Economic Report · MCU18/0019

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Disclaimer: Sister City Partners Limited (SCP) has prepared this report in good faith on the information
provided by and/or gained from primary and secondary party sources. SCP has made every endeavour
to verify the information provided or gained. However, SCP cannot guarantee the accuracy of the
information provided to it, and shall not be responsible for any losses or damages incurred by decisions
made or not made, and actions taken or not taken, on the basis of the information contained in this
document. In using the information contained in this report, the reader releases SCP and its employees
and contractors from any responsibility for such actions and the consequences of such actions.




© 2018 Sister City Partners Limited & WARWICK POWELL




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AUTHOR’S QUALIFICATIONS AND EXPERIENCE

Warwick Powell has over 20 years’ experience in identify and assessing social and
economic impacts across a broad range of public policy propositions and
development activities and initiatives.

After graduating with First Class Honours (Bachelor of Arts), from Griffith University
in 1991 when his research and academic achievements were recognised by the
awarding of the University Medal for Academic Excellence, he deferred a
Department of Foreign Affairs International Studies Scholarship (China) and began
work as the Research Officer to Kevin Rudd, then Director-General of the Office of
the Cabinet (Queensland Government). There, he was responsible for undertaking
analysis and reviews of a broad range of Government policy initiatives covering
areas such as languages education in schools, closure of factories and impacts on
local communities including mitigations, regional economic development programs,
community facilities infrastructure development needs and                  programs (e.g.
community halls, community health centres) etc. He also worked directly with the
Directors-General to undertake twice-yearly audits of Departmental performance
against Governmental priorities and policy benchmarks.

With a broad, whole-of-government background, he was appointed in 1994 to the
role of Policy Advisor to the Minister for Mines and Energy – a role that required
coalface assessments of the impacts of proposed policies and actions on
communities. He was intimately involved in evaluating the economic implications of
the introduction of National Competition Policy in the State’s electricity supply
industry (including economic impacts on consumers and businesses; implications
for employment etc.), as well as the social impacts of proposed high voltage
transmission line projects in various parts of Queensland (e.g. Gordonvale and
Eastlink).   He   also   evaluated   the   social   benefits,   impacts     and    economic
benefits/costs of expanding Government support of renewable energy initiatives.

In his Government career, he was also a Policy Analyst in the Economics Unit of the
Department of Premier and Cabinet where he undertook ongoing research and
analysis of economic data and prepared briefs for Cabinet consideration and action.


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Since 1997, Warwick has worked in private practice, undertaking studies on social
and economic impacts, social attitudes and such like of a broad range of public and
private projects and initiatives. When an Associate Member of the Australian Market
Research Society, he coordinated, managed and implemented large scale and
intimate quantitative and qualitative research projects addressing community
reactions to specific urban, social and economic situations and proposals cognisant
of industry best practice and the latest developments in research and applied
statistical methods.

He has undertaken social and economic impact assessment studies for projects
involving the provision of public recreational infrastructure, community infrastructure
in areas such as GP needs, schooling demand and retirement accommodation
opportunities,   as    well as   private-sector   residential   developments,         housing
affordability initiatives, retail projects (large and small), transit-oriented initiatives,
workers’ accommodation villages, retirement villages and aged care, high-rise
mixed use developments and such like.




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Table of Contents

1     INTRODUCTION                                                   6
1.1    KEY FINDINGS                                                  6

2     AGED CARE IN CONTEXT                                           7
2.1 NATIONAL DYNAMICS                                                7
2.2 NOOSA ECONOMIC PLAN                                              7
2.2.1 UNMET NEED                                                     9
2.2.2 ACTION OBJECTIVES                                              9

3     ASSESSMENT OF PROJECT IMPACTS                                10
3.1 RELEVANCE TO LOCAL ECONOMIC PLAN                               10
3.2 ESTIMATE OF ECONOMIC IMPACTS                                   11
3.2.1 CONSTRUCTION PHASE IMPACTS                                   11
3.2.2 OPERATIONAL PHASE IMPACTS                                    13
3.3 STRATEGIC CLUSTERING                                           15

4     CONCLUSION                                                   17




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1 Introduction

This is a preliminary economic impact assessment of the proposed 90 bed aged
care development project located on lands at the corner of Val Crescent and
Goodchap Street, Noosaville. The subject site is approximately 6,741m2. The
proposed development includes two levels, as well as basement car parking. The
facility will also provide a range of medical and ancillary services to support the
needs of residents.
The economic impact assessment considers:
•   The overall context of the aged care sector and trends in Australian aged care;
•   Noosa’s Economic Development Plan; and
•   The estimated impacts on economic output and employment during both the
    construction phase and the subsequent operational phase of the facility.

1.1 Key Findings
By way of a summary, the key findings of the assessment are:
    1. The project is estimated to support 158 full time equivalent jobs during
       construction.
    2. The project is estimated to support 178 full time equivalent jobs annually
       during operations.
    3. The project is consistent with the objectives of the Noosa Shire Economic
       Plan’s aims to diversify the region’s economic base and promote the growth
       in priority sectors such as aged care, health and wellness.
    4. The project can contribute to the development of the critical mass needed
       for the establishment of a centre of aged care excellence, as earmarked in
       the Noosa Shire Economic Plan – Action Plan.
    5. The project’s location specifically contributes to the creation of an aged care
       and health services cluster around the Noosa Hospital and Central
       Queensland University Noosa Campus. The facilitation of industry
       collaboration and clustering is an objective sought in the Noosa Shire
       Economic Plan. The proposed project goes towards this objective.




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2 Aged Care in Context

2.1 National Dynamics
Aged care is a rapidly growing economic sector in Australia. The sector generated
an estimated $13.5 billion of direct value-added in 2014/15 (Deloitte, 2016).
Indirectly the sector contributed a further $4.1 billion by utilising inputs from other
industries such as food, accommodation and medical services and the downstream
economic activity generated through the payment of wages occasioned by these
industries.
The sector is expected to grow significantly into the future. The Commonwealth
Government Treasury’s 2015 Intergenerational Report estimated that the number of
Australians aged 65 years and over is expected to more than double over the next
40 years. This will result in numbers increasing from 3.6 million persons in 2014/15
to 8.9 million persons in 2054/ 55. Consistent with this growth trend, the Aged Care
Financial Authority estimates that 76,000 new residential aged care places will be
needed by 2023/24 to meet demand.
The Australian aged care sector is growing not just because of an ageing
population. It is also changing due to increased longevity. This is contributing to
developments in the range and depth of services needed to accommodate the
needs of the ageing population into the future.
The sector is already responding to an increasing emphasis on consumer choice.
More Australians are choosing to ‘age in place’ wherever possible. This is leading to
higher uptake of home care services and increased levels of dependency among
those who eventually opt for residential aged care. In the residential aged care
sector, providers are increasingly tailoring services to the needs of individual
residents including through the provision of independent living arrangements,
modern facilities and personalised care. Finally, as ‘baby boomers’ age and enter
aged care, this demographic is demanding a higher level and more complex care.

2.2 Noosa Economic Plan
Noosa has a number of preconditions enabling it to effectively meet this growing
demand for aged care services. Noosa already has a disproportionate concentration
of persons aged 65 years and over. In 2016 (Census 2016), 24% of Noosa’s
residents were aged 65 years and over. This compared to 5.8% for Australia as a
whole. As such, Noosa’s median age is considerably higher (48 years) than is the
case for Queensland (37 years) and Australia (38 years).




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Noosa is demographically speaking at the leading edge of the ageing curve. This
provides a basis for the development of higher order expertise in what is a rapidly
expanding and evolving industry. As noted in the Noosa Shire Local Economic Plan:
       “Noosa has an ageing population. In 2011 the median age for the Shire was
       46 years compared to 38 and 36 years in the South East Queensland Region
       and the State respectively” (p. 5).
Since the 2011 Census, Noosa’s median age has increased from 46 years to 48
years, reflecting a higher than average rate of population ageing.
The Noosa Shire Local Economic Plan seeks to support the diversification of the
structure of the local economy and “grow smart, high value industry sectors”. It
aims to “encourage business growth in sectors that provide a wider range of
employment opportunities and pay scales” and “leverage local expertise to support
the diversification of the local economy” (p. 12).
The Noosa Shire Local Economic Plan recognises the opportunity for the region to
develop this industry. Indeed, according to the Plan, healthcare and wellness are
“recognised as priority industry sectors of competitive advantage” (p. 5). Aged care
and retirement living was specifically identified as a sector of opportunity to diversify
the region’s economic base (p. 9). Consequently, the annual implementation plan for
this sector will include initiatives that aim to facilitate increased:
•   Employment and career opportunities;
•   Business activity;
•   Collaboration and clustering; and
•   Education and training opportunities (p. 17).
The Noosa Shire Economic Plan notes that the “health and wellness sector:
•   Is growing strongly locally, regionally and nationally;
•   Ageing population will stimulate need / demand for services in this sector;
•   Has been identified as a future driver of innovation and technology;
•   Provides a range of employment opportunities;
•   Has direct links to education and training opportunities; and
•   Supports local wellness, revitalisation and remedial businesses and the healthy
    lifestyle appeal of the area” (p. 16).
The Noosa Shire Local Economic Plan goes on to observe that this:
       “sector is trending positive locally, regionally and nationally, driven by our
       ageing population plus advances in technology, diagnostics and treatment.
       The sector also relies on the same lifestyle factors that underpin the
       popularity of tourism and make Noosa a much sought after destination.” (p.
       16)
Further more, according to the Plan:



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       “While the ageing population may imply a shrinking workforce could produce
       less in gross economic terms, it also indicates that there will be demand for a
       range of goods and services specific to an older demographic. Our ageing
       population is looking to remain active and healthy for longer. This will drive
       opportunities in wellness industries.” (p. 16)

2.2.1 Unmet Need
Consistent with national trends in relation to consumer preferences for ageing in
place, the Noosa Shire Economic Plan expects there to be an “increasing focus on
enabling people to remain in their family home longer rather than transitioning into
care facilities” (p. 17). However, in saying so, the Plan recognises that:
       “Noosa provides below the industry average of aged care beds per
       capita: a gap the market will look to fill, thus creating increased
       investment and job opportunities” (p. 17).

2.2.2 Action Objectives
Strategically, as such, the Plan for the sector will include initiatives that aim to
facilitate increased:
•   Employment and career opportunities;
•   Business activity;
•   Collaboration and clustering; and
•   Education and training opportunities. (p. 17).
The supporting Action Plan October 2016 specifically identifies the following key
actions for the health and wellness sector:
•   Work with business and industry to identify potential initiatives that increase
    economic activity and generate employment in the health and wellness sector;
    and
•   Explore the concept of, and test support for, the establishment of a centre of
    excellence in aged care (p. 3).




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3 Assessment of Project Impacts

This section presents an assessment of project impacts in terms of:
•   Its compatibility and contribution to the strategic priorities of the Local Economic
    Plan; and
•   The estimated direct and indirect economic impacts arising from the
    construction and operational phases of the project.

3.1 Relevance to Local Economic Plan
There is no doubt that the further development of aged care facilities in Noosa
contribute to meeting a national and local need. It also takes advantage of the fact
that Noosa’s ageing population already lays the foundations for a region with
significant competitive advantage in the provision of aged care and allied services.
According to the Noosa Shire Economic Plan:
       “This Plan looks beyond tourism-driven economic growth and employment,
       towards a more resilient and diverse economy. … The Noosa Shire Local
       Economic Plan’s aim is to broaden the economic structure of the local
       economy by achieving growth in ‘smart’ industry sectors that offer high
       economic value and low environmental impact” (p. 5).
The Noosa Shire Local Economic Plan goes on to observe:
       “Fundamental to a shift towards a smart economy is the attraction and
       retention of skilled and talented people, and the development of
       collaborative institutional alliances and connections” (p. 5).
The Noosa Shire Economic Plan further comments on key industry sectors that can
deliver employment by exploiting competitive advantage. In doing so, it articulates a
clear set of priority industry sectors as follows:
       “Healthcare and wellness, digital economy, environmental industries, rural
       enterprise, creative industries and professional services are recognised as
       priority industry sectors of competitive advantage that will support economic
       growth and provide employment opportunities” (p. 5).
We note that healthcare and wellness is identified as the lead or first of these
industry sectors with a competitive advantage.
The proposed development goes towards meeting the strategic priorities of the
Noosa Shire Economic Plan, specifically in relation to:
•   Diversification of the local economic structure;
•   Creating employment in high value and low environmental impact sectors; and



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•     The development of specialization and competitive advantage in the healthcare
      and wellness sector, and within that the aged care sector specifically.

3.2 Estimate of Economic Impacts
Input-output analysis is one way of estimating the economic impacts of a project.
We consider two phases:
•     Construction; and
•     Operations.

3.2.1 Construction Phase Impacts
For construction, we assume that total construction cost is $18m1. The duration of
construction is estimated to be 16 months. The economic impacts by industry are
shown in the following table. In summary, the construction of the proposed
development is estimated to generate:
•     $19.3m of total impact on Gross Regional Product, comprising:
              o $5.61m in direct economic impacts;
              o $13.68m in flow-on impacts;
•     158 full time equivalent jobs supported, comprising:
              o 53 full time equivalent jobs supported directly; and
              o 105 full time equivalent jobs supported as flow-on impacts.
The flow-on economic impacts are expectedly diverse, impacting on just about all
sectors in the Noosa and the wider Sunshine Coast 2 economy. Aside from the
construction sector, the three sectors that can be expected to benefit the most from
an employment point of view are:
•     Retail trade;
•     Manufacturing; and
•     Professional, Scientific and Technical Services.
What this points to is how construction activity itself contributes to the
diversification of the region’s economy, in line with the objectives of the Noosa Shire
Economic Plan; and in particular, we can see that two sectors in which there are
medium to high skills occupations (manufacturing and professional, scientific and
technical services) are set to support ongoing employment as a result of the
construction of the proposed facility.




1
    Data source: project proponent communications.
2
  The model estimates the impacts for the Sunshine Coast region as a whole. We can expect that the localised
impacts in specific parts of the Coast will reflect the industry and employment composition of each region.



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Table 1: Economic Impacts during Construction (12 months)
                                 Gross Regional Production ($M)                Employment (FTE)

Industry Sector                  Direct     Flow-on      Total       Direct        Flow-on        Total

Agriculture, Forestry and             0.0        0.2          0.2              0             2             2
Fishing

Mining                                0.0        0.1          0.1              0             0             0

Manufacturing                         0.0        1.3          1.3              0          11              11

Electricity, Gas, Water and           0.0        0.3          0.3              0             1             1
Waste Services

Construction                          5.6        2.2          7.8             53          21              74

Wholesale Trade                       0.0        0.6          0.6              0             4             4

Retail Trade                          0.0        0.8          0.8              0          13              13

Accommodation and Food                0.0        0.4          0.4              0             7             7
Services

Transport, Postal and                 0.0        0.5          0.5              0             4             4
Warehousing

Information Media and                 0.0        0.3          0.3              0             2             2
Telecommunications

Financial and Insurance               0.0        1.9          1.9              0             6             6
Services

Rental, Hiring and Real Estate        0.0        2.1          2.1              0             3             3
Services

Administrative and Support            0.0        1.1          1.1              0          11              11
Services

Professional, Scientific and          0.0        0.6          0.6              0             5             5
Technical Services

Public Administration and             0.0        0.1          0.1              0             1             1
Safety

Education and Training                0.0        0.3          0.3              0             4             4

Health Care and Social                0.0        0.4          0.4              0             5             5
Assistance

Arts and Recreation Services          0.0        0.1          0.1              0             2             2

Other Services                        0.0        0.4          0.4              0             6             6

Total                             $5.61m    $13.68m      $19.30m       53 FTE        105 FTE       158 FTE




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3.2.2 Operational Phase Impacts
For annual operations, we assume that total expense is $11.96m per year.3 The
economic impacts by industry are shown in the following table. The impacts are
estimated for the Noosa and wider Sunshine Coast region. In summary, the annual
operational impacts of the proposed development is estimated to be:
•     $17.59m of total impact on Gross Regional Product, comprising:
              o $8.27m in direct economic impacts;
              o $9.33m in flow-on impacts;
•     178 full time equivalent jobs supported, comprising:
              o 105 full time equivalent jobs supported directly; and
              o 72 full time equivalent jobs supported as flow-on impacts.
As can be seen in the table, the ongoing economic impacts for the region’s
economy are diverse, with employment benefits spread across nearly all industries.
(Only mining is not impacted.) The dominant impact is in the Health Care and Social
Assistance sector, with an estimated 112 full time equivalent jobs supported
annually as a result of the project. This represents 63% of all full time equivalent
jobs supported by the project.
The remaining employment benefits are spread across other industry sectors,
generating a diverse range of employment. This is consistent with the Noosa Shire
Economic Plan’s Focus of Actions, which seeks to:
           “Encourage business growth in sectors that provide a wider range of
           employment options and pay scales” (p. 12).
The project is also able to “leverage local expertise to support the diversification of
the local economy” (p. 12) by building on the competitive advantages of Noosa in
the healthcare space.




3
    Data source: project proponent communications.



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Table 2: Economic Impacts during Operations (annual)
                                 Gross Regional Production ($M)               Employment (FTE)

Industry Sector                  Direct     Flow-on      Total       Direct       Flow-on         Total

Agriculture, Forestry and             0.0        0.1          0.1             0             1               1
Fishing

Mining                                0.0        0.0          0.0             0             0               0

Manufacturing                         0.0        0.7          0.7             0             6               6

Electricity, Gas, Water and           0.0        0.2          0.2             0             1               1
Waste Services

Construction                          0.0        0.2          0.2             0             2               2

Wholesale Trade                       0.0        0.5          0.5             0             4               4

Retail Trade                          0.0        0.9          0.9             0           14               14

Accommodation and Food                0.0        0.4          0.4             0             7               7
Services

Transport, Postal and                 0.0        0.3          0.3             0             3               3
Warehousing

Information Media and                 0.0        0.3          0.3             0             1               1
Telecommunications

Financial and Insurance               0.0        1.2          1.2             0             4               4
Services

Rental, Hiring and Real Estate        0.0        1.9          1.9             0             2               2
Services

Administrative and Support            0.0        0.6          0.6             0             5               5
Services

Professional, Scientific and          0.0        0.4          0.4             0             3               3
Technical Services

Public Administration and             0.0        0.1          0.1             0             1               1
Safety

Education and Training                0.0        0.4          0.4             0             5               5

Health Care and Social                8.3        0.5          8.8         105               7             112
Assistance

Arts and Recreation Services          0.0        0.1          0.1             0             2               2

Other Services                        0.0        0.4          0.4             0             6               6

Total                             $8.27m     $9.33m      $17.59m      105 FTE        72 FTE        178 FTE




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3.3 Strategic Clustering
The Noosa Shire Economic Plan – Action Plan specifically seeks to:
       “Explore the concept of, and test support for, the establishment of a
       centre of excellence in aged care”.
This action drives off the objective of facilitating increased collaboration and
clustering, as noted in the Noosa Shire Economic Plan (p. 17).
The proposed aged care facility contributes to the building of critical mass that
could support the establishment of a centre of excellence in aged care in Noosa. In
spatial terms, it also contributes to the creation of critical mass in and around the
Noosa Hospital as a focal point in the provisioning of aged care and ancillary
services.
The proposed aged care facility is directly opposite the Noosa Hospital on
Goodchap Street. Nearby (within 800m) there is also the existing Noosa Community
Support Centre. A little further away (less than 1.2km) is the Noosa Domain Village,
offering accommodation for an ageing population.
Map 1: Goodchap St Aged Care Facility – Aged Care Cluster




It is also worth noting the proximity of the Central Queensland University Noosa
Campus (also on Goodchap Street), no more than 400m from the subject site. This


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Campus offers a range of relevant courses, including nursing, which directly aligns
with the needs of the aged care sector. Critical mass in and around the Campus
offers opportunities for research / teaching / industry collaboration to build a
foundation of skills within the community to grow the aged care and wellness
sector.
Centres of excellence involving high levels of industry collaboration can be
facilitated by spatial proximity, which provides not only convenience of access but
also an intangible sense of focus. Focal spaces are critical to the creation of a sense
of place, which can underscore the willingness of industry and community to
support the development of a centre of excellence.




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4 Conclusion

The above analysis points to the following key conclusions:
   1. The project contributes to Noosa closing the gap in the provision of aged
      care beds, which is recognized in the Noosa Shire Economic Plan as being
      below the appropriate beds-to-population ratio.
   2. The project has clear economic benefits in both direct and flow-on
      employment terms.
          a. This is the case during the initial 16 months of construction in which
              158 full time equivalent jobs across diverse sectors and roles can be
              expected to be supported.
          b. Furthermore, the economic impact modelling estimates that a further
              178 full time equivalent jobs across diverse sectors and occupations
              will be supported annually as a result of the ongoing operations of the
              proposed aged care facility.
   3. The project is consistent with the strategic aspirations articulated in the
      Noosa Shire Economic Plan to diversify Noosa’s economic base by
      supporting the development of smart industries that leverage off the region’s
      competitive advantages in sectors like aged care, health and wellness.
   4. The project reinforces the direction articulated in the Economic Plan and
      associated Action Plan to drive industry collaboration and clustering, with the
      possibility of establishing a centre of aged care excellence in Noosa.
   5. The project contributes to the building of critical mass in the aged care
      sector that would contribute to the creation of centre of excellence and
      reinforce of Noosa as desirable destination for retirement living.
   6. The location of the project contributes to the Noosa Hospital and Central
      Queensland University Noosa Campus precinct as a locus of activity in the
      provision of aged care facilities and services, further contributing to the
      development of clustering critical mass.




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