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
a
('
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
Ag
ric
ul
tu
re
Fo
re
st
ry
Fis
hi
ng
M
in
in
g
(O
&G
)
Fo
od
p
ro
ce
ss
in
g
En
gi
ne
er
in
g
O
th
er
m
fg
U
til
iti
es
C
on
st
ru
ct
io
n
W
ho
le
al
e
&
re
ta
il
H
os
pit
al
ity
Tr
an
sp
or
t &
s
to
ra
ge
C
om
m
un
ic
at
io
ns
Bu
s,
fi
na
nc
e
&
pr
op
er
ty
G
ov
er
nm
en
t a
dm
in
Ed
uc
at
io
n
H
ea
lth
&
c
om
m
un
ity
C
ul
tu
ra
l a
nd
re
cr
ea
tio
na
l
Pe
rs
on
al
Sector
G
D
P
gr
ow
th 2
0
0
1
-2
0
0
6
(%
p
a
)
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
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Taranaki Industry Projections 2006-2026
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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.
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Taranaki Industry Projections 2006-2026
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4
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.
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Taranaki Industry Projections 2006-2026
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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.
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Taranaki Industry Projections 2006-2026
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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
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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
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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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