2022-11-14 GC Agenda - Item 4 - Attachment 2 - Appendix 13 to Attachment 1

NOOSA SHORT STAY ACCOMMODATION ECONOMIC & SOCIAL ASSESSMENT



APPENDIX B: INPUT-OUTPUT METHODOLOGY
INPUT-OUTPUT MODEL OVERVIEW
Input-Output analysis demonstrates inter-industry relationships in an economy, depicting how the output of one
industry is purchased by other industries, households, the government and external parties (i.e. exports), as well
as expenditure on other factors of production such as labour, capital and imports. Input-Output analysis shows the
direct and indirect (flow-on) effects of one sector on other sectors and the general economy. As such, Input-Output
modelling can be used to demonstrate the economic contribution of a sector on the overall economy and how much
the economy relies on this sector or to examine a change in final demand of any one sector and the resultant
change in activity of its supporting sectors.

The economic contribution can be traced through the economic system via:

•   Initial stimulus (direct) impacts, which represent the economic activity of the industry directly experiencing
    the stimulus.

•   Flow-on impacts, which are disaggregated to:

    o   Production induced effects (type I flow-on), which comprise the effects from:

        ▪    Direct expenditure on goods and services by the industry experiencing the stimulus (direct suppliers
             to the industry), known as the first round or direct requirements effects.

        ▪    The second and subsequent round effects of increased purchases by suppliers in response to
             increased sales, known as the industry support effects.

    o   Household consumption effects (type II flow-on), which represent the consumption induced activity
        from additional household expenditure on goods and services resulting from additional wages and salaries
        being paid within the economic system.

These effects can be identified through the examination of four types of impacts:

•   Output: Refers to the gross value of goods and services transacted, including the costs of goods and services
    used in the development and provision of the final product. Output typically overstates the economic impacts
    as it counts all goods and services used in one stage of production as an input to later stages of production,
    hence counting their contribution more than once.

•   Gross product: Refers to the value of output after deducting the cost of goods and services inputs in the
    production process. Gross product (e.g., Gross Regional Product) defines a true net economic contribution
    and is subsequently the preferred measure for assessing economic impacts.

•   Income: Measures the level of wages and salaries paid to employees of the industry under consideration and
    to other industries benefiting from the project.

•   Employment: Refers to the part-time and full-time employment positions generated by the economic shock,
    both directly and indirectly through flow-on activity, and is expressed in terms of full time equivalent (FTE)
    positions.

Input-Output multipliers can be derived from open (Type I) Input-Output models or closed (Type II) models. Open
models show the direct effects of spending in a particular industry as well as the indirect or flow-on (industrial
support) effects of additional activities undertaken by industries increasing their activity in response to the direct
spending.

Closed models re-circulate the labour income earned as a result of the initial spending through other industry and
commodity groups to estimate consumption induced effects (or impacts from increased household consumption).




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