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AustralianGrapeandWineAuthority
Economic Contribution of the Australian Wine Sector Report:18December2015
Contactforprojectmanagement:GillespieEconomics AgEconPlusPtyLtdABN13317461682 ABN41107715364DrRobGillespie MichaelClarke P:(02)98048562 P:(02)98175888M:0419448238 M:0438844024W:www.gillespieeconomics.com W:www.AgEconPlus.com.auE:[email protected] E:[email protected]
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TableofContents1. Introduction...................................................................................................................................1
2. AustralianWineSectorBackground...............................................................................................2
2.1 Locality...................................................................................................................................2
2.2 WineGrapeGrowing..............................................................................................................3
2.3 WineMaking..........................................................................................................................6
2.4 WineTourism.......................................................................................................................11
2.5 IndustryStatusandOutlook.................................................................................................12
2.6 IndustryStatistics.................................................................................................................14
3. InputOutputModelling...............................................................................................................15
4. Revenue,ExpenditureandEmploymentProfilesoftheWineSector..........................................18
4.1 WineGrapeGrowing............................................................................................................18
4.2 WineMaking........................................................................................................................19
4.3 WineTourism.......................................................................................................................20
5. DirectandIndirectImpactsoftheWineSectorontheAustralianEconomy...............................22
5.1 GrapeGrowingSector..........................................................................................................22
5.2 WineMakingSector.............................................................................................................23
5.3 WineTourism.......................................................................................................................25
5.4 TotalWineSector.................................................................................................................27
5.5 ContributiontoTaxReceipts................................................................................................27
6. Conclusions..................................................................................................................................30
References............................................................................................................................................31
Attachment1AssumptionsandInterpretations,Input-OutputAnalysisandMultipliers.................332
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AbbreviationsABS AustralianBureauofStatisticsAGWA AustralianGrapeandWineAuthorityAWBC AustralianWineandBrandyCorporationCGE ComputableGeneralEquilibrium(model)DoAWR DepartmentofAgricultureandWaterResourcesEU EuropeanUnionFOB FreeOnBoardFTE FullTimeEquivalentGDP GrossDomesticProductGI GeographicalIndicationIO InputOutput(model)OIV InternationalOrganisationofVineandWineTRA TourismResearchAustraliaWFA Winemakers’FederationofAustraliaWGGA WineGrapeGrowersAustraliaAcknowledgementsAgEconPlusandGillespieEconomicswishtothankthefollowingindividualsandorganisationsfortheirassistancewiththeresearch:PeterBailey,ManagerMarketInsights,AustralianGrapeandWineAuthorityGeoffTurner,ManagerResearch,StrategyandResearch,TourismAustraliaPaulEvans,ChiefExecutive,Winemakers'FederationofAustraliaNickPalousis,ChiefExecutiveOfficer,2XEJamesMcIntyre,Associate,2XE
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ExecutiveSummaryThisreportisaneconomicimpactassessmentofthewinesector’sdirectandflow-oncontributiontotheAustralianeconomy.ItwaspreparedfortheAustralianGrapeandWineAuthority(AGWA/WineAustralia).TheAustralianwinesectorincludesgrapegrowing,winemakingandwine-relatedtourism.Thewinesectormakesadirectandsignificantcontributiontooutput,grossdomesticproduct(GDP)andemployment.Inadditiontothewinesector’sdirecteconomiccontribution,thesectoralsomakesaflow-oncontributionviastronglinkagestootherbusinessesthatsupplygoodsandservicesrequiredforgrapegrowing,winemakingandthewinetourismexperience,aswellasthegoodsandservicesdemandedbyemployees.WinegrapesaregrownineveryAustralianstateandterritorywithSouthAustralia,NSWandVictoriabeingthelargestwinegrapeproducers.Winegrapegrowingisanefficientuserofscarceirrigationwaterwithahighgrossvalueofproductionperlitreofwaterused.In2014-15therewere5,160winegrapegrowerswithavineyardareaof135,178hageneratingagrosssalesvalueof$0.773billion.Australianwineisexportorientedwithapproximately60%ofoutputheadedforwinemarketsinEurope,NorthAmericaandAsia.WineisAustralia’ssixthlargestagriculturalexportindustry.RecentAustralianGovernmentdataindicatesthatthereare2,900Australianwineries.Totalannualwineproductionhasbeenestimatedat1.2billionlitreswithagrossvalueof$5.9billion.Internationaltouristsidentify‘greatfood,wine,localcuisineandproduce’asamajorreasonforvisitingAustralia.TourismResearchAustraliaestimatedthatin2014-15therewere15.8milliondomesticvisitornightsand44.2millioninternationalvisitornightsassociatedwithAustralianwineries.Overallwinerelatedvisitorexpendituretotalled$9.2billion.Revenue,expenditureandemploymentprofilesweredevelopedforeachofgrapegrowing,winemakingandwinerelatedtourism.Input-Outputanalysiswasthenusedtoquantifybothdirectandflow-onoutput,value-added,incomeandemploymentforeachofgrapegrowing,winemakingandwinerelatedtourism.Totaldirectandflow-onimpactwasadjustedtoeliminatedoublecountingwheneachindustrywithinthesectorwassummedtoestimatetotaleconomicimpact–TableE1.TableE1DirectandIndirectImpactoftheTotalWineSector DirectEffect Production
InducedConsumption
InducedTotal
Flow-onTOTALIMPACT
OUTPUT($’000,000) 13,347 12,417 14,449 26,867 40,214Type11ARatio 1.00 0.93 1.08 2.01 3.01VALUE-ADDED($’000,000) 6,224 5,484 7,993 13,477 19,701Type11ARatio 1.00 0.88 1.28 2.17 3.17INCOME($’000,000) 3,324 3,233 3,854 7,086 10,411Type11ARatio 1.00 0.97 1.16 2.13 3.13EMPLOYMENT(No.) 68,395 45,286 59,055 104,341 172,736Type11ARatio 1.00 0.66 0.86 1.53 2.53
BecauseInput-Outputmodellingonlyexaminesbackwardlinkagesthisanalysisdoesnotcapturemarginsonwinesalesthroughwholesale,retailandrestaurantsales.Valuesforwinesalesandgrapesalesareatthewinery/farmgate.Inclusionofwholesale,retailandrestaurantsaleswould
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maketheestimatesoftotaldirectandflow-oncontributionhigher.ForexamplethedomesticwholesalevalueofAustralianwineis$2.4billionandretailvalueis$7.4billion.Input-OutputanalysishasshownthattheAustralianwinesectordefinedaswinegrapegrowing,winemakingandwinerelatedtourism:
• Contributes$40.2billioningrossoutputtotheAustralianeconomy.Grossoutputincludes$19.7billioninvalue(value-added)and$10.4billioninwagesandsalariesfromfullandparttimeemployment.
• Supports172,736fullandparttimejobs1mostofwhicharelocatedinregionalAustralia.Jobssupportedbythewinesectorincludedirectemploymentof68,395withinthesectorandafurther104,341fullandparttimejobsduetoflow-oneffects.Estimatesoffullandparttimeemploymentareassociatedwitheconomicactivitylinkedtograpegrowing,winemakingandwinetourismanddonotincludeforwardlinkagessuchasemploymentintheretailsector.
UnlikeComputableGeneralEquilibriummodelling2,Input-Outputanalysisdoesnotgeneratetaxationindicators.InputOutputanalysisaccountsfortaxpaidoninputspurchasedbygrapegrowers,winemakersandthewinetourismsectorandthistaxpaidiscapturedinestimatesofvalue-added.Bywayofexampleofthequantumoftaxpaidbythewinesector,netWineEqualisationTaxpaymentswere$792millionin2014-15andareforecasttoincreaseto$920millionby2018-19(AustralianGovernment,December2015).Input-Outputanalysishasshownthattheaverageeffectsofacontractionorexpansionwithinthewinesectorsuggests:
• Theeconomywouldgainanextra$2.01millionforeveryadditional$1millionofgrossoutputgeneratedbythewinesector.
• Theeconomywouldgainanextra$2.17millionincontributiontovalue-addedforeveryadditional$1millionofvalue-addedgeneratedbythewinesector.
• Thewidereconomywouldgainanextra1.53jobsforeveryjobgainedinthewinesector.TheAustralianwinesectorgrewrapidlythroughthe1990sandexperiencedaseriesofshocksinthenewcentury.Therewerelargedeclinesinpricespaidforwinegrapes,cutsintheprofitabilityofwinemakingandanexchangerateinducedcontractioninwinetourism.Estimatesofeconomiccontributionpreparedforthisstudyreflectaperiodofsubduedeconomicactivity.In2015theoutlookfortheperiodto2021isforareturntomodestgrowth.
1 As defined in the Australian National Accounts 2012-13 as ‘Full time and part time employees, employers, own account workers and contributing family workers’ 2Computable General Equilibrium (CGE) analysis is unsuitable for providing a ‘snapshot’ of an existing industry and its inter-sectoral linkages and is more applicable to assessing the effects of a change or shock to the economy. For instance, NZIER (2014) ‘The economic contribution of the New Zealand wine sector, the impact of growth since 2008’, used CGE to examine the impact of growth in the wine and grape industry in New Zealand compared to if growth had stagnated at 2008 levels. Consequently, for this Australian study which is focused on providing a ‘snapshot’ of an existing industry, Input-Output analysis was preferred.
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1. IntroductionTheAustralianwinesectormakesasignificantcontributiontotheAustralianeconomy.Thisincludestheeconomicactivityassociatedwithgrapegrowinginvineyardsandwineproduction,andextendstotheeconomicactivityfromwinerelatedtourism.ThesethreecomponentsoftheAustralianwinesectoralsohavestronglinkagestoothersectorsoftheAustralianeconomy,inparticularthebusinessesthatsupplythegoodsandservicesrequiredforgrapegrowing,winemakingandthewinetourismexperience,aswellasthegoodsandservicesdemandedbyemployees.Consequently,thecontributionoftheAustralianwinesectortotheAustralianeconomyisgreaterthanjustitsdirecteffects.Thisreportisaneconomicassessmentofthewinesector’sdirectandindirectcontributiontotheAustralianeconomy.ItwaspreparedbyAgEconPlusandGillespieEconomicsfortheAustralianGrapeandWineAuthority(AGWA/WineAustralia).Section2ofthereportlocatestheindustrygeographicallyandprovidesanoverviewofthenatureandscopeofthecomponentsofthewinesector.Section3outlinestheinput-output(IO)modellingmethodusedtoexaminethedirectandindirecteconomiceffectsofthewinesector.Section4combinesavailabledatatodeveloparevenue,expenditureandemploymentprofileforthegrapegrowing,winemanufacturingandwinetourismsectorsoftheAustralianeconomy.Themodellingofthesesectorstoassesstheirflow-oneffectsfortheeconomyisthenreportedinSection5.ConclusionsareprovidedinSection6.
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2. AustralianWineSectorBackground
2.1 LocalityWinegrapegrowing,winemakingandwinerelatedtourismoccursinallstatesandterritoriesofAustralia.Australiahasseventyonewineregions3.ThemainAustralianwineregionsareshownonFigure2.1.Figure2.1WineRegionsofAustralia
Source:WineAustraliaTherelativescaleofdirecteconomicactivitybystateandterritoryisindicatedbyAustralianBureauofStatistics(ABS)2011employmentlevelsintheGrapeGrowingSector4andWineandOtherAlcoholicBeverageManufacturingSector5-seeFigure2.2.FromthisdataitisevidentthatthewinesectorismostsignificantinSouthAustralia,VictoriaandNSW.EmploymentintheNorthernTerritoryandAustralianCapitalTerritoryis9and29,respectively.
3 This includes 63 distinct Geographical Indication (GI) regions plus 8 distinct GI zones that do not have any distinct GI regions attached to them, such as Tasmania and Gippsland (Wine Australia, May 2015) 4 Employment estimates include wine grape, table grape and dried grape production 5 Employment estimates include wine making, wine blending, wine vinegar, fermentation of cider and alcoholic beverages not elsewhere classified.
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Figure2.2EmploymentinGrapeGrowingandWineMakingbyStateandTerritory
Source:ABS2011CensusofPopulationandHousing-4digitemploymentby
NoABSemploymentdataisavailableforwinetourismbecausethereisnospecifictourismindustrysectorintheAustralianandNewZealandStandardIndustrialClassification.The‘tourismsector’ismadeupofcomponentsofseveralindustrysectors,includingtransportation,accommodation,foodandbeverage,recreationandentertainmentandtravelservices.Economicactivity,includingemployment,forthetourismsectorneedstobegeneratedbasedonvisitationlevelsandexpenditure.ThisisdiscussedfurtherinSection3.
2.2 WineGrapeGrowingWinegrapesaregrownandcrushedineveryAustralianstatewithSouthAustralia,NSWandVictoriabeingthelargestwinegrapeproducers-Table2.1.Table2.1GrapeCrushbyState–Tonnes(2014-15)FreshGrapesCrushed Red White TotalNewSouthWales 211,382 284,408 495,790Victoria 156,436 163,035 319,471Queensland 615 404 1,019SouthAustralia 453,913 285,441 739,354WesternAustralia 18,172 26,163 44,335Tasmania 3,732 4,453 8,185
Total 844,250 763,904 1,608,154ABSCatalogueNo1329.0In2014-15therewereanestimated5,160grapegrowerswith135,178haofgrapegrowingarea(ABS2015)producing1,670,000tonnesofgrapecrush(WFA,July2015).Thecostofgrowingwinegrapesvariesaccordingtothesizeofthevineyard,thedegreeofmechanisationandthemethodofirrigation.Harvestingcanbelabour-intensive,althoughmechanisationisincreasingwithintheindustry.Thelocationofthevineyard,fluctuationsinyieldsachievedandpricesreceivedalsocausevariationsincoststructure.Approximately80%ofAustralianwinegrapegrowingenterprisesoperateonlessthan50ha(IBISWorld,May2015).MajorgrapevarietiesgrownbytheAustralianindustryincludeShiraz,Chardonnay,CabernetSauvignon,Merlot,Semillon,PinotNoir,Riesling,andSauvignonBlanc.In2015Shiraz(25%ofproduction)andChardonnay(21%ofproduction)dominate.Theindustrycanbesplitonproductionvolumeinto60%‘warminland’and40%‘therest’.‘Therest’isdominatedbyhighvaluecooler
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
NSW Vic QLD SA WA TAS NT ACT
Empl
oym
ent
No.
State or Territory of Usual Residence
Wine and Other Alcoholic Beverage Manufacturing
Grape Growing
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countrywinegrapeproduction.Byvalue‘warminland’accountsforbetween50%and55%ofindustryvalue.HighestwinegrapepricesarereceivedincoolclimateTasmaniaandlowerpricesarereceivedintheRiverinaandSwanHill(Andersonetal2010).Averagenationalgrapepriceshavebeenonageneraldownwardtrendsince2001whenthenationalaveragewas$933/tonne.Thenationalaveragewinegrapepurchasepricein2014was$441/tonne(WineAustralia,May2015).In2015averagegrapepriceswere$463/tonne(WFA,July2015).
Winegrapegrowingareaunderwentarapidexpansioninthe1990sincreasingfrom60,000haatthebeginningofthatdecadetoapproximately140,000haby2000,increasingagainto145,000hain2012,148,509hain2013beforecontractingto135,178hain2014.Figure2.3showsthehistoricrapidincreaseinAustralianwinegrapegrowingareathroughthe1990s.Figure2.3WineGrapeGrowingArea–HistoricalAnalysisAustraliaandSouthAustralia
Source:Andersonetal(2010)Mostwinegrapesaregrownwiththeassistanceofirrigationwaterandthewinegrapeindustryisanefficientuserofthisnaturalresource.Comparedwithotherfarmenterprises,wateruseperlitreofproductionvalueforgrapesisgreaterthanforotherfruitsorforvegetablesbutitismuchlessthanforsugar,cotton,riceordairying.Inaggregateterms,grapegrowersuselesswaterthanallthoseenterprisesexceptvegetablegrowing-Table2.2.
Table2.2WaterUseperDollarofGVP,GrapesandOtherAgriculturalProducts(litres)Commodity LitresUsedperDollar
ofGVPCreatedTotalWaterUse(Giga-litres)
Grapes 463 626OtherFruit 266 675Vegetables 164 451Sugar 1,045 1,104Cotton 1,838 1,746Rice 4,817 1,230Milk 859 2,871
Weightedaverage 711 1,350Source:Andersonetal(2010)
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Thegrapegrowingindustryhasworkedhardtoimproveitswateruseefficiencyandbythemid-2000shadallbutphasedoutfloodirrigation.ABS(2015)reportsthatmostwinegrapesarenowwateredwithefficientdripormicrospray–Figure2.4.Figure2.4IrrigationMethod–AustralianWineGrapes
Source:ABS2015Figure2.5identifiesthetop15regionsinAustralia(ABSStatisticalArea4,2011)foremploymentingrapegrowing.Figure2.5RegionalEmploymentinGrapeGrowing
-200400600800
1,0001,2001,4001,600
Source:ABS(StatisticalArea4,2011)Grapegrowingcontributesmorethan1,300jobstotheeconomyofSouthEastSouthAustralia.
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2.3 WineMakingThereareapproximately2,900wineriesinAustralia(DepartmentofAgricultureandWaterResources(DoAWR)Levies,2014,datasuppliedbyWineAustralia).Winemakersgrowtheirowngrapesandpurchasegrapesfromwinegrapegrowers.Winemakersalsosellgrapes,bulkwine,andmerchandiseatthecellardoor.Winemakerscontractcrushandpackforotherwineries(WineAustralia&WFA2007).Benchmarkingguidesclassifywinemakingbusinessesintosmall,mediumandlargeenterprisesonthefollowingbasis–Table2.3.Notethestrongrelationshipbetweenenterprisesizeandwineprocessingcost.Table2.3CharacteristicsofWineMakingBusinesses–Small,MediumandLargeCriterion Small Medium LargeOwnership Typicallyanowner
operatedbusinessPredominantlyowneroperated.Mayhavefulltimeemployees
Publicorprivateownership
Productionfacilities Singleproductionsiteproducingbrandedproduct
Thebusinessowns/controlsitswinemakingfacilityandhasacombinationofestatevineyardsandcontractedgrapepurchases
Singleormultipleproductionsites,somecontractcrushing,mixbetweenbrandedproductionandbulkwineproduction,mixbetweenownandpurchasedgrapes
Capacity Annualprocessingcapacityoflessthan750tonnesofwinegrapes
Processingcapacityisbetween750and5,000tonnesofwinegrapes
Processingcapacityexceeds7,000tonnesandmaybeinexcessof120,000tonnes
Salesturnover Winesalesoflessthan50,000casesand$5millioninsalesrevenue.Doesnotincorporaterevenuefromcellardoormerchandise,saleofgrapes,bulkwineorprocessingandpackaging
Winesalesofbetween50,000and350,000casesandbetween$5millionand$20millioninbottledwinesalesrevenue.Mayincludeincomefrommerchandise,bulkwine,processingandpackaging
Grosscasesalesrevenueexceeding$20millionand200,000cases.Extra-largewinemakersmayhavesalesof500,000casesorbulkwinesalesinexcessof100millionlitres
Market Directsalesviacellardoor,websiteandlocalrestaurants
Salestargetedtoarangeofmarkets.Likelytohavea‘marketingteam’.Useadditionalincomesourcestosupplementrevenueandprofitability
Predominantlyabrandedproductionbusiness.Extra-largebusinessesincludebulkwinesales
Processingcost($/litre) $3/litre,micromaker$2/litre,smallwinemaker
$1/litremediumsizedwinemaker
$0.50/litre,largemaker$0.25/litre,extra-largewinemakingbusiness
Source:WineAustralia&WFA(2007)Winemakingischaracterisedbyalargenumberofsmallbusinesses.Forexample,411from523responsestotheWinemakers’FederationofAustralia(WFA)2015VintageSurveywerefromwineriesthatreportedatotalcrushoflessthan500tonnes(WFA2015).Winemakingisaregionallysignificantindustry.Thetop15regionsinAustraliaforemploymentinWineMakingareshowninFigure2.6.
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Figure2.6RegionalEmploymentinWineManufacturing
Source:ABS(StatisticalArea4,2011)Australiaistheworld’ssixthlargestproducerofwine,withproductionataround1.2billionlitresperannum(InternationalOrganisationofVineandWine(OIV)2015).Australianwinesalesincreasedsignificantlyfromthe1990sbuthavedeclinedmarginallysince2006-07–Figure2.7.Figure2.7AustralianWineSales(billionlitres)
Source:WineAustralia(February2015)Wineproduction,domesticsales,domesticsalesvalueandaveragepricereceivedbythewinemakeraresummarisedinTable2.4.
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Table2.4DomesticSalesofAustralianWinebyWineMakingBusiness(2012-13)Beveragewineproduction(millionL) 1,231DomesticsalesofAustralianwine(millionL) 487.7DomesticsalesvalueofAustralianwine($’million) 2369.2Averagepriceperlitre($/L) 4.86Source:ABSCatalogueNo1329.0Domesticsalesaccountforapproximately40%ofwineindustryproductionandsaleshavebeenrelativelyflatfortheperiod2010to2015.Domesticsalesgrowthhasbeencapturedbyimportse.g.NewZealandSauvignonBlancandFrenchChampagne.ThetopwineimportcountriestoAustraliaarelistedinTable2.5.Table2.5AustralianWineImports–Top5Countries2013-14ImportCountry ImportsbyValue($’million) ImportsbyVolume(millionL)NewZealand 334.9 52.2France 205.9 13.1Italy 51.0 8.5Spain 15.0 2.6Chile 4.3 1.1
Total(allcountries) 634.3 81.8SourceDepartmentofAgricultureandWaterResources(DoAWR)2015TheAustralianwinemakingindustryisexportoriented.MorethanhalfofAustralianwineexportsaredestinedforEurope,athirdforNorthAmerica,12percentforAsiaandtheremaining5percentfortherestoftheworld.Asia,includingChina,isagrowingdestinationforAustralianwine(WineAustralia,May2015).TheimportanceofindividualexportmarketsforbottledwineisshowninFigure2.8andbulkwineisshowninFigure2.9.Figure2.8AustralianBottledWineExportsbyTop15Destinations($’million)forMAT#Sept.2015
Source:WineAustralia,ExportReport,September2015#MovingAnnualTotal
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Figure2.9AustralianBulkWineExportsbyTop15Destinations($’million)forMAT#Sept.2015
Source:WineAustralia,ExportReport,September2015#MovingAnnualTotalIncreasinglyAustralia’swineexportsareshippedinbulkshippingcontainers.In2015approximately60%ofAustralia’swineexportswereshippedasbulkandthebalancewasexportedinbottles.Analysisofexportdatashowsthattheaveragepriceforexportwineislowerthaninthepastbutthisispartiallyexplainedbybulkshippingofalowervalueproduct-winewithoutthecostofabottleandbottling.Bulkshippingandbottlingin-marketisparticularlycharacteristicofsalestotheUnitedKingdomwherebulkwineaccountsfor85%ofAustralia’sexportsales(WineAustralia,May2015).AverageFreeOnBoard(FOB)priceforexportwineisapproximately$3/litre(WineAustralia,ExportReport,September2015).WineisAustralia's6thlargestagriculturalexportindustry–Table2.6.
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Table2.6Australia'sTop10AgriculturalExports(byvalue)–2012-13financialyear
AgriculturalCommodity $’million %
Wheat 6,749 17.6
Beef 5,051 13.2
Cotton 2,695 7.0
Wool 2,470 6.4
Canola 2,094 5.4
Wine 1,865 4.8
Lambandmutton 1,637 4.2
Sugar 1,480 3.8
Barley 1,266 3.3
Milkandcream 996 2.6
TotalofAustralianAgricultureexports 38,268 100%* * Based on the WTO definition of agriculture, which excludes fisheries, forestry and rubber. The value of Australian fisheries, forestry and rubber exports in 2013 was respectively: $1,024, $1,089 and $234 (million). http://dfat.gov.au/trade/topics/pages/agriculture.aspxExportwinevolumesgrewrapidlyovertimefromthe1990sto2007andhavesincedeclinedfromapeakof807millionlitresinJuly2007to734millionlitresinSeptember2015.ThedeclineinexportsreflectsamarginaldeclineinAustralianproduction–Figure2.10.Figure2.10AustralianWineExportVolumesOverTime
Source:WineAustraliaSeptember2015
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Encouragingly,inthetwelvemonthstoSeptember2015,AustralianwineexportsrecordedtheirstrongestperiodofgrowthsincetheexportvaluepeakedinJuly2007(WineAustralia,ExportReportSeptember2015).TheeconomicstatusandoutlookforAustralianwineisbrieflyreviewedinSection2.5.
2.4 WineTourismTourismResearchAustralia(TRA2015)estimatethattherewere15.8milliondomesticvisitornightsand44.2millioninternationalvisitornightstoAustralianwineriesin2014-15.Overalltheirexpendituretotalled$9.2billion.BDAMarketingconductedconsumerresearchacross15keyAustraliantouristmarketsforTourismAustralia.Theresearchshowedthat‘greatfood,wine,localcuisineandproduce’wasamajorfactorinfluencingholidaydecision-making(38%),rankingthirdaheadof‘worldclassbeautyandnaturalenvironments’(37%)–Figure2.11.Figure2.11InternationalTouristReasonsforVisitingAustralia
Source:http://www.tourism.australia.com/documents/Food_and_Wine_Fact_Sheet.pdfTourismAustraliahasrespondedtothisresearchwithamajorinternationalmarketingcampaignhighlightingAustralia’sfoodandthewinetravelexperience.
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2.5 IndustryStatusandOutlookFromthe1990sAustralialedawaveofwineexporterswhotransformedworldwinemarkets.Australiaproducedanddeliveredwellpricedwineofconsistentquality.InsodoingAustraliasecureditsplaceasamajorwineexporter.Newworldcountries,especiallythoseinthesouthernhemisphereadoptedthe‘Australianmodel’,theEUexpandedproductionandtheworldwinesupplygrew.InthenewcenturyaseriesofshockshittheAustralianwinesector.Anderson(2015)identifiedtheseshocksasincluding:
• Adecadelong,mininginducedappreciationoftheAustraliandollar–makingAustralianwinerelativelyexpensiveinexportmarkets
• Amulti-yeardroughtwithsevereconsequencesfortheavailabilityandcostofessentialirrigationwater
• Theglobalfinancialcrisisthatbeganin2008andcurtailedexportdemand• ThetighteningofwinedistributionregulationsinCanada,theUSandScandinavia• Thelaunchofanausterityandanti-corruptiondrivein2012byanewChineseGovernment
thateffectivelyreducedgovernment-fundedbanquetingandgiftingofwine• Theriseofsupermarketretailingofwineandtheirpreferenceforbulkpurchasedand‘own
brand’labelledwine• WinefashionswingsthatworkedagainstAustralianwineinUKandUSmarketsandforNZ
SauvignonBlancinthedomesticmarket.Asaconsequenceoftheseshocks,theAustralianwinesectorexperiencedlargedeclinesinthepricespaidtograpegrowersfortheirwinegrapes,cutsinwinemakingprofitsandanexchangerateinducedcontractioninwinetourism.InventoriesofAustralianwinepeakedat2.4billionlitresin2006andproductionandsalesarenowmorecloselyaligned–Figure2.12.OfnoteisanupwardtrendinAustralianwineinventorypost2011andaclosinginventoryof1.8billionlitresin2014.Figure2.12AustralianWineSupply,DemandandInventoriesOverTime
Source:WineAustraliaMay2015
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Despitetwentyfirstcenturysetbacks,theAustralianwinesectorhascautiousreasonforoptimismandthereareseveralpositivesignsemerging.OneiseconomicrecoveryintheUSandpartsoftherecessedeconomiesintheEU.Asecondencouragingsignwasthesubstantialtake-upoftheEU’soffertopaywinegrapegrowerstoremovevinesduringtheperiod2009to2011.TherehasalsobeensomeremovalofvinesinthewarmirrigatedareasofCaliforniaaswellasinAustralia(Anderson2015).Third,expecteddemographicchangesintheUSoverthelongertermsuggestwineconsumptionwillgrowfasterthanoverallpopulation.Fourth,theAsianmarketisgrowingsteadily.Notonlyisthepopulationexpectedtoincreaseby700millionpeopleby2030butAsia’sshareofglobalincomeisexpectedtodouble.AlreadythemiddleclassinemergingAsianeconomiesareconsumingmediumpricedandhighpricedfinewines.Duringtheperiod2011to2014AustralianwineexportstoAsiaaveraged$6.40/litrecomparedtolessthan$2.20/litreforallotherdestinations.EvenAustralianexportstoChina,byfarthebiggestAsianwinemarket,averaged$5.70/litreduringthisperiod(Anderson2015).Australia’sexportprospectsdependonexchangeratemovements.WiththerecentdevaluationoftheAustraliandollar,prospectsforexportwinesaleshavebrightenedandimportsofwineintoAustraliahavebecomelesscompetitive.FinallyitneedstoberememberedthattheslowdownindomesticgrowthfollowingtheendofthemininginvestmentboomwillalsoslowAustralia’spercapitaincomegrowthanddampenthegrowthindomesticdemand(Anderson2015).IBISWorld(May2015a)forecastsstrongerwinesectorgrowthforthefive-yearperiodthroughto2020-21thanhasbeenexperiencedinthefiveyearsto2015-16–Figure2.13.Figure2.13OutlookforAustralianWineSectorto2021(IBISWorld,May2015)
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2.6 IndustryStatisticsKeyAustralianwineindustrystatisticsassembledwiththeassistanceofWineAustraliaaresummarisedinTable2.7.Table2.7-AustralianWineSectorStatistics(variousyears)Measure Year Quantity UnitWineGrapeGrowing Winegrapegrowers 2014-15 5,160 numberWinegrapevineyardarea 2014-15 135,178 hectaresWinegrapecrush 2014-15 1,670,000 tonnesGrossvalueofwinegrapesales 2014-15 773,210,000 $Directemploymentingrapegrowing 2011 7,567 numberWineManufacturing Winemakingenterprises 2014 2,900 numberWineproduction 2012-13 1,231,000,000 litresDomesticsalesofAustralianwine 2012-13 2,369,200,000 $Domesticsalesofimportedwine 2013-14 634,300,000 $ExportsalesofAustralianwine 2012-13 1,865,000,000 $Directemploymentinwinemaking 2011 14,814 numberWineTourism Domesticvisitornights 2014-15 15,801,000 numberDomesticvisitorexpenditure 2014-15 3,466,800,000 $Internationalvisitornights 2014-15 44,178,000 numberInternationalvisitorexpenditure 2014-15 5,740,800,000 $Source:variousSummarystatisticsprovideafoundationforanalysisoftheeconomiccontributionoftheAustralianwinesector.
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3. InputOutputModellingTherearetwomainmethodsthatcanbeusedtoanalysetheeconomiccontributionofanindustry,theyare:
• Input-output(IO)analysis;and• Computablegeneralequilibrium(CGE)analysis.
However,themostappropriatemethodtousedependsonwhattypeofimpactisbeingexamined.IOanalysiscanbeusedto:
• Developasnapshotofanexistingindustryinaparticularyearincludingitsdirectandindirectlinkages;or
• Assesstheeffectsofachangeorshocktotheeconomye.g.anexpansionorcontractionoranewactivity.
CGEanalysisisunsuitableforprovidingasnapshotofanexistingindustryanditsinter-sectorallinkagesandismoreapplicabletoassessingtheeffectsofachangeorshocktotheeconomy.Forinstance,NZIER(2014)‘TheeconomiccontributionoftheNewZealandwinesector,theimpactofgrowthsince2008’,usedCGEtoexaminetheimpactofgrowthinthewineandgrapeindustryinNewZealandcomparedtoifgrowthhadstagnatedat2008levels.Consequently,forthisAustralianstudywhichisfocusedonprovidingasnapshotofanexistingindustry,IOanalysisisused.IOisprimarilyconcernedwiththeeffectofanimpactingagente.g.anindividualbusinessorsector,onaneconomyintermsofanumberofspecificeconomicactivityindicators,suchasgrossregionaloutput,value-added,incomeandemployment.Theseindicatorscanbedefinedasfollows:
• Grossregionaloutput–thegrossvalueofbusinessturnover;
• Value-added(grossregionalproduct)–thedifferencebetweenthegrossvalueofbusinessturnoverandthecostsoftheinputsofrawmaterials,componentsandservicesboughtintoproducethegrossregionaloutput;
• Income–thewagespaidtoemployeesincludingimputedwagesforself-employedandbusinessowners;and
• Employment–thenumberofpeopleemployed(includingfull-timeandpart-time).Animpactingagentmaybeanexistingactivitywithinaneconomye.g.anongoingtourismventure,ormaybeachangetoalocaleconomye.g.anewtourismdevelopment.Inthisstudytheimpactingagentistheexistinggrapegrowing,winemakingandwinetourismsectors.Theeconomyonwhichtheimpactismeasuredcanrangefromatownshiptotheentirenation(Powelletal.,1985).Thisstudyisconcernedwithexaminingtheimpactsofthegrapegrowing,winemakingandwinetourismsectorsontheAustralianeconomy.
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Input-outputanalysisessentiallyinvolvestwosteps:
• ConstructionofanappropriateIOtable(regionaltransactiontable)thatcanbeusedtoidentifytheeconomicstructureofadefinedregionandmultipliersforeachsectoroftheeconomy;and
• IdentificationoftheinitialimpactorstimulusofanindustryinaformthatiscompatiblewiththeIOequationssothattheIOmultipliersandflow-oneffectscanthenbeestimated(JensenandWest,1986).
Forthisstudy,thelatestNationalIOTableproducedbytheAustralianBureauofStatisticsfor2012-13,adjustedto2015values,wasused.IdentificationoftheinitialimpactofthewinesectorinaformcompatiblewiththeIOtablerequiredthedevelopmentofaspecificaggregateemployment,revenueandexpenditureprofileforthegrapegrowingsector,winemakingsectorandwinetourismsector,basedonavailableindustryinformation.ForeachofthegrapegrowingsectorandwinemakingsectoraspecificintermediateIOsectorwasdevelopedwhere:
• Theestimatedgrossannualrevenuewasallocatedtotheoutputrow;• Theestimatedwagebillofemployees(includingimputedwagesfortheself-employed)was
allocatedtothehouseholdwagesrow;• Non-wagelocalexpenditurewasinitiallyallocatedacrosstherelevant114intermediate
sectorsintheeconomy-forthewinemakingsectortheexpenditureongrapeswasequaltothesalevalueofthegrapesector;
• PurchaserpricesforexpenditureineachsectorintheeconomieswereadjustedtobasicvaluesandmarginsandtaxesandallocatedtoappropriatesectorsusingrelationshipsintheNationalInput-OutputTables;
• AllocationwasthenmadebetweenintermediatesectorsandimportsbasedonthepercentageofimportsineachsectoroftheNationalIOtable;
• Thedifferencebetweentotalrevenueandtotalcostswasallocatedtotheothervalue-addedrow;and
• Directemploymentwasallocatedtotheemploymentrow.ThesesectorswereinsertedintotheIOtabletofacilitateimpactassessment.Asidentifiedabove,thereisnointermediatesectorintheIOtablefortourism.Tourismrelatestofinaldemandexpenditureonarangeofgoodsandservicesacrossthe114intermediatesectorsofthenationaleconomy.Anexpenditureprofileforthisfinaldemandexpenditurewasdevelopedbasedontheestimatedtotalexpenditureofdomesticandinternationaltourists,andthemaincategoriesoftourismexpenditure.PurchaserpricesfortourismexpenditureintheeconomieswereadjustedtobasicvaluesandmarginsandtaxesandallocatedtoappropriatesectorsusingrelationshipsintheNationalInput-OutputTables.WithnewintermediatesectorsforgrapegrowingandwinemakinginsertedintotheIOtableandafinaldemandexpenditureforwinetourismdeveloped,thecomputerprogramIO7(Input-OutputAnalysisVersion7.1)wasusedtoestimatetheaverageannualdirectandindirectoutput,value-added,incomeandemployment6impactsforeachofthewinesectorcomponents.
6 It is important to understand that the focus of IO analysis is on the economic stimulus provided by wine sector and not on the economic costs and benefits of the wine sector. Consideration of the economic costs and benefits of wine sector would require the undertaking of a benefit cost analysis.
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Indirectimpactsaredisaggregatedinto:
• Production-inducedeffects-economicactivityfromthepurchaseofgoodsandservicesthatareusedasaninputintoproductionorthewinetourismexperience;and
• Consumption-inducedeffects-economicactivityfromthespendingofemployeesofthewinesectorandemployeesofthosesupplyinginputsintoproductionorthewinetourismexperience.
Inbothcases,inadditiontofirst-roundpurchases,therewillbeaseriesofindirectpurchasesaswavesofsecond,thirdandsubsequent-roundeffectsmaketheirwaythroughouttheeconomy.RatiomultipliersarereportedinSection5foreachofthecomponentsofthewinesector.Theseprovidesummarymeasuresusedforpredictingthetotalimpactonallindustriesinaneconomyfromchangesinthedemandfortheoutputofanyoneindustry.Theyexpressindirectimpactsorflow-onsintermsoftheinitialownsectoreffectse.g.employmentflow-onsinrelationtodirectemploymenteffects,outputflow-onsinrelationtodirectoutputetc.RefertoAttachment1foradiscussionofmultipliersandtheassumptionsunderpinningIOanalysis.Considerationisalsogiventoaggregationoftheimpactsofeachcomponentbeingcarefultoavoiddoublecounting.IOanalysisexaminesbackwardlinkagesonly.Consequently,becauseexpenditurebytouristswouldincludesomeexpenditureonwineatthecellardoorandexpenditurebywinemanufacturerswouldincludeexpenditureongrapestherewouldbedoublecountingiftheeconomicactivityfromeachofthecomponentsofthewinesectorweresimplyaddedtogether.Adjustmentisrequiredtoexpenditureprofilestoremovedoublecountingifthecomponentsofthewinesectoraretobeaggregated.BecauseIOonlyexaminesbackwardlinkages,thisanalysisdoesnotcapturemarginsonwinesalesthroughwholesaleandretailoutlets.Valuesforwinesalesandgrapesalesareatthefarm/factorygate.
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4. Revenue,ExpenditureandEmploymentProfilesoftheWineSector
Section4developsrevenue,expenditureandemploymentprofilesforeachofthecomponentsofthewinesectortoenablethesubsequentestimationoftheirdirectandindirectimpactsonthenationaleconomy.
4.1 WineGrapeGrowingWinegrapegrowingtotalrevenuewasestimatedforfinancialyear2014-15usingdatafromtheAustralianWineSectorSurvey(WFA,July2015)at$773,210,000(totalcrushof1,670,000tonnesatanaveragevalueof$463/tonne)withanABSwinegrapegrowingareaof135,178hacreatinganaveragegrossrevenueof$5,720/ha.Thegrossrevenueestimateof$5,720/hawasalignedtopublishedgrossmarginbudgetstoprovideabreakdownofindustryexpenditure.Publishedgrossmarginbudgetsweresecuredforboth‘warminland’MurrayValley(Retallack2012)and‘coolclimate’Tasmania(DPIPWE2014).Averagegrossmarginwasconsideredacrosstheseproductiontypesandtotalindustryrevenueandexpenditureaggregatedfromtheaveragegrossmarginusingtheindustrygrossvalueestimateof$773,210,000.ResultsareshowninTable4.1.Table4.1WineGrapeGrowingRevenueandExpenditureProfile
AverageGrossMargin
($/ha)
WineGrapeGrowingIndustryTotalRevenueandExpenditure
($’million)Revenue(A) 5,720 773.2
Expenditure Farmlabour 770 104.1Contractlabour 722 97.6Fruittransport 518 70.0Levies 75 10.1Chemicals 582 78.7Nutrition/fertiliser 246 33.3Vineyardfloor/canopymanagement 114 15.4Sundrymaterials/supplies 116 15.7Machineryexpenses 272 36.8Machineryfuel 306 41.4Machineryhire 379 51.2Wateranddrainagecosts 1,395 188.6Repairsandmaintenance-vineyard 100 13.5
Totalexpenditure(B) 5,595 756.4NetRevenue(A)less(B) 125 16.8
Employment 6,807*
*ABS4digitcensusdataforgrapegrowingof7,563(Table2.7)less10%associatedwithtablegrapeanddriedgrapegrowing(IBISWorld,May2015reporttableanddriedgrapesaccountfor10%oftotalgrapegrowingindustryproduction).
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Winegrapegrowingindustryemploymentwasestimatedusingthefollowingdata:
• 7,567employedinalltypesofgrapegrowing(ABS2011,CensusEmploymentbyIndustry4digitlevel)less10%associatedwithtableanddriedgrapeproductioni.e.6,807jobs
• Totalwagesthatexcludecontractlabour–recordedintheinput-outputmodelas‘servicestoagriculture’.Employmentassociatedwithcontractlabourrecordedasa‘multiplier’
• TotalwagesthatincludeTable4.1–‘farmlabour’and‘netrevenue’toreflectimputedwagesfromfarmowners.Totalwagesarethereforeestimatedat$121million($104.1millionfarmlabourplus$16.9millionnetrevenue)
• Averagegrapegrowingindustrywageisthereforeamodest$17,776perannum(totalwagesof$121milliondividedby6,807jobs).ThisestimateisbroadlyconsistentwithIBISWorld(May,2015)whichestimatedaveragegrapegrowingwagefor2014-15at$17,021.
4.2 WineMakingWinemakingtotalrevenuewasestimatedat$5.9billionfromthevalueof‘domesticsalesofAustralianwinebywinemakingbusiness’estimateof$2.369billionfor2012-13(ABS2013)andtheknowledgethatdomesticsalesconstitute40%ofindustrytotalrevenue.ExportvaluedatawasnotemployedbecauseitiscalculatedonanFOBbasis,isnotcomparabletothedomesticdataandincludesnon-winemakingcosts.ExportvalueisalsoaffectedbytheincreaseinlowervaluebulkwineexportsandthetransferofvaluetoAustralianwineryownedbottlingfacilitiesinexportmarkets.Winemakingproductioncost(expenditure)wassourcedfromPalousis(2015)andcrosscheckedwiththeWFAandWineAustraliaGrossMarginReadyReckoner(http://www.wfa.org.au/resources/financial-ready-reckoner/).ItisnotedthattheReadyReckonerwaslastupdatedin2010sogreateremphasishasbeenplacedonthemorerecentPalousis(2015)data.Table4.2providesasummaryofaveragewinemakerrevenueandexpenditurepersaleablelitreofwinealongwiththewinemakingindustrytotal.IndustrytotalrevenueandexpenditurewasdevelopedusingatotalwineproductionestimateforAustralia,2012-13of1.231billionlitres(ABS2013).
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Table4.2WineMakingRevenueandExpenditureProfile AverageRevenueand
Expenditure($/litre)WineMakingIndustryTotalRevenueand
Expenditure($’million)Revenue(salepricepackaged) 4.79 5,900Costofpackaging# 1.79 2,203
Revenueafterpackaging(A) 3.00 3,697Expenditure Winerylabour 0.72 886Grapes 0.63 773Wineloss/wastetreatment 0.13 159Depreciation 0.22 270Electricity/gas 0.08 98Repairsandmaintenance 0.10 128Water 0.07 86
Totalcost(excludingpackaging)(B) 1.95 2,400Netrevenue(A)less(B) 1.05 1,297
Employment 13,629*
#noteanestimated60%ofwineexportsareshippedasbulkwinei.e.lowerpackagingcostforbulk*ABS4digitcensusdataforwineandotheralcoholicbeveragemanufacturing(Table2.7)less8%associatedwithciderandotheralcoholicbeveragemanufacture(IBISWorld,May2015areportciderandotheralcoholicbeveragesat8%ofAustralianandNewZealandStandardIndustrialClassificationtotal).Winemakingindustryemploymentwasestimatedusingthefollowingdata:
• 14,814employedinthewineandotheralcoholicbeveragemanufacturingsector(ABS2011,CensusEmploymentbyIndustry4digitlevel)less8%associatedwithciderandotheralcoholicbeveragemakingi.e.13,629jobs
• Totalwagesthatincludetheself-employedshowninTable4.2as$886million.
• Averagewinemakingindustrywageistherefore$65,000(totalwagesof$886milliondividedby13,629jobs).ThisestimateisbroadlyconsistentwithIBISWorld(May,2015a)whichestimatedaveragewinemakingwagesfor2014-15at$60,875.
4.3 WineTourismWinetourismrevenueandexpendituredata2014-15wassourcedfromTourismAustralia(TourismResearchAustralia,June2015).Separateestimatesareprovidedfordomesticandinternationalvisitors.DataissummarisedinTable4.3.
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Table4.3WineTourismExpenditureandVisitation DomesticWine
Tourism($’million)
InternationalWineTourism
($’million)
Total($’million)
ExpenditureItem Airfares 303.8 1,195.2 1,499.0Tours 211.0 653.6 864.6Transportation 428.2 325.7 753.9Food,drinkandaccommodation# 2,106.3 1,933.5 4,039.8Shopping 277.0 589.2 866.2Entertainment 112.5 106.2 218.7Education 0.4 596.4 596.8Other 27.7 341.0 368.6
Total 3,466.8 5,740.8 9,207.6 Visitornights(‘000) 15,801 44,178.0 59,979.0#noteitisassumedthat3%ofwinesalesatthecellardooristowinetourists.TheestimateisderivedfromtheAWBCandWFA(2007)BenchmarkingGuideforMediumSizedBusinesseswhichestimatesthat3%oftotalsalesforbusinessofthissizeareatthecellardoor.NoABSemploymentdataisavailableforwinetourismbecausethereisnospecifictourismindustrysectorintheAustralianandNewZealandStandardIndustrialClassification.EmploymentdataisgeneratedfromanalysisofthewinetourismexpenditureprofileusingtheIO7software.
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5. DirectandIndirectImpactsoftheWineSectorontheAustralianEconomy
5.1 GrapeGrowingSector
EconomicActivityThetotalanddisaggregatedimpactofgrapegrowingontheAustralianeconomy(in2015dollars)isshowninTable5.1.Table5.1DirectandIndirectImpactoftheGrapeGrowingSector DirectEffect Production
InducedConsumption
InducedTotal
Flow-onTOTALEFFECT
OUTPUT($’000,000) 773 1,079 822 1,901 2,674Type11ARatio 1.00 1.40 1.06 2.46 3.46VALUE-ADDED($’000,000) 128 483 455 938 1,065Type11ARatio 1.00 3.78 3.56 7.34 8.34INCOME($’000,000) 121 252 219 471 592Type11ARatio 1.00 2.08 1.81 3.90 4.90EMPLOYMENT(No.) 6,813 3,093 3,360 6,454 13,267Type11ARatio 1.00 0.45 0.49 0.95 1.95
TheAustraliangrapegrowingsectorisestimatedtomakeuptothefollowingtotalannualcontributiontothenationaleconomy:
• $2,674Minannualdirectandindirectregionaloutputorbusinessturnover;• $1,065Minannualdirectandindirectregionalvalueadded;• $592Minannualdirectandindirecthouseholdincome;and• 13,267directandindirectjobs.
MultipliersRatiomultipliersprovideasummarymeasureofthedirectandindirecteconomicactivityrelativetothedirecteconomicactivityforaparticularindicator.TheType11Aratiomultipliersforthegrapegrowingsectorrangefrom1.95foremploymentupto8.34forvalueadded.Thelowratiomultiplierforemploymentisareflectionoftherelativelylabourintensivenatureofthegrapegrowingsectorcomparedtothesectorsthatexperienceflow-onemployment.Thehigherincomeratiomultiplierreflectsthehigherwagesofthoseexperiencingflow-onemploymentrelativetothelowwageinthegrapegrowingsector.Theveryhighvalue-addedmultiplierreflectslowwagesandlowprofitsingrapegrowingrelativetothesectorsthatexperienceflow-oneffects.
MainSectorsAffectedFlow-onimpactsfromthegrapegrowingsectorimpactanumberofdifferentsectorsofthenationaleconomy.Thesectorsmostimpactedbyoutput,value-addedandincomeflow-onsarethe:
• WaterSupply,SewerageandDrainageServices;• OwnershipofDwellings;
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• Agriculture,ForestryandFishingSupportServices;• RoadTransport;• WholesaleTrade;• BasicChemicalManufacturing;• Finance;• RetailTrade;• Professional,ScientificandTechnicalServices;• RentalandHiringServices(exceptRealEstate);• Non-ResidentialPropertyOperatorsandRealEstateServices;• Employment,TravelAgencyandOtherAdministrativeServices;and• AuxiliaryFinanceandInsuranceServices.
Examinationoftheestimateddirectandflow-onemploymentimpactsgivesanindicationoftheaggregatedsectorswithemploymentlinkagestothegrapegrowingsector(Figure5.1).Figure5.1SectoralDistributionofGrapeGrowingEmploymentImpactsontheNationalEconomy
Figure5.1indicatesthatdirect,production-inducedandconsumption-inducedemploymentlinkagesofthegrapegrowingsectoronthenationaleconomyarelikelytohavedifferentdistributionsacrosssectors.Production-inducedflow-onemploymentoccurmainlyinservicessectors,transportsectors,utilitiessectors,wholesale/retailtradesectors,manufacturingsectors,andprimaryindustrysectorswhileconsumptioninducedflow-onemploymentaremainlyinservicessectors,wholesale/retailtradesectorsandaccommodation/cafes/restaurantssectors.
5.2 WineMakingSector
EconomicActivityThetotalanddisaggregatedannualimpactsofthewinemakingsectorontheAustralianeconomy(in2015dollars)areshowninTable5.2.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Employ
men
t(no
.)
Sectors
DirectEffects
Product.-induced flow-ons
Consump.-induced flow-ons
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Table5.2DirectandIndirectImpactoftheWineManufacturingSector DirectEffect Production
InducedConsumption
InducedTotal
Flow-onTOTALEFFECT
OUTPUT($’000,000) 5,900 6,346 5,352 11,698 17,598Type11ARatio 1.00 1.08 0.91 1.98 2.98VALUE-ADDED($’000,000) 2,464 2,615 2,961 5,576 8,040Type11ARatio 1.00 1.06 1.20 2.26 3.26INCOME($’000,000) 886 1,543 1,427 2,970 3,856Type11ARatio 1.00 1.74 1.61 3.35 4.35EMPLOYMENT(No.) 13,629 22,990 21,874 44,864 58,493Type11ARatio 1.00 1.69 1.61 3.29 4.29
TheAustralianwinemakingsectorisestimatedtomakeuptothefollowingtotalannualcontributiontothenationaleconomy:
• $17,598Minannualdirectandindirectregionaloutputorbusinessturnover;• $8,040Minannualdirectandindirectregionalvalueadded;• $3,856Minannualdirectandindirecthouseholdincome;and• 58,493directandindirectjobs.
MultipliersRatiomultipliersprovideasummarymeasureofthedirectandindirecteconomicactivityrelativetothedirecteconomicactivityforaparticularindicator.TheType11Aratiomultipliersforthewinemanufacturingsectorrangefrom3.26forvalue-addedto4.35foremployment.Thehighratiomultiplierforemployment(andincome)isareflectionoftheflow-onemployment(andincome)includingalldirectandindirectemploymentassociatedwithrelativelylabourintensivegrapegrowingsectorandwinemakingitselfbeingrelativelycapitalintensiveandhencehaverelativelowlevelsofemployment(andincome)forthevalueofproductproduced.
MainSectorsAffectedFlow-onimpactsfromthewinemanufacturingsectorimpactanumberofdifferentsectorsofthenationaleconomy.Thesectorsmostimpactedbyoutput,value-addedandincomeflow-onsare:
• GlassandGlassProductManufacturing;• Grapegrowing;• OwnershipofDwellings;• WholesaleTrade;• RetailTrade;• Finance;• Professional,ScientificandTechnicalServices;• ElectricityTransmission,Distribution,OnSellingandElectricityMarketOperation;• RoadTransport;• WaterSupply,SewerageandDrainageServices;• Employment,travelagencyandotheradministrationservices;• HealthCareServices;and• PublicOrderandSafety.
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Examinationoftheestimateddirectandflow-onemploymentimpactsgivesanindicationoftheaggregatedsectorswithemploymentlinkagestothewinemakingsector(Figure5.2).Figure5.2SectoralDistributionofWineMakingEmploymentImpactsontheNationalEconomy
Figure5.2indicatesthatdirect,production-inducedandconsumption-inducedemploymentlinkagesofthewinemakingsectoronthenationaleconomyarelikelytohavedifferentdistributionsacrosssectors.Production-inducedflow-onemploymentoccurmainlyintheprimaryindustriessector,servicessectorsandmanufacturingsectorswhileconsumptioninducedflow-onemploymentaremainlyinservicessectors,wholesale/retailtradesectorsandaccommodation/cafes/restaurantssectors.
5.3 WineTourism
EconomicActivityThetotalanddisaggregatedannualimpactsofthewinetourismsectorontheAustralianeconomy(in2015dollars)areshowninTable5.3.Table5.3DirectandIndirectImpactoftheWineTourismSector DirectEffect Production
InducedConsumption
InducedTotal
Flow-onTOTALEFFECT
OUTPUT($’000,000) 7,624 6,262 9,258 15,520 23,144Type11ARatio 1.00 0.82 1.21 2.04 3.04VALUE-ADDED($’000,000) 3,835 2,947 5,121 8,068 11,903Type11ARatio 1.00 0.77 1.34 2.10 3.10INCOME($’000,000) 2,465 1,736 2,469 4,205 6,670Type11ARatio 1.00 0.70 1.00 1.71 2.71EMPLOYMENT(No.) 55,175 22,986 37,837 60,823 115,997Type11ARatio 1.00 0.42 0.69 1.10 2.10
TheAustralianwinetourismsectorisestimatedtomakeuptothefollowingtotalannualcontributiontothenationaleconomy:
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Employ
men
t(no
.)
Sectors
DirectEffects
Product.-induced flow-ons
Consump.-induced flow-ons
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• $23,144Minannualdirectandindirectregionaloutputorbusinessturnover;• $11,903Minannualdirectandindirectregionalvalueadded;• $6,670Minannualdirectandindirecthouseholdincome;and• 115,997directandindirectjobs.
MultipliersTheType11Aratiomultipliersforthewinetourismsectorrangefrom2.10foremploymentto3.10forvalue-added.
MainSectorsAffectedImpactsfromthewinetourismsectorimpactanumberofdifferentsectorsofthenationaleconomy.Thesectorsmostimpactedintermsofoutput,value-addedandincomeare:
• Accommodation;• FoodandBeverageServices;• RoadTransport;• OwnershipofDwellings;• RetailTrade;• Finance;• WholesaleTrade;• Professional,ScientificandTechnicalServices;• Arts,sports,adultandothereducationservices(includingcommunityeducation);• Non-ResidentialPropertyOperatorsandRealEstateServices;• Employment,travelagencyandotheradministrativeservices;and• HealthCareServices.
Examinationoftheestimateddirectandflow-onemploymentimpactsgivesanindicationoftheaggregatedsectorswithemploymentlinkagestothewinetourismsector(Figure5.3).Figure5.3SectoralDistributionofWineTourismEmploymentImpactsontheNationalEconomy
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Employ
men
t(no
.)
Sectors
DirectEffects
Product.-induced flow-ons
Consump.-induced flow-ons
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Figure5.3indicatesthatdirect,production-inducedandconsumption-inducedemploymentlinkagesofthewinetourismsectorontheNationaleconomyarelikelytohavedifferentdistributionsacrosssectors.Directemploymentmainlyoccursintheaccommodation/cafes/restaurantssectors,servicessectorsandtransportsectors.Production-inducedflow-onemploymentoccurmainlyintheservicessectorswhileconsumptioninducedflow-onemploymentaremainlyinservicessectors,wholesale/retailtradesectorsandaccommodation/cafes/restaurantssectors.
5.4 TotalWineSector
EconomicActivityItisnotpossibletosimplyaddtheeconomicactivityfromgrapegrowing,winemanufacturingandwinetourismtogivethetotaleconomicactivityfromthewinesectors.ThisisbecauseIOanalysiscapturesbackwardlinkagesandsotheeconomicactivityimpactsfromthewinemanufacturingsectoralreadycapturesthebackwardlinkagestothegrapegrowingsector.Similarly,theeconomicactivityimpactsfromthewinetourismsectorcapturesbackwardlinkagestothewinemakingsector.Toestimatetheeconomicactivityforthetotalwinesector,comprisinggrapegrowing,winemakingandwinetourism,additionalIOanalysiswasundertakenforthewinetourismsectornetofexpenditureatthecellardoorofwineries.Thiswasaddedtotheeconomicactivityimpactsofthewinemakingsector(whichalreadycapturesbackwardlinkagestothegrapegrowingsector).Sodirecteffectsincludewinemakingplusfinaldemandexpenditureonwinetourismrelatedgoodsandservices(netofcellardoorsalestowinetourists).Allothereffectsarereportedinproductionandconsumptionsinducedflow-oneffects.UsingthisapproachthetotalanddisaggregatedannualimpactsofthetotalwinesectorontheAustralianeconomy(in2015dollars)isshowninTable5.4.Table5.4DirectandIndirectImpactoftheTotalWineSector DirectEffect Production
InducedConsumption
InducedTotal
Flow-onTOTALEFFECT
OUTPUT($’000,000) 13,347 12,417 14,449 26,867 40,214Type11ARatio 1.00 0.93 1.08 2.01 3.01VALUE-ADDED($’000,000) 6,224 5,484 7,993 13,477 19,701Type11ARatio 1.00 0.88 1.28 2.17 3.17INCOME($’000,000) 3,324 3,233 3,854 7,086 10,411Type11ARatio 1.00 0.97 1.16 2.13 3.13EMPLOYMENT(No.) 68,395 45,286 59,055 104,341 172,736Type11ARatio 1.00 0.66 0.86 1.53 2.53
TheAustralianwinesectorisestimatedtomakeuptothefollowingtotalannualcontributiontotheNationaleconomy:
• $40,214Minannualdirectandindirectregionaloutputorbusinessturnover;• $19,707Minannualdirectandindirectregionalvalueadded;• $10,414Minannualdirectandindirecthouseholdincome;and• 172,736directandindirectjobs.
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MultipliersTheType11Aratiomultipliersforthewinesectorrangefrom2.53foremploymentto3.17forvalue-added.
MainSectorsAffectedImpacts from thewine sector impact anumberof different sectorsof theNational economy. Thesectorsmostimpactedintermsofoutput,value-addedandincomeare:
• WineManufacturing;• Accommodation;• OwnershipofDwellings;• FoodandBeverageServices;• RoadTransport;• RetailTrade;• WholesaleTrade;• Finance;• Professional,ScientificandTechnicalServices;• GlassandGlassProductManufacturing;• Employment,TravelAgencyandOtherAdministrativeServices;and• HealthCareServices.
Examinationoftheestimateddirectandflow-onemploymentimpactsgivesanindicationoftheaggregatedsectorswithemploymentlinkagestothewinesector(Figure5.4).Figure5.4SectoralDistributionofWineSectorEmploymentImpactsontheNationalEconomy
Figure5.4indicatesthatdirect,production-inducedandconsumption-inducedemploymentlinkagesofthewinetourismsectoronthenationaleconomyarelikelytohavedifferentdistributionsacrosssectors.Directemploymentmainlyoccursintheaccommodation/cafes/restaurantssectors,servicessectors,primaryindustriessectorsandtransportsectors.Production-inducedflow-onemploymentoccurmainlyintheservicessectors,primaryindustriessectorsandmanufacturingsectorswhileconsumptioninducedflow-onemploymentaremainlyinservicessectors,wholesale/retailtradesectorsandaccommodation/cafes/restaurantssectors.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Employ
men
t(no
.)
Sectors
DirectEffects
Product.-induced flow-ons
Consump.-induced flow-ons
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5.5 ContributiontoTaxReceiptsWinegrapegrowing,winemakingandwinetourismbusinessesoperateinanenvironmentofmultipleandcomplextaxationregulationsparticularlywinemakersdealingwithmultipleexportjurisdictions.Examplesoftaxesthatawinemakerissubjecttoandmustactivelymanageare:
• WineEqualisationTax(WET)
• GoodsandServicesTax(GST)
• Stampduty
• Incometax
• Capitalgainstax
• FringeBenefitsTax(FBT)
• Payrolltax
• Customsandimportduties
• Overseastaxesanddutiesforexporters
• Employeesuperannuation.UnlikeComputableGeneralEquilibriummodelling,Input-Outputanalysisdoesnotgeneratetaxationindicators.InputOutputanalysisaccountsfortaxpaidoninputspurchasedbygrapegrowers,winemakersandthewinetourismsectorandthistaxpaidiscapturedinestimatesofvalue-added.Bywayofexampleofthequantumoftaxpaidbythewinesector,netWETpaymentswere$792millionin2014-15andareforecasttoincreaseto$920millionby2018-19(AustralianGovernmentMid-YearEconomicandFiscalOutlook,Table3.10http://budget.gov.au/2015-16/content/myefo/html/03_part_3-01.htm).
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6. ConclusionsTheresearchhasquantifiedthedirectandflow-oneffectsoftheAustralianwinesector.Thekeyresultsfromtheanalysisareasfollows.TheAustralianwinesectordefinedaswinegrapegrowing,winemakingandwinerelatedtourism:
• Supports172,736fullandpart-timejobsmostofwhicharelocatedinregionalAustralia.Jobssupportedbythewinesectorincludedirectemploymentof68,395withinthesectorandafurther104,341fulltimeandparttimejobsduetoinducedeffects.
• Incomefrombothdirectandflow-onemploymentinthewinesectortotals$10.4billion
• Contributes$40.2billiontothevalueofgrossoutputforAustralia.
• Adds$19.7billioninvalue-addedtotheAustralianeconomy.Theaverageeffectsofacontractionorexpansionwithinthewinesectorsuggests:
• Thewidereconomywouldgainanextra1.53jobsforeveryjobgainedinthewinesector.
• Theeconomywouldgainanextra$2.01millionforeveryadditional$1millionofgrossoutputgeneratedbythewinesector.
• Theeconomywouldgainanextra$2.17millionincontributiontovalue-addedforeveryadditional$1millionofvalue-addedgeneratedbythewinesector.
Industryforecastssuggestanexpansionofwinesectoreconomiccontributionsdescribedinthisreport.
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ReferencesABS(2011)CensusofPopulationandHousing–4digitemploymentABS(2013)-AustralianWineandGrapeIndustry,2012-13,Cataloguenumber1329.0accessed25Sept2015http://www.abs.gov.au/ausstats/[email protected] /Latestproducts/1329.0Main%20Features22012-13?opendocument&tabname=Summary&prodno=1329.0&issue=2012-13&num=&view=ABS(2015)–Vineyards,Australia,2014-15,Cataloguenumber1329.0.55.002accessed2Nov2015http://www.abs.gov.au/AUSSTATS/[email protected] /DetailsPage/1329.0.55.0022014-15?OpenDocumentABS(2014)–GrossValueofIrrigatedAgriculturalProductionhttp://www.abs.gov.au/AUSSTATS/[email protected] /Lookup/4610.0.55.008Main+Features12013-14?OpenDocumentAnderson,K.,NelgenS.,Valenzuela,E.,Wittwer,G(2010)EconomiccontributionsandcharacteristicsofgrapesandwineinAustralia’swineregions,WineEconomicsResearchCentreWorkingPaperNo0110http://www.adelaide.edu.au/wine-econ/papers/0110_Aust_wine_regions_0210.pdfAnderson,K.(2015)ReturningtoGrowth:LessonsfromPreviousCyclesinAustralia’sWineIndustry,WineEconomicsResearchCentreWorkingPaperhttps://www.adelaide.edu.au/wine-econ/pubs/working_papers/0215-returning-to-growth-mar15.pdfAustralianGovernment(December2015)Mid-YearEconomicandFiscalOutlook,Table3.10http://budget.gov.au/2015-16/content/myefo/html/03_part_3-01.htm)AustralianSenateInquiryintotheAustralianWineandGrapeIndustry(2015)http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/Australian_wine_industry/SubmissionsDepartmentofAgricultureandWaterResources(DoAWR2015)SubmissiontotheSenateStandingCommitteeonRuralandRegionalAffairsandTransportReferencesontheAustralianGrapeandWineIndustryDepartmentofPrimaryIndustries,Parks,WaterandEnvironment(DPIPWE)(2014)WineGrapeGrowingGrossMarginAnalysishttp://dpipwe.tas.gov.au/Documents/Wine-Grapes-Gross-Margin---Profitability-Analysis.xlsIBISWorld(May,2015)IndustryReportA0131GrapeGrowinginAustralia,GlasstooFull:OversupplyofWineGrapesandFloodingNegativelyAffectsIndustryRevenueIBISWorld(May,2015a)IndustryReportC1214WineProductioninAustralia,Hungover:IndustryRevenueGrowthwillbeConstrainedbyLingeringEffectsofOversupplyJensen,R.andWest,G.(1986)Input-outputforPractitioners:TheoryandApplications.PreparedforDepartmentofLocalGovernmentandAdministrativeServices,LocalGovernmentandRegionalDevelopmentDivision,AustralianGovernmentPublishingService.MKFResearch(2008)TheImpactofWine,GrapesandGrapeProductsontheAmericanEconomy2007:FamilyBusinessesBuildingValuehttps://www.wineinstitute.org/files/mfk_us_econ_report07.pdf
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NZIER(2009)EconomicImpactoftheNewZealandWineIndustry–AnNZIERReporttoNewZealandWinegrowershttp://www.nzwine.com/assets/sm/upload/v9/q6/e9/ls/NZIER_Rep_April_09.pdfNZIER(2014)TheEconomicContributionoftheNewZealandWineSector,theImpactofGrowthSince2008http://www.nzwine.com/assets/sm/upload/82/kf/wf/o7/The%20economic%20contribution%20of%20the%20New%20Zealand%20wine%20sector%20-%20final%20report%20%20%20%20.pdfInternationalOrganisationofVineandWine(OIV)(2015)StateoftheViticultureWorldMarkethttp://www.oiv.int/oiv/info/enconjoncturePalousis,N(2015)Life-cyclecostanalysisofwineprocessingtoidentifymajoropportunitiesforprocessefficiencyimprovements.PreparedforAustralianGrapeandWineAuthorityhttp://research.wineaustralia.com/completed_projects/life-cycle-cost-analysis-of-wine-processing-to-identify-major-opportunities-for-process-efficiency-improvements/Retallack,M.,Swinburn,G.,Drew,CandScholefield,P(2008)VineBizReferenceManualfortheVineyardBusinessDevelopmentProgram&FinancialReadyReckoner.PreparedfortheWineGrapeGrowersAssociationandDAFFRetallack,M(2012)EconomicBenchmarkingfortheMurrayValleyWineRegionSeason2010-11preparedforMurrayValleyWinegrowersIncandtheGrapeandWineR&DCorporationhttp://www.viti.com.au/pdf/Economic%20Benchmark%20Booklet%20FINAL%20121112.pdfScholefieldRobinson(2008)RegionalVineyardBenchmarkingReportpreparedfortheWineGrapeGrowersAssociationTourismResearchAustralia(TRA)(June2015)TRAInternationalVisitorSurveyhttp://www.tra.gov.au/research/latest-ivs-report.htmlWinemakersFederationofAustraliaFinancialReadyReckonerhttp://www.wfa.org.au/resources/financial-ready-reckoner/WinemakersFederationofAustralia(July2015)VintageReportWineAustralia(undated)GrapeandWineProductionhasoverviewreportshttp://www.wineaustralia.com/en/Winefacts%20Landing/Grape%20and%20Wine%20Production.aspxWineAustraliaandWinemakersFederationofAustralia(2007)WineAustralia:Directionsto2025BenchmarkingGuide,SeparateeditionspreparedforSmall,MediumandLargeWineBusinessesWineAustralia(February2015)AustralianWineSectorStateofPlay,AGWAFebruary2015WineAustralia(May2015)SubmissiontotheSenateStandingCommitteeonRuralandRegionalAffairsandTransportReferencesontheAustralianGrapeandWineIndustryhttp://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/Australian_wine_industry/SubmissionsWineAustralia(Sept2015)ExportReport
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Attachment1AssumptionsandInterpretations,Input-OutputAnalysisandMultipliers1. “ThebasicassumptionsinIOanalysisincludethefollowing:
• thereisafixedinputstructureineachindustry,describedbyfixedtechnologicalcoefficients(evidencefromcomparisonsbetweenIOtablesforthesamecountryovertimehaveindicatedthatmaterialinputrequirementstendtobestableandchangebutslowly;however,requirementsforprimaryfactorsofproduction,thatislabourandcapital,areprobablylessconstant);
• allproductsofanindustryareidenticaloraremadeinfixedproportionstoeachother;• eachindustryexhibitsconstantreturnstoscaleinproduction;• unlimitedlabourandcapitalareavailableatfixedprices;thatis,anychangeinthedemand
forproductivefactorswillnotinduceanychangeintheircost(inreality,constraintssuchaslimitedskilledlabourorinvestmentfundsleadtocompetitionforresourcesamongindustries,whichinturnraisesthepricesofthesescarcefactorsofproductionandofindustryoutputgenerallyinthefaceofstrongdemand);and
• therearenootherconstraints,suchasthebalanceofpaymentsortheactionsofgovernment,ontheresponseofeachindustrytoastimulus.
2.Themultipliersthereforedescribeaverageeffects,notmarginaleffects,andthusdonottakeaccountofeconomiesofscale,unusedcapacityortechnologicalchange.Generally,averageeffectsareexpectedtobehigherthanthemarginaleffects.3.TheIOtablesunderlyingmultiplieranalysisonlytakeaccountofoneformofinterdependence,namelythesalesandpurchaselinksbetweenindustries.Otherinterdependencesuchascollectivecompetitionforfactorsofproduction,changesincommoditypriceswhichinduceproducersandconsumerstoalterthemixoftheirpurchasesandotherconstraintswhichoperateontheeconomyasawholearenotgenerallytakenintoaccount.4.ThecombinationoftheassumptionsusedandtheexcludedinterdependencemeansthatIOmultipliersarehigherthanwouldrealisticallybethecase.Inotherwords,theytendtooverstatethepotentialimpactoffinaldemandstimulus.Theoverstatementispotentiallymoreseriouswhenlargechangesindemandandproductionareconsidered.5.Themultipliersalsodonotaccountforsomeimportantpre-existingconditions.ThisisespeciallytrueofTypeIImultipliers,inwhichemploymentgeneratedandincomeearnedinducefurtherincreasesindemand.Theimplicitassumptionisthatthosetakenintoemploymentwerepreviouslyunemployedandwerepreviouslyconsumingnothing.Inreality,however,notall'new'employmentwouldbedrawnfromtheranksoftheunemployed;andtotheextentthatitwas,thosepreviouslyunemployedwouldpresumablyhaveconsumedoutofincomesupportmeasuresandpersonalsavings.Employment,outputandincomeresponsesarethereforeoverstatedbythemultipliersfortheseadditionalreasons.6.Themostappropriateinterpretationofmultipliersisthattheyprovidearelativemeasure(tobecomparedwithotherindustries)oftheinterdependencebetweenoneindustryandtherestofthe
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economywhicharisessolelyfrompurchasesandsalesofindustryoutputbasedonestimatesoftransactionsoccurringovera(recent)historicalperiod.Progressivedeparturefromtheseconditionswouldprogressivelyreducetheprecisionofmultipliersaspredictivedevice”(ABS1995,p.24).Multipliersindicatethetotalimpactofchangesindemandfortheoutputofanyoneindustryonallindustriesinaneconomy(ABS,1995).Conventionaloutput,employment,value-addedandincomemultipliersshowtheoutput,employment,value-addedandincomeresponsestoaninitialoutputstimulus(JensenandWest,1986).Componentsoftheconventionaloutputmultiplierareasfollows:Initialeffect-whichistheinitialoutputstimulus,usuallya$1changeinoutputfromaparticularindustry(PowellandChalmers,1995;ABS,1995).Firstroundeffects-theamountofoutputfromallintermediatesectorsoftheeconomyrequiredtoproducetheinitial$1changeinoutputfromtheparticularindustry(PowellandChalmers,1995;ABS,1995).Industrialsupporteffects-thesubsequentorinducedextraoutputfromintermediatesectorsarisingfromthefirstroundeffects(PowellandChalmers,1995;ABS,1995).Productioninducedeffects-thesumofthefirstroundeffectsandindustrialsupporteffects(i.e.thetotalamountofoutputfromallindustriesintheeconomyrequiredtoproducetheinitial$1changeinoutput)(PowellandChalmers,1995;ABS,1995).Consumptioninducedeffects-thespendingbyhouseholdsoftheextraincometheyderivefromtheproductionoftheextra$1ofoutputandproductioninducedeffects.Thisspendinginturngeneratesfurtherproductionbyindustries(PowellandChalmers,1995;ABS,1995).Thesimplemultiplieristheinitialeffectplustheproductioninducedeffects.Thetotalmultiplieristhesumoftheinitialeffectplustheproduction-inducedeffectandconsumption-inducedeffect.Conventionalemployment,value-addedandincomemultipliershavesimilarcomponentstotheoutputmultiplier,however,throughconversionusingtherespectivecoefficientsshowtheemployment,value-addedandincomeresponsestoaninitialoutputstimulus(JensenandWest,1986).Foremployment,value-addedandincome,itisalsopossibletoderiverelationshipsbetweentheinitialorownsectoreffectandflow-oneffects.Forexample,theflow-onincomeeffectsfromaninitialincomeeffectortheflow-onemploymenteffectsfromaninitialemploymenteffect,etc.Theseownsectorrelationshipsarereferredtoasratiomultipliers,althoughtheyarenottechnicallymultipliersbecausethereisnodirectlineofcausationbetweentheelementsofthemultiplier.Forinstance,itisnottheinitialchangeinincomethatleadstoincomeflow-oneffects,botharetheresultofanoutputstimulus(JensenandWest,1986).Adescriptionofthedifferentratiomultipliersisgivenbelow.
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Type1ARatioMultiplier=Initial+FirstRoundEffects InitialEffectsType1BRatioMultiplier=Initial+ProductionInducedEffects InitialEffectsType11ARatioMultiplier=Initial+ProductionInduced+ConsumptionInducedEffects InitialEffectsType11BRatioMultiplier=Flow-onEffects InitialEffectsSource:CentreforFarmPlanningandLandManagement(1989).REFERENCESAustralianBureauofStatistics(1995)InformationPaperAustralianNationalAccountsIntroductiontoInput-OutputMultipliers.Cat.No.5246.0.CentreforFarmPlanningandLandManagement(1989)ConsultantsreporttoStateplantationsimpactstudy.CFPLM,UniversityofMelbourne.Jensen,R.andWest,G.(1986)Input-outputforPractitioners:TheoryandApplications.PreparedforDepartmentofLocalGovernmentandAdministrativeServices,LocalGovernmentandRegionalDevelopmentDivision,AustralianGovernmentPublishingService.Powell,R.andChalmers,L.(1995)TheRegionalEconomicImpactofGibraltarRangeandDorrigoNationalPark.AReportfortheNSWNationalParksandWildlifeService.