New SOUTHERN DOWNS ECONOMIC COMPARISON · 2018. 11. 9. · 2 SOUTHERN DOWNS REGIONAL COUNCIL | ECONOMIC COMPARISON Labour Market •he unemployment rate in the Southern Downs region

SOUTHERN DOWNSECONOMIC COMPARISON

SOUTHERN DOWNS REGIONAL COUNCIL | ECONOMIC COMPARISONi

ContentsTable of Contents i

Economy 1

Gross Value-Add by Industry 1

Labour Market 2

Building Approvals 4

Cost of Doing Business 6

Average Weekly Wages 6

Industrial Property 7

Commercial & Retail Property Costs 8

Construction Costs 9

Electricity Costs 9

Water Costs 10

Hypotheticals 10

References 13

Gross Value-Add by Industry

SOUTHERN DOWNS REGIONAL COUNCIL | ECONOMIC COMPARISON 1

• As an agricultural hub, the Southern Downs region is highly specialised in agriculture and the direct flow-on food product manufacturing and transport sectors. Agriculture is by far the largest sub-industry by gross value-add in the Southern Downs region, contributing $283.1 million to the regional economy in 2016-17.

• This equated to 18.4% of total gross-value add, significantly higher than the Queensland average for the sub-sector (3.2%).• Further, the ‘food product manufacturing’ (4.8% of total gross value-add) and ‘road transport’ (4.1%) are key contributors to

the Southern Downs region’s economy, particularly when compared to the State average contribution for these sub-industries (1.9% for both).

Source: NIEIR (2018)

Figure 1.1 Gross Value-add by sub-industry, Southern Downs, 2016-17

EconomyThe Southern Downs regional economy has competitive strengths in agriculture, food product manufacturing and transport/logistics, relative to other regions within South East Queensland. The local workforce of almost 17,000 people appears more stable than competing areas and has the highest proportion of workers in food manufacturing and road transport compared to other parts of South East Queensland.

SOUTHERN DOWNS REGIONAL COUNCIL | ECONOMIC COMPARISON2

Labour Market

• The unemployment rate in the Southern Downs region has been lower than the South East Queensland and Queensland averages for the majority of the past seven years.

• However, more recently the Southern Downs’ unemployment rate has risen sharply, up from 3.8% in Septem-ber quarter 2016 to 6.0% in June quarter 2018, in line with the Queensland average for June quarter 2018.

• The rise in the region’s unemployment rate has coincided with a decline in employment in the region, falling from 16,700 persons in September quarter 2016 to 15,934 in June quarter 2018.

• Employment in the Southern Downs region has begun to grow in recent quarters, however employment growth in the region over the year to June quarter 2018 (1.6%) was significantly slower than the rapid employ-ment growth experienced in both South East Queensland (4.6%) and Queensland (4.1%).

Source: DJSB (2018)

Figure 1.2 Labour Force, Southern Downs

• By sub-industry, the ‘food product manufacturing’ and ‘road transport’ sub-industries employed 5.2% and 3.7% of total employment within the Southern Downs region in 2016, respectively.

• Both sub-industries contributed a significantly higher proportion of total employment than other South East Queensland comparison regions in 2016, showing that these sub-industries are well established in the Southern Downs region.

Note: Place of work data Source: ABS (2017)


Figure 1.3 Food Product Manufacturing Employment, 2016

Figure 1.4 Road Transport Employment, 2016

Note: Place of work data Source: ABS (2017)

Building Approvals• The unemployment rate in the Southern Downs region has been lower than the South East Queensland and

Queensland averages for the majority of the past seven years.• However, more recently the Southern Downs’ unemployment rate has risen sharply, up from 3.8% in September

quarter 2016 to 6.0% in June quarter 2018, in line with the Queensland average for June quarter 2018.• The rise in the region’s unemployment rate has coincided with a decline in employment in the region, falling from

16,700 persons in September quarter 2016 to 15,934 in June quarter 2018.• Employment in the Southern Downs region has begun to grow in recent quarters, however employment growth in

the region over the year to June quarter 2018 (1.6%) was significantly slower than the rapid employment growth experienced in both South East Queensland (4.6%) and Queensland (4.1%).

Figure 1.5 Building Approvals, Southern Downs Regional Council

Source: ABS (2018)


• At a regional level, this rapid growth in business construction activity is exceeding growth at the regional and state level.• On a per capita basis, investment into commercial and industrial facilities in the Southern Downs Regional Council area are greater than at the Greater Brisbane and State level.

Figure 1.6 Non-Residential Building Approvals

Source: ABS (2018)

Development Approvals

While building approval values may increase or decrease in any given year, it is often the efficiency at which a local government can process a development applications that is important for investment attraction. Over the last three quarters, the Southern Downs Regional Council has been able to turnaround development application for a material change of use in an average of 18 business days. Building approvals have been turned around in an average of 13 business days. This rate of efficiency would be one of the highest in South East Queensland.


Cost of Doing BusinessThe Southern Downs region has lower costs compared to other parts of South East Queensland. Wages, land cost and lease rates, electricity and water costs are all generally lower than other business destinations within South East Queensland.

Average Weekly Wages• Average weekly wages in the Southern Downs region are lower than the South East Queensland and Queensland

averages for the food product manufacturing, wholesale trade and road transport industries.• The lower wage rates in Southern Downs compared to other South East Queensland regions would imply higher

profitability for businesses that could re-locate to the region.

Figure 2.1 Average Weekly Wages by Sub-industry, 2016

Note: Place of work dataSource: ABS (2017)

Figure 2.2 Average Weekly Wages by Local Government Area, 2016

Note: Place of work dataSource: ABS (2017)

Industrial Property• Figure 2.3 show that the cost of

industrial land in the Southern Downs region is significantly lower than the equivalent price in any of Brisbane’s industrial precincts. Industrial land values in Brisbane are between 2.5 and over 7 times the price of land in the Southern Downs region.

• Figure 2.4 shows that industrial lease rates in the Brisbane region are between 50% and 86% more expensive than in the Southern Downs region.

Figure 2.3 Industrial Land Values


Figure 2.4 Industrial Estates

Source: Savills (2018a); Realcommercial (2018)

Commercial and Retail Property Costs• Table 2.1 and Table 2.2 show a stark difference in the per square metre cost of leasing a commercial property in the

Southern Downs region and the Brisbane, Brisbane Fringe and Gold and Sunshine Coast regions.• While retail property leasing data is not readily available at the regional level, Colliers state that ‘on average net face

rents for prime high street retail tenancies sub 200 sqm as at March quarter 2018 range from $1,500 to $7,000 per sqm’ (Colliers, 2018), significantly higher than equivalent rents in the Southern Downs region.

Table 2.1 Commercial Properties for Lease, Stanthorpe and Warwick regions

Location Property Type Floor area (sqm) $/sqm

100 Grafton St, Warwick Showrooms & Bulky Goods, Shop & Retail, Offices 550 $11849 Guy St, Warwick Showrooms & Bulky Goods, Shop & Retail, Offices 350 $125

Note: For lease as at 24 October 2018. Source: Realcommercial (2018)

Table 2.2 Commercial Office Gross Face Rents ($/sqm) by region

Premium A Grade B GradeLow High Low High Low High

Brisbane CBD $800 $905 $625 $750 $545 $605Brisbane Fringe $525 $625 $400 $495Gold Coast/ Sunshine Coast $400 $500 $335 $455

Source: Savills (2018b)


Construction Costs• Table 2.3 shows that construction costs in Warwick and Stanthorpe are 5% and 10% more expensive than Brisbane, respectively.

Table 2.3 Construction Costs by Building Type ($/sqm)

Brisbane Warwick Stanthorpe

Warehouse $925 $971 $1,018Factory $1,048 $1,100 $1,152Commercial Office $1,643 $1,725 $1,807

Note: Costs exclude fit-out, parking and other tenant specific costs. Difference between factory and warehouse based on heavier footprint and wider span to accom-modate production or assembly activities. Both Warehouse and Factory include precast, tilt-up concrete construction and basic offices (without fit-out).Source: Rawlinsons (2018)

Electricity Costs• Figure 2.5 shows that the Southern Downs region provides some minor costs savings over South East Queensland in terms of electricity costs.• This minor difference would become more important for larger industrial electricity users.

Figure 2.5 Electricity Price Comparison

Source: Ergon (2018); Origin (2018)


HypotheticalsIn order to demonstrate the impact of the identified cost savings in the Southern Downs region over other business locations in South East Queensland hypothetical business operations were devised. These examples demonstrate the overall cost savings that a business could achieve through locating to the Southern Downs region.In order to identify these overall cost savings a variety of assumptions have been made (Table 2.5). A food manufacturing busi-ness and a warehouse/logistics business were selected for this assessment. The businesses are assumed to pay the local average wage, associated payroll tax, lease rate and associated operating costs (i.e. electricity and water).

Table 2.5 Business Assumptions

Food Product Manufacturing Warehouse/Logistics

Employees (No.) 30 30Electricity Demand (kwh) 1,200,000 400,000Water Demand (kL) 5,600 600Building Size (sqm) 3,000 3,000

The following graphs and tables show that a business could save between $112,000 to $512,000 per year, simply from being located in the Southern Downs region and taking advantage of the region’s lower cost basis.

Source: Lucid Economics

Water Costs• Table 2.4 shows that annual water access charges range from the lowest ($235 in Brisbane to the highest ($842 in Ipswich).• Water consumption charges in South East Queensland are 1-1.5 times higher than in the Southern Downs region. The

higher rates are largely based on the required State Government Bulk Water charge, which doesn’t apply to the Southern Downs region.

Table 2.4 Business Water Charges

Southern Downs Brisbane Ipswich Logan Gold Coast Redlands

Annual Charge ($)Annual Access Charge $480.50 $235.08 $842.16 $299.20 $377.76 $342.68Usage Charges ($/kL)Low Usage $1.92 $3.683 $3.484 $3.937 $3.900 $4.098High Usage $1.92 $4.524 $4.895 $3.937 $3.900 $4.098

Note: Southern Downs has a single rate for consumption. Brisbane and Ipswich consumption rates are separated into Tier 1 (<74kL per Quarter) and Tier 2 (>74kL per Quarter).Source: Southern Downs Regional Council (2018); Urban Utilities (2018).


Figure 2.6 Food Manufacturing Business, Annual Operating Costs

Figure 2.7 Warehouse/Logistics Business, Annual Operating Costs

Note: Not all operating costs are included in calculation.Source: ABS (2017); Ergon (2018); Origin (2018); Southern Downs Regional Council (2018); Urban Utilities (2018); Savills (2018a); Realcommercial (2018); OSR (2018); Lucid Economics.



FOOD MANUFACTURING BUSINESS

Southern Downs Brisbane Gold Coast Ipswich Logan

Labour CostsWages $1,430,057 $1,697,546 $1,406,976 $1,588,687 $1,567,130Payroll Tax $15,678 $28,383 $14,581 $23,213 $22,189Total Labour $1,445,734 $1,725,930 $1,421,557 $1,611,900 $1,589,318Operational CostsLease $214,433 $399,000 $339,000 $315,000 $339,000Electricity $349,526 $350,579 $350,579 $350,579 $350,579Water $11,233 $25,569 $22,218 $28,254 $22,349Total Operational Costs $575,191 $775,148 $711,796 $693,833 $711,927Total Costs $2,020,926 $2,501,078 $2,133,353 $2,305,733 $2,301,245Savings in the Southern Downs $0 $480,152 $112,427 $284,807 $280,320

WAREHOUSING/LOGISTICS BUSINESSSouthern Downs Brisbane Gold Coast Ipswich Logan

Labour CostsWages $1,553,070 $1,863,577 $1,624,071 $1,683,432 $1,630,690Payroll Tax $21,521 $36,270 $24,893 $27,713 $25,208Total Labour $1,574,591 $1,899,847 $1,648,965 $1,711,146 $1,655,898Operational CostsLease $214,433 $399,000 $339,000 $315,000 $339,000Electricity $116,838 $117,203 $117,203 $117,203 $117,203Water $1,633 $2,949 $2,718 $3,779 $2,662Total Operational Costs $332,903 $519,152 $458,920 $435,982 $458,864Total Costs $1,907,494 $2,418,999 $2,107,885 $2,147,127 $2,114,762Savings in the Southern Downs $0 $511,504 $200,391 $239,633 $207,267

Table 2.6 Food Manufacturing Business, Annual Operating Costs

Table 2.7 Warehouse/Logistics Business, Annual Operating Costs



ReferencesABS (2017). 2016 Census of Population and Housing. Cat. No. 2001.0. Australian Bureau of Statistics, Canberra.

ABS (2018). Building Approvals, Australia. Cat. No. 8731.0. Australian Bureau of Statistics, Canberra.

Colliers (2018). Retail – First Half 2018. Accessed 24 October, 2018 from www.colliers.com.au..

DJSB (2018). Small Area Labour Market, Australia. Department of Jobs and Small Business, Canberra.

Ergon (2018). Small Business Tariffs. Ergon Energy Retail. Accessed 29 October, 2018 from www.ergon.com.au.

NIEIR (2018). GRP and Employment Data. Accessed 14 October 2018 from www.economyid.com.au/southern-downs.

Origin (2018). Energy prices, rates and charges for business. Origin Energy. Accessed 29 October, 2018 from www.origine-nergy.com.au.

OSR (2018). Payroll Tax Rates. Office of State Revenue. Accessed 1 November, 2018 from www.osr.qld.gov.au.

PriceFinder.com (2018). PriceFinder Market Activity. Accessed 24 October, 2018 from www.pdslive.com.au.

Rawlinsons (2018). 2018 Rawlinsons Australian Construction Handbook. Rawlinsons Publishing, Perth.

RealCommercial (2018). Commercial Properties For Lease in Stanthorpe and Warwick, Greater Regions. Accessed 24 Octo-ber, 2018 from www.realcommercial.com.au.

Savills (2018a). Briefing Brisbane Industrial, Q2 2018. Savills, Brisbane.

Savills (2018b). Quarter Time – National Office, Q3 2018. Savills, Brisbane.

Southern Downs (2018). Southern Downs Regional Council Revenue Statement 2018/19. Accessed 29 October, 2018 from www.sdrc.qld.gov.au.

Urban Utilities (2018). Business Prices and Charges 2018-19. Queensland Urban Utilities. Accessed 29 October, 2018 from www.urbanutilities.com.au.


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New SOUTHERN DOWNS ECONOMIC COMPARISON · 2018. 11. 9. · 2 SOUTHERN DOWNS REGIONAL COUNCIL | ECONOMIC COMPARISON Labour Market •he unemployment rate in the Southern Downs region