GROWING MELBOURNE S NORTH

Transcription

1 GROWING MELBOURNE S NORTH DEVELOPING AN INTEGRATED ECONOMY August 2003 Report for NACC and NIETL/NORTH Link Prepared by: Craig Shepherd, National Institute of Economic and Industry Research (NIEIR) 416 Queens Parade, Clifton Hill, Victoria, 3068 Telephone: (03) Fax: (03) craigs@nieir.com.au

2 COPYRIGHT NOTICE 2003 Northern Area Consultative Committee (NACC) and NIETL/NORTH Link. This work may be reproduced in whole or in part for research or training purposes, subject to the inclusion of an acknowledgement of the source and no commercial usage or sale. Reproduction for the purposes other than those indicated above requires the written permission of the NACC. Requests concerning reproduction and copyright should be forwarded to the NACC, C/- RMIT University, PO Box 71, Bundoora, Vic DISCLAIMER Every effort has been made to ensure that this report is free from error or omission. The information contained in this report has been derived from sources believed to be reliable and accurate. However, neither the NACC, NIETL/NORTH Link nor any persons involved in the preparation of this report accept any liability whatsoever for its contents or information. ACKNOWLEDGEMENT This project is supported by funding from: the Australian Government under its Regional Assistance Programme administered by the Department of Transport and Regional Services (DOTARS); the Victorian Department of Innovation, Industry and Regional Development (DIIRD) and the stakeholders in Melbourne s North Best for Business Program. CONTACT Northern Area Consultative Committee (NACC) C/- RMIT University, PO Box 71, Bundoora, Vic 3083 Telephone: (03) Fax: nacc@rmit.edu.au Website:

3 Darebin Introduction City Council Growing Melbourne s north - developing an integrated economy, commissioned by the Northern Area Consultative Committee (NACC) and NIETL/NORTH Link, provides a detailed analysis of northern Melbourne s regional economy. Building on the NACC s Northern Regional Profile published in 2002, the report analyses a range of data and concludes that the region has the potential to achieve significant economic and social benefits if stakeholders share resources and cooperate across local government boundaries to form a discrete economic zone. It includes recommendations and benchmarks that will support growth and quality employment outcomes for the region into the future. Growing Melbourne s north - developing an integrated economy 3

4 Darebin ContentsCity Council 1. Executive summary 7 2. Introduction 8 3. Overview of the northern region Residents Infrastructure and opportunity Business Developing competitive advantage Time is the essence : changes in manufacturing employment Employment growth: How does the north compare? Residents: employment trends Background issues Local employment Working patterns Travel Manufacturing: the key to future growth Ageing Sub-regional social security trends The key to success an integrated economy Measure and compare the analytical tool Introduction Households Workplace skills Capacity Local economy Outcomes Occupational balance Opportunity cost of travel Analysis of the northern economy Introduction Households Workplace skills Capacity Local economy Outcomes Occupational balance Opportunity cost of travel Overall strength of the region 80 Growing Melbourne s north - developing an integrated economy 4

5 Darebin City Council 8. Summary of recommendations A regional economy Integration across industry sectors Manufacturing Focus local employment Supplementary section: emerging trends Introduction Future of manufacturing and industrial activity Australia s economic malaise a poor performing manufacturing sector Synchrotron Biotechnology Melbourne 2030, the activity centres, and 90 Ashlyn Enterprises Pty Ltd v Yarra CC [2003] VCAT 10. Appendices Appendix 1: Infrastructure 92 Appendix 2: Sub-regional changes in manufacturing employment 94 Appendix 3: Changes in employment since 1991, excluding City of Yarra 97 Appendix 4: Manufacturing: the key to future growth 98 Appendix 5: Social security profiles by LGA 100 Appendix 6: Classification of occupations 107 Appendix 7: Resident employment for remainder of metropolitan Melbourne 108 Growing Melbourne s north - developing an integrated economy 5

6 Darebin Acronyms City Council ABS ANZIC ASCO CBD DSP ERP ETM GDP LGA NACC NIEIR OECD SLA STRIP TCF VCAT Australian Bureau of Statistics Australia and New Zealand Industry Classification Australian Standard Classification of Occupations Central Business District Disability Support Pension Estimated Resident Population Elaborately Transformed Manufactures Gross Domestic Product Local Government Area Northern Area Consultative Committee National Institute of Economic and Industry Research Organisation for Economic Co-operation and Development Statistical Local Area Science Technology Research and Innovation Precinct Textiles, clothing and footwear Victorian Civil and Administrative Tribunal Growing Melbourne s north - developing an integrated economy 6

7 Darebin 1. Executive City Council summary The northern metropolitan region has the potential to achieve significant economic and social benefits for its community through: identification of the region as a defined economic zone development of a clearly stated and adequately resourced regional vision that places increased manufacturing employment as a central goal cooperation and development of partnerships to leverage support at all levels of government local, state and Commonwealth. Historically, the northern metropolitan region has not been built on a significant level of cooperation to drive and support economic growth. In fact, the development cycle shows activity simply moving outwards, propelled by the desire for industrial land and housing. To achieve maximum outcomes, the northern region must share its resources and cooperate across local government boundaries, as the growth potential of particular sub-regions will be relied on to provide mass employment for all in the region. The history, infrastructure and amenity of the inner areas can be harnessed to provide genuine opportunities for those further north. The growth of industry and the development of transport infrastructure, such as the airport in the outer north, provide competitive advantage. However, the region requires a network of excellent transport linkages to utilise these relative strengths and to ensure that the benefits can be shared. If the northern region does not work cooperatively within the framework of a regional economic zone, then the populations of Darebin, Moreland and Yarra will continue to access opportunities in the Central Business District (CBD) or in the inner east, and the remaining areas of the northern economy will suffer. The following recommendations are a result of the in-depth analysis that is detailed within this report and are made within a context of valuing social outcomes and community strength as well as economic outcomes. The northern metropolitan regional economy should aim for the following benchmarks by 2015: a business services sector with a size comparable to the region s share of the population local employment in government and education comparable to the region s share of the population a net exporter of education and training a significant net exporter of personal services output the shortfall in the regional share of retail employment to be reduced to zero a clear dominance in the level of advanced manufacturing maintained. The northern region has a genuine advantage in the strength of the manufacturing sector that cannot be overstated. In 1991, there were approximately 69,000 jobs in manufacturing. This has fallen to 61,600 over the past 10 years. Many jobs have been lost in the textiles, clothing and footwear (TCF) industry, however losses have also been experienced in food, ferrous and non-ferrous metals, and machinery, the sector that includes car manufacturing and associated activities. Stakeholders must work cooperatively and continue to push for the importance of manufacturing in the policy settings of the local, state and national economy. The benchmark for a more successful northern economy will undoubtedly be the growth in this sector: by 2015, the total employment in manufacturing in the northern region should be 100,000 people, a growth rate of 4.1% per annum. Growing Melbourne s north - developing an integrated economy 7

8 Darebin 2. Introduction City Council A previous NACC publication, the Northern Regional Profile, provides a socio-economic snapshot of each of the Local Government Areas (LGAs) that make up the northern metropolitan region. The profile also includes an extensive range of time series data organised under the headings of community, business, employment, education/training and investment. The report was distributed to over 200 community stakeholders and has been both a resource and a trigger for requests for further information. At forums and meetings organised to consider and discuss issues that emerge from the profile data, a number of questions were consistently raised. How should this data inform our understanding? How does this data relate to other data sets and issues? There are many issues in common across the region, how should we work together? Is there a northern economy? What does this mean for future planning? As the next step in the process to develop a comprehensive understanding of the region, the NACC, together with NIETL/NORTH Link, commissioned National Institute of Economic and Industry Research (NIEIR) to provide a detailed analysis of the northern economy to be a catalyst for discussion, strategic thinking, and formal planning and policy processes. NIEIR has completed many reports in the past 20 years that have analysed the future of various sectors and regions within the national economy. Through its work in constructing the past five State of the Regions reports for the Australia Local Government Association, NIEIR has clarified a general perception that regional development in Australia should be a critical focus. Regional differentiation is increasing. When identifying the imbalances between regions, it becomes clear that the linkages between innovation, skills, strong local employment and export-related manufacturing are emerging issues. The strength of a region s economy is often measured by the level of economic growth or the increase in its level of production, and is often compared with the performance of other regions. A region that is growing faster than others is said to be out-performing the trend or excelling. This is a classically narrow view of the world, where the impact of differing starting points is dismissed. Without an effective analysis of the economic and social base at the point of time from which growth is measured, it is unclear whether or not the outcomes are comparably favourable. Adoption of a growth-based paradigm of measurement restricts the application of a genuine vision for a community s future. If only growth is considered, especially short-term growth, it is exceptionally difficult to argue for long-term structural changes in the economy. It is difficult to promote education and training, infrastructure, regionally focused investment strategies or industry targeted assistance. In fact, if growth is the only objective of policy makers, then other objectives (such as regionally equitable outcomes and equality of opportunity and access) can be dismissed, with negative results a necessary flow-on effect of the short-term growth policies. NIEIR research shows that a short-term focus does not build regional success. Strong and sustainable outcomes are built on the direct participation of a region in local wealth creation with support from appropriate policy and planning. This report provides a detailed analysis of the northern region economy and includes: the role industry has played in the past an evaluation of recent changes in industry structure an outline of a number of national and state issues that impact on the region an evaluation of the region s success as a provider of the highest quality income and employment opportunities for its residents the strength of the region and sub-regions in comparison to the rest of Melbourne recommendations to assist the planning for the future success of the region. Growing Melbourne s north - developing an integrated economy 8

9 Darebin 2. Introduction City Council Hume (C) - Sunbury Whittlesea (C) - North Hume (C) - Craigeburn Nillumbik (S) - Balance Hume (C) - Broadmeadows Whittlesea (C) - South Nillumbik (S) - South West Moreland (C) - North Moreland (C) - Coburg Moreland (C) - Brunswick Darebin (C) - Preston Darebin (C) - Northcote Yarra (C) - North Banyule (C) - North Banyule (C) - Heidelberg Nillumbik (S) - South Yarra (C) - Richmond The northern metropolitan region has been defined for this report as the area covering the seven LGAs of Banyule, Darebin, Hume, Moreland, Nillumbik, Whittlesea and Yarra. The region covers 17 Statistical Local Areas (SLAs) as detailed. It includes areas of socio-economic contrast from high income, well qualified residents in secure and full-time employment to regions where residents have high susceptibility to change and economic stress as a result of higher unemployment, lower incomes and lower skill levels. The inner areas are facing challenging issues related to the hollowing out of employment, developing an environment for new employment options to flourish and managing future residential densities in line with the Melbourne 2030 planning strategy. The outer growth areas have major issues related to new home development, growing population and employment, transport infrastructure and managing the rural interface with metropolitan Melbourne. Growing Melbourne s north - developing an integrated economy 9

10 Darebin 3. Overview City Council of the northern region economy 3.1 Residents Of all of the sectors of the northern economy, the most important is its residents, and the diversity of the residents is one of the key characteristics of this sector. The region covers a broad geographical area, characterised by some of the oldest and newest suburbs in Melbourne. In some pockets, such as Nillumbik, the level of economic activity is subdued, while regions like Hume are bustling with activity. Estimated Resident Population YourPlace Low Series LGA Banyule (C) 118, ,000 Darebin (C) 127, ,500 Hume (C) 135, ,000 Moreland (C) 136, ,500 Nillumbik (S) 60,818 66,000 Whittlesea (C) 118, ,500 Yarra (C) 68,947 73,000 Note: Low Series 2012 is based on conservative assumptions and is influenced by current government policy Source: YourPlace 2003 database There are clear regional income differences, as can be seen in the following table. The highest income area is the Statistical Local Area (SLA) of Richmond in Yarra. Its average income per adult resident is almost twice as high as the lowest income area of Broadmeadows. Average personal Statistical Local Areas, northern region income, Census 2001 Hume (C) - Broadmeadows 19,819 Darebin (C) - Preston 20,802 Moreland (C) - North 20,973 Whittlesea (C) - South 21,786 Moreland (C) - Coburg 24,029 Hume (C) - Craigieburn 26,247 Whittlesea (C) - North 26,348 Moreland (C) - Brunswick 26,668 Banyule (C) - North 27,253 Hume (C) - Sunbury 27,436 Darebin (C) - Northcote 27,818 Banyule (C) - Heidelberg 28,814 Nillumbik (S) - Balance 28,887 Nillumbik (S) - South West 30,152 Nillumbik (S) - South 32,891 Yarra (C) - North 33,647 Yarra (C) - Richmond 34,060 Victorian average 26,161 Source: YourPlace database 2001, NIEIR Growing Melbourne s north - developing an integrated economy 10

11 Darebin 3. Overview City Council of the northern region economy 3.1 Residents continued... The immigrant background is another feature of the north in general. As shown in the following table, the northern region has 34.6% of its population foreign born. While this is slightly lower than the Melbourne average, areas such as Moreland and Darebin have foreign born rates significantly in excess of the Melbourne average. However, parts of the region in Nillumbik and Banyule have significantly lower levels of foreign born than regional averages. Foreign born, % of population Moreland (C) 39.8% Darebin (C) 39.6% Whittlesea (C) 38.9% Yarra (C) 38.6% Hume (C) 34.9% Melbourne average 34.8% Northern region 34.6% Australian average 28.1% Banyule (C) 24.5% Nillumbik (S) 18.3% Source: YourPlace database 2001, NIEIR The qualification levels of residents is another example of the diversity of the region. With a similar pattern to income difference, the SLAs in Yarra have almost three times the levels of university qualifications than the Broadmeadows region. The fast-growing areas of Whittlesea and Hume have a clear focus on vocational training qualifications. Statistical Local Areas University No quals northern region degree Diploma Vocation stated Hume (C) - Broadmeadows 15.5% 11.1% 36.2% 37.3% Whittlesea (C) - North 17.0% 11.4% 45.5% 26.1% Whittlesea (C) - South 19.6% 12.5% 38.7% 29.2% Hume (C) - Sunbury 19.6% 14.2% 43.4% 22.8% Hume (C) - Craigieburn 19.9% 12.7% 44.1% 23.3% Moreland (C) - North 20.2% 11.3% 34.9% 33.6% Darebin (C) - Preston 26.7% 12.3% 30.5% 30.5% Banyule (C) - North 29.6% 14.8% 36.5% 19.1% Nillumbik (S) - South West 29.8% 14.7% 39.8% 15.7% Nillumbik (S) - Balance 33.5% 14.9% 35.6% 16.0% Moreland (C) - Coburg 34.1% 12.0% 27.4% 26.5% Banyule (C) - Heidelberg 39.7% 12.7% 23.0% 24.7% Nillumbik (S) - South 39.9% 16.4% 27.9% 15.8% Darebin (C) - Northcote 49.7% 12.1% 18.4% 19.9% Yarra (C) - Richmond 50.1% 12.2% 15.8% 22.0% Moreland (C) - Brunswick 50.8% 11.7% 18.4% 19.1% Yarra (C) - North 57.5% 10.1% 11.8% 20.6% Victorian average 30.6% 13.2% 31.4% 24.8% Source: YourPlace database 2001, NIEIR Growing Melbourne s north - developing an integrated economy 11

12 Darebin 3. Overview City Council of the northern region economy 3.2 Infrastructure and opportunity Infrastructure is the context in which development occurs; it can further development, it can impede it, and it can be either a necessary or sufficient condition for development. The nature of the modern economy, with the dominance of footloose capital and very high hurdle rates required to attract investment, has made infrastructure of all forms increasingly important. Infrastructure can impact on a local economy by: reducing the cost of operating in a domestic market unlocking new markets catalysing innovation expanding the effective labour market expanding opportunities for individuals enhancing broad social outcomes increasing the attractiveness of a region through amenity and lifestyle characteristics. Infrastructure can have multiple impacts on a regional economy, and at times one impact may be positive at the expense of another outcome (refer to Appendix 1 for a detailed explanation of the impact of infrastructure within a regional economy). One piece of infrastructure that addresses at least five of the points raised is a university. The reason why universities are now so important is because they can simultaneously catalyse innovation, increase social outcomes, attract workforces, reduce costs of operation by increasing skills of workers, and expand opportunities for households in the area. The northern region has two well-developed universities (Latrobe and RMIT) that can achieve all of the above. Another piece of infrastructure with a significant range of positive benefits is the Tullamarine airport. Airports catalyse innovation and expand markets, and ready access to airports reduces costs for many industries. Additionally, unlike some other infrastructure, an airport is also a very large employer of the domestic workforce. Of all the growth opportunities, the airport gives this region significant competitive advantage as Melbourne has only one international airport. The recent Federal Government decision with respect to the second Sydney airport at Badgery s Creek means that developments that would otherwise have been built in western Sydney may be able to be captured by Melbourne. The Ring Road is a great piece of infrastructure that has and will continue to unlock the enormous latent demand through connections to the west. Similar opportunities exist in linking to the east and south-east. The new northern hospital in Epping is an example of infrastructure that can enhance broad social outcomes. With regard to health in the north, it is important that anticipated growth constraints imposed by Melbourne 2030 are not used as justification for reducing growth in the provision of services across the breadth of the region. In terms of opportunity creating infrastructure, education will continue to play an important role at the community level. There is enormous potential for new school developments in the growth areas to be designed with a broader vision of the role of schools in developing communities and social capital. This may involve looking at how learning resources can be brought together and shared in new ways with the community. Growing Melbourne s north - developing an integrated economy 12

13 Darebin 3. Overview City Council of the northern region economy 3.2 Infrastructure and opportunity continued... Apart from the airport and universities, the north has other advantages that could be exploited. The Hume Highway is the nation s most important overland link and provides significant current and future transport opportunities for the northern economy. The resurgence of rail, if successful, will provide opportunities in the north that others will not easily match. In addition, the recent policy changes with regard to the Melbourne 2030 planning strategy propose a higher level of population growth in regional Victoria, which is likely to increase the level of trade required between the regions and the Melbourne metropolitan area. While interstate and inter-regional transport is well served, there are local domestic linkages that require more attention. The Whittlesea Epping corridor deserves the same level of road and rail provision as the south-east of Melbourne. High frequency rail connections to Whittlesea, superior east-west connections, and a solution that enables the north to be connected to the Eastern Freeway and Mitcham Frankston Freeway are vital. The task of attracting public spending is a difficult one. Not only must infrastructure now compete for scarce resources, its rewards are not universally applicable. National Institute of Economic and Industry Research (NIEIR) recommends that key stakeholders within the regional economy focus on innovation and market expansion in the places that already have good infrastructure, while elsewhere the focus should be on amenity development and labour market access to other areas of Melbourne. Other sections of this report highlight reasons for these being important motivations. Growing Melbourne s north - developing an integrated economy 13

14 Darebin 3. Overview City Council of the northern region economy 3.3 Business For a modern economy to deliver strong employment, there needs to be a mix of small and large businesses. At its best the small business sector can deliver a highly adaptable range of services with flexible types of employment for employees and operators alike. The medium size business sector can be the innovators, with a fast-growing strong employment base, capable of providing secure employment and moderate levels of training. The large business sector is crucial for the employment of a broad range of people and skills, can provide training and career development, and has the capacity to underpin a strong export oriented economy. Small Medium Large business business business Statistical Local Areas less than more than Total northern region 10 persons persons 50 persons business Banyule (C) - Heidelberg 2, ,198 Banyule (C) - North 2, ,330 Darebin (C) - Northcote 1, ,326 Darebin (C) - Preston 2, ,556 Hume (C) - Broadmeadows 2, ,937 Hume (C) - Craigieburn ,066 Hume (C) - Sunbury ,043 Moreland (C) - Brunswick 2, ,488 Moreland (C) - Coburg 1, ,159 Moreland (C) - North 1, ,314 Nillumbik (S) - South 1, ,508 Nillumbik (S) - South West ,007 Nillumbik (S) - Balance Whittlesea (C) - North Whittlesea (C) - South 2, ,439 Yarra (C) - North 3, ,429 Yarra (C) - Richmond 2, ,776 Northern region 30,246 5, ,673 Victoria 217,386 42,654 6, ,227 Source: YourPlace database 2001, NIEIR In the northern region, large businesses play the very important role of employer, exporter and training provider. Of the 6,187 Victorian businesses employing more than 50 employees, 895 or 14.47% are located in the northern region. These businesses are mainly in the regions of Broadmeadows, Darebin and north Yarra. In some regions (such as Nillumbik), the business landscape is dominated by small businesses, the vast majority employing less than five people. The outer region of Nillumbik, referred to as Nillumbik Balance in the table above, has only one large business, yet is home to 480 small businesses. The strength in the past of the textiles, clothing and footwear (TCF) industry, the spin-off businesses and other medium size businesses in the sub-regions of Banyule and Moreland is reflected in the table above by the relatively large number of medium size businesses. The next table is based on the previous table but has been converted into the percentage share of the total firms of that particular size in each of the SLAs. These amounts can then be compared to the share of population in the region to provide a context for the levels detailed previously. Growing Melbourne s north - developing an integrated economy 14

15 Darebin 3. Overview City Council of the northern region economy 3.3 Business continued... Concentration of industry by location Small Medium Large business business business Statistical Local Areas less than more than Total Pop n northern region 10 persons persons 50 persons business share Banyule (C) - Heidelberg 1.23% 1.06% 1.21% 1.20% 1.31% Banyule (C) - North 0.94% 0.61% 0.40% 0.88% 1.16% Darebin (C) - Northcote 0.89% 0.79% 0.89% 0.87% 0.97% Darebin (C) - Preston 1.32% 1.35% 1.75% 1.34% 1.69% Hume (C) - Broadmeadows 1.05% 1.24% 2.20% 1.10% 1.40% Hume (C) - Craigieburn 0.41% 0.34% 0.53% 0.40% 0.82% Hume (C) - Sunbury 0.41% 0.30% 0.21% 0.39% 0.60% Moreland (C) - Brunswick 0.93% 0.97% 0.99% 0.93% 0.86% Moreland (C) - Coburg 0.83% 0.73% 0.70% 0.81% 1.00% Moreland (C) - North 0.53% 0.37% 0.26% 0.49% 0.97% Nillumbik (S) - South 0.61% 0.41% 0.26% 0.57% 0.60% Nillumbik (S) - South West 0.40% 0.28% 0.11% 0.38% 0.47% Nillumbik (S) - Balance 0.22% 0.12% 0.02% 0.20% 0.19% Whittlesea (C) - North 0.23% 0.15% 0.05% 0.21% 0.28% Whittlesea (C) - South 1.31% 1.18% 1.44% 1.29% 2.17% Yarra (C) - North 1.60% 1.90% 2.13% 1.66% 0.93% Yarra (C) - Richmond 1.01% 1.18% 1.33% 1.04% 0.51% Northern region 13.91% 12.97% 14.47% 13.78% 15.95% Source: YourPlace database 2001, NIEIR As mentioned previously, Hume has a high level of large business compared to its population and share of other size businesses. Growing Melbourne s north - developing an integrated economy 15

16 Darebin 3. Overview City Council of the northern region economy 3.3 Business continued... Concentrations of business by industry sector northern region Small Medium Large business business business Industries in less than more than Total northern region 10 persons persons 50 persons business Accommodation, cafes & restaurants ,085 Agriculture, forestry & fishing Communication services Construction 4, ,884 Cultural & recreational services ,102 Education Electricity, gas & water supply Finance & insurance Food retailing 1, ,466 Government administration & defence Health & community services 2, ,726 Manufacturing 2,309 1, ,619 Mining Motor vehicle retailing & services 1, ,527 Personal & household goods retailing 2, ,475 Personal & other services 1, ,821 Property & business services 6, ,750 Transport & storage 3, ,343 Wholesale trade 2, ,846 Total 30,246 5, ,673 Source: YourPlace database 2001, NIEIR The breakdown of business by industry type is detailed in the table above. There are almost 300 large scale manufacturing firms and a further 1,000 medium size businesses in that sector. Growing Melbourne s north - developing an integrated economy 16

17 Darebin 3. Overview City Council of the northern region economy 3.3 Business continued... Concentrations of business by industry sector Victoria Small Medium Large business business business less than more than Total Industries in Victoria, total 10 persons persons 50 persons business Accommodation, cafes & restaurants 6,311 2, ,572 Agriculture, forestry & fishing 19,377 7, ,780 Communication services 1, ,861 Construction 25,803 4, ,336 Cultural & recreational services 6,184 1, ,719 Education 3,697 1, ,822 Electricity, gas & water supply Finance & insurance 3, ,092 Food retailing 7,604 1, ,118 Government administration & defence Health & community services 15,779 2, ,213 Manufacturing 11,510 4,586 1,272 17,368 Mining Motor vehicle retailing & services 7,795 1, ,278 Personal & household goods retailing 14,719 2, ,981 Personal & other services 12,337 1, ,749 Property & business services 49,590 7, ,478 Transport & storage 16,417 1, ,663 Wholesale trade 14,527 2, ,852 Total 217,386 42,654 6, ,227 Source: YourPlace database 2001, NIEIR Growing Melbourne s north - developing an integrated economy 17

18 Darebin 3. Overview City Council of the northern region economy 3.3 Business continued... Concentrations of business by industry sector northern region expressed as a percentage of Victoria Small Medium Large business business business Share of businesses by industry less than more than Total and size in northern region 10 persons persons 50 persons business Accommodation, cafes & restaurants 11% 12% 10% 11% Agriculture, forestry & fishing 2% 1% 1% 2% Communication services 16% 14% 15% 15% Construction 16% 16% 17% 16% Cultural & recreational services 15% 12% 11% 14% Education 13% 16% 13% 14% Electricity, gas & water supply 8% 0% 7% 6% Finance & insurance 10% 13% 3% 10% Food retailing 15% 14% 16% 14% Government administration & defence 4% 4% 8% 5% Health & community services 15% 17% 16% 15% Manufacturing 20% 22% 23% 21% Mining 7% 6% 0% 7% Motor vehicle retailing & services 17% 13% 17% 16% Personal & household goods retailing 14% 16% 14% 15% Personal & other services 13% 15% 23% 13% Property & business services 14% 13% 11% 13% Transport & storage 19% 16% 22% 19% Wholesale trade 16% 22% 21% 17% Source: YourPlace database 2001, NIEIR The table above highlights the trends in employment and economic structure that are described within this report. The northern economy has a high number of manufacturing firms including a range of small, medium and large businesses, which accounts for approximately 21% of Victorian manufacturing firms. This compares to the northern region contributing less than 14% of all firms across all industries. Transport and storage is clearly shown to have a large role in the northern economy, with approximately 19% of all firms and 22% of large firms operating in the north. This would be expected to strengthen in the medium term. The sectors of the economy that have appreciably lower levels of business formation are in government administration and finance. For larger firms, the sectors under-represented are finance and insurance, and property and business services. Areas of the economy that would be expected to increase in the future are small and medium size businesses in the personal and other services sector. Formation of businesses of this nature, together with general retailing, will be important in trapping a higher proportion of resident income in the future, creating more local income and employment. Growing Melbourne s north - developing an integrated economy 18

19 Darebin 3. Overview City Council of the northern region economy 3.4 Developing competitive advantage Until the early 1960s, the mass urban workforce could not afford transport, so people tended to live near their work. Communities like Moreland, Darebin and Yarra developed with a mix of industry and residents. As transport costs reduced and real wages increased, the burden of transport was lifted. Employers could be confident of sourcing a workforce from anywhere within the metropolitan system. With more competitive uses for land in the inner areas, employers could lower costs and expand the scale of production by moving to greenfield sites. Traditional employment therefore moved to the periphery of metropolitan areas. This trend is changing, as individuals and their skills become important with the increasing specialisation in the workforce and reduction in the scope of mass workforce requirements. With growing traffic congestion, consideration of commuting time has increased in importance. New highskilled businesses can be positioned in easy reach of the homes of senior executives and technology workers. This a strong positive force for change in the northern Melbourne region. At the opposite end of the spectrum, the new residential regions on the outskirts of the city are still built on the premise of driving significant distances to access employment. These growth regions have very few employment opportunities, are often devoid of public transport and are not well linked to education and training. These regions will not be able to attract employment in the same way that Moreland, Darebin and Yarra did 50 years ago. A process of gentrification has occurred across the inner metropolitan regions that suffered the downturn in employment in the past, attracting people with higher levels of income and skills than those who originally lived there. With specific support from high quality infrastructure and active intervention by regional development boards and State Government, employment is now attracted back towards these regions of higher-income earners. Not all of this employment is high-skilled or business services. There are also increasing opportunities for employment in providing households with personal services and recreation within the region. NIEIR believes that these opportunities will enable the inner north to remain a region with strong local employment. Rather than simply allowing the resident construction pressures to remove employment, business growth in these industry sectors allows for an integration of household consumption and lifestyle demands and employment. The inner north can then build its capacity to export these goods and services to other areas of the metropolitan region. The eclectic nature of the northern Melbourne economy provides the perfect environment to tackle the requirements of modern business. With strong planning, exceptional outcomes should be achieved, based on development that is matched to the relative strengths of different parts of the region. The strength of the inner northern region is its integration of a range of industry sectors, the amenity and convenience of its location and great access to public transport. With this base, the employment success of the City of Yarra should be replicated in Moreland and Darebin. To facilitate this, these regions must ensure that: local amenity is a key attractor; that is, an eclectic built environment, restaurants, other entertainment and recreation options, and transport local retail and personal services supply is exceptional population growth trends are reversed in line with the objectives of the Melbourne 2030 vision; the region will then be able to accommodate very strong growth in local employment if the population densities can be further increased to obtain the necessary scale, the opportunities for the better integration of business services and a high-skilled population/workforce will be significantly enhanced through increased population densities. Growing Melbourne s north - developing an integrated economy 19

20 Darebin 3. Overview City Council of the northern region economy 3.4 Developing competitive advantage continued... The competitive advantage of the outer regions such as Hume and Whittlesea are availability of land, scale of infrastructure and transport linkages. In these respects the northern region has a definitive advantage over the vast majority of Melbourne. Recent growth in the industrial sector, eg petroleum and chemicals, machinery and equipment, construction, and advances in transport (Ring Road and increased capacity of transport stock) is fantastic news for northern Melbourne. Developing Centres of Excellence in a number of key industrial sectors is vital to the future of large scale employment in the northern region. If, however, only the industrial sector of the economy is supported or enhanced, the northern region economy as a whole will fail to meet its potential. Business services, government administration/education and retail must be supported and developed at the same time to ensure the required balance and integration is achieved to maximise outcomes. The history of the region has not been built on a significant level of cooperative economic growth. In fact, the development cycle shows activity simply moving outwards, driven by the desire for industrial land and housing. There is a great opportunity to turn around the shortfalls in a number of important industry sectors and to build on the complementary strengths of the sub-regions to gain a significant competitive advantage for the north. Growing Melbourne s north - developing an integrated economy 20

21 Darebin 3. Overview City Council of the northern region economy 3.5 Time is of the essence : changes in manufacturing employment Manufacturing employs 16.5% of residents and 21% of all full-time workers in the northern region. The value of output in manufacturing in the northern region represents 25.1% of all manufacturing in Melbourne, 19.5% of manufacturing in Victoria and a significant 7.8% of manufacturing in Australia. The past 10 years of stagnation of employment in Victoria s manufacturing sector has had a negative impact on the northern metropolitan region. The following table shows the increases and decreases in employment that have been experienced across a range of manufacturing types. There has been considerable development and growth of manufacturing in some areas and more significant decline in others. In general, industry is much stronger and better equipped than ever. However, the table below demonstrates the level of flux that has occurred in the industry (refer to Appendix 2 for detailed subregional comparisons of employment between 1991 and 2001). ANZIC Code Industry - northern region Change 21 Food 6,622 5, Textiles, clothing & footwear 17,831 10,165-7, Wood 3,320 3, Printing & publishing 4,695 4, Petroleum & chemicals 4,733 5,978 1, Non-ferrous 2,364 1, Ferrous 7,045 5,938-1, Machinery 19,166 17,986-1, Building 3,856 5,128 1,273 Total manufacturing 69,630 61,597-8,033 Source: YourPlace database 2001, NIEIR In 1991, there were approximately 69,000 jobs in manufacturing in the northern metropolitan region. This has fallen to 61,600 over the past 10 years. Just over 7,500 jobs have been lost in the TCF industry (refer to Section 9.3 for a more detailed discussion of the industry). However, loss has also been experienced in food, ferrous and non-ferrous metals and machinery, the sector that includes car manufacturing and associated activities. Significant growth has been experienced in the petroleum and chemicals sector along with the building sector, although much of the latter is likely to be related to cyclical issues. It is worth remembering that 1991 employment was measured in a period of historically high levels of unemployment as the economy lurched into recession. Planning to manage these changes occurring across the region is critical because of the rapid way in which the city is evolving. Time is of the essence. With the new Melbourne 2030 strategy, the focus is on how parts of the city can attract people and increase densities. The north needs to make sure that the reduction in manufacturing leads to the creation of new opportunities in all areas of the inner north so that people living in the outer northern areas have the same access to jobs as those in the rest of the region. The opportunities, however, will not be around for long, as the forces for residential consolidation are ever increasing. In a political environment that is still hostile to high density living, the easiest way to increase the total population of areas of such as Moreland, Darebin and Yarra is to allow the conversion of employment areas into low density residential areas (refer to Section 9.6). Growing Melbourne s north - developing an integrated economy 21

22 Darebin 3. Overview City Council of the northern region economy 3.5 Time is of the essence : changes in manufacturing employment continued... A second critical force for managing the change relates to the extremely strong growth of the competing Asian economies. Unless competitive advantages in the areas of elaborately transformed manufacturing are developed in the next five to 10 years, the importance of this historical capacity will seem irrelevant. The connections between supplies and customers, the technical and design skills of the workforces and the incredible capital applied to manufacturing will have dissipated. The chances of competing with these growing Asian economies will be reduced and the capacity of the north to provide large scale local employment will be diminished. Growing Melbourne s north - developing an integrated economy 22

23 Darebin 3. Overview City Council of the northern region economy 3.6 Employment growth: how does the north compare? As shown in the previous section, the northern metropolitan economy is subjected to external forces in the same way as all regions. Trends in Victorian, Australian and international industries impact on the viability and employment capacity of all areas. The following two tables compare the local employment performance. Victorian totals Change Growth p.a. Industry Agriculture 77,502 73,996-3, % Mining 6,097 4,318-1, % Manufacturing 322, , % Utilities 28,468 13,087-15, % Construction 110, ,491 29, % Wholesale trade 114, ,364 3, % Retail trade 248, ,458 60, % Accommodation, cafes & restaurants 64,647 93,353 28, % Transport & storage 78,812 79,992 1, % Communications 39,009 42,435 3, % Finance & insurance 89,856 83,298-6, % Real estate, property development & leasing 23,072 25,868 2, % Technical business services 120, ,568 94, % Government & defence 101,509 62,151-39, % Education 133, ,653 17, % Health & community services 165, ,065 40, % Recreational 32,556 53,928 21, % Personal services 58,042 70,625 12, % Total employment 1,813,919 2,064, , % Source: YourPlace database 2001, NIEIR Growing Melbourne s north - developing an integrated economy 23

24 Darebin 3. Overview City Council of the northern region economy 3.6 Employment growth: how does the north compare? continued... Northern region totals Change Growth p.a. Industry Agriculture 1,022 1, % Mining % Manufacturing 69,630 61,597-8, % Utilities 2,398 1,113-1, % Construction 15,013 19,582 4, % Wholesale trade 18,192 19, % Retail trade 33,417 42,083 8, % Accommodation, cafes & restaurants 6,042 10,697 4, % Transport & storage 11,236 14,582 3, % Communications 3,972 3, % Finance & insurance 6,293 4,995-1, % Real estate, property development & leasing 2,847 3, % Technical business services 11,825 22,258 10, % Government & defence 9,807 5,961-3, % Education 17,966 20,354 2, % Health & community services 28,307 37,985 3, % Recreational 3,474 6,269 2, % Personal services 8,484 9, % Total employment 250, ,254 28, % Source: YourPlace database 2001, NIEIR Through comparison of the two previous tables, the following key issues are noted. Employment in the northern metropolitan region grew slower than the Victorian average. Technical business services grew faster than the state average, with an additional 10,000 jobs created. Although the original level was low, on a comparative basis this trend adequately illustrates the capacity of the region to continue to build business services, given the appropriate environment and planning considerations. Health and community services grew at approximately half the rate of Victoria. Considering the region had a low base level of provision in 1991, and some areas have experienced strong population growth, this is a clear demonstration of public policy failure. The absence of government administration was exacerbated in the period 1991 to Despite having a very low base level of employment in this sector in 1991, the region suffered declines in employment similar to the rest of the state. There are significant differences in the structure of the economy of the City of Yarra as compared to the remaining Local Government Areas (LGAs). These differences can often distort the analysis. For instance, the growth in business services has been especially strong in Yarra, which can tend to overstate the general growth in the region in this sector. For this reason, the table above has been replicated without the City of Yarra data (refer to Appendix 3). Growing Melbourne s north - developing an integrated economy 24

25 Darebin 3. Overview City Council of the northern region economy 3.7 Residents: employment trends For reference, the current employment position of northern region residents by industry is presented in the following table, along with the hours worked in each. The results are expressed as a percentage of total workers who live in the area. Northern region resident employment Over by industry & hours worked <35hrs 35-50hrs 50hrs Total Agriculture 0.20% 0.23% 0.08% 0.51% Mining 0.02% 0.08% 0.02% 0.13% Manufacturing 2.71% 12.04% 1.69% 16.45% Utilities 0.06% 0.33% 0.06% 0.45% Construction 1.33% 4.36% 0.84% 6.54% Wholesale trade 1.03% 3.63% 0.62% 5.28% Retail trade 9.04% 7.54% 1.87% 18.45% Transport & storage 1.01% 2.76% 0.74% 4.52% Communication 0.47% 1.70% 0.24% 2.40% Finance & insurance 1.05% 3.16% 0.41% 4.61% Business services 3.55% 7.42% 1.55% 12.52% Government, administration & education 3.72% 6.39% 0.97% 11.08% Health & community services 4.79% 4.78% 0.62% 10.20% Cultural & recreational services 1.37% 1.24% 0.27% 2.88% Personal services 1.12% 2.02% 0.34% 3.49% Non-classifiable economic units 0.18% 0.26% 0.05% 0.50% Total 31.65% 57.97% 10.38% % Source: YourPlace database 2001, NIEIR Clear trends from the table above are the importance of manufacturing employment and business services to residents. Other points to note include the following. There is a relatively high level of employment in government administration and education despite the relatively low level local employment; that is, residents access these jobs by travelling out of the area. There is a high degree of casualisation in retail trade, with 9.04% out of a total of 18.45% of the retail workforce employed part-time. A high degree of casualisation and exposure to retail employment has the following implications. If the only people who were accessing this employment were those for whom such employment was conducive to expectations and circumstances, then it would have little impact. If, however, there is a high number of young people without other education opportunities accessing such employment, this will indicate a future weakening of the income potential of the region. Similarly, if the percentage of older people for whom no other alternatives exist in employment are accessing this low paid retail part-time work, then the prospects for deriving sustainable retirement income are small. Growing Melbourne s north - developing an integrated economy 25

26 Darebin 3. Overview City Council of the northern region economy 3.7 Residents: employment trends continued... Fundamentally, this sector is completely exposed to the performance of the remaining sectors of the northern economy. Suddenly, 10% of the region s employment is dependent on the income of the region s workers in other industries. If this proportion becomes too high, there is insufficient scale of other employment to protect retail employment, and these workers have very small capacity for real income growth. In the medium term, the outlook for retail employment is very poor. This compares to the relatively low levels of casualisation in manufacturing. Refer to Appendix 7 for resident employment for the remainder of metropolitan Melbourne. Growing Melbourne s north - developing an integrated economy 26

27 Darebin 4. Background City Council issues A number of social and economic issues and trends inform the analysis of the northern region economy. The major issues are described in this section and provide a context for consideration of the analytical tool described in Sections 6 and Local employment The economy of the northern metropolitan region has a large employment base that serves households from both within and external to the region. National Institute of Economic and Industry Research (NIEIR) recommends that policy and planning should focus on the growth of local employment, as this strategy has a number of positive impacts. If the population of the region is assumed to be constant, then an increase in local employment has the following effects. An effective increase in income of the region as travel costs are reduced; it can be assumed that local residents will access these jobs at least at the rate of past local employment. In addition, with the creation of more local jobs, residents will be encouraged to move back into local employment. The stimulus that would not otherwise exist provides tertiary or services employment, promotes education and training and facilitates community development. The bigger the scale of local employment and therefore local demand from the mix of residents and workplaces, the broader the types of services that will be offered. The combination of stronger infrastructure and scale leads to increases in education and training options. In general, the most vibrant local outcomes will be achieved when the employment outcomes are the strongest. However, in regions of exceptionally high incomes, local employment is not required to develop these features because the incomes of the residents alone generate sufficient demand. Growing Melbourne s north - developing an integrated economy 27

28 Darebin 4. Background City Council issues 4.2 Working patterns The importance of local employment will increase in the next 25 years due to changes in demographics and working patterns. The nature of employment has changed in Australia over the past 20 years, and a number of trends need to be taken into account in forecasting employment. In summary these trends are: the growth in double income households development of social infrastructure that increasingly enables mothers to reconcile work with the raising of children increases in part-time, casual, contract work and other flexible work practices ageing of the population, and increasing participation rates through to the age of 70 years. At the same time, people are choosing to live in smaller households as a result of decreasing fertility, higher divorce rates and lower mortality. The reduction in household size is seen in the following graph. Reduction in average household size Victoria Source: YourPlace database 2001, NIEIR The combination of these forces (that is, more people wanting to work, lower household size and an increase in part-time jobs) results in a larger number of jobs per head of population being required in most areas of Sydney and Melbourne. Depending on the number of hours available for work in the economy, this leads to changes in the average hours worked. Growing Melbourne s north - developing an integrated economy 28

29 Darebin 4. Background City Council issues 4.3 Travel The social fabric has changed along with these work practices. The somewhat outdated stereotypical scenario of a single income, work from nine to five and a once-weekly grocery shopping trip seems to have been permanently transformed by the intense focus in today s society on flexibility. This flexibility extends beyond work patterns to also include social and retail patterns. Industries have in part driven changes and in part adapted to the demands to accommodate such practices, for example, 24 hours a day/seven days a week production schedules. Extended trading hours and the concentration of social activities within the metropolitan region have dramatically increased the levels of travel trips generated by households. These forces focus the household more clearly than ever before on minimising the household s total travel task. Travel and associated opportunity costs become significant issues for forecasting future land use patterns. Those regions that have not concentrated on increasing local employment supply and therefore decreasing travel costs, including time lost, will be subject to the greatest falls in real incomes and the highest rates of effective unemployment. For Moreland, Darebin and Yarra, significant advantage with respect to lifestyle (eg cultural and restaurant/cafes) and city based work already exists. When combined with a greater emphasis on local employment and retail, the virtuous 1 cycle of development based around locational advantage becomes significant. 1 Virtuous cycle NIEIR uses this term to mean having virtue and a cycle with outcomes that continue to grow, ie an in-built multiplier. Growing Melbourne s north - developing an integrated economy 29

30 Darebin 4. Background City Council issues 4.4 Manufacturing: the key to future growth Historically, the manufacturing sector has provided significant employment for the northern region. Manufacturing continues to be important and has an additional crucial component export capability. Since the early 1990s, a strong level of domestic demand has driven growth. NIEIR believes that much of this growth was debt-financed and unsustainable, and therefore it is likely that considerable contraction in the growth driven by domestic demand will occur in the future. Regardless of the accuracy of forecasts in this respect, two issues are clear. Construction and retail are unlikely to grow at the same rate as the period 1991 to 2001, and a focus on international export markets mitigates exposure to domestic demand. The strength of manufacturing in Australia is that it is genuinely export-oriented. The degree to which the northern region economy does not focus on developing export capability is the degree to which it will fail to thrive as a regional economy. Exports should never be under-estimated in importance; they represent almost free income to the region. Building an economy that is export-driven makes sense to regions with lower than average socio-demographic fundamentals because it removes future income from the domain of local incomes. Export income has a number of clear advantages over other activity. It is intensively competitive; either the exports are both the cheapest and best or they will be sourced elsewhere. This drives innovation, as the region s businesses strive to stay in front. Exports are likely to be driven by factors outside of domestic demand; this allows export income to continue to grow when domestic factors are not favourable. In general, the market of the rest of the world is enormous compared to the domestic market; therefore an increase in the share of the world market can provide growth that the domestic market could never provide. The market for export goods can be completely different to the local market. For instance, goods that are too expensive for the local market can be produced at a significant margin. This increases local income without any negative impacts on the local area. NIEIR has developed a simulation to illustrate the impact that the future of manufacturing will have on the sub-regions of the northern economy (refer to Appendix 4 for details of the analysis). It is clear from this simulation that manufacturing is very important to the northern region, with up to 91% of potential growth in the Hume (C) Broadmeadows region contributed by this sector. In subregions of Moreland and Whittlesea, manufacturing contributes significantly to growth and economic outcomes. Other regions of interest are presented for comparison and include the wealthier areas to the west and the inner eastern regions of Melbourne. The analysis demonstrates that the future of the northern economy is linked to national export potential. While the region does not mine the resources or grow the wool, the manufactured goods component of exports is crucial to the success of the region. Policy development and planning must support the export of manufactured or value-added goods. With this focus, if Australia thrives in the world economy, so should the northern economy of Melbourne (refer to Section 9.2). Growing Melbourne s north - developing an integrated economy 30

31 Darebin 4. Background City Council issues 4.5 Ageing Ageing, northern region & Victoria Source: YourPlace database 2001, NIEIR An issue of significant importance to the nation as a whole is ageing. With the ageing of baby-boomers impacting on the economy, together with low levels of immigration and fertility, the consequent greying of the nation is well understood. All things being equal, the northern economy should be wellplaced in terms of this trend. The region is not exposed to a relatively high level of aged persons at present, and with the expected growth in population through new housing to be substantial in the next 30 years, it is unlikely the level of ageing will be in excess of Victorian average levels as illustrated in the previous figure. The regional impact of ageing will be a function of housing and retirement income policy, which has such a high level of uncertainty that analysis is reduced to rank speculation. Two possible scenarios include: significant increases in labour force participation by those over 65 years, providing higher incomes and extended links to original communities of residence; increased flexibility of employment and incomes policy to match expectations of service delivery, predominantly health but perhaps recreational, infrastructure and housing property prices and poor taxation policy contributing to a significant movement of elderly residents to disparate parts of Australia, with each destination suffering terribly through the lack of provisioned services and infrastructure. As is evident from these extremes, the anticipated impacts on the northern metropolitan region will also vary widely. NIEIR believes that a mix of the two is likely. Regions that demonstrate the highest levels of innovation, creativity and skills intensity are likely to perform more in the manner of the first scenario, with regions that fall into the trap of domestic oriented activity facing the forces of the second scenario. Growing Melbourne s north - developing an integrated economy 31

32 Darebin 4. Background City Council issues 4.6 Sub-regional social security trends The strength of the economy can be measured by its success in employment and incomes and also by its failures. NIEIR analyses social security information to determine the levels of regional social distress in a number of key areas. Measures developed include: NIEIR effective unemployment This measure is an estimate of the level of unemployment in the region, and takes into account benefit recipient numbers and changes in benefits assignment over time to present a more reliable estimate of regional unemployment than provided by the Department of Employment and Workplace Relations. NIEIR non-job ready This measure includes a broad range of recipient types in order to ascertain the number of people for whom moving back into employment would represent the breaking down of significant hurdles. The term non-job ready refers to the fact that most of these people could not readily accept employment at short notice Measurement of social security trends Three important trends or developments in the determination of unemployment have prompted the need for a new measure of unemployed. 1. Significant growth in the number of recipients of Disability Support Pension (DSP) between 1991 and NIEIR believes that a significant number of these people should be considered unemployed. 2. Through benefit reclassification of youth, the numbers of young people considered unemployed is hidden in the general benefit type Youth Allowance. The activity requirements of this benefit leads to an underestimation in official estimates. 3. The labour force survey question that determines official unemployment is too narrowly defined and has the result of determining a large number of people that actually received unemployment benefits as being employed. NIEIR Effective Unemployment = ( Newstart + Mature Age Allowance + Excess growth in DSP + Estimate of unemployed youth Adjusted Labour Force = Official Labour Force + ( Excess growth in DSP ) ) To estimate how large the true or underlying unemployment rate for a region would have been if the increase in the number of people receiving the DSP had not occurred, NIEIR has reconstructed a series called an effective unemployment rate. To derive the corrected unemployment, the first step is to take out the effect of the increase in disability support pensioners on the labour force. The DSP changes have made the labour force smaller. The adjusted or effective labour force is equal to reported size plus the number of people who have been put on disability support pensions who otherwise would not have been. To determine who would or would not have previously classified as qualifying for DSP, an assumption has been made about each region. It has been assumed that the proportion of the population in 1991 that received the DSP is the best representation of the proportion of that population who would receive it in the long run, ie the proportion of people within the population who are receiving DSPs is assumed to remain fixed. Growing Melbourne s north - developing an integrated economy 32

33 Darebin 4. Background City Council issues Measurement of social security trends continued... Therefore, it has been assumed that the number of DSP recipients in 1991 will only grow as fast as population growth in that region. Any growth in DSP over and above that amount is assumed to be excess growth. Of course, a region may have slower growth in DSP than population growth. In this case the excess growth will be negative, and will be allowed to have positive impact on corrected unemployment. As can be seen in the table below, the levels of effective unemployment have remained quite high since 1996, despite the growth in the economy and employment as shown previously (refer to Appendix 5 for a more detailed set of figures at the sub-regional level). Effective unemployment levels Hume (C) 3,964 6,937 7,604 7,891 8,283 8,276 Banyule (C) 3,033 4,510 4,876 4,601 4,304 4,007 Darebin (C) 6,548 9,531 9,905 8,748 8,537 7,661 Moreland (C) 6,439 9,983 10,077 8,492 8,103 7,621 Nillumbik (C) 971 1,381 1,368 1,325 1,175 1,087 Whittlesea (C) 3,519 5,833 6,538 6,891 6,762 6,504 Yarra (C) 4,812 6,211 6,105 4,795 4,362 4,066 Total 29,286 44,386 46,473 42,743 41,526 39,222 Source: YourPlace database 2001, NIEIR The following figure is provided as a comparison between the NIEIR rates of unemployment and the official rates as reported by the Australian Bureau of Statistics (ABS). 11% Comparison of official / NIEIR unemployment Australia 10% 9% 8% 7% 6% 5% Effective unemployment rate Official unemployment rate Source: YourPlace database 2001, NIEIR Growing Melbourne s north - developing an integrated economy 33

34 Darebin 4. Background City Council issues Non-job ready The level of non-job ready is determined by considering the levels of DSP recipients, long-term unemployed, single parents who have restricted access to labour market opportunities and the number of migrant unemployed who experience multiple barriers to re-entering the workforce. This provides a measure of the degree to which structural barriers are present in a region. (Long-term unemployed + DSP * Single Parent * Migrant unemployed) %NJ = Population The measure is important as, while the short-term unemployed rate can be an indicator of labour availability, it only represents a small part of the total potential labour force. Because the unemployment rate includes only those actively looking for work (those participating in the labour market), it misses a large group of the population. One reason for not participating in the labour force is the perceived inability to find work (either search costs are too high, anticipated pay rates are too low or there is a lack of available positions). Those who have retired from the workforce or are partners who have chosen to manage household affairs, are others who are said not to participate in the workforce. A third group that does not participate are those with structural barriers to finding employment. Simple market mechanisms (such as new employment opportunities) cannot change the situation for those unable to readily move into work. The long-term unemployed often need retraining, single mothers need changes to childcare provisions, and those receiving DSPs require more integrated employment opportunities that reflect their capabilities. When the region is being assessed for sustainability of growth opportunities, the number of non-job ready is crucial for that determination. When regions face a high level of short-term unemployment coupled with a high degree of non-job ready, households face a high level of employment stress. The following table presents the levels of non-job ready in the region. Non-job ready rate Hume (C) 8.60% 11.69% 13.07% 13.32% 13.49% 13.03% Banyule (C) 5.66% 7.80% 8.65% 8.60% 8.25% 7.93% Darebin (C) 11.59% 15.31% 17.01% 16.06% 15.77% 14.81% Moreland (C) 11.20% 14.83% 16.35% 15.14% 14.67% 13.72% Nillumbik (S) 3.16% 4.08% 4.37% 4.41% 4.04% 4.08% Whittlesea (C) 7.82% 10.82% 12.22% 12.59% 12.30% 11.71% Yarra (C) 12.62% 15.24% 16.42% 14.44% 13.65% 12.96% Total 9.07% 11.95% 13.21% 12.71% 12.40% 11.80% Source: YourPlace database 2001, NIEIR With almost 12% of the population aged 18 to 65 being non-job ready, unemployment and structural unemployment are very important issues. Any analytical tool developed or policy objective implemented must seek to address these issues. Clearly one of the paths to a more successful economy is linked to regional capacity to better utilise the latent potential of this large group of people. Growing Melbourne s north - developing an integrated economy 34

35 Darebin 5. The key City to Council success an integrated economy One of the paradoxes of the new knowledge economy is that proximity has remained a key strategic advantage. Despite the fact that information and goods are transported further and faster than ever before, there are significant advantages for businesses working in clusters of like industries. Another key strategic advantage is to be located close to a high-skilled workforce. The success of the manufacturing sector and the wellbeing of households in general is dependent on the ability of the region to develop modern complex supply chains and provide connected business services and high-skilled workers. A strong interconnected and effective supply chain requires that each of the many components in the chain, and preferably those that provide the strongest employment and incomes, needs to be large enough to contribute to the chain s strength, resilience and knowledge integration. In a successful supply chain, the transfer of risk and information along the chain is accentuated in order to provide higher quality outcomes. In turn, the connections drive the relative competitiveness of products produced in these environs vis-à-vis those produced in comparative isolation. When the complex supply chain is further supported by a population and an environment that is invigorating and vital, the real cost of providing the complexity is reduced. Consider an outback mining community, which is the epitome of a well structured but not complex supply chain; intermediate goods, labour and personal needs are all supplied in-house. The problem is that in such an environment the cost of providing workers is enormous, as is the cost of ensuring that the supply chain is kept stable. Compare this to a firm in the region of Ryde in Sydney; it too needs ready access to intermediate goods, but is in close proximity to a large number of firms possibly competing to provide goods. The firm would also need skilled workers, who in turn would require appropriate amenity to meet their personal needs. However, instead of having a high cost of providing this chain, the firm in Ryde is provided with this support at no additional cost. To develop a complex supply chain and achieve strategic advantage, a range of economic activities must be provided within a region. National Institute of Economic and Industry Research (NIEIR) research shows that, while economic theory suggests a region should concentrate on only what they are good at, the regions with the best employment and incomes have a healthy mix of manufacturing, retail, government and business services. In the analytical tool applied in subsequent sections, the level of integration will be an important component. From national research, NIEIR has identified a number of regions that have strong economic outcomes. Analysis of these regions provides a wealth of information that points the way forward for the northern region. These regions are evolving concentrations of activity in the four key areas of economic development: quality manufacturing business services retail government administration and education. One of the strongest performing regional economies surrounds Ryde in Sydney because it provides a strong mix of manufacturing, business services, retail and government administration and education. In this area, Macquarie University is located in close proximity to a large retail complex and a high-tech park with tenants including Compaq and Microsoft along with high-tech manufacturing businesses. Growing Melbourne s north - developing an integrated economy 35

36 Darebin 5. The key City to Council success an integrated economy Another region developing economic integration quickly (and consequent healthy economic outcome) is the eastern region formed along the path of the Mitcham Frankston (Scoresby) Freeway corridor. This region has healthy levels of activity in each of the key areas. An illustration of the region is shown below along with key high-tech sites of interest in Melbourne. 1. La Trobe Research Estate 2. Tullamarine International Trade Park 3. Southport Technology Park 4. Portside Business Park 5. Wellington - Gipps 6. Hawthorn Technology Centre 7. Highbury Rise 8. Tally Ho Technology Park 9. Monash Business Park 10. Monash Science & Technology Park 11. Berwick Business Park 12. La Trobe University Research Park Salmon Street, Port Melbourne 14. Monash Gateway Church Street, Richmond 16. Woodvale Source: NIEIR The eastern region is achieving very strong economic growth, strong employment growth, higher than average skilled employment and rising incomes. Most importantly, the region is becoming a viable location for future high-tech business to locate in a non-central Business District (CBD) region. The addition of the new Mitcham Frankston Tollway will further enhance the connections between the region and the manufacturing centres to the south of Dandenong as well as the workforce in the northeast from Doncaster and Templestowe through to the north of Ringwood. Given the current size of the northern economy (that is, large enough to be considered an economic zone), the rapid degeneration of manufacturing in the inner areas and the significant anticipated population growth, it is imperative for the region to act as an integrated economy. In a non-cooperative scenario, the success of the manufacturing sector in the north could continue and perhaps provide 20% of the local employment needs. However, the level of success would be stifled by limited access to business services. The region would continue to face deficient provision of government services locally, and a constrained retail sector. Growing Melbourne s north - developing an integrated economy 36

37 Darebin 5. The key City to Council success an integrated economy If, on the other hand, there was a significantly increased level of employment in high-skilled manufacturing, this would stimulate growth in business services and perhaps government and education. Furthermore, well-integrated supply chains would increase the value created at all stages of production and contribute to strong real income growth. This of course provides additional retail spending potential, which will drive further expansion of retail output. Juxtapose this scenario to one in which growth is driven by increasing income of those workers living in the north and working elsewhere. Undoubtedly, retail in the north would grow, but to a lesser extent because a large component of retail spending is linked to broader economic activity. But how would this increase in income drive other types of employment such as manufacturing or business services? It would not; these positions would simply grow in the areas that the north's workers travel to. If the advantages of amenity and scale of the activity centres located in the inner regions are not maximised through increasing employment, the populations of Moreland, Darebin and Yarra will continue to access opportunities in the city or in the inner east, and the remaining areas of the northern economy will suffer. The amenity relates primarily to access, diversity of opportunities and the eclectic nature of the built form. The eclectic nature of these inner suburbs provides for many forms of individual and organisational expression. In other ways it will also allow for a density that could not be achieved as easily in a homogenous suburban context. Scale is related to the concentration of population, the network of public transport and proximity to the key education region of Parkville. It is true that there is tension between additional residents being attracted to the inner region and finding jobs for those that are already there. However, the alternative is not simply less people and more opportunities for the current population. Without growth, increased population and utilisation of the amenity of the inner northern region, the employment per population may actually be lower. The northern metropolitan region has the potential to achieve significant economic and social benefits for its community through: the identification of the region as a defined economic zone development of a clearly stated and adequately resourced regional vision that places increased manufacturing employment as a central goal. Stakeholders then have an agreed framework to work in partnership to seek a commitment to regional development from all levels of government to put in place appropriate policies and resource allocation. Tying economic growth, industry development and regionalism together will develop far-reaching outcomes that have a multiplier effect throughout the community as all elements of a healthy economy are realised. Growing Melbourne s north - developing an integrated economy 37

38 Darebin 6. Measure City and Council compare the analytical tool 6.1 Introduction In order to measure and analyse the strengths and weaknesses of a region, National Institute of Economic and Industry Research (NIEIR) has developed a series of economic indicators based on data collected across time and from a variety of sources. These indicators are grouped under broad headings and are described both in brief and in detail in this section. Each group of indicators relates to a critical component of a region s employment strength or productive capability and represents a path to improving outcomes for the region. The indicators are unequivocally positive in orientation; that is, all others things held equal, an improvement in an indicator will lead to an improvement across the region s economy. The economic indicators that make up the analytical tool fall into broad groupings as shown in the diagram below. NIEIR describes this diagram as a road map, because economic and social outcomes are dependent on the various characteristics described and measured, with planning and policy decisions impacting on the future success of the regional economy. Road map of the economic indicators REMAINING ECONOMY Workplace skills: 21st century skills Skills sustainability LOCAL ECONOMY Opportunity cost of travel time HOUSEHOLDS Occupational balance Households: High-skilled residents Exposure to low skills Non-job readiness Outcomes: Labour utilisation Productivity Capacity: Manufacturing, retail, government & education, business services Local economy: Creativity Local employment capacity Employment generation ratio High-tech capacity Power employment Growing Melbourne s north - developing an integrated economy 38