The Western Downs Regional Council annual economic report, released in January, provides a summary of economic and demographic information about the Western Downs Local Government Area, as well as context and analysis for the performance of the regional economy across a wide range of indicators.
The report presents comprehensive coverage and analysis of economic and business conditions for the Western Downs LGA and aims to provide timely and accurate economic data to be used by government and business organizations for planning and decision-making purposes as well as promoting the region as a place to invest and do business.
The economy of the Western Downs continued to grow at a substantial pace in 2014, signified most notably in the 8.3 per cent annual increase in gross regional product in real terms in 2013/14 to a level of approximately $3.2 billion. The Western Downs region has sustained this growth over a long period, as evidenced by an annual average rate of growth of 6.3 per cent for the five years to 2013/14, significantly higher than the rate for Queensland over the same period.
Further underlining the performance of the regional economy in recent years, under the local government growth rankings compiled by Lawrence Consulting – which take into account the average growth over the past five years across four major components of economic performance, namely population, gross regional product, employment and productivity – the Western Downs ranked first of all 78 local governments areas across Queensland.
The growth in real Gross Regional Product (GRP) in the Western Downs continues to be largely driven by the expansion of the mining industry in the region, particularly coal and coal seam gas, with the contribution made by the sector to GRP increasing at a substantial annual rate of 16.4 per cent over the past five years.
Separate analysis conducted by Lawrence Consulting to measure the impact of the resource sector boom of the past eight years on regional incomes in the Western Downs – specifically, gross regional product and GRP per capita – under both ‘with’ (including mining sector based on current contribution to GRP) and ‘without’ (where the contribution of mining is capped at 2006 levels of activity and employment) scenarios.
In 2013/14, the GRP for the Western Downs would reduce by about $600 million resulting in GRP per capita reducing from $94,738 to $76,377, a decrease of 19.4 per cent.
The population of the Western Downs region has grown by almost 3300 persons over the past five years at a faster rate than both the Darling Downs and Queensland. Despite the average age of the population actually reducing over this period, an increase in the share of the population in the 0-9 years and 65 years and over age brackets has had the effect of increasing the dependency ratio for the region by 2.1 per cent to 59.8%, higher than the average for Queensland (50.3 per cent).
This ratio is important because as it increases, there is increased strain on the productive part of the population to support the upbringing and pensions of the economically dependent.
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“The growth in real Gross Regional Product (GRP) in the Western Downs continues to be largely driven by the expansion of the mining industry in the region, particularly coal and coal seam gas…”
The labour market in the Western Downs LGA remained strong in 2014, recording a thirteenth consecutive quarter of positive annual growth in employment and continuing the low levels of unemployment (3.3 per cent) compared with Queensland and Australia.
There are more than 17,600 employed persons residing in the region, although employment did record a small decline for the first time in six quarters in December, 2014. Labour force participation remains high (67.2 per cent) above the respective average for Queensland (65.1 per cent).
Housing & Construction
Projections indicate that there will be more than 5500 new households added to the Western Downs over the period to 2036. Housing costs are more than 50 per cent lower in the region when compared to the Brisbane LGA, with a median house price of $280,000.
Despite the level of economic growth in the region in recent years, the number and value of both residential and non-residential building approvals fell significantly in 2014, indicating a slowing down of the property market.
Income & Prices
Despite the Western Downs LGA recording a significantly higher GRP per capita ($94,738) in 2013/14 than the average for Queensland ($62,361), the region has lower per capita and household income levels than both Queensland and Australia.
Given that average retail prices across the region – with the removal of housing costs – are within one per cent of those in Brisbane, the lower disposable income levels create higher costs of living pressures.
The outlook for the economy of the Western Downs for 2015 remains positive, although growth levels may not reach the benchmarks of recent years due to a number of factors.
- Slight recent weakening in the labour, specifically a drop in the number of employed persons in the September Quarter 2014. Should this trend continue in subsequent quarters it could lead to lowering of projections for economic growth and productivity in 2014/15;
- The decline in the number and value of both residential and non-residential building approvals in 2014 compared with the previous two years, effectively contracting the development pipeline with ramifications for the construction industry;
- The significant decrease in occupancy rates at tourism accommodation establishments, signifying a drop in the level of contract workers travelling to the region for work; and
- The fall in median house prices in recent quarters, although this has the contrasting effect of improving housing affordability in the region whilst also increasing rental yields and thus acting as an inducement for property investment.
Despite these concerns, the increasing level of production in the coal and seam gas industry – which is anticipated to produce in excess of 190 PJ in 2014/15 – will ensure the contribution made by the mining sector to gross regional product will remain high and maintain the high level of flow-on impact to supporting industries such as construction, manufacturing, rental and hiring services and wholesale and retail trade.
INDUSTRY FOCUS: MINING & RESOURCES
In 2013/14, the Queensland Resources Council surveyed its full member companies to identify the economic contribution of the minerals and energy sector to the regional economies across Queensland.
The analysis, conducted by Lawrence Consulting, showed that the minerals and energy sector in the Western Downs region contributed:
- $84.6 million in wages and salaries to 840 direct full time employees, with an average salary of $100,678; and
- $1,065,400 in purchases of goods and services from local businesses (including contractors), community contributions and local government payments.
Western Downs LGA recorded the sixth largest share of direct expenditure from the resource sector in 2013/14, behind Brisbane ($15.8 billion), Gladstone ($4.5 billion), Mackay ($3.0 billion), Toowoomba ($1.3 billion) and Mount Isa ($1.2 billion).
Of the top 20 LGAs for resource sector expenditure, the largest annual percentage increases in direct spending was recorded in the Western Downs (up 36.3 per cent), largely reflective of the growth in coal seam gas derived from the Surat Basin and in contrast to annual declines in other commodity types.
This $1.15 million in direct spending in the Western Downs supported:
- $1.16 million in additional supply chain purchases and household consumption; and
- $507.4 million in wages and salaries associated with a further 10,714 jobs supported in this region.
The total economic contribution (direct, indirect and consumption-induced) from the minerals and energy sector to the Western Downs LGA in 2013/14 was estimated at:
- $2.3 billion in supplying business purchases;
- $592 million in total wages and salaries paid to workers;
- $2.22 billion in value added, or 69.6 percent of total GRP for the region ($3.2 billion in 2013/14); and
- 11,554 full-time equivalent jobs, or 64.5% of the entire workforce in this region.
“Western Downs LGA recorded the sixth largest share of direct expenditure from the resource sector in 2013/14…”