Taranaki industry projections


Table 3.3  Taranaki GDP, 2001 – 2006



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Table 3.3  Taranaki GDP, 2001 – 2006 

Industry

2001

2004

2005

2006

2005

2006

2001 to 

2006

Agriculture

408

411


416

415


1.1

-0.2


0.3

Forestry


24

27

29



30

6.6


5.9

4.6


Fishing

3

3



3

3

-9.9



5.6

-0.9


Mining (O&G)

881


771

794


741

3.0


-6.7

-3.4


Food processing

413


434

425


432

-2.0


1.6

0.9


Engineering

187


202

223


240

10.5


7.6

5.1


Other manufacturing

171


192

173


171

-9.7


-1.5

0.0


Utilities

152


149

158


115

6.4


-27.0

-5.4


Construction

126


180

203


207

12.5


2.1

10.5


Wholesale & retail trade

388


445

465


459

4.7


-1.4

3.4


Hospitality

44

48



55

55

15.5



-0.8

4.6


Transport & storage

112


139

141


143

1.6


1.5

5.0


Communications

82

109



137

128


25.3

-5.9


9.5

Business, finance & property svs

576

680


672

718


-1.1

6.9


4.5

Government administration

84

91

105



103

14.7


-1.4

4.3


Education

118


132

134


130

1.8


-3.2

2.0


Health & community svs

185


190

199


201

5.1


1.0

1.7


Cultural & recreational svs

42

44



44

49

0.5



12.1

3.2


Personal svs

34

37



39

38

5.3



-3.4

2.5


Taranaki

4,028

4,283

4,415

4,379

3.1

-0.8

1.7

New Zealand

130,236

147,128

152,541

155,885

3.7

2.2

3.7

Value Added or GDP ('06, $m)

source:BERL Regional Database, Statistics NZ

%pa change

 

Taranaki GDP growth over the last five years, at 1.7 percent per annum, has been below 



that of New Zealand (3.7 percent per annum).  This is largely the result of slower 

employment growth, itself due to lower population growth. 

The fastest growth rate has been in the construction industry, which averaged 10.5 percent 

per annum, followed by communications, at 9.5 percent per annum.  Major growth has also 

occurred in engineering (5.1 per cent per annum); transport and storage (5.0 percent per 

annum); hospitality (4.6 percent per annum); and business, finance and property services 

(4.5 percent per annum). 

GDP has decreased in three industries, namely utilities (-5.4 percent per annum), mining (-

3.4 percent), and fishing (-0.9 percent per annum) and has remained constant in one (other 

manufacturing). 

Interestingly, forestry (4.6 percent per annum) and agriculture (0.3 percent per annum) have 

both seen GDP rise despite falling employment, indicating a sharp improvement in labour 

productivity. 

Figure 3.7 shows the trend in GDP growth in the Taranaki region compared to New Zealand 

GDP growth between 2001 and 2006. 

 

17 



Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

Figure 3.7  GDP trend, 2001 – 2006 

100


105

110


115

120


125

2001


2002

2003


2004

2005


2006

G

D

P

 in

d

ex 2001=

100

Taranaki


New  Zealand

Source:  BERL

 

The GDP trend shows increasing divergence between New Zealand and Taranaki GDP 



growth.  The region saw its GDP climb in line with national growth between 2001 and 2003, 

before seeing a fall over the next year.  This fall coincides with lower employment growth 

during the 2004 year, a year in which the resident population began to fall after three years 

of growth. 

Taranaki’s GDP growth picture appears at odds with economic activity in the region, where 

you would expect a much better GDP performance relative to the rest of the country.  

However, this does not suggest poor performance and, in light of the region’s population and 

industry structure, suggests very good performance. 

The first factor is that Taranaki has a relatively static population and the labour market is 

therefore very tight.  Hence, growth is coming more from productivity gains than it is from 

increased employment.  In the long run, the productivity gains will provide the region, and its 

businesses, with a competitive advantage. 

Second, compared to nationally, Taranaki’s major industries have a relatively lower GDP per 

FTE ratio.  It also has a smaller proportion of the economy involved in business and financial 

services, which is a high GDP sector.  GDP growth in the business services and 

communication sector has been faster in Taranaki than nationally.  But, because these 

sectors account for such a small proportion of the region’s total GDP, the gain has not been 

as high as nationally  

An alternate way of looking at GDP, taking into account population growth, is GDP per 

capita.  This is presented in Figure 3.8, which shows changes in GDP per capita over the 

 

18 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

last five years.  Taranaki GDP per capita has remained substantially above that of New 

Zealand as a whole across the five years.  In 2006, it stood at $42,000, compared to $38,700 

for New Zealand. 



Figure 3.8  GDP per capita trend, 2001 – 2006 

33

35



37

39

41



43

2001


2002

2003


2004

2005


2006

$'

06 p

er

 cap

it



('

000)

Taranaki


New  Zealand

Source:  BERL

 

There has been some convergence in GDP per capita between Taranaki and the rest of the 



country.  However this is due more to the faster growth in the rest of the economy than a 

slowing in the Taranaki region’s economy. 

Compared to nationally, Taranaki has performed well in most industries apart from 

population based ones such as retail, education, health and recreational services.  Figure 

3.9 compares the five-year annual average GDP growth rates of Taranaki and New Zealand 

for each industry. 

 

19 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

Figure 3.9  Comparison of GDP growth by industry, 2001 – 2006 

BERL Regional Databse; Statistics NZ

4.6


-0.9

-3.4


5.1

10.5


4.6

5.0


9.5

4.5


2.9

1.0


4.8

3.0


4.4

4.1


2.5

3.2


1.7

2.0


4.3

3.4


-5.4

0.01


0.9

0.3


3.7

5.4


3.8

6.1


3.7

3.5


8.6

0.6


2.9

0.8


0.5

-3.7


-1.0

-6

-3



0

3

6



9

12

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Sector

G

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 gr

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 (%

p

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Taranaki


New  Zealand

 

Taranaki has managed above national average growth in GDP in several industries over the 



last five years.  These include construction; communications; engineering; forestry; transport 

and storage; hospitality; and business, finance and property services.  While GDP fell in 

three industries, this was at a lower rate than nationally in two. 

The fall in mining (oil and gas) was due to inactivity in the early 2000’s.  This been arrested 

in the later years.  In 2006, mining GDP grew by close to 17 percent.  The utilities industry 

also grew faster than the national average in 2006. 



3.4 

Summary of Taranaki Industry structure and performance 

The employment and GDP figures reveal three main players in the Taranaki economy –

agriculture, mining (oil and gas) and manufacturing (made up of food processing, 

engineering, and manufacturing).  A large proportion of processing and 

engineering/manufacturing is related to the agriculture and mining industries.  These 

 

20 



Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

industries (dairy and oil and gas in particular) are all recovering in the later half of the 

observation period driven by increasing global demand and the associated prices. 

While agriculture and mining continue to dominate the regional economy, significant growth 

in employment and / or GDP is occurring in services, such as business, finance and property 

services; communications, and hospitality. 

Slower growth in population-based industries such as education, health, cultural and 

personal services reflects the static population in the region. 

 

21 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 



Taranaki’s Key Sectors 

This section discusses eight key sectors in the Taranaki region.  The discussion of each 

sector describes the: 

• 

sector‘s contribution to regional employment, GDP and business units 



• 

increase in total regional employment brought about by an increase of one FTE in each 

key sector (the key sector’s employment multiplier) 

• 

sources of the key sector’s inputs, such as from industries in the region, imports, and 



wages and other household income 

• 

allocation of the key sector’s outputs, such as to industries in the region, exports and 



consumption 

• 

industries that provide the most input into each key sector 



• 

industries most reliant on each key sector to absorb their outputs. 



4.1 Approach 

Each sector’s contribution to employment, GDP and business units was determined using 

the BERL regional database.  Definitions of each of the eight key sectors were decided in 

discussion with Venture Taranaki.  These sectors are oil and gas, dairy, meat processing, 

engineering, other manufacturing, education, the public sector, and tourism.   

The tourism sector analysis uses a different approach.  Because tourism cuts across a 

number of industries it could not be analysed the same way as the other industries.  For the 

tourism analysis we use the Tourism Satellite account to determine the size of the sector in 

the region.  Projections are based on those provided by the Tourism Research Council. 

Multiplier analysis

2

 was used to calculate the economic impact of increasing employment by 



one FTE in each key industry.  This allowed us to estimate that, for example, an increase in 

employment of one FTE in the dairy sector in Taranaki will create an additional 1.51 FTEs in 

the region (ie one FTE creates 2.51 FTEs in total). 

Input-output tables were used to determine the sources and allocation of the key industries’ 

inputs and outputs respectively. 

                                                      

2

 Multiplier analysis is explained in the Appendices.  



 

22 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

For example, within the dairy sector in Taranaki, 47 percent of inputs come from industries in 

the region, 21 percent of inputs are imported from other parts of New Zealand or overseas, 

18 percent comes from other inputs, and 15 percent comes from wages and other household 

income.  On the dairy sector outputs side, 60 percent is exported out of Taranaki, 38 percent 

feeds into other industries in the region, 1.1 percent is consumed locally, and 0.6 percent is 

allocated to other outputs. 

Similarly, input-output tables were used to determine which industries provide the most input 

into each of the seven key sectors and how reliant those industries are on key sectors to 

absorb their outputs. 

For instance, as mentioned above, 47 percent of dairy sector inputs come from industries 

within the region.  An immediate question is - which industries provide those inputs?  Not 

surprisingly, 36 percent of all inputs are provided by the dairy cattle farming industry.  This 

means that of all inputs required by the dairy sector in Taranaki, 36 percent comes from the 

dairy cattle farming industry. 

Knowing that the dairy cattle farming industry provides 36 percent of inputs to the dairy 

sector; a further question would be - how reliant is the dairy cattle farming industry on the 

dairy sector?  The input-output tables indicate that 97 percent of the dairy cattle farming 

industry’s output feeds into the dairy sector.  In other words, the dairy cattle farming industry 

is reliant on the dairy sector to absorb nearly all its outputs.  

 

23 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

4.2 

Oil and gas sector 

The oil and gas sector in Taranaki is made up of four industries at the 114 industry level.

3

  

The industries are oil and gas exploration, oil and gas extraction, services to mining, and 



other mining and quarrying.

4

Table 4.1 shows the contribution of the oil and gas sector to the Taranaki economy and to 



the national oil and gas sector in 2006. 

Table 4.1  Taranaki oil and gas sector 

Taranaki Oil & gas sector

Total

% of regional

% of national oil 

and gas

Employment (FTEs)

817

1.81

90.45

GDP ($mn)

741

16.93

89.68

Business units

57

0.45

41.01

source: BERL regional database, Statistics NZ

 

The oil and gas sector directly employed 817 FTEs in the region in 2006.  Regionally, it 



provided a relatively small proportion of all employment (1.8 percent) and business units 

(0.45 percent).  However, its direct contribution to regional GDP was large, at $741 million, 

or 17 percent, in 2006. 

The Taranaki region is currently home to close to all New Zealand’s oil and gas production.  

As a result, it accounted for 90 percent of all the oil and gas sector’s employment and GDP 

in New Zealand in 2006. 

Growth in this sector is likely to be strong over the next several years as a result of ongoing 

project work and rising demand for fuel.  The sector is expected to play an increasingly 

dominant role in the regional economy.  More detail on likely rises in employment and GDP 

are introduced in the projections in section 5. 

The oil and gas sector has a particularly high employment multiplier of 3.66.  This means 

that creating one additional FTE within the sector will result in a further 2.66 FTEs in the 

region. 

Table 4.2 presents the make-up of the Taranaki oil and gas sector’s inputs and outputs.  It 

also shows the sector’s contribution to each category of regional inputs and outputs. 

                                                      

3

 The 114 industries are based on the Australia and New Zealand Standard Industrial Classification (ANZSIC) 



codes, which classify the various industries in the economy. 

 

24 



Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

Table 4.2  Taranaki oil and gas sector total inputs and outputs 

Taranaki Oil & gas sector

% of sector

% of regional

Inputs

Intermediate inputs

20.34

2.55


Imports

17.35


4.16

Wages and other household income

6.45

3.87


Other inputs

55.87


24.92

Outputs

Intermediate outputs

14.20

1.78


Exports

85.48


17.54

Household and government consumption

0.07

0.03


Other outputs

0.25


0.29

source: BERL, Butcher & Associates

 

Other inputs (which includes depreciation, taxes and profits) make up 56 percent of the 



sector’s inputs, and 25 percent of the region’s other inputs.  A little over 20 percent of the 

sector’s inputs come from industries within the region, as explained in more detail below.  A 

further 17 percent of inputs in the oil and gas sector in Taranaki are imported, accounting for 

4.2 percent of all Taranaki imports.  Wages and other household income accounts for 6.5 

percent of inputs into the oil and gas sector.   

The oil and gas sector exports 85 percent of its output to the rest of New Zealand and 

overseas.  Oil and gas exports account for nearly 18 percent of all Taranaki exports.  The oil 

and gas sector supplied 14 percent of its outputs to industries in the Taranaki region. 

A number of industries provide inputs to the oil and gas sector.  Table 4.3 presents the top 

ten industries by contribution to oil and gas sector inputs in Taranaki. 



Table 4.3  Taranaki oil and gas major input industries 

Oil & gas extraction

6.77

Ancillary services to construction



2.44

Non building construction

1.31

Oil & gas exploration



1.21

Other mining and quarrying

0.89

Wholesale trade



0.85

Technical services

0.84

Services to mining



0.82

Road freight transport

0.65

Electricity generation



0.63

source: BERL, Butcher & Associates

Taranaki Oil & gas sector

% of sector inputs

 

                                                                                                                                                      



4

 The reason for including services to mining and other mining and quarrying is that in the Taranaki region, 98 

percent and 75 percent of these industries’ respective outputs feed directly into the oil and gas sector (ie exploration 

and extraction). 

 

25 


Taranaki Industry Projections 2006-2026 

Venture Taranaki 

November 2007 


 

The oil and gas extraction industry provides the largest proportion of inputs to the oil and gas 

sector, at 6.8 percent.  In other words, 6.8 percent of all inputs required by the oil and gas 

sector are provided by the oil and gas extraction industry. 

The second and third-largest contributors to the oil and gas sector’s inputs are ancillary 

services to construction and non building construction.  These industries contribute 2.4 

percent and 1.3 percent of oil and gas inputs respectively. 

The top-ten oil and gas input industries are rounded out by various mining, technical, 

business, and transport services, as well as wholesale trade.  These trade-related industries 

are typically associated with primary industries.  Together, the top ten input industries supply 

16.4 percent of all industry inputs into the oil and gas sector. 

However, some industries are more reliant on the oil and gas sector than others in that a 

significant proportion of their outputs are purchased as inputs into the sector. 

Table 4.4 presents the ten industries most reliant on the oil and gas sector in terms of the 

portion of their total output contributed to the oil and gas sector in Taranaki. 


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