Aspirations Broome appears to be suffering a loss in business confidence at present. The decision by Woodside to focus on offshore processing of natural gas resources rather than the development of an onshore facility at James Price Point was welcomed by some in the local community, but seen as a huge loss of potential economic benefit by others The cancellation of the planned $50M Broome Boating Facility project in January 2014 also had a negative impact on expectations for local economic growth. 130 Despite this, many in the community remain positive about the options for future regional development. Cities Beyond Perth (Profiles Report), January 2015 Page 84

91 The Broome 2040 Community Survey 131 identified several key needs relating to potential future growth: Required upgrades in physical and social infrastructure and services; Importance of retention of the existing Broome character and lifestyle (fears of becoming another mining town like Karratha City or Port Hedland); Expansion of the local economy, in particular to generate employment and training options for young people; Issues regarding the attraction and retention of population, especially the severe shortage of affordable housing accompanied by a high cost of living; Better management of short-term fluctuations of population (e.g. wet season and cyclone driven inflow, and people from surrounding communities needing to attend medical appointments, funerals or cultural events) on top of seasonal tourism inflow which can more than triple the local population; and The need to address the big social issues, particularly around drugs, alcohol, crime and violence. Broome Chamber of Commerce and Industry has identified the following aspirations for growth 132 : Development of Broome as a logistics cluster hub to service regional resource projects, such as North West defence facilities and tourism industries (through existing deep water port capacity, heavy industrial area, international airport infrastructure, and road transport infrastructure); Increasing role as a transit point for offshore oil and gas in Browse and Canning basins and as an on-shore evacuation centre for all rigs during cyclone season; Minerals industry development (rare earths, iron ore, gold, alumina, kaolin, precious metals, potash, uranium and coal) being held up by lack of infrastructure and high costs to develop; Potential for direct import and export of goods and services through Broome port (currently through Fremantle and road train); Possible avenues for manufacturing development are abattoir and freezing works for cattle industry, vegetable and fruit processing, light industrial manufacturing and servicing facilities for wider Kimberley region, Possible avenues for agricultural/horticultural development require damning of rivers and development of irrigation infrastructure (cost of transport to cities a prohibitive barrier for low-profit commodities), expansion of the existing $10M La Grange horticultural industry through irrigation for large-scale hydroponic production; and Establishment of a defence base in Broome to protect offshore resources. Cities Beyond Perth (Profiles Report), January 2015 Page 85

92 Building Competitive Advantage and Success in the Future Success for Broome in realising the development potential of its natural assets depends upon the development of an agreed pathway towards development that effectively addresses the social issues created by the substantial economic divide. Broome s future as a regional city cannot be effectively realised while the foundations for growth are continually undermined by the lack of a middle ground which enables the growth of a balanced workforce. Barriers to development include the high costs of building in the region (due to cyclone compliance and remoteness factors) and high-end market demand creating severe housing shortages. 133 Affordable and accessible housing is a critical goal for the growth of Broome, particularly the development of housing for the lower income groups within the workforce. Both rental and sales markets in Broome are artificially inflated by a shortage of supply and the ability of the resources industry and government to pay excessively high prices, which effectively crowds other consumers out of the market. However, Broome s primary challenge is to develop its labour market efficiency, and this can only be achieved through improving the health, education and workforce skills of the local inhabitants, particularly the Aboriginal and Torres Strait Islander people. Disengaged local youth, poverty, skills deficits, health and social problems related to substance abuse and violence, all contribute to the lack of a healthy and job-ready workforce The current dependence upon backpacker and itinerant labour is insufficient to attract investors. The alternative pathway is to develop imported labour pathways that are not competing for the same workforce as higher paid FIFO positions in the resources industry. Cities Beyond Perth (Profiles Report), January 2015 Page 86

93 Carnarvon Getting Ready to Grow Drawing its competitive advantage from its location between tourist attractions and use of water resources, Carnarvon could be positioned for significant growth but only if external decisions, investment and markets combine with local energy to enable it to access the opportunities. Population Profile Carnarvon is a small regional centre located in the delta of the Gascoyne River. Carnarvon Shire (which includes the town of Carnarvon and also Coral Bay to the north) had a resident population of 5,788 in The Gascoyne Development Commission notes that the estimated resident population in Carnarvon for 2013 calculated by the ABS provides a higher population figure than the ABS 2011 Census data. The 2012 revised estimated population for Carnarvon is 6,099 usual residents an estimated gain of 311 persons. 136 The population of Carnarvon Shire was projected by the Western Australian Government to be between 2,900 and 6,500 by The Gascoyne Development Commission has set aspirational population growth targets for Carnarvon with a low range of 7,427 and a high range of 13,098 by Meeting these aspirational growth targets would require an annual average growth rate of 1.8 per cent to reach the low range and an annual average growth rate of 6 per cent to reach the high range. Carnarvon achieved an annual average growth of 0.5 per cent between 2006 and The population would reach 6,240 if growth continued at the 2006 to 2011 rate of 0.5 per cent annual average growth until Figure 58: Population structure by age and sex in Carnarvon LGA in Cities Beyond Perth (Profiles Report), January 2015 Page 87

94 The population profile in Carnarvon LGA was reasonably balanced for age and sex distribution in 2011 (Figure 58). There is an evident gap in the 20 to 29 year age group, reflecting the national trend for this age group to seek new employment and education opportunities in other regions and particularly in metropolitan areas. The Gascoyne Development Commission advises that the exit trend for young people begins at age 11 when families either send their child to boarding school or relocate the whole family to access their preferred post-primary education facilities. This explanation is consistent with the trend in the age profile. Economic Profile With an estimated gross regional product of $870M in 2012, the Gascoyne contributes 0.4 per cent of the Western Australian GSP. It is a highly productive region for it s size, with an employment base of 5,255 people in The Gascoyne has a productivity ratio equivalent to the Kimberley, South West and Wheatbelt regions, and is also slightly higher than Perth (see Table 2 previously in this report). Carnarvon s competitiveness in economic fundamentals is also high, as [In]Sight places the town in the top 60 LGAs in national comparison. 140 Average wage/labour costs in Carnarvon were $40,416 and building approvals per capita rate in 2011 was $1.91 which is in the first decile nationally. This substantially higher than average building approvals rate and indicates an economy which is currently experiencing growth. Carnarvon has received substantial Western Australian State Government investment through the Royalties for Regions funding. This investment has enabled development of a number of key local infrastructure projects, including flood protection levies, a new police centre, and a revitalisation of the foreshore and main street precinct. Employment Profile Employment in the local economy is driven primarily by local fisheries and horticulture industries (Figure 59). Employment in agriculture, fisheries and forestry in Carnarvon is six times more important to the local economy when compared to the Western Australian economy. Employment in the electricity, gas, water and waste services industry is the second most important provider of local employment on a proportional basis, having almost twice the level of importance to the local economy when compared to the Western Australian economy. This reflects the higher importance of local area essential services (electricity and gas supply, water supply, and waste services provision) as a provider of employment in Carnarvon, but also reflects the relatively narrow base of alternative industry and the realtively small size of the workforce at present. Cities Beyond Perth (Profiles Report), January 2015 Page 88

95 The accommodation and food services industry is 1.5 times more important as a source of employment in Carnarvon than in the whole of the Western Australian economy. This reflects the level of activity associated with the tourism attractions set around the Shark Bay and Ningaloo World Heritage Areas, which includes sites such as Monkey Mia and Coral Bay. Very high occupation rates are reported in all of Carnarvon s caravan parks, hotels and motels during the peak season, including the Coral Bay settlement where demand often outstrips supply. 141 Planning for expansion of the tourism industry in Carnarvon may benefit from an assessment of the proportion of higher labour need businesses (e.g. food services, hotels and motels) compared to low labour need industry (e.g. caravan parks and self-cater cabins). At present, the industry is not as high a source of local employment as it could be, particularly given the high level of natural attractors available in the region. Figure 59: Location quotient analysis comparing Carnarvon LGA in 2006 and 2011 relative to Western Australian economy count by place of work 142 Cities Beyond Perth (Profiles Report), January 2015 Page 89

96 A strong tourism industry can create flow-on benefits to the local retail, transport, and rental/hiring sectors. Each of these sectors is a provider of employment to Carnarvon at a similar level to the employment by industry profile for the Western Australian economy. Comparison of the place of work and place of residence profiles suggests that employment is relatively contained to the local area, with Carnarvon not currently having high proportions of FIFO workers. Business Profile Carnarvon has a business density of businesses per 1,000 population, which is high compared to the national average of 93.8 per 1,000 population and the third highest of all of the locations studied in this report. The business community was relatively stable over the period, averaging around 100 entry and exits each year. Figure 60: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Carnarvon compared to the rest of the Gascoyne region 143 Cities Beyond Perth (Profiles Report), January 2015 Page 90

97 Half of the businesses in Carnarvon are not employers, but a quarter employ more than five people. Non-employing businesses had a higher than national average level of income at $25,000 per annum. Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Carnarvon compared to the rest of the Gascoyne region in 2012 (Figure 60). The importance of agriculture, forestry and fishing industry is strongly evident, followed by the retail trade sector and the construction industry. The retail sector combined with accommodation and food services sector reflects the importance of the tourism industry to both the Carnarvon and the wider Gascoyne region. The higher minimum turnover for the rental, hiring and real estate services industry reflects the higher costs associated with rental and sales in property in both Carnarvon and the Gascoyne region. This is a consistent pattern throughout each of the locations in the North West of Western Australia studied for this report. The role of Carnarvon as an administrative services centre for the region is reflected in the value of business turnover for administrative and business support services. Local Competitiveness Carnarvon s competitiveness profile exhibits relative strengths in natural resources, economic fundamentals and innovation (Figure 61). It also has a level of competitiveness in business sophistication that is equivalent to the national average, and higher than the average for all other regional LGAs in Western Australia. [In]Sight data reveals that local labour market efficiency has been relatively low. The positives in Carnarvon s labour market are an average level of competitiveness in unemployment, youth unemployment, and levels of skilled labour (e.g. 31 per cent of the workforce working as managers or professionals in 2011). Yet, there are structural weaknesses in a labour force participation rate of only 71 per cent of the working age population (which places Carnarvon in the eighth decile in national comparison) and high levels of welfare dependence (i.e. 23 per cent of the population dependent on government support as the main household income source in 2011). These results reflect the challenges Carnarvon continues to experience in engaging large parts of the potential workforce in the local economy. Overcoming the low competitiveness in human capital and technological readiness within the existing population would likely have flow-on benefits to improve labour force efficiency. Carnarvon has a relatively low overall competitiveness in human capital. While engagement in lifelong learning is the most positive indicator, and high school leaving rates and early childhood outcomes are close to the national average, the learning outcomes for primary and secondary school students overall are low. Lack of options for schooling in Carnarvon, Cities Beyond Perth (Profiles Report), January 2015 Page 91

98 particularly for high school and post-school training, contributes to an exodus of this age group, particularly of children with higher academic potential. 144 Figure 61: Competitiveness in Carnarvon compared to average ranks for Australia LGAs and Western Australian regional LGAs 145 Post-school qualification levels (i.e. technical and university) are also relatively low in Carnarvon. These outcomes underpin the on-going challenges experienced in engaging significant parts of the potential local workforce in the economy, and serve to undermine the future economic potential of Carnarvon. Technological readiness would be improved by connection to the NBN, but workforce skills development is an equally critical area of need. The lack of a Community Resource Centre in Carnarvon may contribute to lower levels of technological skills in the local workforce. The closest Community Resource Centre is in Gascoyne Junction, over 173km away. 146 In contrast to many other small and remote regions, Carnarvon has a relatively high competitiveness in innovation, driven primarily by the relatively high proportion of research and development managers in the town at the Department of Agriculture research station based in Carnarvon. It carries out trials and investigations on a variety of fruits and vegetables, focusing on increasing long-term profitability, improving markets and trade, Cities Beyond Perth (Profiles Report), January 2015 Page 92

99 building industry capacity and ensuring a sustainable agricultural sector 147. This facility is important to Carnarvon s capacity to realise emerging agribusiness opportunities. The core competitive weaknesses in Carnarvon s economy lie in infrastructure, labour market efficiency, human capital and technological readiness. These are issues that are recognised by the Gascoyne Development Commission, which advises that there is a critical need for expansion in infrastructure and industry through a number of major projects to improve local capacity, including: Expansion of the horticulture industry; Extension of salt mining projects; Development of tourism-related amenities; Aged care services and infrastructure development; Need to develop options for locally-based schooling; and Improvements in transport connectivity, particularly in airport and port developments. Carnarvon and the Gascoyne region Carnarvon is not a dominant regional service centre in the same way that many other locations studied for this report are, despite having the majority of the region s total population. This is because each of the larger Gascoyne settlements have necessarily developed a high degree of self-sufficiency due to road distances between each town. Factors such as regional market size and spatial distribution are also challenges for development. Figure 62: Competitiveness in Carnarvon compared to the rest of the Gascoyne region 148 Cities Beyond Perth (Profiles Report), January 2015 Page 93

100 Exmouth has an industry dependent upon tourism, defence and service provision to the offshore oil and gas industry. This contributes to it being the second largest settlement in the Gascoyne Region with a population of 2,393 in The tourism-centred town of Coral Bay, adjacent to Ningaloo Reef, is located closer to Exmouth by road than Carnarvon. This population is capped at 400 residents and visitors are restricted to 3600 per night. 149 This is due to environmental controls and currently limits its potential for future large scale development. The recently developed Coral Bay Settlement Plan recommends a slight increase in capacity for population and visitors to help ease the accommodation shortage in the short term. In addition, the potential for additional tourist accommodation nodes along the Ningaloo Coast is being investigated. 150 Currently, the accommodation shortage shifts the potential for growth of tourism amenities and services to Exmouth and Carnarvon. The proximal location of Carnarvon on the Northern Coastal Highway close to the attractions of both the Ningaloo and Shark Bay World Heritage Areas brings a flow of tourists through the town which is vitally important to the local economy. Essentially, this shifts the potential from growth of tourism amenities and services to Exmouth and Carnarvon. The proximal location of Carnarvon on the Northern Coastal Highway close to the attractors of Ningaloo Reef and Monkey Mia brings a flow of tourists through the town which is vitally important to the local economy. The remaining Shires of Upper Gascoyne and Shark Bay both have very small populations (250 and 850 in 2011). Each of these areas has an industry profile dominated by tourism, agriculture and government administrative services. The presence of the larger centres of Geraldton to the south and Karratha City to the north also constrains the ability for Carnarvon to expand its role as a centre for government administration and regional services to the wider North West area. The [In]Sight profile for Carnarvon reflects some of the diffusion in the regional relationships (Figure 62). Carnarvon is more competitive in natural resources which contributes to a higher level of competitiveness in economic fundamentals compared to the rest of the Gascoyne region. Yet, structural weakness in labour market efficiency is more apparent in Carnarvon than in the the next largest LGAs in the region. Exmouth and Shark Bay LGAs both have higher rates of labour force participation, lower unemployment and substantially lower youth unemployment. In contrast, Upper Gascoyne has a very low participation rate of 60 per cent, and higher rates of unemployment and youth unemployment when compared to Carnarvon. Innovation is higher in Carnarvon than the rest of the Gascoyne due to the presence of the agriculture research facilities. The other endogenous growth drivers of technological readiness and human capital are similarly low in competitiveness for both Carnarvon and the rest of the Gascoyne region. Cities Beyond Perth (Profiles Report), January 2015 Page 94

101 Competitive Position in Relation to Similar Australian LGAs To place these results in context, Carnarvon s competitiveness profile was compared to similar sized LGAs in Australia that also share an analogous location and industry base (Figure 63). Comparators included the Lachlan, Walgett, Narranderra and Balonne Shires in the Murray- Darling Basin and Victoria Daly and Roper Shires in the Northern Territory. These LGAs have similar populations, are all relatively remote and rely on irrigated agriculture as the foundation of their local economies. Overall, Carnarvon is arguably better positioned than these similar areas. Its natural resources ranking is significantly higher reflecting the relative diversity of the employment in Carnarvon in primary industries compared to these other areas. Innovation and economic fundamentals are other sources of competitive strength. This is due to the diversity created by the agricultural and tourism industries, accompanied by the substantial benefit of an established research centre in the LGA. Figure 63: Competitiveness in Carnarvon compared to LGAs in Australia with similar population sizes 151 Cities Beyond Perth (Profiles Report), January 2015 Page 95

102 The Future and Sources of Competitive Advantage for Carnarvon The key competitive advantage for Carnarvon remains in the effective and sustainable exploitation of local natural resources, particularly water. The extent to which Carnarvon is able to access and productively use water to expand the size and value of irrigated agriculture in the region will continue to determine its future. Its proximity to Perth (relative to other sub-tropical growing regions) and Asia provides the potential for Carnarvon to experience steady industry growth if water access issues can be resolved. Carnarvon s other key source of competitive advantage is its location. There are a number of aspects to this including its position on the coast, in a sub-tropical environment and in close proximity to major natural attractions. This provides the local area with a range of opportunities in tourism and lifestyle development that are relatively unique in Australia. Additional competitive advantages for Carnarvon exist in: An established salt mining industry and private export facility at Cape Cuvier, 90 minutes north of Carnarvon town; Existing fisheries industry and processing facilities; and Services to the established pastoral industry in the Gascoyne region. Regional Aspirations At the local level, the focus for the future is predominantly on growing the opportunities for Carnarvon to achieve further growth in the tourism market, become a desired lifestyle destination, and expand the export of food products to global markets. Carnarvon aims to further leverage the flow of tourists to key attractions in the surrounding region and realise the opportunity to become a destination in its own right or hub for access to surrounding experiences. This will require expansion of tourism services and amenities, particularly as demand exceeds supply in the region during peak season, but poor demand in low season creates a barrier to development. 152 Carnarvon has potential to absorb growth in the peak market, as Coral Bay has no capacity for development. Still, it will have to compete with Exmouth for this market share. Natural amenity and climate make Carnarvon a popular seasonal tourism and short-term residential destination, particularly for the grey nomad market seeking escape from the southern winter. There are aspirations to grow the permanent population of Carnarvon by retaining/attracting more older people to permanently reside there, and also attract more workers to employment opportunities created by a larger aged services and amenities sector. Additional housing, aged services, and recreational/retail amenities would need to be developed in Carnarvon to fulfill this aspiration. Cities Beyond Perth (Profiles Report), January 2015 Page 96

103 Building Competitive Advantage in the Future Carnarvon offers good potential for future economic growth, particularly if opportunities are leveraged in emerging markets for agribusiness and food production. Yet, long term economic and population growth will require innovative thinking and concerted action to overcome the challenges of its existing small population size, remote location and limited economic base. Growth of industry will be critical to the future, and this will be best based on existing strengths rather than trying to compete in already-serviced and softening markets in neighbouring regions. While the Western Australian State Government s Gascoyne revitalisation strategy has provided a substantial stimulus for recent local economic activity, there is also benefit still to be realised from recent and continued infrastructure investment funded through Royalties for Regions. Carnarvon s core driver of future growth is most likely to be achieved through developing its specialist knowledge sector in irrigated agriculture and agribusiness. This offers the opportunity for specialist services to engage with irrigated agriculture markets throughout the subtropical zone in Australia and has potential for international export. Furthermore, establishment of closer industry ties with Kununurra and Broome offers the opportunity to develop specialisations in both sub-tropical and tropical zone irrigated systems. The key to future growth remains the sustainable utilisation of local water resources to their economic potential. Investments in flood protection levies have recently resulted in the greater protection of a larger area of arable land (and the town) from regular flooding. Carnarvon would likely benefit from further clarification of water rights. Management arrangements will be required to most effectively leverage available water resoureces. The injection of outside, private capital which also brings a key connection to new markets is also essential for the town s competitive advantage in agriculture to be leveraged as a source of future growth. Leveraging the tourism and lifestyle opportunities in Carnarvon depends upon a number of factors. The Western Australian State Government will play an important role in facilitating this opportunity through its management of water issues in particular. Although local leaders cannot effect the changes needed to resolve these major challenges, their leadership and focus on the issues will be important to ensure the opportunity is progressed by all levels of government and brought to the attention of potential investors. Alongside these two sources of competitive advantage lie some competitive challenges which the region will need to face and overcome to reach its potential. There are relative weaknesses and barriers to growth in infrastructure, particularly in limited communications connectivity. Similarly, difficulties for entry to the housing market are a disincentive to population growth. Current high prices and a limited new supply are key issues in the housing market, but there is also not the level of market demand in place to drive growth and be attractive to private investors. Cities Beyond Perth (Profiles Report), January 2015 Page 97

104 Kununurra Diamonds, Droplets and Diversification From small beginnings as a town created to service the Ord River Irrigation Area (ORIA) development in the 1960s, Kununurra has grown into a dynamic community situated in a green oasis in the furthest northern reaches of Western Australia. The industry mix of the town diversified with the commissioning of the Argyle diamond mine in 1985, which is located approximately 185 km outside of Kununurra and operates a large FIFO workforce. Kununurra now provides a service-base to the Argyle mine and the nearby Savannah nickel, cobalt and copper mine. It also has a service provider role for other East Kimberley towns, particularly the port at Wyndham and the town of Halls Creek. The future for Kununurra centres on the expansion of ORIA stage two, and to a lesser extent, through proximity potential to ORIA stage three across the border in the Northern Territory. Future expansion of mining activity from further exploration and development of latent resources in the region also offers some potential. The advancement of Aboriginal people in Kununurra is also essential to developing economic potential. Improved health, economic, employment and education options for both Aboriginal and non-aboriginal populations will assist increasing social cohesion, improving liveability factors, and providing attractors for investment, particularly related to the development of diversity in the local economy. Population Profile The population in Kununurra (Wyndham-East Kimberley LGA) was 7,799 in Due to identified issues with undercount for the region it is usually more accurate to use the estimated resident population of 8,371 in 2011 for reporting purposes This report uses the LGA count to maintain overall consistency across the competitive advantage group, but the 572 population gap is considered in interpretation of data and addressed where relevant. Similar to Broome, the Kununurra population profile is notable for the substantial lack of people aged 60 years old or more (Figure 64). Several factors are likely to contribute to this, including mortality factors, retirement choices, and availability of aged care housing, health care, and support services. While there are a lot of children aged 0 to 9 years, there is a marked lack of older children aged 10 to 19 years. This reflects a trend for many families with older children to access schooling outside of the region, either in Perth or Darwin. This trend largely reflects the movement of non-indigenous children, as can be seen in Figure 65. Cities Beyond Perth (Profiles Report), January 2015 Page 98

105 Figure 64: Population structure by age and sex in Kununurra (Wyndham-East Kimberley LGA) in Figure 65: Indigenous status by age group for Kununurra (Wyndham-East Kimberley LGA) in Cities Beyond Perth (Profiles Report), January 2015 Page 99

106 Kununurra has a high proportion of Aboriginal and Torres Strait Islander people, approximately 35 per cent of the usually resident population. The traditional owners of Kununurra are the Miriuwung Gajerrong people. The Indigenous population profile is dominated by younger children and younger people, with a substantial decline in the population aged 50 years or more (Figure 65). Higher competitive mortality is likely to be a significant contributor to this differential, often worsened by lower access to health care in regional and remote localities. 157 In contrast, the non-indigenous population profile in Kununurra has a sharp increase in the working age population, reflecting an influx of employment-related migration (Figure 65). There is also a very steep decline in the 50 years or more age group. While some of this decline is likely attributable to regional and remote mortality patterns, much would be expected to reflect retirement-related migration patterns. The population of Kununurra is projected by the Western Australian Government to grow to between 5,600 and 9,900 by The LGA is currently tracking at the mid-range of this 2006 forecast, having achieved 3.6 per cent annual average growth between 2006 and The expected population would be around 13,250 if growth continued at the same rate until 2026, which substantially exceeds the projected range. This high level of growth for Kununurra, has been partially fuelled by accelerated demand for labour from the construction of new resource projects. As projects move into the operational stage, their demand for labour would be expected to slow significantly. Future accelerated growth in demand for labour will depend upon further expansion of industry, through resources development or other projects. Economic Profile The GRP for the Kimberley region in was $3,157M (1.3 per cent of the Western Australian GSP). 159 The centerpieces of Kununurra s economy are the ORIA scheme and the Argyle diamond mine. The Argyle mine has a limited lifespan, being currently scheduled to end in In contrast, the ORIA stage two expansion is underway with ORIA expansion stage three in planning. 161 Employment Profile Kununurra has a more diverse employment profile than many other remote towns, reflecting the twin industry pillars of mining and agriculture underpinning the economy, and its role as a service provider to the surrounding region (Figure 66). Kununurra imports substantial proportions of the labour required for the local mining industry. There is also evidence of labour import for the accommodation and food services industry. Cities Beyond Perth (Profiles Report), January 2015 Page 100

107 Areas which lack development include the knowledge sector and the manufacturing industry. Regional growth pathways have potential to expand in value-add local manufacturing of commodities (both agricultural to food products, and mining ore to final products). Expansion of research and development is also an area with future growth potential, particularly for the export of knowledge in sub-tropical agricultural science to Asia. Figure 66: Employment profile by industry sector for Kununurra (Wyndham-East Kimberley LGA) comparing count by place of work with count by place of usual residence in Business Profile Kununurra has a business density of 97.1 per 1,000 population, which is above the national average of 93.8 per 1,000 population. In contrast to most other regions, Kununurra has experienced a substantial rise in the number of locally registered and actively trading businesses in the region since the GFC in 2009, growing by 120 businesses overall in the two years to The majority of these new businesses were non-employing, which most likely reflects increased availability of local/regional subcontracting opportunities. Cities Beyond Perth (Profiles Report), January 2015 Page 101

108 Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Kununurra compared to Broome and the rest of the Kimberley region in 2012 (Figure 67). This analysis reveals that the retail sector is the dominant industry for locally based business, followed by the construction industry. The agriculture, forestry and fishing industry is the third highest sector for local business. Figure 67: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Kununurra compared to Broome and the rest of the Kimberley region 163 There is almost no evidence for local business in the mining industry, this is likely to be a reflection of the dominance of the large, multi-national companies for this industry in the region limiting competition for resources and/or production costs being unviable for small operations. In such situations, benefit from large mining companies purchasing locally tends to flow into local business in other industries, such as manufacturing, construction, transport, postal and warehousing, accommodation and food services, and the retail trade, though the benefits of this can be reduced by the use of national and international supply and service contracts. Cities Beyond Perth (Profiles Report), January 2015 Page 102

109 Location Quotient The limited importance of mining to the usually resident Kununurra population in Figure 68 is apparent when compared to the FIFO population in Figure 66. This indicates a strong trend for mines in the region to import labour from outside of the LGA. Figure 68: Location quotient analysis comparing Kununurra (Wyndham-East Kimberley LGA) in 2006 and 2011 relative to Western Australian economy count by place of usual residence 164 Agriculture, forestry and fishing has the highest importance to usual residents compared to the Western Australian economy. This importance has increased reaching a level of almost 2.8 times the importance in 2011, compared to a value of 2.2 times in 2006 (Figure 68). Public administration and safety is also more important as a provider of local employment to usual residents, but the level of importance has had a small reduction since Cities Beyond Perth (Profiles Report), January 2015 Page 103

110 In contrast, the importance of mining as a source of employment to people usually resident outside of Kununurra (at the LGA level) is 2.6 times more important than in comparison to the Western Australian economy (Figure 69). A decline is also evident in this sector since Some growth of importance for external workers is evident in the electricity, gas, water and waste services industry, construction, and the information, media and telecommunications industry. Figure 69: Location quotient analysis comparing Kununurra (Wyndham-East Kimberley LGA) in 2006 and 2011 relative to Western Australian economy count by place of work 165 The comparison of these graphs indicates that the anticipated closure of the Argyle diamond mine will have less impact on employment for those usually resident in Kununurra and will disproportionally affect the FIFO workforce. The vulnerability in the local economy is more likely to occur in the local business sector who will need to diversify their revenue sources in anticipation of closure, in order to maintain their current levels of employees. Cities Beyond Perth (Profiles Report), January 2015 Page 104

111 Local Competitiveness Kununurra faces some challenges to improve its competitiveness compared to other regional LGAs in Western Australia and also in comparison to the average for all LGAs in Australia (Figure 70). While natural resources are highly competitive, all other themes are below average which limits the capacity for Kununurra to effectively leverage its competitive advantages. Figure 70: Competitiveness in Kununurra (Wyndham-East Kimberley LGA) compared to average rank for all LGAs in Western Australia and in Australia 166 Despite having high competitiveness with average wage/labour costs of $47,733 Kununurra s overall competitiveness in economic fundamentals is around average. A low rate of building approvals in 2011 indicates a local economy that is not currently in a strong growth phase. Labour market efficiency is reduced by low levels of workforce participation and high rates of welfare dependence. Almost 29 per cent of Kununurra s population are dependent on government support as the main household income source, which is one of the highest proportions in Australia. Cities Beyond Perth (Profiles Report), January 2015 Page 105

112 The strengths of Kununurra s business sector are evident with an average own unincorporated business income was $22,149 per capita in 2011, which is above average in competitiveness. This is accompanied by a reasonable level of diversity in the local economy. The limitations in business sophistication are generated by below average access to local finance, accompanied by a dependence on large employers. These factors increase the vulnerability of the local economy to downturns if a large employer reduces its workforce. Kununurra is particularly challenged in its level of human capital. There are below average levels of competitiveness in both primary and secondary education performance and for participation in lifelong learning. Only 28 per cent of the working age population held either a certificate or diploma qualification, but over 15 per cent of the resident population hold a degree level or higher qualification. The discrepancy in educational achievement indicates a level of social disadvantage in the local population. It is also concerning that Kununurra has over 61 per cent of the adult population with at least one of four risk factors for long term health (i.e. smoking, harmful use of alcohol, physical inactivity or obesity). Kununurra is also below average for competitiveness the two remaining endogenous growth factors, technological readiness and innovation, which limits its potential for long term growth. Only 50 per cent of all households are connected to the internet, and 56 per cent of businesses and households have a broadband connection. In 2011, only 2 per cent of the adult population held a qualification in science or technology and little research and development capacity was able to be identified. Kununurra s remoteness contributes to its very low competitiveness in infrastructure, being in the lowest level in national comparison. While it does have an airport, access to major highways and public rail infrastructure are both low. Access to education is also low in competitiveness, with limited services available for primary and high school. In addition, only two per cent of the adult population enrolled in tertiary education and another two per cent enrolled in technical and further education in While there is a competitive level of access to hospital and allied health services, there is a relative lack of access to GPs. Poor access to education and health services increases the risk of higher costs from poor health and social wellbeing, while also limiting workforce capacity. The lack of infrastructure and essential services requires urgent attention if Kununurra is to grow its economy in the future. Kununurra and the Kimberley Region Sustainable development in the region has been identified as a core priority by the Kimberley Development Commission: The region is at a critical point in balancing its unique environmental values with an increasing identification of development opportunities of a global significance, that must leverage social and economic benefits to its people whilst continuing to create an environment conducive to regional investment. 167 Cities Beyond Perth (Profiles Report), January 2015 Page 106

113 The value of the unique environment is being recognised internationally, with the Kimberley being named as number two in the top ten worldwide locations to visit in the Lonely Planet list for Kununurra is ideally positioned to benefit from this opportunity, but must develop the infrastructure and workforce capacity to meet current and future demand. A high competitiveness in natural resources has not translated into high competitiveness in economic fundamentals for Kununurra (Figure 71). In contrast, the rest of the Kimberley region has very high competitiveness in economic fundamentals, driven mainly by per capita value in building approvals. This likely reflects some of the Royalties for Regions expenditure in places with relatively small populations, such as Derby-West Kimberley and Halls Creek. Lower than average competitiveness is evident across every theme, for both Kununurra and the rest of the Kimberley region. Limitations in infrastructure and essential services, combined with a very low competitiveness in innovation, technological readiness and human capital severely restrict the potential for growth across the region. Addressing the level of disparity between the Indigenous and non-indigenous population must be a factor of highest priority both for Kununurra and the Kimberley region if long term sustainable economic and population growth is to be achieved. In addition to the above factors, a high level of dependence on large employers and a narrow base to the economy both increase vulnerability to external economic factors. Figure 71: Competitiveness in Kununurra (Wyndham-East Kimberley LGA) compared to the rest of the Kimberley region 169 Cities Beyond Perth (Profiles Report), January 2015 Page 107

114 Competitive Position in Relation to Similar Australian LGAs LGAs with competitive population sizes to Kununurra include Circular Head in Tasmania, and Deniliquin, Liverpool Plains and Snowy River in New South Wales (Figure 72). Despite having similar population sizes, there is a high degree of variability in competitiveness profiles. Kununurra and Circular Head have a number of similarities, with a dominant agricultural industry accompanied by resources development. This is reflected in high competitiveness in natural resources, but only average to below average competitiveness in economic fundamentals. Each also has a degree of geographic isolation from the rest of Australia, with limited transport connectivity. The challenges of a smaller population size accompanied by a level of remoteness is evident in each of the profiles, except for Snowy River. Snowy River s economy benefits from the attractors of its location in the Australian Alps. It has good connectivity and an established tourism trade, but it also struggles with infrastructure and essential services, business diversity and dependence on a few large employers. Figure 72: Competitiveness in Kununurra (Wyndham-East Kimberley LGA) compared to LGAs with similar population sizes 170 While some of the other economies are doing better than others, none have above average competitiveness across any of the endogenous growth drivers and most are below average on at least one or more theme. This will limit capacity for future growth if left unaddressed. Cities Beyond Perth (Profiles Report), January 2015 Page 108

115 The Future With a resident population under 10,000 at the LGA level, Kununurra has not yet reached the level of critical mass for growth associated with agglomeration economies. Yet, it does have the potential to develop substantial specialisation due to the unique opportunities for cluster industry development provided by the ORIA scheme. Balancing industry development and population growth while retaining the valued environment and cultural attractors will be critical in determining Kununurra s future pathway. Regional Aspirations Key regional aspirations for the economic and population growth focus on diversification of the local economy and workforce development. Central to this goal is continued expansion agricultural, horticultural and forestry businesses within the ORIA scheme, with direct export to Asian markets. 171 Future resources industry development is also identified, particularly through new minerals, oil and gas exploration in the wider region. 172 The benefits for Kununurra lie in the provision of services to this sector, as a transit point for LDC workforces, and also as a potential source community for workers in other regions, e.g. the Pilbara. 173 Development of a regional workforce, including expansion of educational and training opportunities to reduce the loss of families moving away from Kununurra when they have children requiring secondary school or access to tertiary education. 174 This is likely to reduce outward migration of families in the longer term, as well as contributing to an increase in the skills and qualifications levels in the working age population. Kununurra s existing role as a service provider to the local and surrounding Aboriginal and Torres Strait Islander communities in the Kimberley region shapes the core aspirations to improve health, wellbeing and socio-economic circumstances and reduce the disparity between the Indigenous and non-indigenous populations. Health, education and workforce skills are identified areas requiring a coordinated and sustained effort by government and the wider community to realise cross-generational change. 175 Affordable housing is a particular high priority in Kununurra, particularly for low income SES families who are working so don t qualify for social housing, but earn too little to compete in the costly private housing market. 176 Sources of Competitive Advantage for Kununurra Kununurra has existing capacity to expand both industry and population based on available natural resources. Priority areas for development should aim to build a higher level of diversification in the local economy, to offset the loss of income from the future closure of the Argyle Diamond Mine. Cities Beyond Perth (Profiles Report), January 2015 Page 109

116 In addition to Argyle the existing Savannah mine is currently producing nickel, copper and cobalt ore, and has existing supply contracts to Additional resource opportunities may be developed through future operatiions, developments and exploration in the wider region. Key to Kununurra s development is the extensive irrigated water supply and arable land available through the expansion of the ORIA. This enables substantial capacity for the development of agricultural, horticultural and forestry industries. Kununurra is well-placed to take advantage of growing markets in the Asia-Pacific region, particularly for premium food and value-added food products. Development of these new market opportunities depends upon the availability of direct and timely export pathways, workforce availability and attraction of investment. Kununurra also has substantial availability of natural attractors for tourism, in both coastal and inland areas. This offers the opportunity for development of a substantial tourism and leisure/recreation industry. Building Competitive Advantage and Success in the Future Three key issues underpin the potential for Kununurra to successfully leverage its substantial competitive advantages: A skilled workforce; Developed infrastructure with improved accessibility; and Identification of markets matched to potential products. Kununurra has a very limited skills base in its existing population. Concerted efforts need to be made to improve literacy, numeracy, and workplace skills to create a job-ready workforce which is attractive to potential investors. Seasonal employment is also an issue, with many employers dependent upon backpackers for supply of labour. Improving access to health and education infrastructure and essential services will be key to the future of Kununurra. As identified above, quality schools and access to GPs are essential for improving the health of the local population. More investigation is needed regarding the low level of enrolment at the local Kimberley TAFE campus to identify barriers to entry or improvements that could be made in available courses to better meet the needs of the residential population and local employers. A range of affordable housing options in Kununurra would also facilitate population growth and may help to encourage longer term retention of families. Cities Beyond Perth (Profiles Report), January 2015 Page 110

117 Improving accessibility in transport is critical for enabling success in the future through tourism opportunities. While the airport has sufficient capacity to service the region, there are limited flights available on the main transit routes from Perth, Darwin and Broome. These flights can frequently be booked out by demand from the resources industry and are generally costly in comparison to other holiday locations. This provides a structural barrier to developing the tourism market in Kununurra. A key issue for development of the tourism market, as well as other industries, will be work to identify the most profitable markets that can generate sufficient return to overcome the relatively high costs of production. The remote location of Kununurra, cyclone-proof building requirements, cost of labour and the general high cost of most goods and services places a high base cost for start-ups. Development of niche markets may be more feasible, e.g. high end adventure tourism aimed at more affluent domestic and international travellers rather than family travellers who would not be attracted by the relatively costly air-fares or very lengthy time to travel by road from the southern cities. Cities Beyond Perth (Profiles Report), January 2015 Page 111

118 Boom Towns in Transition Kalgoorlie-Boulder Building the Old and the New Kalgoorlie-Boulder is Western Australia s largest inland city, close to the desert country at the start of the Nullabor Plain. The city is a unique juxtaposition of its heritage past side by side with a very modern mining industry. Over the years its fortunes have varied according to the global market demand for gold and nickel. Most recently, it has reaped a double-boom of high gold and nickel prices, which has generated substantial growth in the surrounding region. Yet, the future for Kalgoorlie-Boulder depends upon a more diversified economy to better deal with the transition times between booms. There is emerging evidence that the cycle is once again shifting from growth to contraction, as recent data indicates rising unemployment in areas within and surrounding the city, accompanied by anecdotal information of a rise in outward migration from the town. 178 This makes it even more essential that a broader business economy is developed to better meet the needs of the city s residents, the surrounding mine sites, and the region s traditional communities. The Goldfields-Esperance region produced 65 per cent of Western Australia s gold production and 75 per cent of Western Australia s nickel production in Current resource industry practices has seen the shift to a larger FIFO component for the local and some of the regional workforce. This workforce transits through Kalgoorlie airport, which now has more than 250,000 passenger movements per year. 180 In addition to the mining industry, Kalgoorlie-Boulder has a role as a service centre for the Goldfields-Esperance region. It provides access to a number of government services, and has an established retail trade and manufacturing services sector. These facilities help to meet the needs of the resident city and surrounding regional population, the mining sites and a number of Aboriginal communities, which are located mostly in the Northern Goldfields sub-region. Kalgoorlie-Boulder is a major station on the main passenger and freight railway line connecting the eastern and western sides of Australia. The proposed PortLink project aims to establish additional facilities in Kalgoorlie-Boulder to create a regional distribution point linked to upgraded road and rail pathways. The expansion of freight capacity in regional areas is anticipated to improve productivity by removing requirements for interstate and intrastate freight to transit through Perth. 181 Another major infrastructure project already underway in Kalgoorlie-Boulder is the $232M expansion of the Eastern Goldfields Regional Prison, which will increase from 100 beds to 350 beds in capacity. 182 This facility is anticipated to provide local economic stimulus through job creation and procurement of local goods and services. Cities Beyond Perth (Profiles Report), January 2015 Page 112

119 Population Profile The population of Kalgoorlie-Boulder LGA was 31,107 in While working age males still outnumber females, Kalgoorlie-Boulder has a more balanced profile than many other miningdominated settlements, reflecting the greater number of families who live in the region (Figure 73). There is also a substantial proportion of younger adults in the age group, which likely reflects the local demand for labour. There is a notable lack of people aged 70 years or older in the population structure. This reflects a strong trend for most Kalgoorlie-Boulder residents to retire elsewhere in Western Australian, either in Esperance, the Great Southern or South West regions. Figure 73: Population structure by age and sex in Kalgoorlie-Boulder LGA in The population of Kalgoorlie-Boulder is projected by the Western Australian Government to grow to between 28,700 and 38,500 by The LGA is currently tracking in the low to mid range of this 2006 forecast, having achieved 1.8 per cent annual average growth between 2006 and The expected population would be around 40,650 if growth continued at the same rate until 2026, which exceeds the projected range. Economic Profile The GRP for the Goldfields-Esperance region in was $10,117M (4.2 per cent of the Western Australian GSP). 185 Regional industry surrounding Kalgoorlie-Boulder is dominated by mining, with a contrasting agricultural-dominant industry profile in the Esperance subregion. Industry within Kalgoorlie-Boulder is more diverse reflecting its role as a regional service provider and servicing the needs of a substantial local population. Cities Beyond Perth (Profiles Report), January 2015 Page 113

120 Employment Profile As expected, mining dominates the employment profile for Kalgoorlie-Boulder (Figure 74). A substantial proportion of the residential population work in mines outside of the LGA in the Northern and Eastern Goldfields sub-regions. A similar, but smaller scale pattern is evident for the construction industry and the transport, postal and warehousing industry. The rest of the employment profile is quite diverse, reflecting the demand of the local population and Kalgoorlie-Boulder s role as a regional service provider. The retail trade is the second highest provider of employment. Other substantial sectors include health and social assistance, education and training, and public administration and safety. Figure 74: Employment profile by industry sector for Kalgoorlie-Boulder LGA comparing count by place of work with count by place of usual residence in Cities Beyond Perth (Profiles Report), January 2015 Page 114

121 Business Profile Kalgoorlie-Boulder has a relatively low business density of 74.4 per 1,000 population, which is below the national average of 93.8 per 1,000 population. Despite this, the overall number of businesses in Kalgoorlie-Boulder has been slowly growing in recent years. There was a net gain of 206 businesses from 2007 to While 52 per cent of the locally registered and actively trading businesses in 2011 had no additional employees, over 25 per cent had between one and four employees and another 22 per cent had five or more employees. Figure 75: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Kalgoorlie-Boulder compared to the rest of the Goldfields-Esperance region 187 Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Kalgoorlie-Boulder compared to the rest of the Goldfields-Esperance region in 2012 (Figure 75). The substantial export earnings of the mining sector are not as evident in locally registered and actively trading businesses, generating only $75.8M for Kalgoorlie-Boulder and $9.4M for the rest of the region in This is because the larger mining companies are either registered in capital cities or are multi-national corporations. Cities Beyond Perth (Profiles Report), January 2015 Page 115

122 Kalgoorlie-Boulder s local business sector obtains the most turnover from construction industry, followed by the retail trade. Substantial local business turnover is also generated by the professional, scientific and technical services sector and the rental, hiring and real estate industry. The rest of the Goldfields-Esperance region is dominated by the high minimum turnover in the agricultural industry, occurring mostly in the Esperance sub-region. There is evidence of some diversity for local business in the rest of the Goldfields-Esperance region, mostly in the construction industry, retail trade, and the transport, postal and warehousing industry. There is also a notable lack of local business activity in the knowledge sector compared to Kalgoorlie- Boulder. Location Quotient The importance of the mining industry to the Kalgoorlie-Boulder economy is highlighted by comparing the relative importance of different employment sectors to the Western Australian economy (where state industry value = 1 in Figures 76 and 77). Figure 76: Location quotient analysis comparing Kalgoorlie-Boulder LGA in 2006 and 2011 relative to Western Australian economy count by place of usual residence 188 Cities Beyond Perth (Profiles Report), January 2015 Page 116

123 The level of importance of the mining industry in Kalgoorlie compared to the Western Australian economy has dropped since 2006, from being five times more important as a source of employment to being 3.5 times more important in As there is no evident growth in importance for other industry sectors, it is likely that this change represents industry re-structuring and/or response to changes in global markets. Figure 77: Location quotient analysis comparing Kalgoorlie-Boulder LGA in 2006 and 2011 relative to Western Australian economy count by place of work 189 Local Competitiveness Kalgoorlie-Boulder s competitiveness profile reflects the continued strengths of the mining sector, with above average competitiveness in economic fundamentals and natural resources (Figure 78). The average wage/labour costs in Kalgoorlie-Boulder were $60,025 which is in the first decile on a national comparison. Additionally, the average own unincorporated business income was $20,296 per capita in 2011, in the third decile nationally. Cities Beyond Perth (Profiles Report), January 2015 Page 117

124 Despite the high income figures, the building approvals per capita rate in 2011 was $0.35 which is in the eighth decile nationally. This indicates a local economy that is not in a period of high growth, and may relate to the fact that, unlike many newer mining towns, Kalgoorlie- Boulder had substantial existing infrastructure in place at the start of the mining boom. Technological readiness is above average in competitiveness as 70 per cent of businesses and households had a broadband connection in Technology related business is also slightly above average in competitiveness, with four per cent of the workforce employed in a technology related business and a further one per cent employed as an ICT and electronics specialist. Figure 78: Competitiveness in Kalgoorlie-Boulder compared to average rank for Australia LGAs and all regional Western Australian LGAs 190 Despite these positive factors, there are structural weaknesses which leave the Kalgoorlie- Boulder economy exposed to external economic forces. Labour market efficiency is below average in competitiveness, due to a relatively low participation rate of 74 per cent of its working age population. Skilled labour (i.e. the proportion of the workforce employed as managers or professionals) is in the lowest decile for national competitiveness. Business sophistication in Kalgoorlie-Boulder is also below average in competitiveness. There is an over-dependence on a few large employers which creates a vulnerability that is not offset by diversity of industry in the local economy. Many existing businesses in other industries Cities Beyond Perth (Profiles Report), January 2015 Page 118

125 depend on the mining industry for business, such as the manufacturing sector and transport industry, which does not generate sufficient diversity in the economic base as it does not grow without the income stimulus provided by mining. The endogenous factors of human capital, technological readiness and innovation are the drivers of long term growth. While technological competitiveness is above average, and innovation is average in competitiveness, the level of human capital is a substantial weak point and will limit future growth if not offset by increased importation of skilled labour. Post-school qualifications in the resident adult population are below average, and English proficiency is in the ninth decile in national comparison. For the younger population, primary school and high school performance are both below the national average in competitiveness, and early childhood performance is also a concern. In 2012, 27 per cent of the children in Kalgoorlie- Boulder measured as developmentally vulnerable. The challenge of remoteness and the low population density of the surrounding region results in a low competitiveness for infrastructure and essential services. Despite having good rail and airport facilities, other infrastructure is less competitive. Access to health infrastructure and essential services is particularly concerning. Severe limitations in available allied health services and GP services may inhibit the availability of a healthy residential workforce and also increases the risk of higher regional health expenditure in the future. Kalgoorlie-Boulder and the Goldfields/Esperance Region The challenges of the natural environment place a cap on the realistic options for expansion of Kalgoorlie-Boulder. There is currently no potential for agriculture, limited potable water supply and substantial distances to travel to reach other towns and cities. Despite this, Kalgoorlie continues to thrive and grow. This is due to the substantial mineral resources in the immediate vicinity and surrounding regions, the service needs of the city s large existing population, and the Aboriginal communities in the Goldfields-Esperance region. Kalgoorlie-Boulder shows an equivalent or higher level of competitiveness on most themes than the average for the rest of the Goldfields-Esperance region (Figure 79). Limitations in infrastructure and essential services across the region is a potential inhibitor for economic growth. This structural weakness is worsened when combined with the low levels of skilled labour across the region. Add in the high levels of welfare dependence also evident in many LGAs and a picture of highly divergent employment groups emerges, polarised between experienced, capable workers and those who face substantial barriers in gaining employment. There is also evidence of divergence in endogenous growth drivers. Kalgoorlie-Boulder has very high technological readiness and average innovation contrasting with below average competitiveness in the rest of the region. Human capital is below average in Kalgoorlie- Boulder, but is even lower in the rest of the region. Cities Beyond Perth (Profiles Report), January 2015 Page 119

126 Figure 79: Competitiveness in Kalgoorlie-Boulder compared to the rest of the Goldfields-Esperance region 191 Competitive Position in Relation to Similar Australian LGAs LGAs of similar population size to Kalgoorlie-Boulder include Central Highlands and Western Downs in Queensland and Moorabool in Victoria (Figure 80). While the Queensland LGAs both share a dominant mining industry, Moorabool has an economy dominated by heritage and experiential tourism and has a shared history as a gold rush town in the 1850s. The mining dominated economies of the Queensland LGAs produces a very similar profile shape to Kalgoorlie-Boulder. They both have a higher level of dependence on large employers and much lower competitiveness in human capital. In contrast, the more established economy of Moorabool shares a level of business sophistication which is similar to Kalgoorlie- Boulder and a higher competitiveness in economic fundamentals despite having much lower competitiveness in natural resources. Moorabool also has higher competitiveness in all of the endogenous growth drivers (human capital, technological readiness and innovation) which will underpin its continued growth in the long term. Cities Beyond Perth (Profiles Report), January 2015 Page 120

127 Figure 80: Competitiveness in Kalgoorlie-Boulder compared to other LGAs with similar population sizes in Australia 192 The Future The Kalgoorlie Super Pit gold mine is scheduled to cease actual mining in 2021, with an expected production lifespan of the stockpile to Other mines currently operating in the region, exploration activity and the development of new mines can be reasonably expected to provide Kalgoorlie-Boulder with a viable industry base for the foreseeable future. The resident population in the region realistically aspire to create some diversity in the local economy to help them weather the gaps created by global cycles of boom and bust. Regional Aspirations The continued development of the mining industry is a core priority for Kalgoorlie-Boulder. This is expected to be realised through three main pathways: exploration and construction of new mines, identification of new export minerals/market opportunities, and the export of specialist services in mining technology. Cities Beyond Perth (Profiles Report), January 2015 Page 121

128 Global market forces are expected to drive the activities of the big multi-national companies operating in the region. There is a recognised need for greater support for small to mid-size operators who are often more likely to employ existing residents and also contract for supplies on a local basis. PortLink is a very high priority for development of employment opportunities unrelated to mining industry in Kalgoorlie-Boulder. In addition to expected economic benefits from the construction phase, anticipated growth in the longer term would be anticipated for employment and investment in the transport industry, manufacturing services and warehousing facilities. The need to develop more diversity in the local economy is also a high priority. Opportunities exist for development of retail, food and accommodation services, arts and leisure activities. While there are substantial sporting facilities in Kalgoorlie-Boulder, a gap exists in the range of other family-friendly, social or cultural activities. Anecdotally, there is a high level of unmet market demand for additional retail and leisure activities. A small, but innovative, creative arts and crafts community is developing. Funding for the appointment of a regional community arts development officer would be a valued asset to help coordinate activities, administer a source of grants funding, and grow schools and community involvement in the creative arts. This is vitally important for building Kalgoorlie- Boulder as a city for all people and meeting local aspirations for a more diverse and culturally-vibrant community. Development of the tourism industry also has unmet potential. Kalgoorlie-Boulder has a unique heritage appeal which is not fully realised. There is a perceived need to improve and expand accommodation and food services. Expansion of the tourism industry would be greatly enabled through the attraction and promotion of events. Recent hosting of state and national sporting events in Kalgoorlie-Boulder have reportedly been very successful. The health and wellbeing of the many highly disadvantaged Aboriginal people, both within Kalgoorlie-Boulder and in the regional communities, is recognised as an area needing long term, coordinated support. Community leaders identify areas of priority need as including transient accommodation facilities, affordable and more frequent transport services, substance abuse rehabilitation beds, post-incarceration support services, domestic violence supports, social and education support services, and preventative health education. 194 These health and wellbeing needs must be met alongside community aspirations for selfdetermination and Indigenous business development. An important opportunity exists here for Kalgoorlie-Boulder to collaborate with other large regional centres, such as Kununurra, Broome and Carnarvon, on working more effectively with local Aboriginal communities to develop innovative responses to core issues underpinning social and economic disadvantage. Cities Beyond Perth (Profiles Report), January 2015 Page 122

129 Sources of Competitive Advantage for Kalgoorlie-Boulder The primary competitive advantage for Kalgoorlie-Boulder exists in the rich mineral resources underground. Continued identification and extraction of gold, nickel, rare earths and other commodities will drive the future economic viability underpinning the local economy. Further to this, there is substantial mining and technical expertise in the local community which has potential for state, national and international export. Considerable unmet potential exists in Kalgoorlie-Boulder s heritage status, existing in the architecture, the social history and the industrial history of the town. Expansion of the tourism industry, accompanied by investment in food and accommodation services and supported by a calendar of sporting, cultural and creative arts events, would add a much needed level of diversity to the local economy as well as creating a more family friendly environment for local residents and visitors. Consideration also needs to be given to the post-mining uses for the Super Pit. The size of the hole is anticipated to be approximately 3.9km long, 1.6km wide and exceed 500 metres in depth when mining is finished. 195 As the largest open cut mine in the Southern hemisphere, the Super Pit has potential to expand its uses beyond the current tours, particularly as a potential extreme sports or motor sports venue. International examples exist of mines and quarries becoming heritage, tourism and events venue assets. One example of former mine site use is The Big Pit National Museum in South Wales, United Kingdom, which offers a range of education and events experiences, alongside its role in preserving an example of national, industrial heritage and the accompanying museum documenting the social and cultural history of the mining towns. 196 In Kalgoorlie-Boulder, proximity to continuing communities of Aboriginal people in the wider region also represents an opportunity for development of local business in areas such as traditional arts, culture and bush-foods. This would expand the tourism attractions of the regions. Potential markets for Indigenous business also exist in providing other goods and services to the mining industry and resident population, unrelated to tradition or culture. The semi-arid climate and terrain offers some areas of latent potential. Sunlight, from low levels of cloud cover, combined with large areas of flat terrain offers the opportunity to develop large solar farms to supplement existing generation sources and power the expansion of local industry. Cities Beyond Perth (Profiles Report), January 2015 Page 123

130 Building Competitive Advantage and Success in the Future The challenge for Kalgoorlie-Boulder exists at both an economic level and a social level. Increasing business diversity and industry depends substantially on the development of a local job ready workforce. Low competitiveness in human capital will continue to inhibit opportunity for those residents of Kalgoorlie-Boulder who struggle to compete against imported skilled labour. There is an identified need to develop additional technical qualification and apprenticeship pathways. Tertiary qualifications can be obtained through the local Agricola College, but flexible learning pathways would benefit local residents wanting to study in other subject areas. Additionally, expansion of industry and population depends upon the availability of infrastructure and services. Consideration needs to be given to assess the availability of potable and non-potable water, power, and road/rail export pathways to meet an expanded level of need created by new population and industry growth. Improvement of the social and cultural fabric of the whole community is a core priority. Innovation will be critical to overcome entrenched disadvantage and to foster the economic inclusion of all sections of the community. Kalgoorlie-Boulder will also benefit from greater preservation and celebration of the heritage and cultural factors which contribute to its original character and resilient spirit. Cities Beyond Perth (Profiles Report), January 2015 Page 124

131 Karratha City The New City of the North Karratha City is Western Australia s newest city, achieving this status in December Despite being the largest population settlement in the Pilbara region, Karratha City has an historical lack of amenities and non-mining infrastructure which has combined with a very high cost of living to contribute to a very high population churn. 197 Karratha City has experienced extremely fast population growth as a result of the mining boom. The Pilbara Cities program was initiated to redress many of these issues and has resulted in substantial investment to develop the town s infrastructure and amenities. 198 Recent efforts have focused on matching community infrastructure to current and future population need. This includes ways to ensure families don t have to leave town when their kids reach teenage years to meet their education needs. 199 The challenge for Karratha City is to grow past its beginnings as a settlement owned and managed by mining companies. It needs to continue to develop an established city with a diverse economy, a long term population and all of the services and amenities that are usually found in similar sized cities. At present, the development of non-resources industry business is limited and the vast majority of the population is there for work rather than lifestyle. Anecdotal evidence also speaks of a time-limited culture, as people go there with a view to staying for a few years and do not perceive themselves as permanent residents, often planning to move elsewhere once their work commitment finishes. Population Profile The population of Karratha City (Roebourne) LGA was 22,900 in A dominant skew of working age males is still evident in the population structure (Figure 81). The lack of young people in the year age group is evident. There is also a substantial lack of people aged 60 or older, reflecting a strong trend for Karratha City residents to retire elsewhere. The population of Karratha City was projected by the Western Australian Government to grow to between 19,500 and 27,300 by The LGA is currently tracking exactly on the high range of this 2006 forecast, having achieved 9.1 per cent annual average growth between 2006 and The expected population would be around 84,500 if growth continued at the same rate until 2026, which far exceeds the projected range. However, this accelerated growth is unlikely to continue as the stimulus resulted from demand for labour by large scale construction of new mining and extraction projects. As these projects move into an operational stage, the demand for labour is expected to slow significantly. Cities Beyond Perth (Profiles Report), January 2015 Page 125

132 Figure 81: Population structure by age and sex in Karratha City LGA in Economic Profile The GRP for the Pilbara region in was $17,255M (7.1 per cent of the Western Australian GSP). 202 Regional industry in the Pilbara has been completely dominated by mining and construction in recent years. Local industry within Karratha City predominantly services the needs of the mines in the surrounding region, but there is evidence of expansion in the business sector creating a more diverse local economy to better meet the needs of the growing population. Employment Profile Karratha City is an importer of labour (Figure 82). Mining and construction are the dominant sources of employment for counts by place of usual residence and place of work. Strong employment is also evident in the transport, postal and warehousing industry, the accommodation and food services industry and the professional scientific and technical services industry. Each of these sectors are substantially driven by demand from the mining industry. The employment sectors more likely to be driven by local population need are in retail trade, public administration and safety, education and training and health care and social assistance. There is a notable lack of employment in the knowledge services sector, particularly in the information, media and telecommunications industry, the financial and insurance services sector and the arts and recreation services industry. Cities Beyond Perth (Profiles Report), January 2015 Page 126

133 Figure 82: Employment profile by industry sector for Karratha City LGA comparing count by place of work with count by place of usual residence in Business Profile Karratha City has a very low business density of 48.4 per 1,000 population, which is substantially below the national average of 93.8 per 1,000 population. The overall number of businesses in Karratha City has been slowly growing in recent years, with a net gain of 91 businesses from 2007 to Notably, 59 per cent of the locally registered and actively trading businesses in 2011 had no additional employees, indicating that they are more likely to be contractors engaged with mining and related industry activity. Only 18 per cent of all local and actively trading businesses had five or more employees. Cities Beyond Perth (Profiles Report), January 2015 Page 127

134 Figure 83: Minimum turnover size for local business by industry sector (for businesses registered in location and actively trading). Karratha City compared to Kununurra and the rest of the Kimberley region 204 Calculations of minimum turnover for local business indicates the level of economic engagement by industry sector in Karratha City compared to the rest of the Pilbara region in 2012 (Figure 83). The dominant sector for local business represents contractors in the construction industry. Rental, hiring and real estate is the next highest business for minimum turnover, reflecting the continued high prices of residential, commercial and industrial property in Karratha City. While the retail trade has the third highest level of business based on a minimum turnover of $2M, it is the smallest of any location examined in this report. Cities with similar population sizes in other regions have retail trades with substantially greater minimum turnover, such as $78M in Broome and $128M in Busselton. The nearest comparison is Carnarvon which has a minimum turnover of $29M for a retail trade servicing a population approximately a quarter of the size of Karratha City. Cities Beyond Perth (Profiles Report), January 2015 Page 128

135 Location Quotient The importance of mining to Karratha City is evident in analysis of the location quotient comparison to the Western Australian economy both for usual residents and as a place of work (Figures 84 and 85). Figure 84: Location quotient analysis comparing Karratha City (Roebourne LGA) in 2006 and 2011 relative to Western Australian economy count by place of usual residence 205 The amount of importance has dropped since 2006 by a quotient of 1.7 for usual residents and a quotient of two for place of work. In both cases this loss is accompanied by a rise in the importance of the construction industry. There is no evidence of an increase in importance of any other sector, instead there are very small reductions in importance of the retail trade and the education and training sector as a source of employment compared to the Western Australian economy. Cities Beyond Perth (Profiles Report), January 2015 Page 129

136 Figure 85: Location quotient analysis comparing Karratha City (Roebourne LGA) in 2006 and 2011 relative to Western Australian economy count by place of work 206 Local Competitiveness Karratha City is one of the most competitive LGAs in Australia for economic fundamentals (Figure 86). The average wage/labour costs were $77,692 which is in the first decile on a national comparison. The building approvals per capita rate was $4.33 in 2011, which indicates an economy experiencing high growth. The average own unincorporated business income was $27,987 per capita in 2011, which is in the second decile for national comparison. Cities Beyond Perth (Profiles Report), January 2015 Page 130

137 Despite a very strong economic performance, labour market efficiency is only average in competitiveness. This is due to a low participation rate of 68.9 per cent of its working age population, which is in the ninth decile in national comparison. This is accompanied by a low rate of skilled labour in the workforce. Business sophistication in Karratha City is also average in competitiveness. While there is evidence of diversity in the economy, a high proportion of the workforce are dependent on large employers, which leaves it highly vulnerable to external economic changes. Long term growth has positive factors due to higher than average competitiveness in human capital and technological readiness. This will be limited if the bottlenecks in innovation and in infrastructure and essential services are not addressed. Lack of access to hospitals, health practitioners and educational institutions are of particular concern. Also, 22 per cent of the population have low levels of English proficiency, which limits their workforce potential. Figure 86: Competitiveness in Karratha City (Roebourne LGA) compared to average rank for Australia LGAs and regional LGAs in Western Australia 207 Cities Beyond Perth (Profiles Report), January 2015 Page 131

138 Karratha City and the Pilbara Region The economic effects of the mining boom across the whole of the Pilbara is strongly evident in the competitiveness profile comparing Karratha City to the rest of the region (Figure 87). Parallel levels of competitiveness exist for natural resources and economic fundamentals. Mutual challenges of remoteness are evident in low competitiveness for infrastructure and essential services. Karratha City differs from the rest of the Pilbara region in its higher level of competitiveness in all other factors, except for innovation which is below average for both the city and the rest of the region. This likely reflects a tendency for the dominant industry sector to import expertise rather than generate innovation capacity at a local level. This reduces the capacity to maintain its competitiveness in global markets, again creating vulnerability as the local economy is based on commodity exports. Other limitations to future economic growth in Karratha City exist in structural weaknesses that will inhibit development if not addressed. A high dependence on imported labour and the dominance of large employers leaves Karratha City vulnerable to impacts of operational changes by individual employers and in the resources industry as a whole. This needs to be addressed by widening diversity in the local economy. Finally, but most importantly from a long-term economic development perspective, is the disparity between the Indigenous and non-indigenous populations. This is evident in very low competitiveness in proportions of skilled labour, workforce participation and low levels of English proficiency in the locally resident population. Figure 87: Competitiveness in Karratha City (Roebourne LGA) compared to the rest of the Pilbara region 208 Cities Beyond Perth (Profiles Report), January 2015 Page 132

139 Competitive Position in Relation to Similar Australian LGAs LGAs with similar population sizes to Karratha City include Griffith and Singleton in New South Wales and Isaac in Queensland (Figure 88). Karratha City shares high competitiveness in natural resources and economic fundamentals with both Singleton and Isaac, who each have a dominant mining industry. In contrast, Griffith s economy is focused on irrigated agriculture and demonstrates an average level of competitiveness in economic fundamentals. All of these locations have a limited proportion of skilled labour in the workforce. Each also has structural vulnerability in an over-dependence upon large employers. Karratha City and Griffith both have higher competitive levels of competitiveness in business sophistication. This is due to a large proportion of income in Karratha City being earned through income from own business. In Griffith it is driven by good access to local finance and a large export/import/wholesale industry. Figure 88: Competitiveness in Karratha City (Roebourne LGA) compared to LGAs with similar population size in Australia 209 Access to infrastructure and essential services may be an impediment to growth in Isaac and Karratha City. In contrast, Singleton and Griffith are both competitive in this theme. This is likely to be linked to their timeline for growth, as younger, faster growing cities in more remote locations may have a large lag in their development of infrastructure and essential services to service population needs. Cities Beyond Perth (Profiles Report), January 2015 Page 133

140 The Future The vast level of natural resources in the Pilbara offers substantial potential for continued development over many decades into the future. The main factor affecting the exploitation of these assets is the variable level of demand and price offered by the global economy. At present, a shift from the construction phase of the boom to the operational phase is likely to slow the excessively high growth of recent years, offering a more stable environment for regional development. A core challenge for Karratha City is to use this period of more economic stability to identify viable ways to expand the local economy. This will reduce its vulnerability to the external economic fluctuations of the resource commodity markets and the resulting shifts this creates in the operational focus of a few very large employers. Other challenges exist in the perception of the city as a place to live for a few years rather than a lifetime. While some transience is related to the inflow and outflow of construction workforce, reduction of overall population churn will help to improve the liveability of the city and reduce workforce costs related to high turnover. Regional Aspirations Karratha City aspires to more than double its current population to reach 50,000 people by While the main focus of economic growth is logically tied to continued resources development, pathways for increasing the diversity of local industry include: Substantial expansion of the amenities and services available to residents, particularly families. The City of the North plan provides a blueprint for growth, with core projects including the development of the city centre, and additional retail and business precincts linked to residential developments, such as the new Karratha City waterfront at Mulataga; Increasing the attractors and infrastructure available to help re-establish the tourism industry which has been crowded out by high competition for resources from the resources industry; Encouraging the development of businesses by Aboriginal people; Establishment of additional defence and emergency services bases; and Developing alternative energy generation to power local industry, including solar power. Given their relative proximity within a remote region, it will be important for Port Hedland and Karratha City to develop complementary industry strengths rather than waste resources in competing with each other for the development of new industry sectors. Further discussion of cooperative strategies at a local government and regional level will assist the development of such a strategy. Cities Beyond Perth (Profiles Report), January 2015 Page 134

141 Sources of Competitive Advantage for Karratha City Karratha City s primary competitive advantage exists in its proximity to the extensive minerals, oil and gas resources in the surrounding region. Continued development of existing resources and prospective diversification into other minerals, such as uranium, copper, nickel and rare earths is likely to provide a substantial base for industrial activity in the longer term. The city has a well-established role as an infrastructure, logistics and services base to the resources industry, including both light and heavy industrial estates, the airport and close proximity to the port at Dampier which is working close to capacity. A small manufacturing industry is present, but is limited by high production costs. 210 Karratha City has an established role as a provider of services to the local population base and for the whole of the Pilbara region. It is home to regional branch offices for a number of State and Federal government departments and agencies, in addition to shop-front facilities for commercial entities, such as insurance and financial services. Karratha City also has a competitive advantage in its position halfway between Exmouth and Broome, making it a key stopping point for road traffic along the North-West Coastal Highway. This offers potential for expansion of services to tourists, particularly the grey nomad sector. Building Competitive Advantage and Success in the Future The future of economic expansion in Karratha City depends upon access to a substantial workforce, either through local population or through importation of labour. Karratha City is working to build a larger resident population, but may also need to support greater traffic of FIFO populations to projects in the wider regions. The increasing internationalisation of labour in the mining industry is an industry-wide trend, particularly for highly skilled labour, which can create high levels of churn in all mining communities. Remoteness and a lack of facilities have worked against Karratha City in the past, and there will be a strong imperative to overcome external perceptions of it as a place to work rather than a place to live. The very high costs of living have also been a substantial disincentive, particularly for young families and older people on limited incomes, but some of these pressures have moderated recently. 211 The above problems are well-recognised, and efforts are underway to reduce bottlenecks in housing supply to create a more normalised market. Yet, decreasing prices can create stresses for existing home owners due to a loss of equity, and investors who are used to receiving a premium rent, particularly if they are leasing to mining companies or government departments. Cities Beyond Perth (Profiles Report), January 2015 Page 135

142 Cost challenges also affect the development of diversity in business and other industry, such as manufacturing. High production costs are generated by the factors including substantial competition for labour, limitations in supply chains, and remoteness. Workforce development will be a critical factor in leveraging the competitive advantages for Karratha City. It is important to continue developing a higher skilled proportion of the population to reduce dependency on imported labour. Geographic proximity to Asia also offers potential pathways for the development of new trade relationships for existing and new industry areas. Collaboration with Port Hedland and Kalgoorlie-Boulder offers the opportunity to explore innovative development of specialist industries and non-resource industries. Cities Beyond Perth (Profiles Report), January 2015 Page 136

143 Port Hedland Becoming More Than a Work Place Established as a small port to service the pastoral and pearling industries, Port Hedland experienced massive expansion with the development of the iron ore mining industry in the 1960s. Currently the world s largest bulk export port, Port Hedland exported 288 tons of iron ore in The activities of the port essentially dominate the town, which is focused on the infrastructure necessary for large iron ore trains and port loading facilities. Beyond this industrial focus exists a town on its way to becoming a future city of the North. The Port Hedland LGA is actually comprised of two towns. Port Hedland has developed around the harbour and its associated industrial facilities, with a small town centre and mostly older style residential development. South Hedland is primarily a residential area with substantial numbers of new houses, and more extensive retail and community amenities. Recent rapid growth created by the labour demand from the expansion of the resources industry placed strains on the town s physical and community infrastructure. The Pilbara Cities program was initiated to redress many of these issues and has resulted in substantial investment to develop the town s infrastructure and amenities. 213 The future of Port Hedland will need to balance the needs of both industry development and population growth. Attracting larger populations and reducing churn will depend upon continuing the already substantial efforts to improve liveability. Action will also be needed to shift external perceptions from Port Hedland just a place where people go to work to becoming a place that people are happy to call home, for both current and future generations. Population Profile The population of Port Hedland LGA was 15,044 in 2011, counted on place of usual residence. The population structure is notable for its skewed male population in the workforce age groups from 20 years to 59 years (Figure 89). While there is a substantial base of children aged 0 to 9 years, the relative shortfall in the 10 to 19 year age group reflects a tendency for many families to seek education and training options for their children in Perth. The population structure is also notable for a marked lack in the 60 years and higher age groups, due to a strong trend for people to retire to other regions. There are twice as many men in the 60 to 69 year age group, reflecting the resource industry demand for labour which has seen many older men stay in employment or undertake mining work to take advantage of higher wages prior to retirement The population of Port Hedland is projected by the Western Australian Government to grow to between 13,100 and 19,100 by The LGA is currently tracking at the mid to high range of this 2006 forecast, having achieved 6.8 per cent annual average growth between 2006 and The expected population would be around 40,350 if growth continued at the same rate until 2026, which exceeds the projected range. Cities Beyond Perth (Profiles Report), January 2015 Page 137

144 Figure 89: Population structure by age and sex in Port Hedland LGA in This very high level of growth for Port Hedland has been fuelled by accelerated demand for labour from the large scale construction of new resource projects. As projects move into the operational stage, the demand for labour is expected to slow significantly. Future growth in demand for labour will depend upon expansion of industry, through resources development or other projects. Economic Profile The GRP for the Pilbara region in was $17,255M (7.1 per cent of the Western Australian GSP). 216 The Pilbara is the largest regional contributor to GSP in Western Australia, and has the highest productivity when measured at a per capita rate for labour force. Employment Profile The dominance of the mining industry in Port Hedland is clearly evident in the employment profile in 2011 (Figure 90). A large component of construction workers is also evident, followed by the transport, postal and warehousing and the accommodation and food services industries, all of which directly benefit from contracts to supply mining activities in the Pilbara. Each of these industries profiles also reflects the large importation of labour into the region from LDC work. Cities Beyond Perth (Profiles Report), January 2015 Page 138