ECONOMIC PERFORMANCE OF

AUSTRALIA’S CITIES AND REGIONS

2016-17 DECEMBER 2017

Economic Performance of Australia’s Cities and Regions 1

This report has been prepared by SGS Economics and Planning. SGS
Economics and Planning are not liable to any person or entity for any
damage or loss that has occurred, or may occur, in relation to that person
or entity taking or not taking action in respect of any representation,
statement, opinion or advice referred to herein.

SGS Economics and Planning Pty Ltd

ACN 007 437 729
www.sgsep.com.au
Offices in Canberra, Hobart, Melbourne, Sydney
TABLE OF CONTENTS
PREFACE 1
About SGS Economics and Planning 1
About this publication 1

1 OVERVIEW 2
1.1 GDP Growth Rates 2
1.2 Contribution to Growth 5
1.3 Interest Rate Comparison 6

2 ECONOMIC PERFORMANCE 7
2.1 Sydney 8
2.2 Melbourne 12
2.3 Brisbane 17
2.4 Adelaide 21
2.5 Perth 25
2.6 Canberra 29
2.7 Tasmania 32
2.8 Regional Analysis 35

3 METHODOLOGY 39
3.1 Industry methods 39
3.2 Areas for further refinement and research 42
LIST OF FIGURES
FIGURE 1 2016-17 GDP GROWTH RATES – VOLUME MEASURE 2 FIGURE 23 ADELAIDE INDUSTRY STRUCTURE 23
FIGURE 2 2016-17 GDP PER CAPITA GROWTH RATES – VOLUME MEASURE 4 FIGURE 24 LABOUR PRODUCTIVITY, ADELAIDE 24
FIGURE 3 2016-17 GDP PER CAPITA – VOLUME MEASURE 4 FIGURE 25 PERTH GDP GROWTH – VOLUME MEASURE 26
FIGURE 4 SYDNEY GDP GROWTH – VOLUME MEASURE 9 FIGURE 26 CONTRIBUTION TO PERTH GDP GROWTH, 2016-17 26
FIGURE 5 CONTRIBUTION TO SYDNEY GDP GROWTH 2016-17 9 FIGURE 27 PERTH GDP PER CAPITA GROWTH – VOLUME MEASURE 27
FIGURE 6 SYDNEY GDP PER CAPITA GROWTH – VOLUME MEASURE 10 FIGURE 28 PERTH INDUSTRY STRUCTURE 28
FIGURE 7 SYDNEY INDUSTRY STRUCTURE 10 FIGURE 29 LABOUR PRODUCTIVITY, PERTH 28
FIGURE 8 LABOUR PRODUCTIVITY, SYDNEY 11 FIGURE 30 CANBERRA GDP GROWTH – VOLUME MEASURE 30
FIGURE 9 MELBOURNE GDP GROWTH – VOLUME MEASURE 13 FIGURE 31 CONTRIBUTION TO CANBERRA GDP GROWTH, 2016-17 30
FIGURE 10 CONTRIBUTION TO MELBOURNE GDP GROWTH, 2016-17 13 FIGURE 32 CANBERRA INDUSTRY STRUCTURE 31
FIGURE 11 MELBOURNE MANUFACTURING GVA ($MILLION) 14 FIGURE 33 CANBERRA GDP PER CAPITA GROWTH – VOLUME MEASURE 31
FIGURE 12 MELBOURNE GDP PER CAPITA GROWTH – VOLUME MEASURE 15 FIGURE 34 TASMANIA GDP GROWTH – VOLUME MEASURE 33
FIGURE 13 MELBOURNE INDUSTRY STRUCTURE 15 FIGURE 35 TASMANIA GDP PER CAPITA GROWTH – VOLUME MEASURE 33
FIGURE 14 LABOUR PRODUCTIVITY, MELBOURNE 16 FIGURE 36 CONTRIBUTION TO TASMANIAN GDP GROWTH, 2016-17 34
FIGURE 15 BRISBANE GDP GROWTH – VOLUME MEASURE 18 FIGURE 37 TASMANIAN INDUSTRY STRUCTURE 34
FIGURE 16 BRISBANE GDP PER CAPITA GROWTH – VOLUME MEASURE 18 FIGURE 38 REGIONAL NSW GDP AND GDP PER CAPITA GROWTH 36
FIGURE 17 CONTRIBUTION TO BRISBANE GDP GROWTH, 2016-17 19 FIGURE 39 REGIONAL VICTORIA GDP AND GDP PER CAPITA GROWTH 36
FIGURE 18 BRISBANE INDUSTRY STRUCTURE 19 FIGURE 40 CONTRIBUTION TO REGIONAL VICTORIA GDP GROWTH, 2016-17 37
FIGURE 19 LABOUR PRODUCTIVITY, BRISBANE 20 FIGURE 41 MANUFACTURING GVA VOLUME MEASURE ($ MILLIONS) 37
FIGURE 20 ADELAIDE GDP GROWTH – VOLUME MEASURE 22 FIGURE 42 CONTRIBUTION TO REGIONAL WA GDP GROWTH, 2016-17 38
FIGURE 21 ADELAIDE GDP PER CAPITA GROWTH – VOLUME MEASURE 22 FIGURE 43 REGIONAL WA CONSTRUCTION GVA VOLUME MEASURE ($ MILLIONS) 38
FIGURE 22 CONTRIBUTION TO ADELAIDE GDP GROWTH, 2016-17 23 FIGURE 44 CONTRIBUTION TO REGIONAL QLD GDP GROWTH, 2016-17 38

LIST OF TABLES
TABLE 1 GROSS DOMESTIC PRODUCT – VOLUME MEASURE 2016-17 3 TABLE 5 CONTRIBUTION TO MELBOURNE GDP GROWTH – VOLUME MEASURE 14
TABLE 2 CONTRIBUTION TO GDP GROWTH – VOLUME MEASURE 5 TABLE 6 CONTRIBUTION TO BRISBANE GDP GROWTH – VOLUME MEASURE 20
TABLE 3 HYPOTHETICAL REGIONAL INTEREST RATES 6 TABLE 7 CONTRIBUTION TO ADELAIDE GDP GROWTH – VOLUME MEASURE 24
TABLE 4 CONTRIBUTION TO SYDNEY GDP GROWTH – VOLUME MEASURE 11 TABLE 8 CONTRIBUTION TO PERTH GDP GROWTH – VOLUME MEASURE 27
PREFACE
ABOUT SGS ECONOMICS AND PLANNING
SGS Economics and Planning (SGS) is a member-governed college of professionals
that exists to shape policy and investment decisions in favour of sustainable urban
and regional development. We are Australia’s premier independent advisory firm
in this field. As a college of professionals, SGS aspires to continuously learn and
create new knowledge, to constructively contribute to policy debate and to offer real
solutions to urban and regional issues. SGS is independent, honest, thoughtful and
innovative, committed to the public interest and committed to sustainability.
SGS became a certified B Corporation in 2017. B Corps use the power of business to
solve social and environmental problems. SGS was certified by the non-profit B Lab
to meet rigorous standards of social and environmental performance, accountability,
and transparency. We’ve evaluated how our practices impact our employees, our
community, the environment, and our customers.
SGS is at the forefront of Economic and Social Analysis. We are at the cutting edge
of research into economic clusters and the links between urban amenity, economic
growth and community wellbeing. Our approach is underpinned by the recognition
that economic development is a continuous process of growing an area's level of
income and capital and how these are distributed amongst the community. Typically
measured in terms of income and employment, economic development is also
measured by improvements in education, health, culture, community wellbeing and
the environment.
ABOUT THIS PUBLICATION
Australian cities and regions are orphans. Responsibility for managing their economy
(in terms of taxation, planning, infrastructure provision, regulation and economic
Economic Performance of Australia’s Cities and Regions
development) fall between all tiers of government. Official statistics tend not to
publish economic data in more detail than the state level. For the past nine years SGS
has produced estimates of Gross Domestic Product¹ (GDP) for each major capital city
and regional area across Australia. Our research into understanding the distribution
of economic growth has filled a key void in economic policy.
Since the 2015-16 publication of Economic Performance of Australia’s Cities and
Regions, the Australian Bureau of Statistics (ABS) has issued a new set of National
and State Accounts. This ABS data contains a set of historical revisions, where the
annual data is revised through the time series back to 1989-90 for the purposes of
incorporating updated data and a range of improvements to compilation methods.
The 2016-17 publication was to have used the Place of Work data from the 2016
Census, however this data was published by the ABS, but then removed due to
errors.
The remainder of this document is set out as follows:
ƒƒ Section one provides a summary of results, comparing the economic outcomes
for each region
ƒƒ Section two provides a detailed discussion of the economic performance of each
region
ƒƒ Section three provides a detailed description of the methodology.
For further information about the statistics contained within this publication please
contact Mr Terry Rawnsley via email Terry.Rawnsley@sgsep.com.au or
+61 3 8616 0331.
¹GDP (Gross Domestic Product) refers to Australia, GSP (Gross State Product) refers to a State, while GCP
(Gross City Product) refers to a city. However, for simplicity’s sake in this paper all different measures are
referred to as GDP.
1
OVERVIEW
The Australian Bureau of Statistics (ABS) Australian National Accounts: State
Accounts (Cat. No. 5220.0) publication provides estimates of economic activity for
each state and territory on an annual basis. SGS Economics and Planning (SGS) has
developed estimates of economic activity for each major capital city, along with the
regional balance of each state. These statistics provide improved insights into the
relative economic performance of each of Australia’s major capital cities (Sydney,
01
per cent) and Melbourne (2.8 per cent). Perth (-3.5 per cent) and Regional Western
Australia (-1.4 per cent) experienced a technical recession during 2016-17.
FIGURE 1 2016-17 GDP GROWTH RATES - VOLUME MEASURE
8.0%

Melbourne, Brisbane, Adelaide and Perth), and the regional balance of each state,
the Northern Territory, Tasmania and the Australian Capital Territory. They also 6.0%
highlight the productivity challenge facing our cities and regions.

During the early 1980s, the economic structure of Australia was fairly homogeneous. 4.0%

Manufacturing was the primary income generator across most parts of the country.
Of course, certain areas had specialisation industries for example, Agriculture, 2.0%
AUSTRALIAN AVERAGE

Mining and Manufacturing in regional areas and knowledge-intensive services in the

central core of cities. Examining economic statistics at the national level would have
provided reasonable insight into the conditions across the whole of Australia. 0.0%

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The economic evolution of the past 30 years has resulted in a far more complex

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picture. The rise of knowledge-intensive services, differentials in government

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policy and investment, the resources boom, the declining competitiveness of
manufacturing and other changes have created a patchwork economy. -4.0%

1.1 GDP GROWTH RATES -6.0%

As shown in Figure 1 there was a wide range of growth rates across the country.
The regions with the strongest growth were Regional South Australia (6.6 per cent)
and Regional Victoria (5.8 per cent) which were boosted by strong agricultural
production, Canberra (4.6 per cent), Northern Territory (3.9 per cent), Sydney (3.3
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning
Table 1 presents the value of GDP, annual growth rate, the average annual growth
rate for the last decade and the share of national GDP for each region.

Economic Performance of Australia’s Cities and Regions 2

TABLE 1 GROSS DOMESTIC PRODUCT - VOLUME MEASURE 2016-17

GDP ANNUAL GROWTH AVERAGE ANNUAL SHARE OF

REGION
($MILLION) (2016-17) GROWTH (06-07 TO 16-17) GDP (16-17)
Sydney $417,874 3.3% 2.7% 24.7%
Regional NSW $139,987 1.5% 1.6% 8.3%
Melbourne $324,925 2.8% 2.7% 19.2%
Regional Victoria $74,084 5.8% 1.3% 4.4%
Brisbane $157,501 1.4% 2.5% 9.3%
Regional QLD $151,208 2.2% 2.3% 8.9%
Adelaide $77,902 0.9% 1.7% 4.6%
Regional SA $23,889 6.6% 2.0% 1.4%
Perth $141,251 -3.5% 3.5% 8.3%
Regional WA $91,901 -1.4% 4.7% 5.4%
Tasmania $28,577 1.1% 1.5% 1.7%
Northern Territory $25,427 3.9% 3.4% 1.5%
Canberra $37,566 4.6% 3.2% 2.2%
Australia $1,692,092 2.0% 2.6% 100%

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 3

Figure 2 shows GDP growth in per capita terms. The regions with the strongest FIGURE 3 2016-17 GDP PER CAPITA– VOLUME MEASURE
growth were Regional South Australia (5.9 per cent), followed by Regional Victoria
$250,000
(4.2 per cent), Northern Territory (3.7 per cent) and Canberra (2.9 per cent). Perth
(-4.7 per cent) and Regional Western Australia (-2.0 percent) experienced the largest
declines in per capita GDP growth.
$200,000
FIGURE 2 2016-17 GDP PER CAPITA GROWTH RATES – VOLUME MEASURE
8.0%

$150,000

6.0%

$100,000
4.0%

2.0%
$50,000

AUSTRALIAN AVERAGE
0.0%
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Regional Regional Regional Northern

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Sydney Melbourne Regional Vic Adelaide Regional SA Perth Tasmania Canberra

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NSW QLD WA Territory

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GDP Per Capita $81,300 $51,100 $66,800 $50,200 $65,400 $59,900 $58,400 $61,100 $69,000 $234,900 $55,100 $103,800 $92,400
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Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

-4.0%

-6.0%
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

Figure 3 presents the level of GDP per capita.

Regional Western Australia had by far the highest
GDP per capita ($234,900) which is driven by iron
ore and other mineral production. In terms of
the major capital cities, Sydney’s GDP per capita
of $81,300 was the highest, followed by Perth
($69,000), Melbourne ($66,800), Brisbane ($65,400)
and Adelaide ($58,400) and Tasmania ($55,100),
Regional New South Wales ($51,100), and Regional
Victoria ($50,200) had the lowest GDP per capita.

Economic Performance of Australia’s Cities and Regions 4

1.2 CONTRIBUTION TO GROWTH TABLE 2 CONTRIBUTION TO GDP GROWTH – VOLUME MEASURE
WHOLE
Table 2 presents each region’s contribution to GDP growth for the 1990s, 2010s (2009- MOST
PERIOD (1989-
2000s, 2010s, the most recent financial year and the whole period REGION 1990s 2000s 10 TO 2016- RECENT YEAR
90 TO 2016-
17) (2016-17)
(1989-90 to 2016-17). This demonstrates the importance of Australia’s 17)
two largest cities, Sydney and Melbourne, to the national economy, and Sydney 33.7% 16.2% 28.0% 41.6% 23.0%
the variable contributions of the resource-reliant economies of Regional Regional NSW 8.7% 5.6% 5.4% 6.3% 6.6%
Western Australia and Queensland.
Melbourne 13.2% 20.0% 20.3% 27.1% 19.1%
Sydney has traditionally been a significant driver of Australia’s economy, Regional Victoria 8.4% 2.9% 2.4% 12.5% 3.5%
accounting for 33.7 per cent of Australia’s economic growth in the 1990s. Brisbane 11.0% 13.0% 8.1% 6.7% 10.6%
This title was ceded to Melbourne in the 2000s (20.0 per cent), with Regional QLD 7.6% 12.1% 8.6% 9.8% 10.5%
Sydney accounting for 16.2 per cent of national growth in the 2000s. The Adelaide 4.1% 4.3% 2.2% 2.1% 3.6%
Harbour City’s economy has returned to its preeminent position in the Regional SA 0.8% 1.6% 0.4% 4.6% 1.0%
last seven years, accounting for 28.0 per cent of growth since 2009-10,
Perth 6.7% 11.1% 10.4% -15.8% 9.9%
and 41.6 per cent in the most recent year.
Regional WA 4.1% 7.2% 8.6% -4.0% 7.1%
Meanwhile Melbourne has demonstrated increasing importance to Tasmania 0.4% 1.8% 0.8% 1.0% 1.3%
Australia’s economy, successfully transforming from the “rust belt” Northern Territory -0.1% 1.6% 2.2% 3.0% 1.7%
economy of the late 80s to the diversified economy of today. This is Canberra 1.1% 2.5% 2.6% 5.1% 2.2%
illustrated through Melbourne’s increasing contribution to national
Australia 100% 100% 100% 100% 100%
growth, from 13.2 per cent in the 1990s and 20.0 per cent in the 2000s,
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning
to 20.3 per cent over since 2009-10. In 2016-17, Melbourne accounted
for 27.1 per cent of national growth, the second largest contributor
behind Sydney.

Table 2 also illustrates the impact of the resources boom on Australia’s

economy. Perth’s economy accounted for 6.7 per cent of growth in the
1990s, increasing to 11.1 per cent in the 2000s and 10.4 per cent in the
2010s. Regional Western Australia showed a similar trend, from 4.1 per
cent in the 1990s to 7.2 per cent in the 2000s, and 8.6 per cent in the
2010s.

There has been a transition in Regional Western Australia from a

construction boom to production boom, with new mine development
curtailed by falls in commodity prices.

Economic Performance of Australia’s Cities and Regions 5

1.3 INTEREST RATE COMPARISON TABLE 3 HYPOTHETICAL REGIONAL INTEREST RATES
INTEREST RATE INTEREST RATE INTEREST RATE INTEREST RATE
Whilst overall Australia’s cities have displayed a level of strength and REGION
2013-14 2014-15 2015-16 2016-17
resilience reflecting the competitive advantages built up over the Sydney 3.50% 3.50% 3.75% 3.50%
last three decades, each city faces challenges to ensure the ongoing
Regional NSW 1.75% 1.25% 0.25% 0.50%
prosperity of their residents through long-term growth. Some of
these challenges are common to all cities (e.g. efficient provision of Melbourne 2.00% 2.00% 2.25% 2.25%
infrastructure, attraction of skilled workers, industry development and Regional Victoria 1.50% 1.00% 0.25% 0.50%
ensuring liveability), however others are unique to certain cities due to Brisbane 2.25% 1.00% 0.25% 0.25%
city-specific industry structures and other geographic factors. Regional QLD 2.00% 1.00% 0.25% 0.25%
Adelaide 1.25% 1.00% 0.25% 0.25%
At a city level, there are limited policy levers available to manage the
Regional SA 1.25% 1.00% 0.50% 1.00%
individual economies of Australia’s cities in the short-term. At the
national level, interest rates are used as a tool to help manage short Perth 2.25% 1.25% 0.50% 0.25%
term economic movements. As the economy grows at a faster rate, Regional WA 4.00% 2.75% 0.50% 0.25%
interest rates are increased to ensure that the rate of growth does not Tasmania 1.00% 1.00% 0.25% 0.25%
become unmanageable. Conversely, a slowing economy would see Northern Territory 5.00% 5.00% 3.50% 3.25%
interest rates cut to stimulate growth.
Canberra 2.00% 1.75% 1.50% 2.00%
Australia 2.50% 2.00% 1.50% 1.50%
However, as shown above, the rates of growth across the country vary
greatly, so setting a single interest rate for all regions is challenging. To Source: SGS Economics & Planning and Reserve Bank of Australia
highlight the economic divergence between regions, Table 3 presents a
hypothetical situation where each region has its own central bank setting
local interest rates. The weighted sum of all the rates is equal to the
current Reserve Bank of Australia (RBA) target cash rate of 1.5 per cent.

In this hypothetical situation, the Reserve Bank of Sydney would have

decreased interest rates to 3.50 per cent (a reduction of 0.25 percentage
points) in response to slowing economic growth.

A Reserve Bank of Melbourne would have kept rates steady at 2.25 per
cent. Except for Northern Territory and the Canberra, the rest of the
country would have rates of between 0.25 per cent and 1.0 per cent.

Clearly policy makers do not the ability to set different interest rates
across the country, but this analytical exercise highlights how divergent
Australia’s regions have become in terms of their economic growth.

Economic Performance of Australia’s Cities and Regions 6

 02
ECONOMIC PERFORMANCE

Economic Performance of Australia’s Cities and Regions 7

 2.1
SYDNEY
In terms of both share of the national economy and
contribution to economic growth, Sydney is usually the most
important city in Australia for economic growth. However,
the decade from 2000-01 could be described as Sydney’s ‘lost
decade’. This period of relatively sluggish economic growth
was the result of various factors, all of which contributed to
a decline in Sydney’s competitiveness over that period. One
key factor was the ineffective application of urban policy,
including:
ƒƒ Poor housing policies which generated congestion and
have had a significant impact on affordability
ƒƒ Lack of investment in transport capacity
ƒƒ Limited opportunities for businesses to locate in strategic
locations at affordable rents.

While these are structural challenges still facing Sydney,

the last few years have seen improvements in the supply
of housing (with more supply in the pipeline), and new
commercial redevelopments in the CBD (including Barangaroo
and the revitalisation of some older precincts such as
Martin Place and Circular Quay) and increased investment in
Parramatta CBD.

Public transport projects including Sydney Metro and the

light rail projects across the city will also provide additional
transport capacity in the medium to long term.

Figure 4 presents the Volume measure (i.e. excluding inflation)

of GDP growth for Sydney, compared to New South Wales and
Australia. Sydney represents around 75 per cent of the New
South Wales economy; and as a result, the Sydney and New
South Wales growth rates track very closely together.

Economic Performance of Australia’s Cities and Regions 8

FIGURE 4 SYDNEY GDP GROWTH - VOLUME MEASURE Figure 5 presents the industry contribution to Sydney GDP growth for 2016-17.
Professional services (0.8 percentage points), Financial & Insurance Services
6.0%
(0.7 percentage points) and Wholesale Trade (0.3 percentage points) were
the largest contributors to growth. Health Care, Real Estate Services, Media
5.0% & Telecommunications and Manufacturing contributed between 0.2 and 0.3
percentage points. Four industries made a small detraction from economic growth.

4.0% FIGURE 5 CONTRIBUTION TO SYDNEY GDP GROWTH 2016-17

Other services
3.0% Arts & recrea�on
Health care
Educa�on
2.0% Public admin
Admin services
Professional services
1.0%
Real estate services
Financial
Media & telecom
0.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Transport
Accom & food services
Sydney New South Wales Australia
Retail
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Wholesale
Construc�on
As shown in Figure 4, leading into 1999-00 Sydney had a higher rate of growth U�li�es
than the rest of Australia. Between 2000-01 and 2012-13, Sydney’s growth Manufacturing

underperformed relative to the rest of Australia, with the 2008-09 Global Financial Mining

Crisis impacting Sydney particularly hard. The last four years have seen Sydney’s Agriculture

economy significantly outperform the rest of the country. -0.1% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%

Source: SGS Economics & Planning

Sydney’s GDP growth slowed in 2016-17 from a very high 3.9 per cent in 2015-16 to
3.3 per cent.
Growth over the past few years has been linked to mainly cyclical factors. Sydney’s
role as a major financial hub has provides access to global capital flows, which over
the past few years have been flooded with liquidity. The strong growth in Sydney’s
Financial & Insurance Services (the city’s largest industry) and low interest rates has
helped support growth across several other industries.
Economic growth is driven by a range of factors, including population growth. To
eliminate the impact of population growth, Figure 6 presents growth in Sydney’s GDP
per capita, again compared to New South Wales and Australia. The overall pattern is
similar to that of the GDP growth rate.
Sydney’s GDP per capita of $81,300 is $11,900 higher than the national average –
the highest margin since 2004-05. Sydney’s GDP per capita is $30,200 higher than
Regional NSW, the highest on record.

Economic Performance of Australia’s Cities and Regions 9

 FIGURE 6 SYDNEY GDP PER CAPITA GROWTH - VOLUME MEASURE FIGURE 7 SYDNEY INDUSTRY STRUCTURE²
5.0%
Other services
Arts & recrea�on
4.0% Health care
Educa�on
Public admin
3.0% Admin services
Professional services
Real estate services
2.0% Financial
Media & telecom
Transport
1.0%
Accom & food services
Retail
0.0% Wholesale
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Construc�on
U�li�es
-1.0% Manufacturing
Mining
Agriculture
-2.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Sydney New South Wales Australia
June - 1997 June - 2017
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Source: SGS Economics & Planning

As shown in Figure 7, the Professional Services and Financial & Insurance Services ²As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes
industries represent 24.9 per cent of the economy of Sydney. This is up from 17.5 per less subsidies on products and Statistical discrepancy).
cent in 1996-97. The Financial & Insurance Services share of Sydney’s economy was
at a record high of 15.9 per cent in 2016-17.

Other major changes to the industry structure of Sydney over the same period
include the decline in Manufacturing from 11.1 per cent to 5.1 per cent.

In terms of labour productivity (Gross value added per hour worked), Sydney is the
most productive of the major Australian capital cities. Sydney’s labour productivity
grew faster (1.9 per cent) than the national average (0.6 per cent) and is now at a
record high of $92.7 per hour worked (as shown in Figure 8). This reflects two related
factors. The first is the relative concentration of high labour productivity industries
(mostly Financial & Insurance Services and Professional Services) located in Sydney.
The second reflects the advantages, in terms of economies of scale and scope, which
are offered to firms by the virtue of the size of the Sydney economy.

Economic Performance of Australia’s Cities and Regions 10

 FIGURE 8 LABOUR PRODUCTIVITY, SYDNEY TABLE 4 CONTRIBUTION TO SYDNEY GDP GROWTH - VOLUME MEASURE
$95
INDUSTRY 2012-13 2013-14 2014-15 2015-16 2016-17
$90 Agriculture, forestry & fishing 0.0% -0.1% 0.0% 0.1% -0.1%
Mining 0.1% 0.0% 0.0% 0.0% 0.0%
$85
Manufacturing -0.1% 0.0% -0.3% 0.1% 0.2%
$80 Electricity, gas, water & waste 0.0% -0.1% -0.1% -0.1% 0.0%
Construction 0.2% 0.2% 0.3% 0.4% 0.1%
$75
Wholesale trade 0.0% 0.0% 0.3% 0.2% 0.3%
$70 Retail trade 0.1% 0.1% 0.3% 0.2% 0.0%
Accommodation & food -0.1% 0.0% 0.1% 0.1% 0.2%
$65
Transport, postal & warehousing 0.1% 0.0% 0.0% 0.2% 0.0%
$60 Information media -0.1% 0.3% 0.3% 0.3% 0.3%
Financial & insurance 0.7% 0.5% 0.6% 0.5% 0.7%
$55
Rental, hiring & real estate 0.4% 0.2% 0.4% 0.5% 0.2%
$50 Professional, scientific & technical 0.3% 0.2% 0.6% 0.0% 0.8%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Administrative & support -0.1% 0.1% 0.2% 0.1% 0.0%
Sydney Weighted Average Major Ci�es Australia

Source: SGS Economics & Planning Public administration & safety 0.2% 0.3% 0.0% 0.2% 0.0%
Education & training 0.0% 0.0% 0.2% 0.2% 0.1%
Health care & social assistance 0.1% 0.3% 0.1% 0.1% 0.3%
Arts & recreation 0.1% 0.1% -0.1% 0.0% 0.0%
Other services -0.1% 0.3% 0.0% -0.1% 0.0%
Ownership of dwellings 0.1% 0.1% 0.1% 0.3% 0.3%
Taxes less subsidies on products 0.2% 0.2% 0.2% 0.3% 0.0%
Statistical Discrepancy -0.1% 0.2% 0.1% 0.1% -0.3%
Gross Domestic Product 2.1% 2.9% 3.6% 3.9% 3.3%
Source: SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 11

 2.2
MELBOURNE
Melbourne has been a success story over the last 25 years,
successfully transitioning from an economy heavily reliant on a
declining Manufacturing sector to a diversified economy with
significant growth in Professional and Financial & Insurance
Services. Much of the growth in the Professional Services and
Financial & Insurance Services industries in Melbourne has been
the result of investments made over the past two decades.
Development of Southbank and Docklands provided the Central
Business District with “brownfields” to accommodate significant
levels of new employment. Road projects, such as the Western Ring
Road, CityLink and EastLink, helped to improve connectivity across
the city.

These factors have produced agglomeration economies which

enabled high-productivity firms to flourish. However, this
employment growth has absorbed the public transport capacity to
the Melbourne CBD.

Without additional transport investment, Melbourne risks facing

lower levels of economic growth. Aside from the Regional Rail
Link (opened June 2015), Melbourne has had limited significant
transport improvement in recent years. The proposed Melbourne
Metro Rail Project will change this; however, the tentative
completion date of 2024 means the benefits are still some way off.

More immediately, the Victorian Government’s program to remove

50 level crossings from the Metropolitan train network over
the next seven years will bring incremental benefits in terms of
increased rail and road network capacity. The West Gate Tunnel is
expected to open in 2022, and will improve connectivity for western
Melbourne.

Economic Performance of Australia’s Cities and Regions 12

Figure 9 compares GDP growth for Melbourne with Victoria and Australia. Melbourne
experienced a larger boom in 1999 and a larger bust in 2001 than the rest of
Australia (this period was influenced by the introduction of the new taxation system
which caused changes in consumption patterns to avoid the Good & Services Tax.
2001 was also the timing of a global recession. Melbourne’s growth between 2001-
02 to 2004-05 was noticeably higher than Australia. This was driven by very strong
growth in Financial & Insurance Services in Melbourne.
After low growth between 2011-12 and 2013-14, Melbourne has outperformed the
Australian economy over the last three years. The slowing of growth in 2016-17 was
driven by a sharp decline in Manufacturing.
A range of other industries (Health Care, Public Administration, Wholesale and
Construction) contributed between 0.3 and 0.4 percentage points to growth.
During 2016-17, car manufacturers reduced production in preparation for the closure
of production lines, which had a large impact on the economy. Manufacturing
detracted 0.6 percentage points from GDP growth. Figure 11 presents the Gross
value added (GVA)³ for the Manufacturing industry in Melbourne. This provides a
sense of the scale of the decline of manufacturing in the most recent year and over
the past decade.
FIGURE 10 CONTRIBUTION TO MELBOURNE GDP GROWTH, 2016-17

FIGURE 9 MELBOURNE GDP GROWTH - VOLUME MEASURE Other services

Arts & recrea�on
7.0%
Health care
Educa�on
6.0% Public admin
Admin services

5.0% Professional services

Real estate services
Financial
4.0% Media &telecom
Transport

3.0% Accom & food services

Retail
Wholesale
2.0% Construc�on
U�li�es

1.0% Manufacturing
Mining
Agriculture
0.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 -0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0%

Source: SGS Economics & Planning

Melbourne Victoria Australia

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning
³Gross value added is the industry equivalent of Gross domestic product.
Figure 10 presents the industry contribution to Melbourne GDP growth for 2016-17.
Profession Services (0.7 percentage points) was the largest contributor to growth.

Economic Performance of Australia’s Cities and Regions 13

FIGURE 11 MELBOURNE MANUFACTURING GVA ($MILLION) TABLE 5 CONTRIBUTION TO MELBOURNE GDP GROWTH - VOLUME MEASURE
$26,000
INDUSTRY 2012-13 2013-14 2014-15 2015-16 2016-17
Agriculture, forestry & fishing 0.1% -0.2% 0.0% 0.0% 0.0%
$25,000 Mining 0.0% 0.2% 0.0% 0.0% 0.0%
Manufacturing -0.3% 0.1% 0.1% 0.0% -0.6%
Electricity, gas, water & waste 0.0% 0.0% 0.1% 0.1% 0.1%
$24,000
Construction 0.0% -0.1% 0.5% 0.6% 0.4%
Wholesale trade 0.3% 0.1% 0.1% 0.3% 0.4%
$23,000
Retail trade 0.3% -0.1% 0.4% 0.4% 0.1%
Accommodation & food 0.0% 0.0% 0.1% 0.1% 0.1%
$22,000 Transport, postal & warehousing 0.1% 0.0% 0.0% 0.2% 0.2%
Information media 0.1% 0.1% 0.4% 0.3% 0.0%
Financial & insurance -0.1% 0.5% 0.4% 0.5% 0.2%
$21,000
Rental, hiring & real estate 0.0% 0.3% 0.2% 0.2% 0.1%
Professional, scientific & technical 0.5% 0.0% 0.2% 0.5% 0.7%
$20,000 Administrative & support -0.1% 0.2% 0.0% 0.2% 0.1%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Public administration & safety 0.0% 0.4% -0.1% 0.0% 0.3%
Source: SGS Economics & Planning
Education & training 0.1% 0.0% 0.0% 0.1% 0.1%
Health care & social assistance 0.4% 0.7% 0.4% 0.3% 0.3%
Arts & recreation -0.1% 0.0% 0.0% 0.1% 0.0%
Other services -0.2% 0.0% 0.0% 0.0% 0.0%
Ownership of dwellings 0.1% 0.1% 0.1% 0.3% 0.2%
Taxes less subsidies on products 0.2% 0.1% 0.2% 0.4% 0.1%
Statistical Discrepancy -0.1% 0.0% 0.0% -0.2% 0.1%
Gross City Product 1.5% 2.5% 3.2% 4.4% 2.8%
Source: SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 14

Figure 12 presents per capita GDP growth for Melbourne, Victoria and Australia. As shown in Figure 13, Professional Services and Financial & Insurance Services
While the overall pattern is like GDP growth, in six of the past ten years GDP per represented 21.2 per cent of the economy of Melbourne. This is up from 14.5 per
capita has contracted in Melbourne due to population growth outstripping economic cent in 1996-97. Over the same period, the share of Manufacturing fell from 16.3 per
growth. In 2016-17, GDP per capita is 3.2 per cent higher than in 2006-07. cent to 6.3 per cent (the lowest level on record).

FIGURE 12 MELBOURNE GDP PER CAPITA GROWTH - VOLUME MEASURE FIGURE 13 MELBOURNE INDUSTRY STRUCTURE⁴
10%
Other services
Arts & recrea�on
8% Health care
Educa�on
6% Public admin
Admin services
Professional services
4% Real estate services
Financial
2% Media &telecom
Transport
Accom & food services
1%
Retail
Wholesale
0% Construc�on
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 U�li�es
Manufacturing
-1%
Mining
Agriculture
-2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%
Melbourne Victoria Australia
June - 1997 June - 2017
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Source: SGS Economics & Planning

⁴As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes less
subsidies on products and Statistical discrepancy)

Economic Performance of Australia’s Cities and Regions 15

 As shown in Figure 14, Melbourne’s productivity is below the weighted average for
the major capital cities and Australia due to a higher concentration of jobs in lower
productivity industries. 2016-17 saw no change in Melbourne’s labour productivity.

FIGURE 14 LABOUR PRODUCTIVITY, MELBOURNE

$90

$85

$80

$75

$70

$65

$60

$55

$50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Melbourne Weighted Average Major Ci�es Australia

Source: SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 16

 2.3
BRISBANE
BRISBANE
For
Forananextended
extendedperiod,
period,economic
economicgrowth
growthininBrisbane
Brisbanehas hasbeen
been
fuelled by population migration, with people from
fuelled by population migration, with people from the southernthe southern
states
statesbeing
beingdrawn
drawntotoemployment
employmentopportunities,
opportunities,cheaper
cheaper housing
housing
and anand an attractive
attractive lifestyle.
lifestyle. The challenge
The challenge for Brisbane
for Brisbane is
is to establish
toaestablish a competitive advantage, in addition to
competitive advantage, in addition to population growth, to population
growth,
ensureto ensure
the city’s the city’s continued
continued development.
development. Unlikeand
Unlike Sydney
Sydney and Melbourne,
Melbourne, Brisbane does Brisbane doesanot
not have have
deep poola deep pool of
of export-oriented
export-oriented Financial & Insurance Services and
Financial & Insurance Services and Professional Services firms.Professional
Services firms.
Therefore, Therefore,
a more a more
diversified diversified
industrial industrial
makeup makeup
will be needed to
will be needed
overcome thetocyclical
overcome the cyclical
downturn downturn in Mining.
in Mining.

InIn2016-17,
2016-17,the
theBrisbane
Brisbaneeconomy
economyaccounted
accountedforforaround
aroundhalfhalf of
ofthe
theQueensland
Queenslandeconomy.
economy.This Thisisisthe
thesmallest
smallestshare
shareofofall
allthe major
the majorcities
capital capital
andcities
is theand is the
result of result
a moreofdispersed
a more dispersed
population and
population and significant mineral production
significant mineral production in Regional Queensland. in Regional
Queensland.
As shown in Figure 15, Brisbane’s GDP growth was higher than the
Asnational
shown in Figureduring
average 15, Brisbane’s GDP growth
the early-to-mid washowever
1990s, higher than
it also
the national average during the early-to-mid
experienced a more pronounced contraction around 1990s, however
the timeit of
also
theexperienced
introductionaof more pronounced
the GST. During thecontraction around the
2000s, Brisbane’s exposure
time of the introduction of the GST. During the 2000s,
to the minerals boom ensured growth higher than the Australian Brisbane’s
exposure
average.toBrisbane’s
the mineralsGDPboom
growth ensured
has alsogrowth higher
displayed than the
significant
Australian average. Brisbane’s GDP growth has also displayed
volatility, with drops in growth experienced in 2008-09 (during the
significant volatility,
Global Financial with drops
Crisis), and inin2010-11
growth(as experienced
a result ofinthe2008-09
major
(during the Global Financial
floods in Queensland). Crisis), and in 2010-11 (as a result of
the major floods in Queensland).

Economic Performance of Australia’s Cities and Regions 17

FIGURE 15 BRISBANE GDP GROWTH - VOLUME MEASURE FIGURE 16 BRISBANE GDP PER CAPITA GROWTH - VOLUME MEASURE

9.0% 6.0%

8.0%
5.0%

7.0%
4.0%
6.0%
3.0%
5.0%
2.0%
4.0%
1.0%
3.0%
0.0%
2.0% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

1.0%
-1.0%

0.0% -2.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
-1.0% -3.0%

-2.0% -4.0%
Brisbane Queensland Australia Brisbane Queensland Australia

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

Figure 16 shows that growth in GDP per capita for Brisbane exhibited a very
similar trend to growth in GDP. 2016-17 saw negative growth in Brisbane’s GDP
per capita (-0.7 per cent), which was the fifth time in the last ten years that GDP
per capita has contracted.

Economic Performance of Australia’s Cities and Regions 18

As shown in Figure 17, the largest contributors to Brisbane’s growth in 2016-17 was Figure 18 shows that in 2016-17, Financial & Insurance Services (9.2 per cent) was
Professional Services (0.6 percentage points), Health Care (0.6 percentage points), the largest industry in Brisbane, followed by Professional Services (8.7 per cent) and
Financial & Insurance services (0.4 percentage points) and Public Administration and Health Care (8.1 per cent).
Transport (both 0.2 percentage points). Significant drags on the Brisbane economy
included Mining (-0.3 percentage points) due to reduced ‘head office’ activity, FIGURE 18 BRISBANE INDUSTRY STRUCTURE⁵
Construction and Manufacturing (both -0.2 percentage points). Other services
Arts & recrea�on
FIGURE 17 CONTRIBUTION TO BRISBANE GDP GROWTH, 2016-17 Health care
Educa�on
Other services Public admin
Arts & recrea�on Admin services
Health care Professional services
Educa�on Real estate services
Public admin Financial
Admin services Media & telecom
Professional services Transport
Real estate services Accom & food services
Financial Retail
Wholesale
Media & telecom
Construc�on
Transport
U�li�es
Accom & food services
Manufacturing
Retail Mining
Wholesale Agriculture
Construc�on
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
U�li�es
Manufacturing June - 1997 June - 2017
Mining Source: SGS Economics & Planning
Agriculture
-0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% ⁵As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes
less subsidies on products and Statistical discrepancy).
Source: SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 19

Figure 19 illustrates that Labour productivity in Brisbane is lower than Australia and TABLE 6 CONTRIBUTION TO BRISBANE GDP GROWTH - VOLUME MEASURE⁶
the weighted average of the major capital cities.
INDUSTRY 2012-13 2013-14 2014-15 2015-16 2016-17
FIGURE 19 LABOUR PRODUCTIVITY, BRISBANE Agriculture, forestry & fishing -0.1% -0.1% 0.0% 0.0% 0.0%
Mining -0.6% 1.0% 1.3% -1.1% -0.3%
$90
Manufacturing -0.2% -0.6% -0.1% 0.0% -0.2%
$85 Electricity, gas, water & waste 0.0% 0.0% 0.1% 0.1% 0.0%
Construction 0.5% 0.1% 0.4% -0.7% -0.2%
$80
Wholesale trade 0.1% -0.1% -0.4% 0.2% 0.2%
Retail trade 0.1% 0.3% -0.1% 0.3% 0.1%
$75
Accommodation & food 0.1% 0.0% 0.2% 0.0% -0.1%
$70 Transport, postal & warehousing 0.0% -0.2% 0.2% 0.1% 0.2%
Information media -0.1% 0.1% 0.1% 0.1% 0.0%
$65
Financial & insurance 0.8% -0.9% 0.7% 0.6% 0.4%
Rental, hiring & real estate -0.2% 0.9% -0.1% 0.4% 0.0%
$60
Professional, scientific & technical 0.5% -0.2% -0.2% 0.4% 0.6%
$55 Administrative & support 0.1% 0.1% 0.0% 0.1% 0.0%
Public administration & safety -0.7% -0.1% 0.1% 0.3% 0.2%
$50
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Education & training 0.0% 0.5% 0.1% 0.1% 0.0%
Brisbane Weighted Average Major Ci�es Australia Health care & social assistance 0.3% 0.2% 0.7% 0.4% 0.6%
Source: SGS Economics & Planning Arts & recreation 0.1% 0.0% 0.0% 0.0% 0.0%
Other services 0.0% -0.1% 0.3% -0.1% 0.0%
Ownership of dwellings 0.1% 0.0% 0.0% 0.2% 0.2%
Taxes less subsidies on products 0.2% 0.0% 0.3% 0.2% -0.1%
Statistical discrepancy 0.2% 0.2% 0.3% 0.2% -0.3%
Gross City Product 1.6% 1.1% 4.1% 1.9% 1.4%

Source: SGS Economics & Planning

⁶Rounded figures

Economic Performance of Australia’s Cities and Regions 20

 2.4
ADELAIDE
Adelaide has been a perennial underperformer economically
over the past few decades, as the city struggles to overcome
the ongoing decline of the Manufacturing sector. The South
Australian capital is faced with many structural challenges
which do not have a clear solution. Aside from the decline
of Manufacturing, it has a population which is ageing more
rapidly than other cities, and a shallow pool of export-oriented
knowledge-intensive industries which will constrain growth over
the coming years. The weakness in the economy will continue
to exacerbate the long-term trend of migration of skilled labour
(particularly those in younger age groups) to elsewhere in
Australia.

In most years since the mid-90s, Adelaide has experienced GDP

growth below the national average (Figure 20). Like Brisbane,
Adelaide exhibits more of a ‘boom and bust’ cycle than Sydney
and Melbourne. In 2016-17, the GDP of Adelaide grew by 0.9
per cent. South Australia grew by 2.2 per cent, of which 1.4
percentage points came from Agriculture.

Economic Performance of Australia’s Cities and Regions 21

FIGURE 20 ADELAIDE GDP GROWTH - VOLUME MEASURE FIGURE 21 ADELAIDE GDP PER CAPITA GROWTH - VOLUME MEASURE

6.0% 6.0%

5.0% 5.0%

4.0%
4.0%

3.0%
3.0%

2.0%

2.0%
1.0%

1.0%
0.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

0.0% -1.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
South Australia Australia
Adelaide South Australia Australia
Adelaide

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

In per capita terms, Adelaide’s GDP growth is closer to the national average, and still As shown in Figure 22, Health Care (0.6 percentage) and Wholesale Trade (0.4
shows the same volatility (Figure 21). This can be explained by the fact that Adelaide percentage) made the largest contribution to growth in 2016-17. Manufacturing
has relatively low population growth compared to the rest of the country. contributed (0.1 percentage) to growth, the largest contribution from this industry
since 2006-07.

Construction (-0.6 percentage points) made a significant detraction from GDP

growth. This is likely related to the completion of the new Royal Adelaide Hospital
during 2016-17.

As shown in Figure 23, Health Care is now the largest industry in Adelaide,
accounting for 10.5 per cent of the city’s GDP in 2016-17. Due to Adelaide’s ageing
population, this sector has become increasingly important in recent years. Financial
& Insurance Services was the second largest (9.5 per cent). Manufacturing has
significantly decreased its share of Adelaide’s GDP over the past two decades, from
17.9 per cent to 6.4 per cent of GDP.

Economic Performance of Australia’s Cities and Regions 22

FIGURE 22 CONTRIBUTION TO ADELAIDE GDP GROWTH, 2016-17 FIGURE 23 ADELAIDE INDUSTRY STRUCTURE⁷

Other services Other services

Arts & recrea�on Arts & recrea�on
Health care Health care
Educa�on Educa�on
Public admin Public admin
Admin services Admin services
Professional services
Professional services
Real estate services
Real estate services
Financial
Financial
Media & telecom
Media & telecom
Transport
Transport
Accom & food services
Accom & food services Retail
Retail Wholesale
Wholesale Construc�on
Construc�on U�li�es
U�li�es Manufacturing
Manufacturing Mining
Mining Agriculture
Agriculture 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%
-0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% June - 1997 June - 2017

Source: SGS Economics & Planning Source: SGS Economics & Planning

⁷As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes less
subsidies on products and Statistical discrepancy).

Economic Performance of Australia’s Cities and Regions 23

Labour productivity in Adelaide is the lowest of the major capital cities, which is TABLE 7 CONTRIBUTION TO ADELAIDE GDP GROWTH - VOLUME MEASURE⁸
heavily influenced by the composition of major industries the economy (Figure 24).
INDUSTRY 2012-13 2013-14 2014-15 2015-16 2016-17
Adelaide has a lower percentage of higher productivity industries than other major
capital cities. Agriculture, forestry & fishing -0.2% 0.1% 0.1% 0.1% -0.2%
Mining 0.2% 0.1% 0.2% 0.0% -0.1%
FIGURE 24 LABOUR PRODUCTIVITY, ADELAIDE
Manufacturing -1.1% -0.3% 0.0% -1.0% 0.1%
$90 Electricity, gas, water & waste -0.2% -0.2% 0.3% 0.2% 0.1%
Construction 0.3% 0.2% -0.1% 0.0% -0.6%
$85
Wholesale trade 0.3% 0.3% 0.0% 0.1% 0.4%
$80 Retail trade 0.0% 0.1% 0.4% 0.2% 0.1%
Accommodation & food -0.1% -0.1% 0.2% 0.1% 0.0%
$75 Transport, postal & warehousing -0.5% 0.0% 0.1% -0.1% 0.2%
Information media -0.1% 0.1% 0.1% 0.1% 0.1%
$70
Financial & insurance 0.2% 0.4% 0.1% 0.1% 0.2%
$65 Rental, hiring & real estate 0.3% 0.1% 0.0% 0.1% 0.1%
Professional, scientific & technical 0.4% -0.3% -0.1% 0.1% -0.2%
$60 Administrative & support -0.1% -0.1% 0.1% 0.0% -0.2%
Public administration & safety 0.0% 0.2% 0.2% 0.1% -0.1%
$55
Education & training 0.2% -0.1% 0.0% 0.1% 0.0%
$50 Health care & social assistance 0.4% 0.4% 0.2% 0.4% 0.6%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Arts & recreation 0.0% 0.1% 0.0% 0.0% 0.0%
Adelaide Weighted Average Major Ci�es Australia
Other services 0.2% 0.0% 0.0% 0.0% 0.0%
Source: SGS Economics & Planning Ownership of dwellings 0.0% 0.0% 0.0% 0.2% 0.2%
Taxes less subsidies on products 0.0% 0.0% 0.2% 0.3% 0.0%
Statistical Discrepancy 0.7% 0.1% -0.1% -0.1% 0.0%
Gross City Product 1.2% 1.4% 2.0% 1.1% 0.9%
Source: SGS Economics & Planning

⁸Rounded figures

Economic Performance of Australia’s Cities and Regions 24

 2.5
PERTH
As illustrated in Figure 25, the effect of mining
on Perth’s economy has been profound
with growth in the city’s GDP significantly
outperforming the national average from
2000-01 to 2013-14. The effect of the end of
the mining boom on Perth’s economy has been
equally profound. Perth was in a recession
during 2016-17 with a decline of 3.5 per cent in
GDP. This is a significantly larger than the 1.5 per
cent decline that Perth experienced during the
last national recession in 1990-91. The 2016-17
results followed two years of the lowest growth
rates since the 1990-91 recession.

Economic Performance of Australia’s Cities and Regions 25

FIGURE 25 PERTH GDP GROWTH - VOLUME MEASURE FIGURE 26 CONTRIBUTION TO PERTH GDP GROWTH, 2016-17
12.0%
Other services
Arts & recrea�on
10.0%
Health care
Educa�on
8.0%
Public admin
Admin services
6.0% Professional services
Real estate services
4.0% Financial
Media & telecom
2.0% Transport
Accom & food services
0.0% Retail
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Wholesale
-2.0% Construc�on
U�li�es
-4.0% Manufacturing
Mining
-6.0% Agriculture
Perth Western Australia Australia -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0%

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning Source: SGS Economics & Planning

The decline in Perth’s economy in 2016-17 was reflected across most sectors
(Figure 26). Financial & Insurance Services (0.6 percentage points), Health Care (0.5
percentage points) and Education (0.3 percentage points) were the only industries
that made any meaningful contribution to GDP growth.

Construction detracted 1.5 percentage points from Perth’s GDP growth. Professional
Services (1.1 percentage points) and Public Administration (0.6 percentage
points) were the biggest contributors to the decline in GDP. The decline in Public
Administration followed a positive contribution (0.7 percentage points) in 2015-16.

Perth’s key challenge going forward will be to find alternate sources of economic
growth now that the mining boom, that has driven the city’s economy for the past
decade, is over. The economic slowdown is compounded by the flight of skilled
labour, as many workers formerly employed in mining-related jobs migrate to the
eastern seaboard in search of employment.

Economic Performance of Australia’s Cities and Regions 26

TABLE 8 CONTRIBUTION TO PERTH GDP GROWTH - VOLUME MEASURE⁹ Figure 27 presents the GDP per capita growth rate for Perth. During the early 2010s,
the spill over of mining construction and ongoing increases in the volume of iron ore
INDUSTRY 2012-13 2013-14 2014-15 2015-16 2016-17
produced in Regional Western Australia drove growth in Perth’s GDP per capita.
Agriculture, forestry & fishing 0.1% 0.3% -0.1% 0.0% 0.1%
Mining 0.1% 1.8% -0.4% -0.4% 0.2% In 2016-17, Perth experienced the largest decline in GDP per capita on record (-4.7
Manufacturing -0.3% 0.4% 0.1% -0.4% -0.4% per cent). It is the third straight year of decline Perth’s has GDP per capita.
Electricity, gas, water & waste 0.0% 0.0% 0.1% 0.1% -0.1%
Construction 0.8% 1.1% 0.0% -0.6% -1.5%
FIGURE 27 PERTH GDP PER CAPITA GROWTH - VOLUME MEASURE
Wholesale trade 0.4% 0.0% 0.0% -0.1% -0.2% 8.0%
Retail trade 0.3% 0.0% 0.1% 0.1% -0.2%
Accommodation & food 0.3% -0.2% 0.1% 0.2% -0.3% 6.0%
Transport, postal & warehousing 0.3% 0.1% -0.2% -0.1% 0.0%
Information media -0.2% 0.2% 0.1% 0.2% -0.1% 4.0%
Financial & insurance 0.9% 0.3% 0.8% -0.5% 0.6%
Rental, hiring & real estate 0.4% 0.1% -0.1% -0.1% 0.0% 2.0%
Professional, scientific & technical 1.3% -0.1% -0.6% 0.3% -1.1%
Administrative & support 0.1% -0.2% -0.1% -0.1% -0.1%
0.0%
Public administration & safety 0.5% 0.3% -0.2% 0.7% -0.6% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Education & training 0.1% 0.1% 0.1% 0.2% 0.3% -2.0%

Health care & social assistance 0.8% 0.8% 0.2% 0.4% 0.5%
Arts & recreation 0.0% 0.1% 0.1% 0.0% 0.0%
-4.0%
Other services 0.0% -0.1% 0.1% 0.1% -0.1%
Ownership of dwellings 0.3% 0.1% 0.0% 0.2% 0.2% -6.0%
Taxes less subsidies on products 0.4% -0.1% 0.3% 0.3% -0.2% Perth Western Australia Australia
Statistical Discrepancy -0.4% -0.6% -0.5% -0.2% -0.1%
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning
Gross City Product 6.7% 5.1% 0.9% 0.3% -3.5%

Source: SGS Economics & Planning

⁹Rounded figures

Economic Performance of Australia’s Cities and Regions 27

Figure 28 presents the industry share of the Perth economy in 1996-97 and 2016-17. FIGURE 29 LABOUR PRODUCTIVITY, PERTH
Over this period, Manufacturing’s share of GDP halved, while Professional Services
$90
and Health Care grew significantly.
$85
In 2016-17, Construction was the largest industry (10.7 per cent). Professional
Services (8.1 per cent) and Health Care (7.8 per cent) were also large industries in $80
Perth.
$75
Figure 29 presents estimated labour productivity for Perth. In 2006-07 the city was
below the weighted average of the major capital cities; however, the onset of the $70
mining boom brought Perth in line with the weighted average for the major capital
cities. This was due to growth in a range of high labour productivity industries in $65
Perth. The last year saw labour productivity fall by 2.4 per cent, the largest fall for the
city on record. 12 of the 19 ANZSIC industries experienced a fall in labour productivity $60
in 2016-17.
$55
FIGURE 28 PERTH INDUSTRY STRUCTURE¹⁰
$50
Other services 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Arts & recrea�on Perth Weighted Average Major Ci�es Australia
Health care
Source: SGS Economics & Planning
Educa�on
Public admin
Admin services
Professional services
Real estate services
Financial
Media & telecom
Transport
Accom & food services
Retail
Wholesale
Construc�on
U�li�es
Manufacturing
Mining
Agriculture
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
June-1997 June-2017

Source: SGS Economics & Planning

¹⁰As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes less
subsidies on products and Statistical discrepancy).

Economic Performance of Australia’s Cities and Regions 28

 2.6
CANBERRA
Canberra’s GDP growth tends to track the
national average less closely than other capital
cities. This is due to its small size and the fact
that its largest industry, Public Administration, is
less dependent on overall economic conditions.
Figure 30 shows Canberra’s GDP growth over
the last 20 years. Cuts to the public service saw
Canberra’s GDP growth fall to just 0.8 per cent
in 2013-14, the lowest growth seen since 1996,
the last time there were major cuts to the public
service. Over the past three years economic
activity has surged to 4.6 per cent in 2016-17.

Economic Performance of Australia’s Cities and Regions 29

FIGURE 30 CANBERRA GDP GROWTH - VOLUME MEASURE FIGURE 31 CONTRIBUTION TO CANBERRA GDP GROWTH, 2016-17
7.0% Other services
Arts & recrea�on
6.0% Health care
Educa�on
Public admin
5.0% Admin services
Professional services
4.0% Real estate services
Financial
Media & telecom
3.0% Transport
Accom & food services
2.0% Retail
Wholesale
Construc�on
1.0%
U�li�es
Manufacturing
0.0% Mining
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Agriculture
Canberra Australia -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 Source: Australian National Accounts: State Accounts, Cat. No. 5220.0

As shown in Figure 31 the highest

contribution was Professional services
(2.7 percentage points) which accounted
for almost 60 per cent of all growth. Only
twice before has an industry in Canberra
made a larger contribution to growth.
This was Public Administration in 1993-
94 (2.8 percentage points) and 2006-07
(4.0 percentage points). In 2016-17,
Public Administration, Canberra’s largest
industry, made no contribution to growth.

Figure 32 presents the industry share of

Canberra’s economy. The most substantial
difference over the past twenty years is
the increased importance of Professional Services, which grew from 7.3 per cent in
1996-97 to 10.3 per cent in 2016-17 and Health Care which increased from 6.8 per
cent to 10.8 per cent.

Economic Performance of Australia’s Cities and Regions 30

FIGURE 32 CANBERRA INDUSTRY STRUCTURE¹¹ FIGURE 33 CANBERRA GDP PER CAPITA GROWTH - VOLUME MEASURE
6.0%
Other services
Arts & recrea�on
Health care 5.0%
Educa�on
Public admin
Admin services 4.0%
Professional services
Real estate services
Financial 3.0%
Media & telecom
Transport
Accom & food services 2.0%
Retail
Wholesale
Construc�on 1.0%
U�li�es
Manufacturing
Mining 0.0%
Agriculture 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

-1.0%
June-1997 June-2017 Canberra Australia

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 Source: Australian National Accounts: State Accounts, Cat. No. 5220.0

Figure 33 presents the GDP per capita growth rate for

Canberra. Canberra’s population has continued to grow
despite the cuts (albeit more slowly than the Australian
average), resulting in negative GDP per capita growth
in 2013-14. Again, the GDP per capita growth rate
recovered strongly growing by 2.9 per cent.

¹¹As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes less
subsidies on products and Statistical discrepancy).

Economic Performance of Australia’s Cities and Regions 31

 2.7
TASMANIA
For most of the last 20 years, Tasmania’s
economy has grown more slowly than the
national average (see Figure 34). The last four
years have seen steady growth of between 1.1
per cent and 1.4 per cent. Part of the reason
why Tasmania shows lower GDP growth than
Australia is its relatively low population growth.

Per capita growth rates in Tasmania, shown

in Figure 35, show less of a gap with Australia
compared to overall GDP figures, with growth
rates tending to move in line with Australia’s
growth. In 2016-17, the GDP per capita growth
in Tasmania was 0.5 per cent compared to
the Australian growth rate of 0.4 per cent. In
six of the past ten years the GDP per capita in
Tasmania has outperformed the national growth
rate.

Economic Performance of Australia’s Cities and Regions 32

FIGURE 34 TASMANIA GDP GROWTH - VOLUME MEASURE FIGURE 35 TASMANIA GDP PER CAPITA GROWTH - VOLUME MEASURE
6.0% 6.0%

5.0%
5.0%

4.0%
4.0%

3.0%
3.0%
2.0%
2.0%
1.0%

1.0%
0.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
0.0% -1.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

-1.0% -2.0%
Tasmania Australia Tasmania Australia
Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 and SGS Economics & Planning

Economic Performance of Australia’s Cities and Regions 33

FIGURE 36 CONTRIBUTION TO TASMANIAN GDP GROWTH, 2016-17 FIGURE 37 TASMANIAN INDUSTRY STRUCTURE¹²

Other services Other services

Arts & recrea�on Arts & recrea�on
Health care Health care
Educa�on Educa�on
Public admin Public admin
Admin services Admin services
Professional services Professional services
Real estate services Real estate services
Financial Financial
Media & telecom
Media & telecom
Transport
Transport
Accom & food services
Accom & food services
Retail
Retail
Wholesale
Wholesale Construc�on
Construc�on U�li�es
U�li�es Manufacturing
Manufacturing Mining
Mining Agriculture
Agriculture 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
-1.0% -0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% June-1997 June-2017

Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 Source: Australian National Accounts: State Accounts, Cat. No. 5220.0 

¹²As measured by industry Gross value added share of GDP (excluding Ownership of dwellings, Taxes less
In 2016-17, Public Administration (0.8 percentage subsidies on products and Statistical discrepancy).
points), Health Care (0.7 percentage points), and
Agriculture (0.5 percentage points) were the
biggest contributors to Tasmania’s GDP growth.

Financial & Insurance Services were the most

significant drag on Tasmanian growth (-0.8
percentage points). The breakdown of each
industry’s contribution to Tasmanian economic
growth is shown in Figure 36.

As with all the other states, the decline in the share of Manufacturing in Tasmania is
significant, falling from 12.2 per cent of GDP in 1996-97 to 6.0 per cent in 2016-17.
Heath Care grew from 8.4 per cent of GDP in 1995-96 to 12.5 per cent in 2016-17.
Several other industries have shown modest growth in their share of the economy.

Economic Performance of Australia’s Cities and Regions 34

 2.8
REGIONAL ANALYSIS
While the focus of this report has been on the major
capital cities, there are also major economic changes in
Regional Australia. This section provides a snapshot of
some of these changes.

Economic Performance of Australia’s Cities and Regions 35

As shown in Figure 38, the economy of Regional New South Wales contracted in FIGURE 39 REGIONAL VICTORIA GDP AND GDP PER CAPITA GROWTH
2013-14 (-0.7 percent) and experienced very weak growth in 2014-15 (0.6 percent). 10.0%
A key factor in the economic decline has been a fall in Manufacturing (see Figure 41).
The last two years have seen stronger growth in GDP of 3.6 per cent and 1.5 per cent.
8.0%
FIGURE 38 REGIONAL NSW GDP AND GDP PER CAPITA GROWTH
7.0% 6.0%

6.0%
4.0%

5.0%
2.0%
4.0%

3.0% 0.0%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

2.0%
-2.0%

1.0%
-4.0%
0.0% Per Capita Growth GDP Growth
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Source: SGS Economics & Planning
-1.0%

-2.0%
Per Capita Growth GDP Growth
Source: SGS Economics & Planning

As shown in Figure 39, there has been a decline in Regional Victoria’s GDP in three of
the past ten years, and a decline in GDP per
capita in five of the past ten years.

The most recent year saw very strong

growth for Regional Victoria of 5.8 per cent,
the highest growth rate since 1990-2000.
Almost 40 percent of this growth came from
very strong agricultural production and a
boost in associated food manufacturing.
Manufacturing in Regional Victoria saw an
increase in production (see Figure 41) in
2016-17, even with the closure of the Ford
plant in Geelong.
Economic Performance of Australia’s Cities and Regions 36
FIGURE 40 CONTRIBUTION TO REGIONAL VICTORIA GDP GROWTH, 2016-17 FIGURE 41 MANUFACTURING GVA VOLUME MEASURE ($ MILLIONS)

Other services $12,500

Arts & recrea�on
Health care $11,500
Educa�on
Public admin
Admin services $10,500
Professional services
Real estate services
$9,500
Financial
Media & telecom
Transport $8,500
Accom & food services
Retail
$7,500
Wholesale
Construc�on
U�li�es $6,500
Manufacturing
Mining
Agriculture $5,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
Regional New South Wales Regional Victoria
Source: SGS Economics & Planning Source: SGS Economics & Planning

In 2016-17, Regional Western Australia experienced the

largest (1.4 percent) economic recession on record. This was
due to the end of the mining construction boom. As shown
in Figure 42, despite strong increases in Agriculture (1.2
percentage points) and Mining (0.9 percentage points), the
impact of a decline in construction activity resulted in the
Regional Western Australia economy contracting.

Figure 43 shows that GVA of the Construction industry in Regional Western Australia
is back at levels not seen since before the start of the mining boom in 2003-04.
Figure 43 also provides a sense of the scale of the mining construction boom in
Regional Western Australia.

Economic Performance of Australia’s Cities and Regions 37

FIGURE 42 CONTRIBUTION TO REGIONAL WA GDP GROWTH, 2016-17 FIGURE 43 REGIONAL WA CONSTRUCTION GVA VOLUME MEASURE ($ MILLIONS)
Other services $14,000
Arts & recrea�on
Health care
$12,000
Educa�on
Public admin
Admin services $10,000
Professional services
Real estate services
Financial $8,000
Media & telecom
Transport
$6,000
Accom & food services
Retail
Wholesale $4,000
Construc�on
U�li�es
Manufacturing $2,000
Mining
Agriculture
$-
-6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: SGS Economics & Planning Source: SGS Economics & Planning
While not as bad as Regional Western Australia, Regional Queensland also saw FIGURE 44 CONTRIBUTION TO REGIONAL QLD GDP GROWTH, 2016-17
a decline resulting from the end of the mining construction boom. While Mining Other services
production (3.0 percentage points) increased strongly in 2016-17, the overall Arts & recrea�on
economy remains weak in Regional Queensland. Health care
Educa�on
Public admin
Admin services
Professional services
Real estate services
Financial
Media & telecom
Transport
Accom & food services
Retail
Wholesale
Construc�on
U�li�es
Manufacturing
Mining
Agriculture
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Source: SGS Economics & Planning
Economic Performance of Australia’s Cities and Regions 38
METHODOLOGY
There are three approaches to measuring Gross Domestic Product:
ƒƒ The Production Approach: the sum of the Gross value added for each of the
industries and taxes, less subsidies on products;
ƒƒ The Expenditure Approach: measures final expenditure on goods and services;
and
ƒƒ The Income Approach: sum of income generated by all factors of production.
At the Australian level, the Production, Expenditure and Income approaches are
averaged by the ABS to produce and estimate of GDP. However, at the State level,
a lack of data on trade between the states results in the Expenditure and Income
approaches being combined and averaged with the Production approach. The hybrid
Expenditure and Income estimates of Gross State Product (GSP) have been published
since the 1990s. The Production approach has only been estimated and published
as part of the Australian National Accounts: State Accounts (Cat. No. 5220.0) since
2007.
In developing GDP¹³ estimates for each major capital city (as defined by the capital
city statistical divisions), the Production approach is used. This is used firstly
because of the lack of data on interstate trade, and secondly because the data
available to calculate the Production approach is more robust (and hence requires
fewer assumptions to be made) than that available for the Expenditure or Income
approaches. For each industry, wherever possible, the same data sources that have
been used to produce industry Gross value added at the state level are used to
produce industry Gross value added at the city level. Some of these data sources
include:
ƒƒ Agricultural Commodities: Small Area Data, Australia (Cat. No. 7125.0);
ƒƒ Manufacturing Industry, Australia (Cat. No. 8221.0);
ƒƒ Regional Population Growth, Australia (Cat. No. 3218.0);
¹³GDP (Gross Domestic Product) refers to Australia, GSP (Gross State Product) refers to a State, while
GCP (Gross City Product) refers to a city. However, for simplicity’s sake in this paper all different
measures are referred to as GDP.
Economic Performance of Australia’s Cities and Regions
03
ƒƒ Household Expenditure Survey, Australia (Cat No. 6530.0);
ƒƒ Education and Training Experience (Cat. No. 6278.0); and
ƒƒ Labour Force, Australia, Detailed, Quarterly (Cat. No. 6291.0.55.003).
Via the use of the implicit price deflation technique, the Chain Volume Measures
of the industry Gross value added are converted into current prices. This method
overcomes the non-additivity issue with the Chain volume measure and allows
the aggregation of industry estimates of GVA to overall GDP. In order to maintain
consistency with the wider National Accounts, the Production Approach estimate of
city GDP is benchmarked to the state GDP.
For deriving labour productivity, the estimates of hours worked are taken from
Information Paper: Implementing New Estimates of Hours Worked into the Australian
National Accounts, 2006 (Cat. No. 5204.0.55.003) which provides the total hours
worked within the economy for 2004-05. The index of total hours worked from the
Australian System of National Accounts, 2016-17 (Cat. No. 5204.0) has been used to
advance the 2004-05 estimate for the years between 2005-06 and the most recent
year. This Australian total hours worked figure has then been allocated for each
industry in each capital city based on its share of total hours worked from the Labour
Force, Australia, Detailed, Quarterly (Cat. No. 6291.0.55.003).
3.1 INDUSTRY METHODS
The Gross value added for each industry for Australia is derived in the annual supply
and use tables using the double deflation technique. That is, subtracting estimates
of intermediate input from estimates of output. Where possible the same data has
been used in estimating State level industry Gross value added. The details of this
estimation method are outlined in “Information paper: Gross State Product using the
Production approach GSP(P)”. In estimating the Capital City level industry Gross value
added, where possible, the same data sources have been used. The following section
provides a summary of the data sources used to estimate Gross value added for each
industry. A quality assessment is also provided.
39
AGRICULTURE, FORESTRY AND FISHING
Method
Australian National Accounts: State Account (cat. no. 5220.0) provides a measure of
Gross value added for the Agriculture, forestry & fishing industry in State. Data from
the Agricultural Commodities: Small Area Data, Australia, 2006-07 (cat. no. 7225.0)
provides information on the gross value of agricultural production within Capital City
and Balance of the State.
The share of the gross value of agricultural production within Capital City is used to
allocate the State Gross value added figure to Capital City for 2006-07. The Capital
City share is altered in every other year using the hours worked from the Labour
Force, Australia, Detailed, Quarterly (cat. no. 6291.0.55.003).
Quality
The most reliable estimate would be for 2006-07, with the estimates based on the
labour force survey being a slightly lower quality. The 2006-07 share based on the
Agricultural Commodities: Small Area Data, Australia publication is 8.5 per cent
and the Labour Force, Australia, Detailed, Quarterly estimate is 8.3 per cent. This
indicates that the labour force survey is a good proxy of economic activity in the
Agriculture, forestry & fishing industry.
This method would be unlikely to capture head office operations of Agriculture,
forestry & fishing firms located in Capital Cities. This would have a very small
downward bias on the estimates. Due to the relatively small size of the industry in
the Capital City (0.2 per cent in 2006-07), it would have little impact on the quality of
Capital City’s GDP.
MINING
Method
The Gross value added per hour worked (labour productivity) for the Professional,
scientific & technical services industry is multiplied by the total hours worked in the
Mining industry in the Capital City. This is done as much of the Mining activity in the
Capital City is often related to head office operations. The Professional, scientific &
Economic Performance of Australia’s Cities and Regions
technical services Gross value added per hour worked is thought to reflect the type
of activities carried out by head office operations.
Quality
Due to the conceptual issues with measuring mining production associated with
city based workers and lack of data the Mining estimates of Gross value added are
considered to be of a very low quality. The method would not account for direct
mining operations (quarries, sands etc) which take place in the Capital City. This could
have a very small downward bias on the estimates. Due to the relatively small size of
the industry in Capital Cities (between 0.1 per cent and 0.4 per cent) it would have
little impact on the quality of the Capital City’s gross domestic product.
MANUFACTURING
Method
Data from the Manufacturing Industry, State and Australian Capital Territory (cat. no.
8221.1.55.001) publication provides information on the sales income share between
Capital City and the Balance of State for 2001-02. Manufacturing Industry, Australia,
2006-07 (cat. no. 8221.0) provides the sales income spilt for 2006-07.
The share of the income within Capital City and the Balance of State is used to
allocate the State Gross value added figure to Capital City for 2001-02 and 2006-07.
The Capital City share is altered in every other year using the movements in hours
worked from the Labour Force, Australia, Detailed, Quarterly (cat. no. 6291.0.55.003)
publication.
Quality
The most reliable estimate would be for 2001-02 and 2006-07 with the estimates
based on the labour force survey of a slightly lower quality. The 2001-02 income
share for the Capital City is 69.8 per cent and the labour force hours worked is 72.8
per cent. The 2006-07 income share for the Capital City is 68.6 per cent and the
labour force hours worked is 70.3 per cent. This indicates that the labour force survey
is a reasonably good proxy of economic activity in the Manufacturing industry. The
availability of detailed Manufacturing industry statistics data for 2001-02 and 2006-
07 makes the estimates of Capital City’s industry Gross value added of a good quality.
40
ELECTRICITY, GAS, WATER AND WASTE SERVICES
Method
National Gross value added for the two digit industry subdivisions from Australian
System of National Accounts (cat .no. 5204.0) and the Census two digit industry
subdivision place of work data is used to estimate an average Gross value added per
worker. The Census place of work data for Capital City and the Balance of State is
then applied to these averages. The share of the total estimated gross valued added
is applied to the Australian National Accounts: State Account (cat. no. 5220.0) Gross
value added for the Electricity, gas, water & waste services for State. This produces
an estimate for 2005-06 for Capital City and Balance of State Gross value added for
this industry. Population growth is then used to create a time series for industry
Gross value added.
Quality
The quality for the Electricity, gas, water & waste services industry estimates would
have to be seen as low. The lack of data is the key issue. The conceptual issue of
splitting Gross value added between generators / water treatment plants and
distribution networks is also challenging. The industry is estimated to represent
around 2.0 per cent of a city’s gross domestic product.
EDUCATION AND TRAINING
Method
The Australian Bureau of Statistics publication, Australian National Accounts:
National Income, Expenditure and Product (cat. no. 5206.0) provides a measure
of Gross value added for the Education industry in Australia. Government Finance
Statistics, Education, Australia (cat. no. 5518.0.55.001) is used to split the national
estimates of Education Gross value added into School & Post School Education.
Australian National Accounts: State Account (cat. no. 5220.0) provides a measure of
Gross value added for the Education industry in each State. The Survey of Education
and Training (cat. no. 6278.0) provides data on people with education qualifications,
and estimates of school aged population taken from Population by Age and Sex,
Regions of Australia (cat. no. 3235.0) are used to allocate the State estimate of
education by level to the capital city.
Economic Performance of Australia’s Cities and Regions
Quality
Given the detailed level of data being used and the fairly straightforward nature of
the delivery of education and training services (in a spatial sense) lead to the quality
of this industry estimated being classed as good.
OWNERSHIP OF DWELLINGS
Method
Average rents in Capital City and Balance of the State are derived from the Housing
Occupancy and Costs, Australia, 2005-06 (cat. no. 4130.0) publication and combined
with population data to estimate the share of Ownership of dwellings for the two
areas. This is then applied to the Ownership of dwellings Gross value added from the
Australian National Accounts: State Account (cat. no. 5220.0).
Quality
The quality of the available data and the clear conceptual boundaries lead to the
quality of this industry estimate being classed as good.
ALL OTHER INDUSTRIES
Method
In the absence of any data which would allow the share between the Capital City
and Balance of the State to be estimated, the hours worked from the Labour Force,
Australia, Detailed, Quarterly (cat. no. 6291.0.55.003) is used. The industries which
this method is applied to are:
ƒƒ ­Construction
ƒƒ Wholesale trade
ƒƒ Retail trade
ƒƒ Accommodation & food services
ƒƒ Arts & recreation services
ƒƒ Other services
For some industries one adjustment is made to the hours worked share. The hours
worked are weighted by an average wage rate for Capital City and Balance of the
State from the Census. This accounts for different economic structures within each
41
industry in the Capital City and Balance of the State. For example, in Financial & Quality
insurance services the type of activities (from basic banking operations up to hedge
funds) is much wider than in Balance of the State (where basic banking operations This method should produce reasonable estimates of the split between Capital City
are the most common activities). The industries which this method is applied to are: and Balance of the State for Taxes less subsides on products.
ƒƒ ­Information media & telecommunications
ƒƒ Financial & insurance services Aggregation of industry estimates to Gross Domestic Product
ƒƒ Rental, hiring & real estate services
ƒƒ Professional, scientific & technical services Via the use of the implicit price deflation technique, the chain volume measures
ƒƒ Public administration and safety of industry Gross value added are converted into current prices. This method
ƒƒ Health care and social assistance overcomes the non-additivity issue with the Chain volume measure and allows the
aggregation of industry estimates of Gross value added to overall gross domestic
Quality product. In order to maintain consistency with the wider National Accounts, the
Production approach estimate of Capital City gross domestic product is benchmarked
The quality of the various industry estimates would vary and should be treated with to Gross State Product. An industry weighted GDP implicit price deflator is created to
some caution but in aggregate the method should be provide a good estimate of a for the Capital City and Balance of State.
Capital City’s gross domestic product.
3.2 AREAS FOR FURTHER REFINEMENT AND RESEARCH
TAXES LESS SUBSIDES ON PRODUCTS
Methodological areas which are the subject of ongoing research and development
Method include:
ƒƒ Development of a Supply Use Table to improve editing of the city GDP estimates;
Australian National Accounts: State Account (cat. no. 5220.0) provides a measure ƒƒ Development of a Purchasing Power Parity (PPP) measure to allow better
of Taxes less subsides on products for the Agriculture, forestry & fishing industry in comparisons between the relative size of each major capital city;
each State. The Capital City share of Agriculture, forestry & fishing industry Gross ƒƒ Development of multifactor productivity estimates for each state and city; and
value added is used to split the value of Taxes less subsides on products this industry. ƒƒ Incorporation of additional industry specific data sources as they become
The residual of the State Taxes less subsides on products is then spilt using the total available.
industry value added (excluding Ownership of dwellings) for Capital City and the
Balance of State.

Economic Performance of Australia’s Cities and Regions 42

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CANBERRA HOBART MELBOURNE SYDNEY

Level 2, 28-36 Ainslie Avenue PO Box 123 Level 14, 222 Exhibition Street 209/50 Holt Street
Canberra ACT 2601 Franklin TAS 7113 Melbourne VIC 3000 Surry Hills NSW 2010
+61 2 6257 4525 +61 421 372 940 +61 3 8616 0331 +61 2 8307 0121
sgsact@sgsep.com.au sgstas@sgsep.com.au sgsvic@sgsep.com.au sgsnsw@sgsep.com.au