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E-CommerceAcross Australia

© Commonwealth of Australia 2000

ISBN 0 642 75093 9

DOCITA 39/00

This work is copyright. Apart from any use as permitted under the Copyright Act 1968,no part may be reproduced by any process without prior written permission from theCommonwealth Department of Communications, Information Technology and the Arts/National Office for the Information Economy.

This study was undertaken by the Allen Consulting Group with assistance from theCentre of Policy Studies at Monash University and the opinions expressed are those ofthe consultants. The Department does not assume responsibility for the content oropinions expressed in the report, and disclaims any liability for errors or omissions.

Requests and inquiries concerning reproduction and rights should be addressed to:

The ManagerE-Commerce AnalysisNational Office for the Information EconomyGPO Box 2154Canberra ACT 2601Australia

Telephone: 02 6271 1000Facsimile: 02 6271 1800Website: www.noie.gov.au

The contributions of State and Territory Governments to this study is gratefullyacknowledged.

The National Office for the Information Economy is part ofthe Department of Communications, Information Technologyand the Arts.

E-COMMERCE ACROSS AUSTRALIAiii

Foreword

E-commerce is helping people around the world operate smarter and faster.Information exchange, business transactions, deals and discussions arehappening online every day—breaking down traditional barriers and openingup exciting possibilities. Australia has been quick to realise the opportunitiesassociated with online developments, or the new ‘information economy’.

Take-up rates of e-commerce are soaring. With close to half of the country’sadult population accessing the Internet, Australia has the fourth highest usagein the world.

All medium-sized businesses and over 80 per cent of small businesses inAustralia use personal computers. Over 35 per cent of all businesses have anonline presence—a comparative business advantage that translates intoAustralia being consistently rated in the top ten nations globally for itse-commerce environment.

Over half of Australian households have personal computers and close to35 per cent have Internet connections with penetration rates increasing rapidly.Five per cent of Australian adults shopped via the Internet in the 12 months toFebruary 2000, and 74 per cent paid for their purchases online. Take up ratesof other kinds of e-commerce—such as telephone banking and electronic fundstransfer—were even higher.

E-commerce creates a powerful capacity to open up new markets and to createunprecedented efficiencies. The landmark E-commerce Beyond 2000 reportreleased in February 2000, found there are significant net benefits from theimpact of e-commerce—for instance, Australia’s GDP is expected to increase by2.7 per cent ($AUD 15 billion) by the year 2007.

The Australian Government wants these benefits to be spread evenly across thecountry. With regional Australia already embracing the online revolution—experiencing a 164 per cent increase in online households since February1998—there are significant opportunities on offer.

A better understanding of the impact of e-commerce throughout Australia’sregions—in terms of industry output and employment—will support andpromote a stronger up-take of online business initiatives across Australia.

This report examines the impact on individual industries and on employmentin regions. It is about gaining an understanding of the changes that are likely tooccur from the isolated impact of e-commerce. It is not a total economicforecast for a region.

It provides an insight into the reasons behind predicted changes, enablinggovernments to develop policy initiatives to maximise the positive outcomes,and minimise any negative impacts.

Effective collaboration between industry, other governments and thecommunity is important for all Australians to share in the benefits ofe-commerce. The contribution of States and Territories to this study was,therefore, very valuable.

I trust this report will become an important resource for business, policymakers, communities and anyone with an interest in maximising the benefits ofe-commerce.

RICHARD ALSTONMinister for Communications,Information Technology and the Arts

E-COMMERCE ACROSS AUSTRALIAv

Table of contents

Executive summary vii

Part 1 – Economic Analysis

Chapter one Study context 3

1.1 Aims and goals 3

1.2 Background: E-commerce beyond 2000 report 3

1.3 Study approach 4

1.4 The base case 4

1.5 Limitations of the regional study 5

Chapter two E-commerce preparedness: the non-uniform case 6

2.1 Supply 6

2.2 Consumption 9

2.3 The Allen E-commerce Preparedness Index 10

2.4 Sensitivity to different assumptions 11

Chapter three Economy-wide simulation results 13

3.1 Preparedness and time 13

3.2 Simulation results 14

3.3 Comparison with the uniform case 18

Chapter four Overview of regional impacts 24

4.1 Changes brought about by greater use of e-commerce 24

4.2 Drivers of change in non-metropolitan Australia 25

4.3 Metropolitan and non-metropolitan 26

4.4 Government strategies 33

Chapter five Sensitivity analysis 35

5.1 Lagging and economic outcomes 35

5.2 Comparing MMRF and MONASH 36

Appendix A Composition of the Allen ECP Index 38

A.1 Supply 38

A.2 Consumption 44

Appendix B Policies in the Commonwealth, States and Territories 49

E-COMMERCE ACROSS AUSTRALIAvi

Appendix C Analytical framework 65

C.1 The State and Territory Government Reference Group (STRG) 65

C.2 A framework for economic analysis 65

C.3 The Monash Multi-Regional Framework Model (MMRF) 66

C.4 Evaluation of regional impacts 74

Appendix D E-commerce impacts that flow through tooutput and employment 77

D.1 Output 77

D.2 Composition and pattern of growth 77

D.3 Aggregate employment and wages 77

D.4 Implications for national welfare 78

D.5 External competitiveness 78

D.6 Industry outcomes 79

Part 2 – Regional Impacts

Australian Capital Territory 85

New South Wales 88

Northern Territory 124

Queensland 127

South Australia 160

Tasmania 181

Victoria 193

Western Australia 226

E-COMMERCE ACROSS AUSTRALIAvii

Executive summary

Will Australia’s regions be better off with greater use of e-commerce?E-commerce is expected to neutralise the tyranny of distance and place us all ona level footing in the global marketplace. The challenge is that Australia is madeup of many diverse communities with disparate geographic and economicfundamentals. Given differing e-commerce preparedness, will some regions havea ‘first mover’ advantage over others in the race to join the new knowledgeeconomy? What are the consequences of lagging behind?

In February 2000, the Minister for Communications, InformationTechnology and the Arts, Senator the Hon Richard Alston, released thereport E-commerce beyond 2000 which analysed the impact of e-commerceon the Australian economy as a whole as well as on specific sectors. Thatreport also looked briefly at the impact on States and Territories.E-commerce beyond 2000 has kindled wide interest in this kind of analysisboth in Australia and internationally. The Report has been the most accesseddocument on the website of the National Office for the InformationEconomy. The E-Commerce Across Australia report supplements theinformation provided in E-commerce beyond 2000 and provides a moredetailed analysis of the impact of e-commerce on regions of Australia.

This study involves the analysis of three seemingly imponderables: the impactof e-commerce on the economy at large; the impact of differinge-commerce preparedness and take up rates in regions; and the response of theunderlying economy to such change and differences. It involves forecastingdevelopments well into a future which remains uncertain.The approach taken is to make assumptions about many of these factors andsee what difference they would make, given the underlying structure of theregional economies. The analysis is conducted on the basis of no policychanges in terms of both macro-economic, micro-economic ande-commerce policies.

The focus of this study is on how we use e-commerce. Rather thanconcentrating on the most visible e-commerce businesses and innovators whichare just the tip of the iceberg, it looks at the other nine tenths beneath thesurface, including the everyday businesses and households that make up thebulk of the economy.

An e-commerce preparedness index

E-commerce preparedness has been assessed using a new indicator: the AllenE–commerce Preparedness (ECP) Index. This is based on key factors illustratingenduring structural differences between the preparedness of the States andTerritories to adopt e-commerce. This composite index includes dataassociated with e-commerce use which are arranged intotwo clusters:

• data that indicates capacity to use e-commerce in supply; and

• indicators of the capacity to use e-commerce in consumption.

A State or Territory that achieves a median ECP index score is assumed to fullyimplement e-commerce in 10 years. Based on this index, the Australian CapitalTerritory (ACT) is considered the most prepared to take up e-commerce.It would obtain the full benefits of e-commerce uptake in seven years,compared to the Northern Territory which would take13 years to see the full direct benefits, with the States spread out in betweenthe two. The economic outcomes under this scenario are labelled the ‘non-uniform case’.

This study looks at regionalimpacts of e-commerce

Simulation modelling to lookat the imponderables

Focus on the use ofe-commerce rather thane-commerce activity itself

A new basis of measuringpreparedness for e-commerce

A new insight

A topic of wide interest

E-COMMERCE ACROSS AUSTRALIAviii

Implications for the States

The analysis in this report is conducted by modelling a “base case” of theeconomy in which e-commerce is frozen. Another scenario is then modelledwith e-commerce factored into the economy thereby enabling the effects ofe-commerce to be isolated by comparing the two scenarios.

The Monash Multi-Regional Forecasting (MMRF) model simulation resultsindicate that Australia’s economy and the economies of all of its States gain inthe medium to long term. They are projected to have a higher level of outputof between 0.8 per cent to 3.6 per cent by the year 2010, with national GDPrising by 2.9 per cent.

It seems that being a front-runner in e-commerce preparedness does notnecessarily translate into a substantial first mover advantage. Much depends onthe underlying structure of the economy involved.

The forecast response of the ACT’s economy is a good illustration. Ultimately,the ACT economy is expected to realise substantial gains from the greater useof e-commerce, with a forecast increase in activity of3.1 per cent by 2010. However up to 2006, the ACT’s increase in outputwould be just 0.1 to 0.4 per cent more than it would be if there was a uniformrate of e-commerce implementation nation-wide. This is a relatively modestincrease given that the ACT is considered three or more years ahead of mostother States. This reflects the fact that despite substantial structural change anddiversification in the ACT’s economy, government final demand remains amajor component in its economic base—something not altered greatly by e-commerce. So the ACT will not be able to convert early efficiencies into asubstantial commercial advantage to expand more rapidly at the other States’expense.

In contrast, Victoria, which is ranked second in terms of generale-commerce preparedness, is able to convert even a modest timing advantageinto more substantial economic gains. Victoria would see an increase in outputof 0.6 per cent above the rate that would apply if implementation of e-commerce occurred at a uniform rate throughout Australia. This increase inactivity in Victoria peaks at four per cent, and a year earlier, than in theuniform case.

Being roughly in the middle, New South Wales (NSW) loses some value to themore rapid adopters of e-commerce in the early years. The outputs of NSWand Victoria are largely substitutes for each other so that if one lags, the otherfills the gap. Whichever State is faster will capture value early from the other.In the long run this makes little difference and NSW and Victoria emerge withbasically the same increase in activity of about 3.5 per cent higher than thebase case over the period 2010 to 2016.

The projections also demonstrate that coming last in preparedness terms maynot, in fact, be too costly. Tasmania and the Northern Territory are expected toperform better than other States, despite their low ranking in the Allen ECPIndex. This is the case when the structure of a region’s economy is notparticularly sensitive to changes in the use of e-commerce.

South Australia is among the leaders in terms of preparedness and economicoutcomes.

While not actually lagging in terms of e-commerce preparedness, WesternAustralia is forecast to experience an initial setback with greater use ofe-commerce before seeing the lowest rate of increase of any State. This reflectsits industry structure which continues to rely heavily on exporting mining and

Economic structure matters

All States gain

The isolated impact ofe-commerce is modelled

E-COMMERCE ACROSS AUSTRALIAix

agricultural outputs, that would be impeded if the capital inflows resultingfrom greater use of e-commerce result in an upward pressure on the exchangerate.

Queensland performs slightly better than Western Australia given that it hasslightly more tourism in its economic base, which benefits more directly fromincreased use of e-commerce.

Regional impacts

Regional impacts have been studied at the level of the 57 statistical divisionsdefined by the Australian Bureau of Statistics to examine issues about economicgeography.

Results from the MMRF model that take into account non-uniform applicationof e-commerce indicate that:

• many statistical divisions (30) are unambiguously better off. That is, theycan expect an increase in regional output and employment as a result ofe-commerce. On average across all 57 divisions by the year 2010, outputwill increase by two per cent compared to the base case;

• around 24 divisions will experience increased output, but lose someemployment. This is a typical result when an increase in labour productivityreduces demand for labour in some areas (although it is notable that nation-wide there is an expected increase in employment);

• there are no significant differences in the results for metropolitan and non-metropolitan regions. The average change is difficult to distinguishstatistically speaking. What matters is the composition of each region’sunderlying economy. Those that are broadly based with a heavy presence ofnew service-based activities will do well with greater use of e-commerce.Whereas regions more dependent on just a few key activities are vulnerableto an overall contraction as a result of greater use of e-commerce; and onlythree regions are expected to see contractions in output and employment.These are all very reliant on mining and to a lesser extent agriculture.

Overall, it is notable that the dislocation involved in the greater use ofe-commerce is expected to be largest in regions that have the most to gain fromthe change, particularly in terms of employment. This means that as long aspeople upgrade their skills to meet changes in demand in the labour market,they should be able to cope by changing jobs (or the nature of their work)while still living in the same area. This should reduce many of the normaltransitional difficulties often seen with major structural change.

Overarching implications

The conventional wisdom in setting policies for industry development is toseek to attract clusters of leading-edge activity. This reflects what is now widelyknown about the diffusion of knowledge, innovation and competitiveness.Subscribing to this wisdom has resulted in the spotlight being directed towardsthe e-commerce elite, those businesses that are leaders in providinge-commerce solutions, or those that are making great strides in implementinginnovative systems. This study indicates that this may not be enough.

It suggests that what happens in the bulk of the economy—behind theleaders—is also significant. In other words, the day-to-day world of ordinarybusiness and households is important. If this section of the economy fallsbehind in a region, it can result in a set back, no matter how successful thatregion’s leaders are. Rapid and diffused implementation is the key.

The findings of the study highlight the traditional role for government inmaking sure the environment at large is conducive for development.

Drilling down to look atAustralia’s 57 statisticaldivisions

Most regions better off. Onlya very small number areworse off

Biggest changes in regions thatundergo greatest change

Keep a broad perspective tomaximise benefits

E-COMMERCE ACROSS AUSTRALIAx

Structural adjustmentpolicies should be able to befocused

Overall, the results from this study highlight the implications of change frome-commerce for metropolitan and non-metropolitan regions. Opportunitiesexist for regions to improve their prospects through structural change. Thereare only a very small number of regions, communities and industries thatexperience a net negative outcome. This should make it fairly straightforwardto design effective, focused and affordable policy measures to facilitate changeand mitigate the most sensitive adverse impacts.

It is important to remember that the findings in this report are based on thepremise that government policies and initiatives will remain unchanged for theperiod of the analysis. A major purpose of this study is to give policy makersan understanding of the changes that are likely to take place and themechanisms behind these changes so that they can take appropriate action topromote the benefits of e-commerce while mitigating any negative impacts.In fact governments are giving increasing priority to e-commerce. Forexample, the Federal Government’s Networking the Nation program, theinitiatives of the National Office for the Information Economy and the manyState and Territory programs outlined in Appendix B represent significantsteps towards altering, for the better, the predictions of this study.

Part 1 –Economic Analysis

E-COMMERCE ACROSS AUSTRALIA3

chapterone Study context

This chapter places the study into context. It sets out the study aims anddiscusses how they are achieved.

1.1 Aims and goals

The study aims to analyse, in some detail, regional differences in the economicimpact of the greater use of e-commerce. There are three challenges. The firstis to identify factors that drive regional differences in the adoption ofe-commerce. The second is to assess how those differences translate intoeconomic implications. The third is to develop this focus on relatively smallareas of Australia’s geography while not losing track of the larger economicstory.

The approach is to concentrate on rigorous economic analysis rather thanprovide a description of the general consequences of e-commerce. The studyaims to provide an indication of the likely nature of changes that are in storefor Australia’s regions and their flow-on impact through State, Territory andregional economies using quantitative measures where practical. It is importantto recognise that information about the nature of e-commerce is currentlypartial and still developing.

The analysis aims to help governments to develop policies and evaluate theneeds of regional Australia with respect to the uptake of e-commerce.

1.2 Background: E-commerce beyond 2000 report

On 11 February 2000, Senator Alston released the report, E-commerce beyond2000 (www.noie.gov.au/beyond2000). The National Office for the InformationEconomy (NOIE) in partnership with 13 leading businesses commissioned thisreport. The E-commerce beyond 2000 report was the first attempt tosystematically and rigorously analyse the effects of the uptake of e-commerceon the Australian economy.

This original pilot study forecasts how e-commerce will permeate the economy,resulting in significant growth as well as simultaneous increases in real wagesand employment. It provided a comparison of the Australian economicperformance when e-commerce was implemented uniformly over 10 years,against the case where the use of e-commerce remained largely static (the ‘basecase’). These results were subsequently disaggregated to obtain results for theeconomies of States, Territories and statistical divisions. For the economies ofStates and Territories, it was assumed that the use of e-commerce was fullyimplemented uniformly over 10 years—the ‘uniform case’.

The technical changes or ‘shocks’ used in the pilot study demonstrated that theefficiency gains derived were substantially from business-to-businesse-commerce activity, although business-to-consumer e-commerce activity didprovide efficiency gains.

The study further illustrated that firms changing their business practices tomake optimal use of the capability of e-commerce also achieved productivityenhancements. This is an additional type of business-to-business e-commercebenefit. With a streamlined interface between production and sales, forexample, firms could extend ‘just in time’ processes to almost every activity,reducing inventories and other input costs. They may also be able to streamlinetheir own purchasing and orders processing systems and reduce the cost offinding and processing sales. E-commerce introduces potential distribution costsavings for many firms, particularly those that can digitise their products.It may also be easier to reduce the cost of after-sales service.

The results from this earlier analysis have been published by NOIE andcirculated widely. They have been reviewed widely and, it seems, generallyaccepted by knowledgeable commentators.


1.3 Study approach

The strategy for this study has been to draw on the framework established inthe E-commerce beyond 2000 report. This study takes up the earliere-commerce changes (or ‘shocks’) and investigates in more detail what wouldhappen if there are (as seems likely) differing e-commerce adoption rates orusage (the ‘non-uniform case’) in Australia’s States, Territories and 57 statisticaldivisions.

An advantage in taking this approach is that it provides a useful benchmark.The non-uniform scenario can be compared throughout the study with thebase case scenario—see Box 1.1.

The study also combines the application of economic models, based ontheoretical frameworks, with qualitative and quantitative input from Stategovernment officers and others who are experts in the area of e-commerce.This provides a rigorous and balanced approach that seeks to minimise thepitfalls inherent in using economic models or input from experts in isolationfrom each other. Input was obtained from a State and Territory GovernmentReference Group (STRG) while the Monash Multi-Regional Forecasting(MMRF) model was used as the framework for the main quantitative part ofthe analysis. Appendix C outlines the involvement of the STRG and theMMRF model in more detail.

Box 1.1

Model methodology — base, uniform and non–uniform cases

There are a number of MMRF simulations that are referred to throughout the report. These relate to

three different scenarios about the state of the economy and its use of e-commerce. They are as

follows:

• Base Case: where the use of e-commerce remains largely static. That is, where there is no further

implementation of e-commerce.

• Uniform Case: This is essentially the scenario examined in the E-commerce beyond 2000 report

where greater use is made of e-commerce in the Australian economy. It is called the uniform case

because it is assumed that changes are uniform in each industry across the country. That is, that

a given percentage reduction in costs in the value chain in say, manufacturing, is the same in

every state and region of Australia.

• Non-Uniform Case: this looks at what would happen if different states have different rates of

e-commerce adoption. Thus savings in manufacturing in one state might be achieved earlier than

the others.

This study concentrates on the non–uniform case and compares the results obtained with the base

and uniform cases.

The effects of e-commerce are measured by the differences between the base case, uniform case and

non-uniform case projections using MMRF.

Source: The Allen Consulting Group.

1.4 The base case

Throughout this report, forecasts are made on the basis of deviations predictedby the MMRF model compared to a base case. In other words, the analysisdoes not purport to predict the actual state of a feature of the economy (suchas employment or output). Rather, it isolates the impact of e-commerce byconstructing a base case of the economy to the year 2016, with the level ofe-commerce frozen at the level in the year 1997. The model then superimposese-commerce on the economy and analyses outcomes in terms of the differencebetween the base case and the simulations with e-commerce. Hence, the title ofall the graphs note that they are deviations from the base case.

1c h a p t e r


The base case simulation is detailed in Appendix C to this report. The keyinputs to the base case are:

• the fact that the economy will grow and exhibit changes in prices andindustry composition in line with standard economic forecasts(incorporating forecasts from Access Economics);

• trends in world commodity prices (largely drawing on forecasts of theAustralian Bureau of Agricultural and Resource Economics (ABARE));

• trends in technology, particularly as reflected in changes in input/outputratios for differing industries;

• known policy changes of significance including issues such as theintroduction of the GST and related reforms.1 The reforms from theRalph Review of Business Taxation have not been included because theywere announced after this analysis had been done;

• immigration and population growth forecasts from the Australian Bureau ofStatistics;

• pre-existing trends in the use of e-commerce as they applied up to the endof 1996–97 (the base year for the current MONASH model). This isprojected to be supported by a reasonable level of access to Internetinfrastructure through adequate bandwidth at reasonable prices; and

• the economic impact of greater use of some forms of e-commerce such asEDI, ATMs and EFTPOS. These developments continue well-establishedtrends, and expected further developments have been factored into theeconomic forecasts.

1.5 Limitations of the regional study

Economic models are a simplification of reality. They are useful because theymake it easier to understand the key drivers in the big picture without thebeing distracted by the confusion of everyday life. Ultimately, not everythingcan be modelled and a lot will be left out.

When modelling the impact of e-commerce it was important to trim and distilmuch of the detail to discern the main trends.

A structural change of the sort that is generally expected is likely to permeatethe economy and everyday life in many different ways—with many unexpectedimpacts. Hopefully the techniques learnt in this study will be useful to othersexamining the issues. They may also be adapted and expanded for use in anysubsequent major study that concentrates on an even broader range ofprobable impacts.

The State and Territory economy-wide analysis of e-commerce is the first of itskind. Despite an extensive search, the consultants were unable to find similarresearch. As a groundbreaking exercise, it is hoped this study will stimulateconstructive debate on the impact of e-commerce and how this should beanalysed. Future studies will be the richer for this debate.

However, a note of caution is required about the way in which the results ofthis study are analysed and interpreted. This study is very much an earlyattempt to analyse the nature and direction of the impacts of e-commerce onthe States, Territories and regions. The results are therefore more indicativethan definitive and should be interpreted accordingly.

1 See Peter B. Dixon and Maureen T. Rimmer, ‘Changes in Indirect Taxes in Australia: A Dynamic GeneralEquilibrium Analysis’, Australian Economic Review, December 1999 (forthcoming).

1c h a p t e r


chaptertwo

E-commerce preparedness:the non-uniform case

How prepared is the economy in each State and Territory to make greater use ofe-commerce? This chapter outlines the approach used to identify and quantifyfactors, and explain how these were used to assess the relative position of eachState and Territory in their preparedness to use e-commerce. The aim is toprovide an indication of which States and Territories are likely to becomee-commerce leaders and which may lag behind.

Assessing e-commerce preparedness in different parts of Australia is not easy.There is still very little reliable data or indicators about e-commerce in theeconomy at large. There is even less information available about what ishappening on a State-by-State basis. Of course, adoption of e-commerce ismoving quickly. In fact adoption of e-commerce is moving more quickly thanmost other areas, and so there may well be large gaps between today’s forecastsand actual outcomes.

There is also a wide range of factors to take into account. Some of the keyconsiderations that shaped the approach adopted in this study are summarisedin Box A.1 of Appendix A.

The Allen E-commerce Preparedness (ECP) Index 2 has been developed toidentify and assess the structural regional differences in the impact of greateruse of e-commerce. The Allen ECP Index score provides an indication ofhigher or lower levels of preparedness and different levels of use ofe-commerce in the different States and Territories. Scores have beennormalised to facilitate comparison. The higher the Allen ECP Index the moreprepared the specific economy is with respect to the take up of e-commercerelative to other States and Territories.

Box 2.1

Current and potential e-commerce

This study aims to measure the regional differences resulting from the impact of differing rates of

greater use of e-commerce between the states. To measure the potential of e-commerce in each of the

regions, the current preparedness of the states in terms of implementing e-commerce is used as an

indicator of their relative capabilities to implement e-commerce and achieve the benefits of

implementing e-commerce in the near future.


The Allen ECP Index is a composite index based on two clusters of factors anddata:

• supply—the preparedness and propensity of producers to use e-commerceand the initiatives of governments in helping to prepare their respectiveeconomies for the take up of e-commerce. This was weighted at 0.603 ; and

• consumption—the different propensity of consumers to use e-commerce.This was weighted at 0.40.

2.1 Supply

The measurement of performance in this area should draw on data thatindicates the different preparedness and propensity of producers to usee-commerce in each State. In doing this, the aim is to look at the issue from aneconomic perspective. This places less reliance on separating business-to-business e-commerce from business-to-consumer e-commerce than is often thecase. Box 2.2 sets out why this is the case.

2 The naming of the index reflects the point that it is based on an independent observer’s views. While it hasbeen framed in consultation with the Commonwealth, State and Territory Governments it does notconstitute a viewpoint held by any of the Governments involved.

3 The reason for weighting each cluster and the rationale used is explained in Section 2.3.


Box 2.2

B2B and B2C

When looking at production in the context of e-commerce many typically seek to base the analysis

on the distinction between business–to–business (B2B) and business–to–consumer (B2C) use of

e-commerce. This reflects data that shows that presently most e-commerce activity is in the business-

to-business category that is growing most rapidly, and that it is business-to-business

e-commerce that is altering supply chains, lowering cost structures and changing competitive

advantage. Already business-to-business e-commerce accounts for approximately 80 percent of

worldwide e-commerce activities.a

It is not surprising that the bulk of e-commerce is of the B2B type. A cursory glance at the input

output tables that underpin how the economy is measured indicates that this form of commerce

accounts for the overwhelming volume of economic transactions. It has been obvious for some time

that in developed economies there are a large number of transactions made for most goods and

services before the final sale is made to the consumer.

The high proportion of e-commerce B2B transactions is merely in line with the underlying magnitude

of existing B2B activity. Any change in the nature of commerce will appear to be greatest in B2B

transactions. This merely reflects the diffusion of e-commerce into the larger base of B2B

transactions.

There are no industries in the Australian economy, conventionally measured, that only undertake one

or the other transaction classification today. There are very few industries that do not earn a

substantial portion of their income from business–to–business transactions (most are in the public

sector such as defence, if the public is viewed as the consumer).

The distinction may be valuable in marketing, but offers little additional insight when looking at

economic impacts. It is likely that, as use of e-commerce matures and is adopted as an everyday tool,

less reliance will be made of this distinction. Today, for example there is little benefit from economic

analysis distinguishing between B2B and B2C commercial use of the telephone.

Both types of e-commerce transactions contribute to economic activity. Greater use of both will

result in efficiency gains and the general benefits analysed in earlier reports. From the perspective of

regional economies, the underlying ability of producers to undertake one type of e-commerce is very

likely to be highly associated, if not identical, to the ability to undertake the other. Aspects that are

more likely to shape outcomes are differences in the underlying nature of a region’s economy. That

is, regions that have a heavier reliance on mining will probably become slightly less involved in B2C

transactions than those that have a greater emphasis on services that can be sold direct to

customers. This is the dimension that is captured specifically with the use of the MMRF model.


a Reede, ‘Emerging Emarkets — Positioning for Regional Ecommerce Opportunities’, Gilbert and Tobin Ecommerce Manual, January 2000.

Factors that contribute to different preparedness and propensities to usee-commerce include:

• business websites—websites offer business increased access to theircustomers and suppliers. With the economies of scope that accompanynetworks, greater efficiencies and synergies can be expected to flow tothose States that have a higher proportion of their businesses ‘open forbusiness’ on the Internet;

• business Internet access—necessary to engage in e-commerce;

• telecommunications access—the efficiency, reliability, timeliness and cost oftelecommunications bandwidth is likely to be an increasingly importantfactor shaping the success of e-commerce ventures. This is generally linkedto telecommunications infrastructure and regulatory issues; and

• transportation costs—moving physical goods is likely to be an importantpart of e-commerce order fulfilment for some time to come. Businesses aremore likely to take up e-commerce successfully where the costs oftransporting their good/service from their production locations toconsumers is competitive—that is, where their transport costs are moreaffordable.

2c h a p t e r


While markets are crucial, it is clear that governments also play a role in themixed economy. They are as able to shape outcomes in the area ofe-commerce, as they are elsewhere. State and Territory Governments are veryactive in encouraging the adoption and expansion of e-commerce in Australia.They are able to do so through a number of means including:

• providing a supportive policy environment and framework for the conductof e-commerce;

• mobilisation of their own resources, (such as spending or taxing) to changeincentives; and

• leading by example in terms of online government services or governmentprocurement.

Appendix A elaborates on factors in the supply cluster and Appendix Bprovides a summary of government initiatives to promote e-commerce in theStates and Territories.

The government component of this cluster was weighted at 0.25 compared to0.75 for production.

Index scores for each State and Territory for the supply cluster are reported inTable 2.1. The unweighted index is essentially an overall score for this cluster.It is a relative measure with the average equal to a score of 100. Values above100 indicate a better than average position, and vice versa. The weighted indexis the value each State and Territory obtains for this cluster when calculatingthe overall Allen ECP index.

Table 2.1

Supply indices

State/Territory Unweighted Weighted

New South Wales 97 58

Victoria 103 62

Queensland 97 58

South Australia 105 63

Western Australia 102 61

Tasmania 101 60

Northern Territory 93 56

Australian Capital Territory 103 62


The results of this cluster suggest the States and Territories fall into two groups.South Australia, Victoria, the Australian Capital Territory, Western Australiaand Tasmania are tightly grouped and are separated by a small margin ahead ofNew South Wales, Queensland and the Northern Territory. This narrow spreadof the indices indicates that on average there is not much difference betweenthe preparedness of business between the States and Territories on thismeasure. There may well be greater deviations between businesses within eachState and Territory, than between the States and Territories.

This indicator provides results that may be at odds with many popularpreconceptions about e-commerce. It suggests that the smaller States (from aneconomic perspective) such as South Australia, Western Australia and theAustralian Capital Territory are keeping pace with, or are slightly ahead of thelarger States—New South Wales and Victoria. When looking at the States thataccount for most economic activity it is also notable that Victoria is slightlyahead of New South Wales.

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This result does not reflect a quirk in the data where, say, an extremely high orlow score distorts the picture. The broad pattern of small State leadership isconsistently apparent in many of the indicators used in this cluster. Whileconsiderable attention tends to be concentrated on high profile New SouthWales and Victorian businesses getting online and obtaining the capacity fore-commerce, many businesses in the large rump of these States are sloweradopters of e-commerce.

There are many possible interpretations of this result. One is that businessespreviously facing the most significant disadvantages of distance (in WesternAustralia for example) have been quicker adopters of new technology toovercome those disadvantages. Businesses in the smaller States may also havebeen quicker to exploit the capacity of e-commerce to develop new externalmarkets needed to expand.

2.2 Consumption

The consumption cluster largely encompasses business-to-consumere-commerce (as well as consumer-to-consumer transactions). It aims to reflectthe different preparedness and subsequent propensity of consumers to take upand regularly use e-commerce.

Business-to-consumer e-commerce is in its formative stages, with consumersstill experimenting with online purchasing. Survey data consistently revealssome scepticism among consumers regarding the security of informationinvolved in transactions, uncertainty about vendor integrity, logisticalbottlenecks, consumer protection, as well as general issues about access to theInternet (such as having the right computer and Internet access). Nevertheless,it is expected that these concerns and suspicions will dissipate over time asconsumers, producers and regulators increase their experience withe-commerce.

A number of factors have been identified as being significant in shapingconsumers’ preparedness and propensities to use e-commerce, and as beingmeasurable with available statistics. They include:

• reduced costs of personal computers (PCs) and Internet access—obviouslythe cheaper PCs and Internet access become, the more likely consumers areto access these goods and services and therefore more likely to take upe-commerce;

• security concerns and consumer acceptance—as consumers’ securityconcerns dissipate and e-commerce is regarded as a more acceptable meansof undertaking transactions, consumers will be more likely to take upe-commerce;

• income levels—recent experience in Australia and abroad demonstrates thatthere is a positive correlation between income levels and access to theInternet, and subsequent use of e-commerce;

• education levels—recent Australian experience demonstrates that Internetaccess and use of e-commerce tends to be positively correlated witheducation level; and

• demographic characteristics—survey data consistently shows that certainage groups are more likely than others to obtain computer and Internetaccess. Subsequently certain age groups are more likely to take upe-commerce.

The factors and the data used to assess their impact are discussed in detail inAppendix A.

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The index scores that result from this framework are reported in Table 2.2below.

Table 2.2

Consumption indices

State/Territory Unweighted Weighted

New South Wales 98 39

Victoria 99 40

Queensland 95 38

South Australia 93 37

Western Australia 97 39

Tasmania 88 35

Northern Territory 97 39

Australian Capital Territory 132 53


The ACT leads, and does so with a substantial margin over the other States.The fact that the ACT is predominantly a metropolitan area whereas otherStates have much larger non-metropolitan communities is one reason for this.

States or Territories with a significant non-metropolitan distribution ofconsumers do not perform well in this index. This may reflect the lack oftelecommunications infrastructure investment and the lack of effectivetelecommunications competition outside the major telecommunicationsmarkets of Sydney and Melbourne. For those based in non-metropolitan areas,it is of course difficult to participate in e-commerce if the required underlyingtelecommunications infrastructure is simply not available.

The result is not dependent on just one piece of data. The pattern reflected inthe overall table is apparent in most of the data used in this cluster.

The ACT takes the lead in almost every aspect considered important in shapingthe ability of a State or Territory’s population to engage in e-commerce.The ACT has a well educated and high income population that is already activein e-commerce.

Interestingly, there is little difference between NSW and Victoria in this cluster.

The spread of scores in this consumption cluster is also quite large. As well asthe leader having a large margin over the next highest score, Tasmania is wellbehind the other States.

This finding reflects a lot about the differing level and rate of economicdevelopment in the Australian States and Territories as well as fairly entrencheddemographic trends and differences.

2.3 The Allen E-commerce Preparedness Index

An overall index score for each State and Territory has been calculated bycombining the results of the two clusters. Rather than using a simple average ofthe cluster scores, it has been decided in consultation with the STRG to give adifferential weighting to the components. Applying differential weighting is amatter of judgement. The weights and the rationale for each cluster areexplained below.

• It reflected a view about the significance of efficient production in theeconomy and the likelihood that this was the principal means by which theeconomic consequences of leading or lagging behind would be felt. Whilethe role for governments is viewed as significant, and efficient delivery ofgovernment services is also important, it was considered less significant interms of overall preparedness for e-commerce than commercialtransactions. The supply cluster was attributed a weighting of 0.60.

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• Efficient consumption is also viewed as important. Private and publicdemand accounts for 80 per cent of final expenditure in a developedeconomy such as Australia and is the ultimate point of economic activity.Apart from export sales, regions will not obtain much benefit from newtechnology over time unless their consumers actually engage in e-commerce. Therefore, the consumption cluster was attributed a weightingof 0.40.

On this basis, the index indicating the preparedness of States and Territoriesfor e-commerce is provided in Table 2.3 below. The final Allen indices arecomprised of the addition of the weighted indices for the two clusters.

Table 2.3

The Allen e-commerce preparedness index

State/Territory Allen Index

New South Wales 97

Victoria 102

Queensland 96

South Australia 100


Tasmania 96



National 100


According to the Allen E-commerce Preparedness Indices, the ACT economy isviewed as being the most prepared for the uptake of e-commerce afterperforming very strongly in both the supply and consumption clusters. Thismay be a little surprising for some readers. It reflects a lot about underlyingstructural factors such as income and demographics which suggest that theACT is well placed to take advantage of what e-commerce has to offer.

Victoria, South Australia and Western Australia were the next best-preparedeconomies for the uptake of e-commerce. There is marginal difference betweenthese States.

Victoria’s result reflects a strong performance in government initiatives. SouthAustralia was however ranked highest in production and very highly ingovernment leadership but did not perform well in the consumption cluster.

NSW is ranked fifth outright in terms of being prepared to take upe-commerce.

Queensland and Tasmania were the next ranked economies. Tasmania’sconsumption cluster performed well below the Australian average while itssupply cluster performed just above the average. All of Queensland’s clustersperformed below the average.

The Northern Territory was ranked behind all States and Territories.

2.4 Sensitivity to different assumptions

The overall picture generated from the index is not overly sensitive toreasonable changes in key assumptions in the preparation of the index.A number of different permutations were tried in the context of discussionswith State Governments about this study. The differing permutations left therankings essentially unchanged.

Despite changes in the weightings, the overall picture remained largelyunchanged.

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That is, the ACT maintains its lead regardless of most changes in weightings.For the ACT to lose its outright first mover advantage—that is for the ACT tobecome equal leader with South Australia—the supply cluster needs to beallocated a weighting of 1.0. This illustrates that reasonable variations to theweightings will not result in the ACT losing its first mover status.

The relationship between NSW and Victoria is stable under most reasonablecluster weightings.

Generally, the lowest prepared States lagged despite changes in the weightings.That is, although the final position of Tasmania and the Northern Territorydoes depend on weightings adopted, one or the other is invariably the leastprepared for e-commerce.

The other States—Queensland, South Australia, and Western Australia—basically sit somewhere in the middle under most reasonable variations in theweightings, although the relative order of these middle ranked states does tendto change marginally with a variation in weighting.

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chapterthree Economy-wide simulation results

What are the economic implications of the economies in different regions ofAustralia implementing e-commerce faster than others? Will the leadersoutperform the others and obtain a first mover advantage? This chapter reportson simulations that have been conducted to assess the economy-widedimensions of these questions.

3.1 Preparedness and time

The Allen ECP Index indicates that there are substantial differences in thepreparedness of the States and Territories to undertake e-commerce. Theproblem is that it is very difficult to say from here how significant thosedifferences are. How long will the leaders be able to sustain their lead? Whenwill the others catch up?

It is likely, however, that the appropriate focus should be upon the longerterm. An aim in constructing the Allen ECP Index was to select structuraldifferences that appear likely to last for some time, probably many years.Certainly many of the patterns in the underlying data have been there for someyears already. Also, we already have a fair idea of what would happen if therate of implementation in the States and Territories were broadly uniform (thiswas already analysed in E-commerce beyond 2000). The point of interest iswhat would happen if the gap in time between the leaders and slower adopterswere large. Another point is that it is reasonable to assume that eventually allof the States and Territories will eventually achieve similar levels ofe-commerce activity.

Box 3.1

Technology and scale

In this Report, it has been assumed that all of the states and territories achieve similar levels of

e-commerce activity in the long-run. That is, there will be equalisation of on-line service across the

states and territories in the long-run. This is because there are powerful forces at play in Australia

that will push the states and territories towards uniformity, including the shift to services, fiscal

federalism and the operation of national policies and programs (eg, the programs run by NOIE).

Anecdotal observations about the dispersion of changes in business practices brought about by new

technology supports eventual technological convergence. Standing back and taking a broad view of

business use of new technology over time in the Australian states and territories we see:

• striking similarities in telephone usage although previously some states had been leaders and

some took longer than others;

• very similar patterns in the use of the fax; and

• uniformity in the utilisation of underlying infrastructure such as electricity networks even

though they were developed at a different pace in different states.

The key issue is about time. The index is used to estimate illustrative differences between states and

territories in the time it takes to implement e-commerce processes. The reasonable assumption is

made that the more prepared a state is, the more quickly it will be able to fully implement

e-commerce, and subsequently the quicker it will benefit from the efficiency gains from greater use

of e-commerce. Conversely, the less prepared a state is, the less able it will be to implement

e-commerce and subsequently the longer it will take to benefit from the efficiency gains from greater

use of e-commerce.


The way to proceed is to use the Allen ECP Index in the MMRF model byaltering assumptions about the time it takes to achieve full implementation ofthe e-commerce changes in the various States and Territories. All of the Statesand Territories eventually obtain the efficiency gains outlined in theE-commerce beyond 2000 study—it is just that some get there sooner, andothers later.


The benchmark implementation period should be the same as the time frameused in the earlier E-Commerce beyond 2000 report. This incorporated anassumption that full implementation of the identified changes (or shocks)would happen over 10 years. This was used because it was viewed as beingconservative. Some observers argue that we will see the full effect of manychanges much sooner. This may well be the case but there is little hardevidence either way.

As noted earlier, the scenario where implementation occurs evenly over10 years in every State and Territory is referred to as the ‘uniform case’.

On this basis, regions with an average Allen ECP score are assumed toimplement the e-commerce changes in the average timeframe, which is after10 years. Reflecting its lead in the Allen ECP Index, the ACT is assumed toachieve the expected direct change in seven years rather than in 10 years,reflecting its greater preparedness. At the opposite end of the scale, reflectingits low index score, full implementation of the e-commerce changes in theNorthern Territory are assumed to take three years longer than the average.That is, it takes 13 years to obtain the full direct benefits. The States are spreadout in between reflecting their index score. The economic outcomes under thisscenario are labelled the ‘non-uniform case’.

Table 3.1 sets out a comparison of the States’ and Territories’ e-commerceimplementation years for the non-uniform case.

Table 3.1

E-commerce implementation scenarios

State/Territory Non-uniform case — implementation years

New South Wales 11

Victoria 9

Queensland 12

South Australia 10


Tasmania 12




3.2 Simulation results

MMRF produces aggregate economic outcomes that are broadly in line withthose obtained using the MONASH model in E-commerce beyond 2000.Economic activity (real GDP) is forecast to increase by just under three percent by the year 2010 in both models. This indicates that there is no significantmodel bias in the shift to the regional model. This is discussed in more detail inAppendix C.

While the national results are broadly similar, the MMRF model results revealsignificant differences in outcomes for the states and territories.Key dimensions are discussed below.

Economic activity

Figure 3.1 provides a comparison of the expected output, or Gross StateProduct (GSP) of each State and Territory when they lead or lag one another inachieving implementation of e-commerce (the ‘non-uniform case’) against theoutput that would have been obtained if use of e-commerce remained largelystatic (the ‘base case’).

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Figure 3.1

GSP and GDP (% deviation in non-uniform case from base case)

Source: MMRF Model Results.

The results indicate that even though there may be significant differencesbetween e-commerce implementation rates, every State and Territory obtainsbenefits in terms of higher output in the medium to longer term (i.e. after 2003and out to the year 2016) than otherwise. However, some do better thanothers and one (Western Australia) sees a temporary setback, although this isvery small.

The ACT’s output benefits from its first mover advantage in the earlier years(until 2005). However after the year 2005 the ACT’s output does not continueto increase as significantly from greater use of e-commerce. Over the initialyears of the simulation the ACT expands by up to 0.4 per cent more than itwould under the uniform case (if all states implemented e-commerce at thesame rate). The increase in output is relatively modest despite the three-year ormore advantage that it enjoys over other the States and the Northern Territory.The ACT’s economy does not maximise the benefit of its first mover advantagebecause government spending still significantly influences its economy.Government activity does rise as a result of general economic growth (raisingrevenue and expenditure expectations). However it is not as substantial aboost, or as sustained as, that which would apply to an economy which couldtranslate more of this productivity advantage into a competitive advantage intrade between States or internationally. Overall, however, the ACT economydoes perform above the Australian average.

Victoria is expected to be the second most rapid adopter of e-commerce. Whilethe time margin in Victoria’s favour is relatively small, it is sufficient to giveVictoria a substantial boost in terms of a larger e-commerce growth dividend.Activity increases by a peak of four per cent above the base case forecast. Thisis about 0.6 per cent higher than the increase expected if e-commerce wereimplemented at the same pace in every State and Territory. It is also notablefrom a net present value perspective that these gains are more valuable becausethey are enjoyed earlier. Victoria is able to maximise its second moveradvantage because its economy is able to translate e-commerce efficiency gainsinto a competitive advantage. It expands as private sector firms increaseexports abroad and interstate.

Although it was ranked equal third with South Australia in terms of its AllenECP Index score and was just under the Australian average, Western Australiais the least stimulated State from greater use of e-commerce. This is because theWestern Australian economy has a heavy reliance on mining which may besomewhat challenged as a result of a higher exchange rate that is expectedfrom greater use of e-commerce. More importantly, the accelerated growth in

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the other States encourages capital and labour to migrate to the other States,compounding the effect of the lag and contributing to a small contraction inoutput at first.

Box 3.2

Exchange rate sensitive output

A key factor which affects particular states’ output (particularly, Western Australia and Queensland)

is the change in Australia’s exchange rate from increased use of e-commerce. This macro economic

result is one of the driving forces behind certain regional results.

As noted in both the E-commerce beyond 2000 report and this study, the result of increased use of

e-commerce is that GDP increases meaning a net expansion of industries. This expansion needs to be

funded by investment and, assuming that the savings rate in Australia remains unchanged, this

requires an inflow of foreign capital which raises Australia’s exchange rate.

As noted earlier in this Chapter, this study does not purport to predict the actual exchange rate,

rather, it predicts that the rate would be higher than the rate that would prevail in the absence of

increased use of e-commerce (the base case).

The appreciation of the exchange rate negatively impacts on those industries particularly sensitive to

the exchange rate — that is commodity industries such as mining and to a lesser extent agriculture.

Commodity exports become relatively more expensive overseas and face increased competition

domestically from relatively cheaper imported goods and services. Therefore, states such as Western

Australia which have a heavy reliance on commodity industries are somewhat challenged in the

earlier years from the appreciation of the exchange rate.

However, as exports recover, the exchange rate in the ‘non-uniform’ case moves back towards the

‘base’ case (that is, the scenario where there is no increased use of e-commerce) and regional

economies sensitive to exchange rate changes recover, resulting in output growth. See section D.5 of

Appendix D for a further detailed explanation of the impact of increased use of e-commerce on

Australia’s external competitiveness.


Other outcomes of increased use of e-commerce driving change in industrystructure and employment are:

• GDP increases by 2.9 per cent;

• aggregate employment and real wages rise;

• the material wellbeing of Australians improves;

• competitiveness is affected by the exchange rate; and

• some industries grow and others contract.

These are summarised in Sections D1 to D6 of Appendix D and explained indetail in the E-commerce beyond 2000 report.

As the largest State economy, NSW has an industrial composition broadly inline with that of Australia at large. Its performance is therefore very close tothe national average. It does not perform as well in the non-uniform case as itdoes in the uniform case, as it is assumed to lag some of the other States inimplementing e-commerce — that is, it takes NSW 11 years to fully implemente-commerce while it takes Victoria nine years and the ACT seven years to fullyimplement e-commerce. The gains in Victoria (and to a lesser extent, the ACT)are at the expense of lower increases in activity in NSW. This is becauseresources flow into Victoria and the ACT, which would otherwise flow intoNSW, to take advantage of the productivity gains from these States morerapidly implementing e-commerce. In the non-uniform case, Victoria and theACT achieve more rapid productivity gains that translate into a competitiveadvantage up to around the year 2006 for Victoria. In the longer run thismakes little difference as NSW and Victoria emerge as the States with thelargest increases in activity of about 3.5 per cent due to the efficiencies arisingfrom e-commerce after 2010.

South Australia also achieves a large increase in activity of aroundthree per cent due to efficiencies arising from e-commerce.

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✭ ✭

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South Australia’s forecast deviation path for output is close to that ofAustralia’s GDP. While it does produce commodity exports, like Victoria,South Australia does not have a heavy reliance on such exports that tend to bedisadvantaged from the higher exchange rate. South Australia is relatively wellprepared for e-commerce and benefits from a degree of second moveradvantage, although to a lesser extent than Victoria. This explains SouthAustralia’s output being stimulated less than Victoria’s.

While Queensland is not that far behind the national average in terms ofe-commerce preparedness, its economy receives only a modest boost fromgreater use of e-commerce. Queensland is, in fact, the second least stimulatedeconomy. Like Western Australia, Queensland also has a heavy concentrationof mining and of agriculture. An offset for Queensland, which results in itsoutput increasing by more than Western Australia’s, is its well developedtourism industry which tends to benefit from greater use of e-commerce.The net result is output growth below the Australian average.

Their lower level of e-commerce preparedness does not disadvantage theeconomies of Tasmania and the Northern Territory substantially. LikeQueensland, they have strong representations in their economies ofcommodity exports (which shrink due to a higher exchange rate) and tourism(which tends to benefit from increased use of e-commerce). The net result ishigher output, although this is forecast to be below the Australian averageincrease.

Employment

Figure 3.2 provides a comparison by State and Territory when they lead or lageach other in achieving implementation of e-commerce (the non-uniform case)against the employment that would have been obtained if use of e-commerceremained largely static (the base case).

Figure 3.2

Employment (% deviation in employment for non-uniform case from base case)

Source: MMRF Model Results.

The ACT’s employment benefits from its first mover advantage in the earlieryears (until 2007) from increased use of e-commerce. However after 2007 theACT’s employment growth is projected to flatten out. Again, the ACT doesnot have the ability to maximise the benefits from its first mover status becausegovernment spending which tends to be exogenous largely influences itseconomy—that is, government spending is less responsive to economicconditions than other sources of demand. The ACT’s economy continues to bedominated by this stable source of demand. Nevertheless, the ACT’semployment growth is projected to be greater than the national average fromincreased use of e-commerce.

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Victoria’s employment is projected to increase the most until 2006. This can belargely attributed to its mix of e-commerce friendly industries, which allowVictoria to maximise the benefits of its second mover advantage. Victoria’semployment decreases significantly from 2006 until 2010. This is becausee-commerce is expected to generate increases in real wages and subsequentlyreduces employment. Initially real wages are fixed and employment adjusts tochanges introduced by e-commerce. However as the use of e-commerceincreases, output and employment will increase over time. Although theincrease in employment subsequently decreases because of the increase in realwages, employment growth overall remains above the base case reflecting theincreased employment associated with technological changes frome-commerce.

In NSW, employment benefits from increased use of e-commerce. LikeVictoria, NSW is able to translate e-commerce efficiency gains into increasedoutput and employment due to its mix of e-commerce friendly industries.However, NSW is not as prepared for increased use of e-commerce as otherStates—for example the ACT and Victoria.

South Australia’s forecast deviation path for employment was close to thenational average. South Australia benefits significantly from increased use ofe-commerce but does not capture early mover advantages to the same extent asthe ACT or Victoria due to its marginally lower preparedness. Also, SouthAustralia does not have a heavy reliance on commodity exports, which tend tobe disadvantaged as a result of a higher exchange rate.

Tasmania and the Northern Territory’s forecast deviation paths foremployment initially decrease, but both subsequently increase from 2007. Theforecast employment growth for both economies is below the national average.This can be attributed to their mix of industries, some of which tend to gainfrom e-commerce and those industries, such as commodity industries, whichtend to shrink. Moreover, it is also driven by their relatively lower e-commercepreparedness indices. The Northern Territory and Tasmania both tend to lagthe rest of Australia in implementing e-commerce. This confers a competitiveadvantage on the other States to the detriment of employment in the NorthernTerritory and Tasmania. However, from 2007, these States recover as theyincrease their productivity by implementing e-commerce more fully in the lateryears and the other States have already partly absorbed their e-commerce gainsdue to their more rapid implementation of e-commerce.

Queensland and Western Australia’s forecast deviation paths for employmentperform well below the Australian average. This is because both economieshave a heavy reliance on the agricultural and mining sectors, which tend to beadversely affected by greater use of e-commerce. Queensland’s employmentdeviation path is higher than Western Australia’s because of its large tourismsector which tends to benefit from e-commerce. Western Australia’s forecastdeviation for employment in later years increases significantly, reflecting agradual decline in the importance of agriculture and mining in its economy.

This analysis highlights the fact that e-commerce brings considerable changes inemployment. While some industries will shed jobs, in net terms there will be agrowth in employment nationally and the movement is generally from lowerskilled, lower paid jobs to well paid employment relying on higher levels ofskills. This calls for structural adjustment policy responses to anticipate thechanges ahead so that the benefits are maximised and the negative impacts areminimised.

3.3 Comparison with the uniform case

It is useful to compare each State and Territory’s results under the non-uniforme-commerce preparedness scenario with the uniform case. This highlights thatit is the interplay of preparedness and the underlying structure of an economythat shapes the ultimate outcome. This is reported in the figures below.

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Figure 3.3

GSP by state and territory — uniform and non-uniform cases (% deviation from base case)

(a) New South Wales GSP

New South Wales is the state with the most significant gains in the long-run whether implementation

of e-commerce is uniform or non-uniform.

In the non-uniform case, NSW takes 11 years to implement e-commerce. It will obtain lower

additional activity compared to the uniform case.

Up to the year 2008, the other states which implement e-commerce more quickly than NSW achieve

more rapid productivity gains that translate into a competitive advantage for them.

From 2008, NSW fully implements e-commerce and the increase in activity is then aligned with the

forecast that would apply under the uniform case.

(b) Victoria GSP

Victoria leads all other states, except for the ACT, in implementing e-commerce in the non-uniform

case. By implementing e-commerce relatively more quickly than the other states — taking only

9 years to fully implement e-commerce — the additional increase in output is higher than that

resulting from the uniform case up to the year 2006.

Over the period 2006–2009, the other states continue to improve their productivity and

competitiveness. As a result the increase in Victoria in the non-uniform case slips below the level

that would be obtained in the uniform case. The increase in activity then stabilises at a level only

slightly below the level that would apply in the uniform case. This reflects the equilibrium outcome

in competition with other states.

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Figure 3.3 — continued


(c) Queensland GSP

In both cases, implementation of e-commerce in Queensland provides increased economic activity.

In the non-uniform case, Queensland lags states such as NSW and Victoria in implementing

e-commerce. As Queensland takes longer to implement e-commerce in the non-uniform case, the

additional increase in its output is less in the earlier years compared to the uniform case. However by

the year 2008, Queensland’s rate of e-commerce adoption accelerates in the non-uniform case.

Meanwhile, the more rapid adoptors of e-commerce have implemented e-commerce and so have fully

absorbed their productivity gains from e-commerce. Queensland is then able to boost competitiveness

and the increase in output returns to the level that would be achieved with uniform implementation,

and then exceeds it.

Queensland is forecast to obtain a growth increment in the period after 2009 above that forecast in

the uniform case. This reflects underlying base case forecasts. Queensland is distinctive in having

relatively rapid growth in the service industries that benefit most from e-commerce. Giving

Queensland a productivity boost later in the simulation period appears to result in a small growth

premium reflecting complex competitive factors within the MMRF model.

(d) South Australia GSP

There is little difference between the forecast increase in activity in the non-uniform case compared

to the uniform case — SA takes 10 years to fully implement e-commerce in the non-uniform case

which is the same as under the uniform case. In terms of time to implement e-commerce, the

3c h a p t e r


difference is minimal in terms of normal rounding error which occurs in this type of analysis.

However, South Australia’s GSP is higher in the non- uniform case and this is achieved earlier than in

the uniform case. This is due to South Australia’s relatively high e-commerce preparedness.

To the extent that the difference has economic significance, it is due to what happens in other

states. In the non-uniform case, SA is among the leaders in e-commerce preparedness. Only Victoria

and the ACT implement e-commerce more rapidly than SA in the non-uniform case, while WA is

equivalent to SA. This gives SA a competitive advantage.

(e) Western Australia GSP

There is very little difference between the forecast increase in activity in the non-uniform case

compared to the uniform case — that is, WA is assumed to take 10 years to fully implement

e-commerce in the non-uniform case which is the same as occurring under the uniform case.

The difference is minimal in terms of normal rounding error which occurs in this type of analysis.

To the extent that the difference has economic significance, it is due to what is happening in other

states. In the non-uniform case there are more states that are behind WA in implementing

e-commerce than ahead — only Victoria and the ACT implement e-commerce more rapidly in the

non-uniform case than WA. This provides WA with a very slight competitive advantage in the

modelling.

3c h a p t e r Figure 3.3 — continued


1997

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(f ) Tasmania GSP

In the non-uniform case, Tasmania lags most of the other states (except NT and Queensland).

This confers a competitive advantage on the other states to the detriment of additional growth in

Tasmania in the non-uniform case compared to the uniform case.

Tasmania recovers a lot of ground in the years 2007 to 2010 when it is increasing productivity from

increased use of e-commerce and the other states have already partly absorbed their e-commerce

productivity gains.

(g) Northern Territory GSP

In the non-uniform case, the NT lags the other states by many years — in fact, some states have a

5 to 6 years time advantage in implementing e-commerce. This confers a competitive advantage on

the other states to the detriment of additional growth in the NT in the non-uniform case compared

to the uniform case.

The NT recovers a lot of ground in the years 2008 to 2010 when it is increasing productivity from

increased use of e-commerce and the other states have already partly absorbed their e-commerce

productivity gains.

Nevertheless, the NT’s additional growth in the non-uniform case remains below that achieved with

uniform implementation over the years to 2016. This reflects the conversion of gains that the other

states enjoy from increased e-commerce into structural advantages. It is an issue of opportunities

lost from lagging.



1997

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Non-uniform

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(h) Australian Capital Territory GSP

In both cases, implementation of e-commerce in the ACT results in higher economic growth than

what would occur in the base case. The ACT leads all states in implementing e-commerce in the non-

uniform case. By implementing e-commerce more quickly than the other states — taking only

7 years to fully implement e-commerce — the ACT obtains a competitive advantage. The model

results indicate, however, this only confers a small improvement in activity above that of uniform

implementation. This is because the ACT’s economy is largely determined by government spending

which tends to be exogenous.

However, from the year 2006 in the non-uniform case, the other states’ and territories’ rate of

e-commerce adoption accelerates and catches up to the ACT’s adoption of e-commerce. This results in

the ACT losing its first mover advantage and the increase in output decreases to slightly below that

in the uniform case.

Source: MMRF model results.




chapterfour Overview of regional impacts

What are the implications of differences in the preparedness to adopte-commerce between regions? This chapter draws out overarching observationsabout the implications for regions. It supplements Part Two of this report whichprovides details about forecasts for 57 statistical divisions within Australia.

4.1 Changes brought about by greater use of e-commerce

The Monash Multi-Regional Forecasting (MMRF) model has been used toexamine what difference varying rates of adoption of e-commerce among theStates and Territories may bring. The MMRF is a dynamic computable generalequilibrium model of the Australian economy. Details about the model areprovided in Appendix C.

As explained in earlier chapters, this study builds on previous work reported inE-commerce beyond 2000. With the assistance of an Industry ReferenceGroup, that study identified 14 major direct impacts and estimated the fullflow-on implications of these using another model, the MONASH model.It was viewed that those direct impacts were a reasonable approximation of thenature of the structural change ahead. Those results have been published andcirculated widely, with considerable coverage in the national media. To date,the broad findings have not been subject to challenge. Most of the feedbackreceived to date suggests that the earlier view is fairly conservative.

The major direct impacts identified in this study and the previous E-commercebeyond 2000 study are summarised in the box below.

Box 4.1

Summary of shocks used in the MMRF modelling

Description

s1 Savings of margins by consumers

s2 Saving of time of consumers

s3 Purchase of e-commerce equipment and services by consumers

s4 Saving of margins by industries

s5 Saving of labour by industries in buying input

s6 Purchase of e-commerce equipment by industries

s7 Direct labour saving technical progress in transport and banking

s8 Time saving by industries dealing with the transport and banking sectors

s9 Time saving by households dealing with the transport and banking sectors

s10 Additional margins savings by the communications industry

s11 Saving of particular inputs

s12 Twist in favour of imports

s13 Increase in foreign awareness of Australian products

s14 Reductions of foreign currency c.i.f. prices of imports

Source: Centre of Policy Studies.

The MMRF model permits a detailed analysis of the statistical divisions usedby the Australian Bureau of Statistics (ABS)—see Figure 4.1. These divideAustralia into 57 areas selected to reflect ‘identifiable social and economiclinks between inhabitants and between the economic units within the region,under the unifying influence of one or more major towns or cities’.4 (SeeAppendix C about technical aspects of the MMRF model).

4 Australian Bureau of Statistics, Australian Standard Geographical Classification, Catalogue no. 1216.0,AGPS, Canberra, 1995, p. 18.


Figure 4.1

Australian Bureau of Statistics’ statistical divisions

Source: Australian Bureau of Statistics.b

b Although the MMRF model is based upon the Australian Bureau of Statistics’ statistical divisions, they are not identical. For MMRFpurposes, they differ in the following ways;

• ABS 510 statistical division has been divided into two statistical divisions (Peel and South West) for this study;

• ABS 535 statistical division has been divided into two statistical divisions (Mid-West and Gascoyne) for this study; and

• ABS Northern Territory statistical divisions have been combined into one single statistical division (Northern Territory) for this

study.

4.2 Drivers of change in non-metropolitan Australia

In recent years, there have been a number of factors which have affected non-metropolitan Australia. One major factor has been increased globalisationwhich enables businesses to trade beyond their local areas. Such drivers ofchange have also included:

• technological advances—improved transport and telecommunications havechanged farming, increased agronomic developments and changed theadoption of new mining techniques. The telecommunications revolutionhas been accompanied by employment opportunities although to differingdegrees. For example, regional centres like Launceston and Ballaratwelcome the advent of telephone call centres as large-scale employers5 ;

• demand for services—the ability of online services to fill gaps, improvequality and reduce costs of services in areas such as health, education andbanking;

• a downward trend in world prices for agricultural commodities—this hasbeen reflected in a decline in producers’ terms of trade;

• changes in consumer tastes—this has been demonstrated by consumers’decreased demand for wool and increased expenditures on tourism,recreation and leisure;

• changes in lifestyle—there has been an increase in internal migration tocoastal areas; and

• government policy changes—this has involved the lowering of tradebarriers, deregulating the financial system, national competition policy ingeneral and increased regulation to protect the environment.

5 Senate Employment, Workplace Relation, Small Business and Education Reference Committee, Report onthe Inquiry into Regional Employment and Unemployment—Jobs for the Region, September 1999, p.12.

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710545

540

435530

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525505

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520

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605

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130135160125

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105115

140150

155

805/810

215

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225

210 255

250

245240235

220205

415

425

420


All of these drivers of change have naturally changed the composition ofeconomic activity in Australia’s regions, with some changes impacting unevenlyon Australia’s regions, resulting in some regional disparity.

Although there are some drivers of change that have impacted negatively onregional Australia, others have been positive. That is, some factors haveintensified adjustment pressures that have caused short term ‘pain’ in someindustries but in the long run have created growth opportunities in otherindustries. One such positive factor, which is the focus of this report, istechnological change, specifically the benefits resulting from increased use ofe-commerce for regional Australia.

It is becoming clear that e-commerce is likely to have a profound impact on theeconomy, including regional economies. Aspects of change include:

• a reduced tyranny of distance—use of new technologies increasinglyremoves the tyranny of distance and isolation that have been factorsimpeding development outside of Australia’s capital cities;

• access to global markets—even small producers can now sell to globalmarkets. With the Internet, regional businesses have increased scope toadvertise and sell their products into a global market at lower cost;

• productivity gains—e-commerce will allow firms to re-engineer and canresult in a streamlined interface between production and sales. E-commerceintroduces potential distribution cost savings for many firms, particularlythose that can digitise their products;

• changes to value chains—that is, e-commerce can change firms’relationships with their suppliers, or with their consumers. For example,there will be a degree of disintermediation between wholesalers andretailers. Although this may result in transitional pain as retail trade isaffected negatively, in the long term this can result in reduced costs andprices for industries and consumers;

• new products and ways of doing things—the impact of e-commerce will bemagnified many times when completely new products and services aredeveloped;

• changes in prices and inflation—the combination of reduced productioncosts and increased competition over the Internet will have a significantdownward pressure on prices and inflation; and

• employment—this is a ‘mixed bag’ for regional Australia. That is, many ofthe productivity improvements that may come with greater use ofe-commerce also pose a threat to employment (for example,disintermediating layers of economic activity between buyers and sellersresults in bypassing jobs). However, an offsetting factor is that the lowerprices for goods and services would stimulate demand in other areas andincrease their demand for labour.

This study hasn’t factored in all of the benefits of increased use of e-commerce.It is very difficult to analyse many quality of life benefits. To the extent thatthese are not factored in, the results are conservative.

4.3 Metropolitan and non-metropolitan

Earlier analysis undertaken in the E-commerce beyond 2000 study suggestedthat there were no significant differences in the economic impact ofe-commerce between metropolitan and non-metropolitan regions. To theextent that there were differences, it was possible that rural areas were amongthe major beneficiaries. The study E-commerce beyond 2000 was limited by themodel being constrained to assuming that every region would adopte-commerce at the same pace. This is overcome by the greater flexibility of theMMRF model to deal with regional differences.

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Traditional measures

Taking the different preparedness of the States and Territories into accountchanges the outlook slightly from the E-commerce beyond 2000 report, wherethey were assumed to have the same degree of e-commerce preparedness.

Figures 4.2(a) and 4.2(b) compare employment and output deviations formetropolitan and non-metropolitan statistical divisions relating to the year2010.

The average metropolitan output deviation was 2.9 per cent while the averageemployment deviation for metropolitan areas is 0.6 per cent. Moreover, theaverage non-metropolitan output deviation was 1.8 per cent while the averageemployment deviation for non-metropolitan areas is –0.4 per cent reflecting anet loss of jobs in regional areas.

Figure 4.2

Regional impacts: Gross regional product and employment (long run % change from base case)

(a) Metropolitan regions

(b) Non-metropolitan regions

Source: MMRF model results.

4c h a p t e r

-1

Change in GRP (y-axis)

Change in Employment (x-axis)

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In both figures it is desirable to be to the right of the vertical axis, indicatingincreased employment. It is also desirable to be above the horizontal axisindicating an increase in regional activity and incomes. The best quadrant to bein is the top right hand side of each chart which indicates higher output andmore jobs. The least favourable quadrant is to the lower left hand side whichindicates a contraction in output and employment. The other two quadrantsreflect mixed results.

Figures 4.2(a) and 4.2(b) demonstrate that the relationship betweenemployment and output in the metropolitan and non-metropolitan statisticaldivisions are similar in nature.6 The data for both follow the same trend line.This trend line reflects the impact of a two per cent increase in labourproductivity in most statistical divisions7 .

Metropolitan divisions

Figure 4.2(a) demonstrates that most of the capital cities are unambiguouslybetter off—all of the capital cities tend to have a more friendly mix ofe-commerce industries compared to some of the rural statistical divisions.

Only Perth and Brisbane are in the ambiguous situation of a significant increasein output, but a small decrease in the level of employment in 2010 comparedwith the base case. The decrease in employment levels for these two divisions isattributed to the displacement of workers from those industries which tend notto benefit from greater use of e-commerce. However, as these displacedworkers begin to find employment in the fastest growing sectors of theeconomy, employment begins to rise.

The upside from this analysis is that there are not many jobs involved in thesetwo areas relative to the increase in output and it should not be difficult(relative to many other structural changes) to implement effective structuraladjustment measures.

Both Melbourne and Sydney experience the greatest percentage increase inGRP while the ACT experiences the greatest percentage increase inemployment. For the ACT, employment increases substantially with increaseduse of e-commerce, reflecting the higher level of growth in labour-intensivepublic sector activity compared with other more capital-intensive activities suchas agriculture.

Non-metropolitan divisions

The statistical divisions, such as the Mid-North Coast and Richmond-Tweed arein the positive/positive top right quadrant, indicating higher output andemployment. There are 21 non-metropolitan divisions in the top-rightquadrant.

In those divisions in the positive/positive quadrant, real GRP generallyincreases initially as industries and consumers progressively adopt e-commerce.With greater adoption of e-commerce, these economies make better use ofexisting resources—that is, total factor productivity increases. More capital isinjected into sectors with the highest productivity gains and there is an increasein the supply of labour stemming from time savings to producers andconsumers. These effects slowly filter through to other sectors of the nationaleconomy.

6 The MMRF productivity results are more tightly clustered around the trend line than those for MONASH.This reflects the higher level of industry aggregation in MMRF: in MMRF there were only 31 industriesrelative to 113 in MONASH. Fewer industries means less scope for changes in the industrial composition ofoutput by region.

7 Uniform productivity growth results from the assumption of uniform wage growth: with uniform wagegrowth there must be uniform adjustment in marginal products of labour in every industry and in everyregion. Uniform wage growth reflects conditions in Australia where there are still quite centraliseddetermination arrangements and labour mobility between the States.

4c h a p t e r


Generally, higher activity is maintained in these divisions even after the fulleffects of the modelled e-commerce changes have taken place in the latteryears. This reflects the dynamic benefits as e-commerce boosts the fastestgrowing parts of the economy which therefore expand in the long run.

For the divisions in the top-right quadrant, the benefits from the efficiencies ofgreater e-commerce use are broadly spread across the different industrysectors.

The picture is not so clear cut with other statistical divisions reflecting higherregional activity (and incomes) but lower employment growth due toproductivity enhancements—these fall into the mixed results quadrant. The neteffect on statistical divisions in these quadrants will vary. For example, in someregions, the growth in output could produce greater net benefits than the fallin employment, while the opposite may be true in other regions.

There are three divisions (North-West Queensland, Pilbara, and Goldfields-Esperance) that are disadvantaged by the structural change.

For example, real GRP in the Pilbara Division is projected to be lower thanotherwise with increased use of e-commerce—real GRP is 0.5 per cent lower in2008 while the contraction narrows to 0.07 per cent lower by 2016. This isassuming that the division does not make any policy changes in response togreater use of e-commerce that result in structural changes. The reduction inboth employment and output from increased use of e-commerce in the Pilbararesults mainly from the contraction in the mining industry. It appears that themain industries of the Pilbara and other statistical divisions in the bottom-leftquadrant are sensitive to the exchange rises expected to flow-on from theinvestment boost associated with e-commerce. The upside from this analysis isthat there are not many jobs involved and it should not be difficult (relative tomany other structural changes) to implement effective structural adjustmentmeasures if the forecasts are, in fact, accurate.

Dislocation index

Looking at output and employment as indicators of change only tells part ofthe story. For this reason, this study adopted another indicator—the dislocationindex. The dislocation index measures the industrial dislocation, which is theextent of structural change for the economies of the different statisticaldivisions, as a result of increased use of e-commerce

This indicator measures the degree of associated contraction and expansion indifferent industries, and the associated movement of resources andemployment between them—the ‘churning rate’—in each statistical divisionfrom e-commerce, ceteris paribus. That is, the study has assumed thatgovernment policies are unchanged, and that the economic performanceresulting from increased use of e-commerce is independent of governmentpolicies.

This additional indicator is important as it is a measure of the transitional‘pain’ associated with the structural change arising from increased use ofe-commerce. The dislocation index calculated for each statistical division hasbeen adjusted so that the absolute size of each division has no impact on theindex calculated for each region.

Where there is a modest dislocation index—a moderate churn rate—thissuggests that the impact of e-commerce on the area is minimal. It also impliesthat the region does not have many opportunities to take advantage of the newe-commerce opportunities, given its economic base. Conversely, where there isa high dislocation index—a high churn rate —this suggeststhat the impact ofe-commerce on the area is large, and that there are many opportunities arisingfrom e-commerce. These opportunities can be in existing industries within thedivision or in new and developing industries.

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However associated with such benefits and opportunities for these statisticaldivisions, is the transitional pain for these longer-run high benefiting areas. Forexample, a high dislocation index results in economic output and employmentgrowth in the longer-run. In the interim though, workers and industriesdisplaced due to increased use of e-commerce will require re-skilling andretraining before finding employment in the new productive growth areas ofthe changing economy.

The average dislocation index for the 57 statistical divisions is 3.09 per centwith 30 statistical divisions above the average and the remaining 27 statisticaldivisions below the average.

Figure 4.3 graphs the statistical divisions’ dislocation indices.

Metropolitan divisions

Essentially, the dislocation indices for the metropolitan divisions are higherthan average. There are only two metropolitan divisions out of 11— Perth andNorthern Territory —with dislocation indices below the average (3.09 percent). This suggests that cities, with their more diverse economic base,experience the full brunt of the structural change. Conversely they can makethe most of the opportunities associated with increased use of e-commerce.

Non-metropolitan divisions

In relation to the metropolitan areas, it a somewhat mixed bag. There are 25statistical divisions below the average and 21 above the average dislocationindex.

Overall analysis of dislocation indices

Like many other structural changes before it, e-commerce will involve industryand employment displacement. There are some major changes ahead that willinvolve transitional costs. This will, of course, be most pronounced for thosewho lose their jobs, or even their previous occupational prospects.

Analysis indicates that there is a strong positive relationship betweendislocation and changes in employment. The higher the rate of change, thehigher the net gain in employment. Conversely, regions that see little changewill see less increase in employment, or even, a reduction in employment.This is portrayed in Figure 4.4 below.

The North West Queensland statistical division is an outlier with a dislocationindex of around 2.5 per cent and a change in employment of –2.6 per cent.The fall in employment is larger than average given its dislocation score.This region is classified as a remote resources development division, forecast tobenefit minimally from greater use of e-commerce. This is because its majorindustrial sector, mining, is negatively affected from greater use of e-commerce.

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Figure 4.3

Dislocation Arising from Greater Use of E-Commerce


WheatbeltSouth West

PilbaraGoldfields-Esperance

Great SouthernMid WestGascoyne

PeelKimberley

PerthSouth West

Central WestDarling Downs

FitzroyWide Bay-Burnett

North WestMackay

WimmeraEyre

York & Lower NorthNorthernFar North

East GippslandNorthernSouthern

Murray LandsNT

BrisbaneMoreton

South EastMallee

Western DistrictMersey-Lyell

North WesternMurray

GippslandCentral West

Outer AdelaideNorthern

ACTMurrumbidgee

GoulburnNorthernFar WestLoddon

AdelaideCentral Highlands

Ovens-MurrayGreater Hobart

HunterSouth Eastern

BarwonIllawarra

Richmond-TweedMid-North Coast

MelbourneSydney

0 0.005 0.01 0.015 0.02 0.025 0.03 0.035 0.04 0.045DISLOCATION INDEX

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Figure 4.4

Regional dislocation and employment change

Source: The Allen Consulting Group

This illustrates the fact that with structural change arising from e-commerce,the greatest gains in regions are accompanied by some considerable disruption,arising from the need for industries to re-structure and for people to re-skilland change employment. Thus the substantial increases in employment inregions such as Sydney, the Richmond-Tweed, or the Ovens-Murray area willbe earned as a consequence of sometimes-uncomfortable change. Alternativelythe expected losses in employment in regions such as the Pilbara or North WestQueensland are essentially because the modelling does not show them makingsignificant changes.

Box 4.2

Context of e-commerce changes

It is useful to consider how the e-commerce changes compare to the ongoing changes that are

affecting metropolitan, and rural Australia stemming from broader economic and social forces to set

the context of the e-commerce changes. One such major comparable change is the National

Competition Policy (NCP) reforms. Comparing the changes of e-commerce to NCP changes provides an

objective view of the relative contribution of e-commerce reforms to observed regional changes:

“The selected NCP reforms are cumulatively estimated to provide a sustained

increase in output for the economy, as measured by real gross domestic product

(GDP), of 2.5 percent above what would otherwise occur in the absence of reforms.

This is equivalent to almost one year’s average annual growth of the economy.”

Productivity Commission, Impact of Competition Policy Reforms on Rural and Regional Australia,

Report no. 8, AusInfo, Canberra, 1999.

MMRF projects that implementation of e-commerce across Australia will provide a sustained increase

in output for the economy of approximately 2.8 percent above what would otherwise occur in the

absence of e-commerce up to the year 2016 — this too is equivalent to almost one year’s average

annual growth of the economy. This demonstrates that the economic benefits from increased use of

e-commerce are equivalent to those obtained from the selected NCP reforms.


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4.4 Government strategies

As a general rule this analysis provides information as input to thedevelopment of effective and focused policy responses by government.Government policy responses to changes from e-commerce should seek tomaximise the opportunities arising from greater use of e-commerce for theregions. This involves government:

• encouraging regions’ industrial bases to diversify, especially into thoseservice industries that are most suited to being provided online at adistance;

• providing a leadership role so that regional industries are encouraged tomaximise the opportunities from greater use of e-commerce learning fromexample;

• increasing the local skill base of communities so there are individuals withthe relevant IT and e-commerce skills to be able to work in the new andadjusted industries; and

• encouraging those commodity industries to develop strategies to maximisethe advantages of e-commerce in their production process. For example,this will involve the agricultural and mining industries using e-commerce tomaximise exporting opportunities. This is occurring in the United Stateswhere miners have realised they can sell their commodities more effectivelythrough online auctioning systems: transport and logistics groups haverealised that they can offer their distribution skills to e-tailers;manufacturers have realised they can provide production scheduleinformation to suppliers whose runs can be worked around production;and inventory can be reduced.8

Many have argued that market forces will, in the first instance, lead theadoption and expansion of e-commerce technology and processes, with theneed for strategic business advantages demanding innovation. While to a largeextent this is no doubt true, there still remains a strategic role for governmentto address outstanding issues that are not always the immediate concern ofbusiness, such as:

• privacy and security legislation;

• equity of access;

• IT education policy;

• regional development; and

• government electronic service delivery.

In addition to complementing Commonwealth Government efforts in terms ofawareness raising and promotion, States and Territories are engaged in afurther element of IT policy, namely attracting investment.

The objective for governments should not be to impede the transition, despitethe regional discomfort that may emerge. To do so would be to place thesubstantial opportunities of higher growth and enlargement at risk. It has alsobeen shown in E-commerce beyond 2000 that slowing down the transitionwould lead to a considerable loss of competitiveness in Australia, resulting indeterioration in economic outcomes. Moreover, by obstructing the transition,governments will simply stop the flow of the economy’s resources into thoseareas where there is increased growth as a result of greater use of e-commerce.

Furthermore, in searching for efficient e-commerce policy solutions,governments should not simply focus on high technology activities. Rather,governments should focus on use of e-commerce technology at the coalface,which tends to be the real driver of the productivity enhancements arisingfrom e-commerce.

8 Beeby, M, ‘Auto industry changes gear into e-drive’, Australian Financial Review, 22 March 2000, p.11.

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Above and beyond these proactive e-commerce strategies, governments shouldconsider policies to ameliorate the adverse consequences that will result fromthe transition ahead. Although these are likely to be small relative to increasesintended to stimulate similar levels of economic benefits (such as thecompetition policy agenda of micro-economic reforms), the costs can be highlyconcentrated in specific regions.

See Part Two of this report for further detailed discussion of the economiceffects of e-commerce on each statistical division.

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Do the earlier results depend entirely upon the Allen ECP Index score? Howimportant is the underlying economy to the overall view? How do the resultsfrom the MMRF model compare with those from the MONASH model? Thischapter reports on a number of sensitivity analyses to answer these questions.

5.1 Lagging and economic outcomes

A sensitivity analysis has been conducted to discern the underlying effect oflagging behind in the implementation of e-commerce. This analysis has beenconducted because it is independent of views that may or may not have beencaptured in the Allen ECP Index.

In this analysis, simulations were undertaken where each State and Territorywas assumed to lag the rest of Australia in the implementation of e-commerceby three years. That is each State and Territory in turn, is assumed to take13 years to achieve the changes brought about by e-commerce modelled inearlier parts of the study, while the others are assumed to do the same in10 years. Table 5.1 presents the results.

Table 5.1

The cost of lagging behind (% deviation of laggard case from uniform case)

State/Territory Average Annual Net Present Value

Percentage Change of the Change in GSP

in Output with Lag with lag ($ million, 1995 prices)

( 2 ) ( 3 )

New South Wales -0.9 –17,103

Victoria -1.0 –13,335

Queensland -0.5 –4,272

SA -0.6 –2,296

Western Australia -0.6 –3,391

Tasmania -0.8 –874

NT -0.7 –409

ACT -0.4 –478

Source: Monash Multi Regional Forecasting results.

Column two illustrates the sensitivity of each State economy to the pace ofadoption of e-commerce. It reports the average annual percentage difference inGSP for each State when comparing the level of activity with uniform adoptionof e-commerce to lagged adoption. The data reflects the average of the10 years to 2009–10. So, the NSW figures illustrate that GSP can be expectedto be 0.9 per cent lower if it lags behind and implements e-commerce in13 years as opposed to 10 years. This is not a forecast. It is merely a measureof the responsiveness of the State’s economy to changes in timing.

The third column in the table provides a measure of the value of the cost oflagging. This is reported in terms of the net present value (in 1995 prices) ofthe annual loses in millions of dollars for the 10 years to 2009–10.

These indicators are also indicative of what would result, if the experimentwere carried out the other way. That is, the increase in GSP if each State ledthe others by three years would be of a similar order of magnitude, but with anopposite sign (that is the figures in the table above would be benefits ratherthan costs).

This analysis confirms the earlier finding that greater use of e-commerce isbeneficial for every State. It reinforces the fact that realising the benefits soonerrather than later is beneficial in itself, as there is a cost involved in laggingbehind.

chapterf i ve Sensitivity analysis


The results give a great deal of insight into the sensitivity of each State’seconomy to the timing of implementation of e-commerce. Remember thatthese results do not reflect the preparedness index in any way. Rather, whatthey show is that the underlying structure of Victoria’s economy in the contextof the others appears to be the most susceptible (by a small margin) to laggingbehind. On average, lagging behind costs Victoria a full percentage point eachyear in its level of economic activity. Looked at a different way, Victoria hasmuch to gain in early implementation of e-commerce. Victoria seems to besensitive because it has competitors (particularly in NSW) that produce closesubstitutes for what it does.

NSW is a close second to Victoria, with a difference that is within the normalrounding error associated with this kind of analysis. The main point is thatNSW also has an economy that is very sensitive to lagging behind in adoptinge-commerce. It seems that NSW and Victoria are the most vulnerable becausetheir economies produce goods that are very close substitutes for each other.If NSW lags, Victoria would be able to quickly step in and deliver similargoods at similar prices or vice versa. Thus NSW also has much to gain in earlyadoption of e-commerce.

The economies of Tasmania, the Northern Territory, South Australia andWestern Australia are the next most responsive economies to the uptake ofe-commerce. Their goods and services are not as easily replicated and so sufferless loss of market share and output if they experience a delay in e-commerceadoption. It should be noted that the costs to these economies of laggingshould still be viewed as significant.

Queensland is somewhat of an outlier. The results indicate that there issomething different about Queensland, which makes it less sensitive whenlagging the other States in the forecast period, in sectors such as tourism andother services. This is more pronounced in Queensland than in other States.Delayed implementation of e-commerce stimulates these sectors. The resultsalso suggest that Queensland produces goods that are much less easilysubstituted by the larger economies in NSW and Victoria. Queensland’stourism activity is a case in point.

The ACT appears to be the least responsive economy to delays in the uptake ofe-commerce. This is consistent with the ACT’s heavy reliance on governmentactivity which tends to be driven by exogenous factors (i.e. political rather thaneconomic factors). This adds support to the earlier analysis based on the AllenECP index that this economy faces constraints in maximising the advantages ofbeing a leader in the use of e-commerce.

Column three of Table 5.1 puts the implication of lagging into context in termsof the magnitude of the cost (the opportunity cost of activity foregone). Thedollar values are quite large, emphasising the significance of the cost of delays.Naturally, reflecting the fact that NSW is the largest State economy, thereduction in output in that State is the largest for a given percentage pointreduction. The results indicate a loss of $17 billion in that State (in Net PresentValue terms) for the decade up to the year 2009–10). This would be offsetsomewhat nationally by gains in other States when they take advantage ofdelays in NSW. The model results give a reasonable indication of the potentialeconomic activity that would slip away if e-commerce is delayed.

5.2 Comparing MMRF and MONASH

To determine the robustness and accuracy of the MMRF model, its nationalresults were compared to the results obtained from the MONASH model.At the national level, the results from MONASH are similar to those obtainedfrom MMRF by aggregating across the State economies. This is illustrated inTable 5.2.

5c h a p t e r


MMRF shows a slightly bigger e-commerce effect on real GDP relative toMONASH, (2.9 per cent compared with 2.7 per cent). Given the differencesbetween the models in their theoretical specifications (for example, eightregions compared with one) and in their industrial classifications (31 industriesin MMRF compared with 113 in MONASH), the degree of correspondencebetween the results is very high.

Table 5.2

Results

Effects of e-commerce (% deviations from base case, 2010)

Variables MONASH simulation MMRF simulation,

(uniform case) (Non-uniform case)

Real GDP 2.7 2.9

Aggregate employment 0.4 0.5

Aggregate capital stock 2.1 2.7

Household consumption 3.5 3.9

Aggregate investment 2.7 4.3

Quantity of exports 3.0 2.9

Quantity of imports 4.5 6.9

Source: MMRF Modelling Results.

5c h a p t e r


appendixA Composition of the Allen ECP Index

This appendix provides more detailed notes and, where appropriate,underlying data about the dimensions measured in the Allen ECP Index.

Box A.1

E-commerce preparedness considerations

There are a number of considerations that shaped the approach to assessing preparedness for

e-commerce in this study.

• Separate regional from national preparedness. There are many key factors that apply to the whole

of Australia more or less equally. Major e-commerce businesses, for example, have a national

approach (eg the national roll out of electronic banking by the four major banks). With a

regulated national telecommunications carrier, many prices that could impact on e-commerce use

are set with a high degree of uniformity throughout Australia, independent of the underlying

cost. While there are many factors that will influence preparedness, the focus here is upon those

where there are significant differences between the areas examined.

• Capture region-wide influences. The aim is to capture from the available data a sense about the

characteristics of each state as a whole. It is recognised that there is considerable diversity

within each of Australia’s states in this area, as in many others. Nevertheless, in much the same

way that it is widely acknowledged that the population of one state can be richer than another,

the challenge is to see if there is a way of saying that on average one state is ahead of another

in use of e-commerce. This may be more challenging in Australia than in many other places.

Whereas there were once marked differences between the industrial composition between the

states, these have diminished given convergence that has accompanied the greater reliance that

is now placed on services activities in every state.

• Avoid the popular preoccupation with the supply of e-commerce services. The structural change

that is ahead is more than a technology issue. It is more about the use that is made of the new

technology. Concentration on indicators about where e-commerce service providers

(ie, advisory, central processing facilities) are located may give a misleading result about

preparedness in different regions. What matters is the capacity of businesses and households in

an area to make the switch to less resource intensive means of conducting their business.

• Look at longer term factors. The aim is to construct a measure that can be used in an economic

forecasting framework. This requires looking for indicators that point to enduring structural

influences that are not volatile.

• Focus on Use. The aim is to capture factors which relate to the broad use of e-commerce

throughout the economy. This involves looking beyond the early innovators. Factors that assess

how easy or hard it will be for ordinary businesses and households to take up e-commerce will be

of greater value in an economic study.


A.1 Supply

There are several factors that contribute to different propensities of business touse e-commerce, in both buying and selling goods and services (i.e. business-to-consumers and business-to-business transactions). Indicators underlying thebusiness component of the supply cluster include:

• business Internet access;

• business websites;

• telecommunications access; and

• transportation costs.

Business Internet access

The number of businesses online is a sign of the potential magnitude ofe-commerce, and an indication of progress toward ubiquitous access to a rangeof online services for both consumers and business customers.


Figure A.1 shows the percentage of businesses in Australia with Internet access.

Figure A.1

Percentage of businesses connected to Internet

Source: Victorian Employers’ Chamber of Commerce and Industry, The National Electronic Commerce

Survey 1999–2000 available at www.vecci.org.au.c

c The survey results were received courtesy of Multimedia Victoria.

Business websites

To have a presence on the Internet, businesses often will establish a website.Business websites (with varying degrees of sophistication and security features)are also frequently used to conduct e-commerce. They can be used to givecustomers information about the business and its goods and services on offer,as well as to conduct transactions. The higher the proportion of businesseswith websites in a State, the more prepared it is to undertake e-commerce.

The available data indicates that more firms are now selling their goods andservices through the Internet. The 1999 Yellow Pages Small Business Indexsurvey reported positive trends with respect to business uptake of e-commerce.This survey indicated that, as of February 1999, 12 per cent of small businessesand 18 per cent of medium businesses were using the Internet to sell theirproducts and services. These proportions were expected to increase to30 per cent and 38 per cent respectively in the following year.

Figure A.2 shows the percentage of businesses in Australia with websites.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 10 20 30 40 50 60 70 80 90 100

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Figure A.2

Percentage of businesses with websites

Source: Victorian Employers Chambers of Commerce and Industry, The National Electronic Commerce

Survey 1999–2000 available at www.vecci.org.au.d

d The survey results were received courtesy of Multimedia Victoria.

Telecommunications access

The ability of business to conduct e-commerce can be shaped by differences inthe quality of access, including bandwidth. The availability of bandwidth willshape where business will be attracted to going online. A lack of bandwidth orunreliable bandwidth will increasingly place businesses at a disadvantage totheir competition.

Direct measures of bandwidth affordability, availability and reliability would bean ideal way to indicate differences in the States and Territories in regard tothis dimension. However bandwidth data on a State and Territory basis was notavailable for this study.

Telstra’s fault repair performance from 1 January 1999 to 31 December 1999has been used as a proxy. It was reasoned that the Internet infrastructure islikely to be more reliable, available and convenient in areas where faults weremore quickly restored.

Figure A.3 shows a breakdown of Telstra’s service standards by State andTerritory. The score indicates the proportion of service repairs undertakenwithin Telstra’s obligations on a State-by-State basis. The higher the score, thehigher the average service level and reliability.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 10 20 30 40 50 60 70

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Figure A.3

Telecommunications quality (percentage)

Source: Productivity Commission, Impact of Competition Policy Reforms on Rural and Regional

Australia, Report No. 8, AusInfo, Canberra, figure 6.3, p.181.

Transportation costs

Fulfilling orders generated through e-commerce ultimately relies on thephysical transportation of goods or moving people to provide services. Whilethis may be less of a constraint as more goods and services become fulldigitised (as is the case now with software, manuals and music), it seems thatfor some time to come transport affordability will be an important element ofe-commerce success.

Businesses are more likely to take up e-commerce where the costs oftransporting their goods/services from production locations to consumers arelow. All else being equal, States with low transport costs are likely to be morecompetitive.

In looking at this dimension it is important to take into account the ability tointeract in domestic markets, as well as overseas. The consultants undertook asurvey of delivery transport firms to determine an index reflectingtransportation costs by State and Territory, for both domestic and internationaldeliveries. The international transport indices were largely based on the costsof Australian producers delivering goods to the Asian economies.9

Figure A.4 shows domestic transport affordability indices by State andTerritory, while figure A.5 shows international transport affordability indicesby State and Territory.

Note: The lower the transport costs, the higher the transport index to reflectthe increased transport affordability for producers in that State.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 10 20 30 40 50 60 70 80 90

9 It was reasoned that Australian consumers are more likely to purchase goods online from the United States,rather than United States consumers purchasing goods from Australian producers. This is based on theassumption that the United States e-commerce market is substantially more developed, offering more choicethan Australia’s e-commerce market at this time.

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Figure A.4

Domestic transport indices


Figure A.5

International transport indices


Government contribution

Analysis of the impact of the full range of roles that governments are playing inthe different States is difficult at present. Unlike federal systems of governmentin other countries, the majority of tax powers in Australia are with theCommonwealth rather than the States (resulting in a vertical fiscal imbalance).Tax and the Internet is therefore largely a national issue applying evenly acrossthe States. It appears that the main areas of difference between the States are indivergences in electronic service provision and the ability to undertakeelectronic transactions when dealing with government.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 20 40 60 80 100 120

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 20 40 60 80 100 120

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The study has focused on government electronic transactions as an indicator ofdifferences in the capacity of each State and Territory to influence rates ofadoption of e-commerce. This analysis also reflects the differing levels ofservice provision and use of electronic transactions. Three broad levels areapparent:

• information provision—government services delivered to consumers havein the past largely been information-based and provided by traditionalmeans such as over the counter, mail and/or telephone facilities. With thedevelopment of e-commerce and online services, this service can nowlargely be provided online by government;

• non-payment transactions—these government services involve lodgingforms and requests. There are two types of non-payment transactions.Those involving authentication, such as birth certificates, and those that donot require authentication. Currently those non-payment transactions notrequiring authentication are more developed in terms of being providedonline by governments. However the online potential for non-paymenttransactions requiring authentication is rapidly developing; and

• payment transactions—all government purchasing and all payments to andby governments. For example, payroll tax payments, business licences,ticket purchases and registration etc.

These specific roles help reduce the transaction costs of doing business withgovernment and facilitate the governments’ leadership role in the effective useof e-commerce. This helps build confidence and familiarity amongst consumersand businesses about using e-commerce.

It is also notable that the study looks at States in a geographical sense. Whenlooking at the role of government, the study also includes an assessment ofsome services that are delivered by local government and semi-governmentagencies within the boundaries of each State and Territory.

The study examined the degree to which governments have facilitated the useof e-commerce in accessing government services. To do this a representative‘basket’ was identified, in the first instance, consisting of government goodsand services offered online in each State and Territory. The basket of good andservices was chosen to provide an indicative measure of the differences betweenthe each State and Territory in encouraging e-commerce—it is a relativemeasure not an absolute measure. A key aim was comparability. Transactionsused in some jurisdictions but not available in others were not included.

In setting up the basket, the selection of goods/services attempted to accountfor both consumer and business interactions with government. For example,the basket includes business licensing, payroll taxation, liquor licensing etc.which are business-to-government activities. It also includes birth, death andmarriage certificates, electoral enrolments, access of demerit point informationetc. which tend to be consumer-to-government activities. Some items such aswater payments, vehicle registration renewal and workcover encompassed bothconsumer-to-government and business-to-government transactions.

The basket of government services does not capture the full range of initiativesof each government to promote e-commerce in its jurisdiction. Rather, itprovides a comparison of the States by identifying as many common services aspracticable and rating their effectiveness. Accordingly, it includes only featuresagainst which all States could be rated.

An example is booking driving licence tests. Although each State and Territoryrequires its residents to receive a licence before being able to drive, SouthAustralia has an alternative arrangement where individuals do not need tobook ‘official’ driving tests. As a result, the South Australian Government doesnot offer such a service. It would be unfair to ‘penalise’ South Australia for notoffering this online service as a result of its different institutional arrangements.Another example of inconsistent institutional arrangements is land taxation.

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Both the Northern Territory and the ACT have different land ownershiparrangements and subsequently do not offer individuals the ability to pay theirland taxes online. And in NSW there are different institutional arrangementsfor registration renewals in relation to ‘pink slips’, which has limited NSW’sability to further develop the online potential of this service. Hence this itemwas not included.

A.2 Consumption

There are several factors contributing to consumers’ different propensities touse e-commerce. These factors include:

• household computer use;

• household Internet access;

• security concerns and consumer acceptance;

• income levels;

• education levels; and

• demographic characteristics.

Household computer use

Household personal computer (PC) use is an important first step towardsundertaking e-commerce. It indicates an investment in the technology requiredto access the Internet and undertake e-commerce.

This is likely to become less important in time. More products are increasinglyavailable offering functional Internet access with greater convenience than aPC, and at less cost. These devices include hand-held computers as well asmore sophisticated mobile phones. Some analysts have argued that e-commercewill not become a major force until households are able to routinely makepurchases via relatively mundane equipment such as the household television.However, while such changes may occur quickly amongst leading-edgeconsumers, it is likely that the great bulk of household access to e-commerce(using the Internet) will still require a PC. In any case, household access to aPC remains a useful indicator, if only because it is comparable between Statesand is still broadly associated with general preparedness.

Figure A.6 shows the percentage of households in Australia with a homecomputer by State and Territory.

Figure A.6

Percentage of households using a computer in 1998

Source: Australian Bureau of Statistics, Household Use of Information Technology,

Catalogue No. 8146.0, p.10.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 10 20 30 40 50 60

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This data is a robust structural indicator for the consumption cluster. This isbecause although the percentage of households in Australia using a computerhas quadrupled since 1996, the relative differences between States andTerritories has been unchanged—for example, in 1996 the ACT had thehighest proportion of households with a home PC while Tasmania had thesmallest proportion of households with a computer.10

Household Internet access

General household access to the Internet is also a necessary step toundertaking e-commerce (at least to undertake business-to-consumere-commerce).

The proportion of households online is both a sign of the potential magnitudeof e-commerce, and an indication of our progress toward ubiquitous access toa range of online services. The growing awareness of Internet uses is evident inthe increased interest shown in online banking and online shopping inAustralia in recent years.

States and Territories with a higher proportion of households already onlinewill have a larger potential market for e-commerce vendors. Whilee-commerce opens up global markets, in practice and for some years to comegiven underlying logistical factors and normal market constraints (languageand culture), the great bulk of many ordinary electronic business ventures willprobably be made up of sales to nearby customers.

Figure A.7 shows the percentage of households in Australia with Internetaccess by State and Territory.

Figure A.7

Percentage of households with home Internet access in 1998

Source: Australian Bureau of Statistics, Household Use of Information Technology, Catalogue No.

8146.0, p.10.

This indicator is a good structural indicator for the consumption cluster. Thisis because although the percentage of households in Australia with Internetaccess has quadrupled since 1996, the relative position of the states hasremained unchanged—for example, in 1996 the ACT had the highestproportion of households with Internet access while Tasmania had thesmallest proportion of households with Internet access.11

10 Australian Bureau of Statistics, Household Use of Information Technology, Catalogue Number 8146.0,Table 1.3, p.9.

11 Australian Bureau of Statistics, Household Use of Information Technology, Catalogue Number 8146.0,Table 2.3, p.25.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 5 10 15 20 25 30

aa p p e n d i x


Consumer concerns about privacy and data security

Privacy and security is often nominated as one of the foremost barriers toonline transactions.12 Lingering consumer scepticism can be made worse by thefailure of some businesses to disclose how they treat consumer information,such as credit card and address details.13 Naturally, the more concernedconsumers are about the security of e-commerce, the more unlikely they are totake up e-commerce.

Over time, it is likely that individuals will become more aware andcomfortable with online transactions. Over time security concerns will becomea less relevant and significant indicator of the structural preparedness ofconsumers in the various States to take up e-commerce. Nevertheless, this is anarea that seems likely to be a factor for some years when seeking to assessadoption by a given State, including the ‘mums and dads’, and not merely therapid adopters.

Figure A.8 shows the percentage of consumers (selected at random) who heldsecurity concerns about using e-commerce, as a proportion of the total numberof consumers in each State.

Figure A.8

Security concerns in 1999

Source: The Allen Consulting Group (via www.consult Pty Ltd).

Income levels

Recent changes in the number of Australians with Internet access shows accessto the Internet is positively correlated with income.14

The positive correlation demonstrates that the higher an individual’s income,the more affordable a computer and Internet access is, and subsequently themore likely the individual is to be able to undertake e-commerce transactions.A good proxy for this indicator is, therefore, the average taxable income ofindividuals by State and Territory.

Figure A.9 shows the average taxable income for Australians by State andTerritory.

12 See, for example, the result of research by Forrester Research Inc. at http://www.forrester.com/ER/Press/Release0,1769,177.FF.html

13 A recent survey by Consumers International found that only 17 per cent of sites enabled consumers todecline the receipt of future communications from retailer, while only 14 per cent allowed consumers to optnot to have their information passed onto third parties—Consumers International, Consumers @ Shopping:An International Comparative Study of Electronic Commerce, 1999, available at http://www.consumersinternational.org.

14 The Department of Industry, Science and Resources, Knowledge-Based Activities: Selected Indicators, AGPS,p.35.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 5 10 15 20 25

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Figure A.9

Mean taxable income

Source: Australian Taxation Office, 1997–98 Taxation Statistics.

Education

Surveys of e-commerce use consistently find a close association between aperson’s level of education and their use of e-commerce. It therefore seemsreasonable to seek to include a variable that captures the different level ofcommitment to education in each State and Territory. The premise is that thegreater this commitment, the more likely that the population of that Statewill be to undertake e-commerce (and indeed, join the knowledge economyat large).

Figure A.10 shows by State and Territory the results of the education indexthat has been constructed for this study. This uses Australian Bureau ofStatistics data about government spending on secondary and tertiary educationin each State15 divided by the population of each State.

Figure A.10

Education indices


Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 5000 10000 15000 20000 25000 30000 35000 40000

15 Australian Bureau of Statistics, Expenditure on Education 1997–98, Catalogue No. 5510.0.

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 20 40 60 80 100 120 140

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Demographic characteristics

Survey data consistently indicates that people aged between 20 and 49 are thehighest users of the Internet and e-commerce. Approximately 25 per cent ofpeople aged 20 to 29, 26 per cent of those between 30 and 39, and 21 percent of 40 to 49 year-olds use the Internet and are therefore the more likelygroups to take up e-commerce.

Figure A.11 shows the age characteristics of Internet users in Australia, whilefigure A.12 shows the proportion of individuals in the 20 to 49 age group on aState and Territory basis.

Those States with a higher percentage of individuals in this age group wereallocated a higher index for this indicator.

Figure A.11

Australian Internet user population — March 1999

Source: www.consult Pty Ltd.

Figure A.12

Proportion of individuals in 20–49 age group on State by State basis

Source: www.consult Pty Ltd and Australian Bureau of Statistics, Population Projections

1997–2051, Catalogue No. 3222.0.

less than 15

15 to 19

20 to 29

30 to 39

40 to 49

50 to 59

60 to 69

70 & over

0 5 10 15 20 25 30

Australia

ACT

NT

TAS

WA

SA

QLD

VIC

NSW

0 20 40 60 80 100 120

aa p p e n d i x


appendixB

Policies in the Commonwealth,States and Territories

This Appendix summarises the main initiatives in the Commonwealth, Statesand Territories to promote the uptake of e-commerce.

The Commonwealth Government

The Commonwealth Government has a range of programs and measures topromote the uptake of e-commerce in Australia. These include programs toimprove infrastructure and industry capability, address the skills necessary to bea leader in the information economy, provide government leadership andestablish a legal framework conducive to e-commerce.

Infrastructure and industry capability

The Universal Service Obligation

The Universal Service Obligation (USO) is one of the core communityobligations of the telecommunications industry. The legislation imposes ageneral obligation to ensure that all people in Australia, wherever they live orwork, have reasonable access on an equitable basis, to the standard telephoneservice (including customer equipment), payphones, and prescribed additionalcarriage services. A supporting obligation requires those services to be suppliedon request.

The Government is committed to revitalising the service and earlier this yearannounced new arrangements to improve the equity of the USO fundingprocess, increase certainty over USO costs, encourage competition in USOdelivery, and improve consumer choice.

As a first step in introducing contestability in the USO, the Government isundertaking two regional contestability pilots.

Other initiatives designed to revitalise the delivery of the USO include:

• responsibility for paying for the USO will be expanded to include carriersand carriage service providers which earn more than a prescribed amount;

• the net universal service cost in 1998/99 and 1999/00 will be increasedfrom around $250 million to around $280 million; and

• the USO will now be costed in advance for a period of up to three years.

Further information on the Universal Service Obligation is available atwww.dcita.gov.au/uso

The Information Technology Online (ITOL) Program

ITOL is a competitive grant program that accelerates the adoption of business-to-business e-commerce solutions, especially by communities of small andmedium enterprises. ITOL provides funding for collaborative projects thatdemonstrate new and innovative online solutions that have real businessbenefits. Grants are available for up to $150 000, capped at 50 per cent ofproject costs.

More information about the program is available at www.noie.gov.au/ITOL

Rural Transaction Centres (RTC)

The Commonwealth Government has made up to $70 million available to helpsmall communities establish their own centres providing access to basictransaction services such as banking, postal services, Medicare easyclaimfacilities, phone and fax—otherwise known as Rural Transaction Centres(www.dotrs.gov.au/rtc/index/htm).

Rural communities with populations up to 3 000 are eligible for assistance.However, the program is open to other towns with a strong case for assistance.


Networking the Nation

Networking the Nation is the Commonwealth Government’s five year RegionalTelecommunications Infrastructure Fund which provides funding fortelecommunications projects identified by rural, regional and remotecommunities. Launched in 1997, the $250 million program helps to bridgegaps in telecommunications services, improve online access and reduce thesecosts, while assisting the economic and social development of rural Australia.

In June 1999, the Commonwealth Government expanded the Networking theNation program. A further $171 million was invested through four newinitiatives, made possible from the proceeds of the second partial sale ofTelstra. These elements are:

Local Government Fund

The Local Government Fund is an initiative that focuses on support forregional and rural local government authorities. Over five years the$45 million Fund will assist in the delivery of local government services andbenefits to communities by improving access to telecommunications and onlineservices.

Building Additional Rural Networks (BARN)

Through BARN, communities in rural, regional and remote Australia will beable to work with State and local governments to provide opportunities for thepromotion of service delivery solutions, new commercial entrants, andincreased competition. The program will:

• provide $70 million for the development and implementation of innovativetelecommunications and IT infrastructure and services;

• fund projects which will improve commercial service, quality and prices inregional Australia; and

• enhance competition in the supply of products and services.

Remote and Isolated Islands Fund

This Fund provides $20 million over three years to assist in meeting thetelecommunications needs of island communities disadvantaged by theirisolation. It is designed to address the particular needs of remote islands suchas the Torres Strait, Christmas, Norfolk and Kangaroo islands.

Internet Access for Regional and Rural Australia

By providing $36 million over three years, the Fund supports Internet accessfor rural, regional and remote communities at a reasonable cost, at leastequivalent to untimed local call access.

For more information about these Networking the Nation initiatives visit thewebsite at www.dcita.gov.au/ntn

Building on IT Strengths (BITS)

The Government’s $158 million BITS program aims to build the strength andcompetitiveness of the Australian information industries sector, includingfostering much stronger commercialisation linkages with R&D organisationsand the creation of clusters of innovative IT&C businesses. In particular, theprogram seeks to:

• increase the rate of new SME formation in the Australian informationindustries (especially from R&D organisations), and foster linkages andnetworking between participants in the information industries sector;

• facilitate the availability and use of leading-edge network technologies bythe information industries sector; and

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• develop further an internationally competitive IT&C sector in Tasmania.

Further information about this program is available from www.dcita.gov.au/bits

The Trials of Innovative Government Electronic Regional Services (TIGERS)

The $10 million TIGERS project aims to improve access to Commonwealth,State and Local Government services.

Further information about TIGERS is available at www.govonline.gov.au/projects/services&innovation/tigers.htm

Test-IT

The Government’s Test-IT program aims to increase the competitiveness ofAustralian businesses, especially SMEs, by providing grants to improve accessto information technology and communications trialing, demonstration andconformance testing capabilities.

Test-IT also provides grants to help Australian firms access essential testingfacilities not available in Australia, and to help Australian industry to keepabreast of, and influence, emerging standards and plan for their early andwidespread adoption in Australia.

For further information, visit www.dcita.gov.au (then under the easy-finddialogue box, click on ‘I’, select ‘information technology’, then select ‘Test-ITProgram Guidelines’).

Government Leadership

The Commonwealth Government is implementing the Prime Minister’s 1997commitment to government leadership in the Investing for Growth statementthrough its Government Online strategy www.govonline.gov.au. This strategyhas eight priority areas:

• Agencies to take full advantage of the opportunities the Internet provides;

• Facilitation of enablers such as authentication, metadata standards,electronic publishing and record keeping guidelines, accessibility, privacyand security;

• Enhancement of government online services in regional Australia;

• Enhancement of the impact of the government online initiatives ondevelopment in the Australian IT industry;

• Government business operations to go online;

• Monitor best practice and progress;

• Facilitate cross agency services; and

• Communicate with stakeholders.

Another initiative, the E-Procurement Strategy, will help to foster the growthof e-commerce and, in turn, allow citizens and business to reap huge benefits interms of jobs, choice of goods and services, and access to markets. The aim isthat 90% of all agencies’ simple procurement transactions will be undertakenelectronically by the end of 2001; and all suppliers will be paid electronicallyby the end of 2000. Moving to electronic procurement will help our agenciesreduce administrative costs, make smarter purchasing decisions, and generallyimprove their procurement performance.

The GATEKEEPER strategy is a whole of government approach to meeting theneeds of Commonwealth agencies for public key technology to supportauthentication and identification.

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The Australian Business Number Digital Signature Certificate (ABN-DSC)involves broad-use digital certificates, linked to an entity’s ABN, that willfacilitate secure online transactions between business and government andfoster the use of digital certificates and e-commerce among Australianbusinesses.

Skills

The Australian National Training Authority (ANTA) has a range of initiatives tomeet the skills requirements of industry and the community in meeting thechallenges of the Information Economy. For example, ANTA is progressing thedevelopment of e-commerce products (competency standards, qualifications,support materials, etc) for training packages. This is a two year initiative withproducts for 6 sectors including IT&T, business services, tourism and retail duefor completion in June 2001. Other industry sectors will be targeted in thesecond year of the initiative.

The Commonwealth Government has established the Ignite website(http://www.ignite.net.au) to provide a one stop shop of information onInformation Technology and Telecommunications (IT&T) careers, skillrequirements, job opportunities, education and training courses.

The Commonwealth Government will provide up to $5 million to help theIT&T industry to establish a Skills Exchange. The Exchange will work closelywith the IT&T industry’s Training Advisory Board and other stakeholders toaddress the current shortage of IT&T skills by:

• working with the industry and education sectors to anticipate skills needsand developing the appropriate education and training courses;

• working with employers, especially small and medium sized enterprises(SMEs), to assess their staff ’s skill needs and negotiating with providers tomeet those needs;

• increasing community awareness of IT&T career opportunities; and

• increasing awareness of improved staff recruitment, management andtraining practices, especially among SMEs in the IT&T sector.

Immigration is an important source of skilled workers and a recent review ofAustralia’s policies has revealed that we are extremely competitive and havesome significant advantages:

• Australia does not have a quota system;

• the sponsored skilled migration program is very streamlined and allowsIT industry workers to enter or remain permanently in Australia; and

• labour agreements enabling employers to recruit a specific number ofworkers to fill identified and emerging labour market shortages have beenin place for some time.

An industry information package to help employers understand immigrationpolicies is currently being developed.

Legal and Regulatory Framework

The Commonwealth is committed to a light touch regulatory approach,acknowledging that the adoption of e-commerce will be led by industry. Wherenecessary, it has acted early to introduce legislation to provide an environmentconducive to e-commerce and, in several cases, this has become the blueprintfor similar legislation in states, territories and even overseas. For example:

• The Electronic Transaction Act (ETA) removes existing legal impedimentsthat may prevent a person using electronic communications to satisfy legalobligations under Commonwealth law. The Act gives business and thecommunity the option of using electronic communications when dealingwith Government agencies.

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• The Copyright Amendment (Digital Agenda) Bill aims to ensure thatcopyright law continues to promote creative endeavour while still allowingreasonable access to copyright material.

• To address consumer concerns, The Privacy Amendment (Private Sector)Bill implements the National Principles for the Fair Handling of PersonalInformation which were developed by the Privacy Commissioner followingconsultation with business, consumers and other interested groups. Itprovides minimum standards for the collection, use, disclosure, security ofand access to personal information by private sector organisations.

Australian Capital Territory (ACT)

The ACT is extremely well placed to benefit from and contribute to theaccelerating introduction of online services and electronic business. AustralianBureau of Statistics surveys consistently rank the ACT in first place as thejurisdiction with the highest PC penetration per household and the highestlevel of Internet access in the country. The report E-commerce beyond 2000released by NOIE, also identified the ACT as the jurisdiction whose economywas likely to benefit the most over the next five years from e-commerce.

The ACT Government has earmarked $18 million for the development ofonline government services in the 2000–01 financial year and is activelyimplementing its ACT e-Government Strategy. Canberra is also rapidlydeveloping as a centre of advanced technology research and development andmanufacturing activity. It is building on established expertise in science,communications, space and computer technology, and telecommunications anddefence.

An Information Industries Development Board has been appointed to deliveron these directions. Comprising key information and technology executivesfrom the public and private sectors, the Board is tasked with providing inputand direction to Government on matters relating to the IT&T industry in theACT. The Board will collaborate with industry and the community to developan action agenda for the growth of this important industry into 2000 andbeyond. This will ensure that both the industry and the Government’s visionfor the future of IT&T in Canberra is realised.

TransACT, is a project to deliver a broadband digital network facility toCanberra. It will involve the roll out of high-speed ‘fibre to the kerb’ systemacross Canberra in September 2000. Approximately 10 000 Canberra homesshould be online by Christmas 2000 and all homes will be connected withinthe near future. Homes will be switched on progressively in loops of severalhundreds or thousands.

AUSe.NET has two workshops that aim to give SME owners and managers thewhy as opposed to the how of e-commerce. Workshop one introduces SMEoperators to e-commerce and presents case studies to demonstrate e-commerceopportunities and applications. Workshop two is aimed at SME operators whomay already have access to the Internet and understand some e-commerceapplications but are yet to harness e-commerce as a real business tool.

The ACT Business Gateway (www.business.act.gov.au) is a web-based resourcefor business in the region, in particular small businesses or companiesexpanding into the ACT from interstate or overseas. The facility alsoincorporates a hotline telephone operator service to ensure that governmentinformation and business licences are available to those businesses withoutInternet access. The former ACT Business Licence Information Service (BLIS)has also been incorporated as part of ACTBG, and the whole licensing servicecan now be accessed online including information discovery and the down-loading of application forms. It will soon be possible to lodge licenceselectronically.

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New South Wales (NSW)

NSW is the home of the Australia’s IT&T industry. Nearly 70 per cent ofAustralia’s top 250 IT&T companies have their head office in NSW, and morethan 65 per cent of multinational IT&T companies are based there.

Most of these companies are based in Sydney. Sydney is one of Asia Pacific’smajor economic forces rivalling regional powers such as Hong Kong andSingapore. As one of Asia Pacific’s most dynamic financial centres, Sydney isthe home to Australia’s major financial institutions.

The economic strengths in the IT&T and finance industries reflect the successof the NSW Government’s key investment attraction programs for regionalheadquarters and call centres. In return, these key industries have helped todrive the development of the online economy in NSW.

The NSW Government has also been successful in driving online technologiesto create a more dynamic economy, a better-connected society, an efficientpublic service and a sustainable environment.

The NSW Department of Information Technology and Management hasimplemented a number of initiatives that are particularly conducive to businessand community take up of e-commerce.

The NSW Government recognises that affordable, flexible, reliable bandwidthis a vital requirement for online transactions. Therefore, it established theGovernment Network Service (GNS) to deliver a high quality, whole-of-government data communications network service using private suppliers.

The GNS has already increased competition among suppliers to provide datacommunications services in NSW. The NSW Government is now working withGNS suppliers on a series of trial projects to improve services in regional andremote areas. Trial projects are already underway in communities includingBrewarrina, Walgett, Wagga Wagga, Griffith, Singleton, Merriwa, Murrurundi,Gosford, Tamworth, Campbelltown and Camden.

The NSW Government is contributing $12 million over three years to theAustralian Centre for Advanced Computing and Communications (called ac3).

The centre is a commercial partnership between government and sevenNSW-based universities in collaboration with the leaders of the highperformance computer industry – IBM, NEC, and Silicon Graphics.

The centre will provide high performance computing services and tools tostimulate growth and development in industry, employment, research andeducation. Operations will include data warehousing, data mining and realtime analysis and modelling and support e-business applications. Local industryenvisages that the high performance computers will act as key enablers foreffective and secure electronic commerce transactions. The centre will alsooffer affordable Application Service Provider facilities to encourage take up bysmall and medium enterprises. The project will help to establish high-speedcommunication links by connecting the Australian Technology Park (ATP) inSydney with the regional partner operations in Western Sydney, Newcastle,Wollongong and Bathurst, supporting the centre.

A total of $1 million is being invested by the private sector and the NSWGovernment to establish a Centre of Excellence in E-Business in WesternSydney.

Founding partners include the NSW Government, Unisys, University ofWestern Sydney and Western Institute of TAFE. Associate partners includeMicrosoft, Dell, Hewlett Packard and Cisco who will provide in-kindcontributions and showcase their wares through the centre. The centre willalso be linked with AUSe.NET.

The centre is a pilot project to provide alternate solutions to the skills andtraining solutions currently on hand to the IT&T industry. Initially, the centrewill comprise of students from the University of Western Sydney and from

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Western Sydney Institute of TAFE. Unisys will provide supervision and qualitycontrol to develop the students’ IT skills on real life government and industryprojects with a specific focus on electronic business.

Because of its large computing capacity the centre will also become animportant partner in the Australian Centre for Advanced Computing andCommunications.

Enabling communities to trade in the electronic marketplace is a high priorityfor the NSW Government. A Community Gateway Strategy has beendeveloped in collaboration with regional communities, allowing them accessto the benefits on offer in the information economy.

The strategy provides a guide for regions to profile locally based electronicservices and resources through online directories, links to regional websitesand maps, community noticeboards and discussion forums. The CommunityGateway Strategy also identifies opportunities to generate demand for accessto the Internet and website development. This demand creates an environmentthat encourages commercial telecommunications, web developers and InternetService Providers to provide services to regional NSW.

A project to develop a Regional Gateway Toolkit that will enable regions tobuild gateways that can be deployed within an interoperable RegionalGateway network throughout NSW, was piloted in the Riverina Regionbetween March and June 2000. This pilot will be used to identify content,participants and management processes relevant to population andmaintenance of the Regional Gateway.

In May 2000, the Department of Information Technology and Managementwas successful in obtaining joint funding from the Commonwealth’sNetworking the Nation program ($8.25 million) and the NSW Government($7.2 million) to establish Community Technology Centres (CTCs) in NSW.

The funding will enable up to 55 Community Technology Centres to beestablished in small towns of less than 3 000 and Local Government Areas ofless than 10 000.

The Community Technology centres are ‘Neighbourhood Centre’ facilities,which provide services and resources that will be able to be used by students,older people and local small business and for learning and using technology.

The NSW Government is leading the implementation of e-commerce withinthe State by making a commitment to provide all appropriate services onlineby December 2001. To date there are more than 2 500 links registered on theNSW Government website (www.nsw.gov.au).

Northern Territory

The Northern Territory Government Office of Communications, Science andAdvanced Technology runs a series of seminars across the Territory, from AliceSprings to Darwin. The seminars are aimed at all Territorians, and provideinformation about e-commerce and the Internet. In the past there has beensignificant focus on business related e-commerce issues. Business issues will befurther developed through the Department of Industries and Business in thefuture. The seminar series has been particularly successful and has generatedsignificant interest in e-commerce, the Internet and computers. The series willcontinue in the next financial year and will meet attendees’ requests for topicsof interest.

The Northern Territory Government, Department of Industry and Business(DIB), has created a internal business unit that provides advice and assistanceto businesses so they may participate in the new electronic economy. The unitwill provide advice on business planing and business case development andevaluation, integration of e-commerce initiatives into the business, includingadvice on the re-engineering of processes, and guidance in seeking fundingassistance.

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The DIB also services the Territory Business Centres (TBC). The BusinessCentres provide information and advice about starting and running a businessin the Territory, in one place. At the TBCs an interested person can register abusiness name, search for business names, get information on all relevantlicence and permit, apply online for a range of business licences and get accessto accurate information on all business assistance services and products.

For a number of years the Northern Territory Government has owned andoperated a whole-of-government wide area network (WAN). The WAN hasprovided a standard communications network in a fully controlled environmentproviding a secure and reliable whole-of-government network. Whilst theinfrastructure provision and management has now been outsourced, thearchitecture is well established and provides a substantial basis on which tobuild the delivery of services for online government.

In addition to the WAN, the Northern Territory Government has created awhole-of-government environment of standard application software anddevelopment tools. This environment, like the whole-of-government network,is mandated and greatly simplifies the process of providing whole-of-government solutions.

The implementation of the whole-of-government communicationsinfrastructure has provided a platform on which the Northern TerritoryGovernment has built a government wide intranet. The intranet provides allgovernment agencies with information on current and significant events such asimportant weather events (cyclones) and other events of community interest,‘hot topic’ updates such as virus alerts, and updates on whole-of-governmentservices such as the Northern Territory government-wide email service. Theintranet also provides access to all Northern Territory Government agencywebsites and associated information, links to legislation and parliamentarydebates and Northern Territory Government job vacancies.

The delivery of government services electronically is a major commitment forthe Northern Territory Government. The standardised and mandated use of thegovernment network and applications provide a solid basis on which theNorthern Territory Government can build solutions to provide all Territorianswith more efficient electronic services with less red tape.

Queensland

The Queensland Government’s strategy for positioning the State for theinformation age was outlined in the Queensland Communication andInformation Strategic Plan released by the Government in September 1999.

Promotion of e-commerce is one of the major strategic directions of the plan,along with IT&T skill development, development of the IT&T industries in theState, community, business and labour force development through IT&T,telecommunications infrastructure, and better Government service throughelectronic delivery.

Queensland’s e-commerce strategy is to:

• create a supportive legal and administrative framework;

• promote the use of e-commerce throughout the business community,particularly among small and medium-sized enterprises; and

• have Government progressively use e-commerce in delivering services to itsclients and in dealing with its suppliers.

Like other jurisdictions, Queensland will shortly be passing electronictransactions legislation to provide legal certainty for electronic transactions.Queensland is currently considering strengthening privacy protectionarrangements governing State agencies, particularly in relation to onlinetransactions. The State Government is working to maximise the security of

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transactions within Government, and between Government and others.Queensland provides the State/Territory representative on the NationalElectronic Authentication Council.

In recognition of the potential e-commerce offers for improved economicperformance in all industries in all parts of the State, the QueenslandGovernment is actively promoting e-commerce initiatives throughout industry,particularly among small and medium-sized enterprises and those in rural andregional areas.

Household and business use of Internet is lower in non-metropolitan areasthroughout Australia, and hence Queensland’s status as the most decentralisedState means that Internet use is somewhat lower in Queensland than in otherStates. For this reason, State Government efforts to promote e-commerce inparticular, and the application of IT&T for business purposes more generally, isheavily focused on non-metropolitan areas.

For example, State Development Centres employ specialist advisors focusingon e-commerce under the Computer Assistance for Small Enterprises (CASE)scheme. A range of other innovative programs is being implemented topromote IT&T awareness and skills, particularly for applications such ase-commerce.

Queensland has the strongest local government sector in Australia, so the StateGovernment is also working with local government to promote both thedelivery of local services via electronic means and local government taking aleadership role in the promotion of IT&T at the community level.

Queensland’s strategies operate at two levels amongst the State’s Governmentagencies.

On one level, e-commerce and electronic service delivery initiatives areencouraged at the agency level, in line with each agency’s charter and customerneeds. A number of agencies have adopted e-commerce strategies, such as forthe sale of publications over the Internet.

Examples of significant initiatives include the Queensland TelemedicineNetwork (http://www.health.qld.gov.au/qtn/home.htm), which are pioneeringremote access to health services, and the Virtual Schooling Service(http://education.qld.gov.au/virtualschool/) which provides rural and remotestudents interactive access to a range of senior secondary courses that wouldotherwise have been difficult for them to access.

These initiatives are supported at the whole-of-government level by a range ofmeasures which promote e-commerce and electronic service delivery in anintegrated manner. Examples include:

• a single State Government entry point (http://www.qld.gov.au/);

• Queensland Purchasing assistance to agencies in respect of eProcurementinitiatives (http://ep.qgm.qld.gov.au);

• cross-agency projects such a Service Locator and a common receiptingsystem; and

• Information Standards covering issues such as security and use of theInternet, (http://www.dcilgp.qld.gov.au/comminfo/guidelines.html).

Future initiatives will include electronic tender boxes and additionalInformation Standards in areas such as resource discovery and web accessibility.

Recognising the dynamic nature of e-commerce developments, an e-commercepolicy framework for the Queensland Government as a whole is currentlybeing prepared.

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South Australia

The South Australian Government is implementing information economyawareness projects aimed at the business sectors, consumers and communitygroups. It is also actively moving to embrace the use of e-business principles inits own operations and interactions with business and the community moregenerally.

In the business sector, the Government is focussing its efforts on raisingawareness of the information economy and its potential impacts amongst smallbusinesses in South Australia. The Information Economy Policy Office (IEPO)is conducting an awareness campaign which highlights the need for firms toconsider the opportunities and threats posed by the information economy, andplan their response. The campaign targets industry associations, small businessadvisers as well as individual business operators throughout the State.

As part of this campaign an Information Economy Checklist has beendeveloped and circulated to all businesses in the State. In addition, anInformation Economy hotline was established in 1999 through which smallbusiness can obtain advice, assistance and referrals tailored to their specificcircumstances. The hotline has been well used, with a significant number ofcalls from firms in sectors such as tourism, retail, wholesale, manufacturing,consulting, food and wine.

The Government is making extensive use of local industry case studies tohighlight relevance to particular sectors as well as the immediacy of theinformation economy. A package containing a CD-ROM, handbook and avideo, have been developed to be sold to business customers. This pack featuresinstructions on the features and benefits of e-commerce and how to use theInternet to advantage. Local case studies and testimonials are also a part of thepackage.

In addition to the small business awareness campaign, the Networks for YouProgram has been established to meet the particular needs of communities andbusiness in regional areas.

More than 120 Networks for You Centres have now been established acrossSouth Australia. These are supported by locally based coordinators and traineeswho work closely with individuals, community and business groups to raiseawareness of the information economy. Various educational tools including avideo, CD-ROM, printed material and other Internet-based resources are madeavailable to clients of the Networks for You Centres.

As a major participant in the State’s economy, the South AustralianGovernment recognises it has an important role to play in stimulating theadoption of e-business practices. To that end the Government has establisheditself as an exemplar user of e-business principles particularly in relation totransactions conducted between government and business.

Through ‘The Business Channel’ (http://www.businesschannel.sa.gov.au/),which has been undertaken by the Department for Industry and Trade, many ofthe information services and transactions between government and businesshave been made available in electronic form. This project is making it easierand less costly to deal with government as well as highlighting to local businessthe benefits of new ways of conducting business. The Government iscontinually making more electronic transactions available to meet the needs ofbusiness. The Government has also recently provided seed funding of$3 million to agencies to assist them in delivering additional services online.

Another major initiative of the Government has been its electronicprocurement program. This program is aimed at stimulating the uptake ofe-commerce by local industry as well as delivering cost savings to both industryand government. The program has involved the establishment of the‘SA Tenders and Contracts’ website (http://www.satenders.gov.au), makingtenders available electronically and allowing electronic registrations for tenders

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as well as in selected cases electronic lodgement of tenders. The E Purchase SAelectronic purchasing system has also been established by the State, andelectronic purchasing capability is to be further extended across government.

The South Australian Government was the first to offer car registration online,electronic payroll tax payment and electronic lodgement of tenders. The StateGovernment has won Gold Awards in the Government Technology ProductivityAwards for the Business Channel and stage one of its electronic procurementsystem, E-Purchase SA.

Additional funding has been provided by the Government to develop the SACentral (http://www.sacentral.sa.gov.au) website which provides a singleconvenient source of information about government, industry and thecommunity in South Australia.

The Information Economy Policy Office (IEPO) has also been working withspecific industry sectors to develop e-commerce initiatives. For example, in thetourism area, a project to facilitate adoption of e-commerce by small tourismoperators on Kangaroo Island is being established in conjunction with localstakeholders. This project will ultimately assist in marketing the island and itsattractions to domestic and international markets and contribute to improvingthe profitability of local tourism operators. IEPO has also been working withSA’s Food Online project to encourage greater use ofe-commerce in the food industry.

The South Australian Government recently launched the Information Economy2002 – Delivering the Future policy initiative. The policy represents a blueprintfor a regional economy to integrate and benefit fully from the InformationEconomy. It outlines 21 specific initiatives for the 21st Century. The deadlinefor action and achievement is 2002 and will encompass government, businessand community activities that accelerate whole-of-State participation in theinformation economy. A number of the aforementioned activities form thefoundations for many of the initiatives. For more information on InformationEconomy 2002, visit the web-site at http://www.ie2002.sa.gov.au.

Tasmania

The Premier established the Internet Commerce Committee during 1999 toexchange information and research on Internet commerce developments andprojects planned or underway within and outside government in Tasmania.Membership of the Committee is drawn from business, government and thecommunity.

The Tasmanian Government and the University of Tasmania jointly establishedthe Tasmanian Electronic Commerce Centre (TECC) to provide a focal pointfor projects and initiatives that support the uptake and improvement ofe-commerce practices within the Tasmanian business community. It is fundedunder the Commonwealth Government’s Networking the Nation program.

Its mission is to accelerate the profitable participation of Tasmanian businessesin the online economy. A number of initiatives have been implemented tosupport this goal:

• EC Aware seminars—to provide an introduction to e-commerce and theopportunities it offers;

• EC Ready—a program to provide businesses with access to consultants tohelp identify e-commerce needs and opportunities;

• project funding—offering financial support for selected e-commerceprojects; and

• register of IT and E-Commerce Providers—providers and consultants whocan help businesses realise their e-commerce plans.

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Tasmania Business Online (TBO) was established in December 1999 as aproject of the TECC in conjunction with the Tasmanian Partners of KPMG.Its key objectives are to create:

• an online trading service that is particularly focused on the needs of SMEs;

• a single gateway or portal for information relevant to Tasmanian businessand industry;

• a directory of Tasmanian businesses regardless of online capability;

• a shared, community-based infrastructure for managing tradingopportunities and business communications support facilities; and

• a recognised and marketed gateway for conducting commerce into and outof Tasmania.

The TECC is about to enter into a business partnership with an InternetCommerce Provider to implement Tasmania Business Online.

This innovative and award winning system provides online access to a range offree information, including a street atlas and maps, as well as subscriberservices to gather information and undertake transactions in relation to landtitles and land valuations. Ongoing development of the system will lead tofurther e-commerce opportunities in relation to spatial information.

Service Tasmania Online is a general entry point (http://www.service.tas.gov.au/)that provides ready access to a range of State, Commonwealth and LocalGovernment services, including:

• electronic transactions (e.g. payment of electricity accounts, Council rates,Court fines, land tax, recreational sea fishing licences, policeinfringements);

• application forms for various business and consumer transactions(e.g. Australian Business Number, business names, birth, marriage or deathcertificates, concession forms, firearms licences, freedom of information,housing rental subsidies, land valuations); and

• general advice and information (e.g. education, consumer information).

These services will be expanded through the Commonwealth Government’sProject TIGERS to include other services provided by the Commonwealth andby Local Government.

The EnAct Legislation system provides online access to consolidated Tasmanianlegislation. Access to the database is free and is likely to remain so. However,there is potential for providing additional services on a subscription basis tokey users, such as access to Bills and links to case law.

The State Government’s application for ‘Networking the Nation’ funding foran electronic procurement pilot project to operate through Service Tasmaniawas recently approved. The pilot project will involve implementation ofInternet-based procurement in relation to two Government organisations, witha view to a whole-of-government rollout following a comprehensive evaluationat the end of the pilot period.

Victoria

Victoria has established a reputation as a world leader in the development andapplication of new technologies. This reputation has been built on Victoria’sstrengths: a culture of innovation; a strong skills base; and the ability tocommercialise great ideas. This has enabled Victoria to produce cutting-edgecompanies such as Looksmart and Melbourne IT—two global Internet firmswhich compete on the world stage. This flair for innovation ensures thatVictoria is well placed to take advantage of the growth occurring ine-commerce. The Victorian Government’s policy for the information andcommunications technologies (ICT), Connecting Victoria, identifies

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e-commerce as a top priority and aims to deliver the benefits of technology toall Victorians. The Victorian Government is currently in the process ofdeveloping a comprehensive policy framework to facilitate the uptake ofe-commerce.

The Government recognises that boosting e-commerce requires the bestpossible business environment. In particular, a stable legal and regulatoryregime is critical in underpinning an information society, especially inincreasing confidence in using e-commerce amongst citizens and business.To this end, the Victorian Government recently passed the ElectronicTransactions Act (ETA) which recognises the equivalence of e-commerce topaper-based transactions, and provides business and consumers with greaterconfidence to do business online. The ETA mirrors the model law forelectronic transactions developed cooperatively between the States, Territoriesand the Commonwealth. The Act cements Victoria’s position as a leader in thedevelopment of a suitable legal and regulatory environment to booste-commerce.

The Government has also proposed laws to regulate the collection andhandling of personal information in the public sector. Under the InformationPrivacy Bill, introduced May 2000, Victoria will appoint its own PrivacyCommissioner to ensure that agencies of Government deal with citizens’personal information transparently and responsibly. These laws have beendeveloped to be compatible with the proposed Federal private sector privacylaws, also introduced earlier this year. By creating a seamless environment forthe flow of personal information within and out of Victoria, they will help tobuild the confidence of consumers in dealing with Government and businesselectronically. The laws will not be restricted to transactions undertakenonline.

The role of the public sector as a catalyst for change in the new economy iscrucial and the Victorian Government is leading by example through its highlysuccessful Government On-line (GOL) Program. To date, nearly 100 VictorianGovernment transactions are available over the Internet and all suitableGovernment information and services will be online by 2001. The programmakes dealing with government easier—providing ‘anywhere, anytime’ access.For example, ‘The Business Channel’ (http://www.business.channel.vic.gov.au/)provides a single point of electronic access for assistance, includinginformation and transaction capabilities, on all aspects of running a businessand dealing with government. The Business Channel is an initiative of theGovernment’s channel program which is being expanded and currentlyincludes the Land and Better Health Channels, among others. Anotherinitiative, the Victorian Business Licence Information Service (BLIS), providesholistic reports on the licences required to establish a particular business.Licence information from the Victorian State, Commonwealth and LocalGovernments is brought together to appear in user-friendly reports.

Central to the Government’s GOL strategy is the promotion of electronicpurchasing of products and services by the public sector. The VictorianGovernment Purchasing Board (VGPB) established an EC4P (e-commerce forpurchasing) panel for use by all State and Local Government agencies. Theseinitiatives are making Government more efficient. For example, theintroduction of e-purchasing at the Department of Natural Resources andEnvironment (DNRE) cut the cost per transaction from $32 to $5. Building onthe success of DNRE, all Government Departments and agencies are scheduledto have electronic purchasing systems implemented within the next 24 months.

Promoting skills is critical. Victoria is addressing the ICT skills shortage, whichis global in nature, by working together with industry and training providers tonurture the skilled people needed in the ICT industry. An ICT Skills Taskforcehas been established to help advise the Government on skills issues.The ‘Go for IT’ program—a youth traineeship program—and theGovernment’s commitment to boost IT training through Victoria’s TAFE

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system and Vocational Education and Training in secondary schools, recognisethat not all IT careers require a university education. A Multimedia IndustryTraining Strategy (MITS) is underway which consists of various initiativesaimed at improving the overall ICT skill level in the business community andincludes targeted e-commerce training for small business. Furthermore, inrecognition of the growth of the semiconductor industry, the Government hasannounced a commitment of $7.1 million over three years for the Chipskillsprogram—an industry-focussed initiative that allows universities to workdirectly with companies when formulating curricula. The Government will alsoinvestigate ways of making ICT careers more attractive to our top students andlooking at the possibility of retraining people from other industries.

The Victorian Government also places a strong emphasis on communitydevelopment and is providing all Victorians—particularly those who may havemissed out—with an opportunity to access the Internet. The Government’shighly successful Skills.net program has provided Internet training and accessto more than 40 580 people.

The Victorian Government is keen to harness the power of the Internet for allVictorians, especially those in rural and regional areas. To this end a range ofinitiatives have been announced which include:

• The $170 million Regional Infrastructure Development Fund, of which asignificant component will be used to build the State’s ICT capabilities,particularly in regional Victoria;

• a review of VicOne—the State’s broadband telecommunications networkthat links all Victorian Government locations—to evaluate ways that it canbe accessed by more Victorians, particularly those in rural and regionalareas; and

• the Regional Connectivity Project involving six regional centres which arepromoting the uptake of e-commerce in country Victoria.

An important element of the Victorian Government’s ICT strategy is theVictorian E-commerce Early-Movers Assistance Scheme (VEEM). The programprovides funding packages to local councils throughout Victoria to develope-commerce projects and applications in municipalities. Other relevant StateGovernment programs include the on-line Electronic Export Assistance Centre(providing export advice to companies) and the Victorian Tourism On-lineProgram (designed to market Victoria both in Australia and overseas). Anotherinitiative, Project.reX, matches students from local universities and TAFEcolleges with local firms to assist businesses in their adoption of e-commercetechnologies and processes. The Government is also working with business topromote the uptake of e-commerce and has supported the publications of twohandbooks, Successful E-Commerce and the E-Commerce Handbook. Thesepublications provide useful tips and case studies to firms on how torevolutionise their operations using e-commerce technology and capabilities.

Importantly, the Government is committed to positioning Victoria as a centreof knowledge-based activity. The Government has an active investmentattraction and export promotion program to ensure that businesses withe-commerce and related capabilities are located in Victoria. For example, eSignAustralia—a leading digital encryption company—recently announced asignificant investment in the State.

Apart from getting the basic ‘tools’ and ‘fundamentals’ right, such as skills andinfrastructure, success in the global e-commerce market requires a partnershipbetween business, Government and the community in a variety of areas. Onesuch area is the commercialisation of new technology and ideas. The VictorianGovernment has allocated $310 million over five years to boost science,technology and innovation. Another initiative—the $20 million TechnologyCommercialisation Program—also provides innovators with the information

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needed to turn smart ideas into good businesses. This will include e-commerceapplications, but will cut across all the high-tech industries, includingbiotechnology.

The Victorian Government is especially keen to explore the contribution of theprivate sector in making Government operations more efficient, streamlinedand responsive. An example of this is the Government’s arrangement with itsbank to provide all public sector organisations with banking services.Connecting all Government offices, schools and agencies would ordinarily bean expensive arrangement but using the VicOne telecommunicationsinfrastructure, all agencies can now use banking services through just fourconnections instead of hundreds. This represents a considerable saving in bothcommunication and transaction costs.

Western Australia

The Government established the Office of Information and Communications(OIC) within the Department of Commerce and Trade in July 1997 tocoordinate and develop communications and information policy in WesternAustralia in the Public Sector, across business and the general community.

There have been a number of significant achievements including the:

• Statewide Telecommunications Enhancement Program (STEP) which wasannounced in October 1999. It means that for the first time two carriers—Cable & Wireless Optus and Telstra—will supply data communicationsservices to Government agencies in rural and remote Western Australia.Within two years, many hundreds of agency locations throughout the Statewill have competitive access to fast and economical data communications,vital to the development of initiatives like Telehealth and the Police Servicesatellite links and to the wider community;

• OnlineWA Communities Program which is delivering products andprograms designed to introduce people to, and raise awareness of, theopportunities and benefits of the Information Age and the Internet,decreasing the ‘tyranny of distance’ for businesses, community and family;

• OnlineWA ‘Single Doorway to Government’ (www.online.com.au—a keyinitiative put in place to provide superior and simpler customer servicethrough a single point of entry to Government services. It assists people togain access to Government information and services without having tounderstand the structure of Government. It was launched by the Premier inMay 2000 and has been an unprecedented success, including receiving highpraise from the public using the service, and from experts commenting onthe quality of the site and range of information provided; and

• the development of the Electronic Commerce Centre website(www.ecc.online.wa.gov.au) which is maintained and updated fortnightly byOIC to provide a wealth of information on the principles and practices ofonline services.

Many agencies have already developed sophisticated online products; thefollowing highlights are a small sample:

• the Department of Commerce and Trade established the Business andInvestment Gateway (BIG.WA) which is part of the Government’s businesschannel under the Single Doorway. Launched in January 2000, BIG.WA provides a one-stop shop for business to access government businessservices, including the latest information on investment and businessopportunities in Western Australia;

• the Library & Information Service of Western Australia (LISWA) has beendelivering interactive online services to clients since 1995 when it becamethe first public library in the world to make its entire catalogue availablethrough the web. This created a unique ‘virtual public library’, whichremains unmatched in any other State;

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ba p p e n d i x • Contract and Management Services has established services to provide

departments and agencies with whole-of-government services. Theseinclude SalesNet, ProcureLink, ServiceNet, Datalink, GovernmentElectronic Tender Information Bulletin Board and WA FastPay, and a recenttender was issued for the Government Electronic Marketplace;

• in June 1999 details were released of the $16 million Telehealth project tolink major Perth hospitals with 20 regional and remote sites providingbenefits such as audio-visual communications, image and data transfer,health information, education and training for health professionals andsupport services. The first of the selected sites are now linked; and

• Western Australian Tourism Commission has developed a website withmultiple features providing access to a comprehensive database of details onWestern Australian attractions and tourism operators. This site won aninternational award in formal recognition that it represents world’s bestpractice. During February 1 718 individual users per weekday visitedthe site.

In addition, legislative and regulatory barriers to online service delivery ande-commerce are being addressed at a Federal and State level.

The Government released in January 2000 a far-reaching strategy to putWestern Australians at the leading edge of the digital age. The strategy aims toensure that schools are equipped with state-of-the-art technology and thatstudents, teachers, parents and households have access to, and are trained in,the use of the technology. More Government and private sector services will bebrought online in a user-friendly way, delivering benefits to the communitythrough a coordinated approach to information provision and service delivery.The four phases of the strategy are:

• technology in schools and teacher training;

• educating parents and other groups to utilise the technology;

• connecting homes to the Internet and providing tuition; and

• providing government and private sector services online.

The OIC 2000 plan, developed by the OIC in the Department of Commerceand Trade, endorsed by the Cabinet Standing Committee encompasses:

• Telecommunications —increasing affordable access to, and enablingeffective use of, telecommunications infrastructure for economic and socialdevelopment across Western Australia;

• Industry Development—supporting the development of Western Australia’sInformation and Communications Technology industry;

• Government On-line Services—improving government service deliverythrough enabling the adoption of online service delivery. The ‘SingleDoorway’ project provides easy access to government services andinformation without the user having to understand how government isstructured;

• Enabling E-Commerce—enabling the development of Western Australia’sInformation Economy through e-commerce policy, strategies, legislationand education; and

• Business and Community On-line— encouraging business and community togo online by awareness raising, increasing adoption and improving servicesfor all.


STRG initial input onimpacts and scenarios

CONSUMPTIONCLUSTER

SUPPLYCLUSTER

Households with Internet access

Business withwebsites

Households using PCs

Business withInternet access

Income levels Quality

Education Transport costs (both domestic & international)

Security concerns

Allen E-Commerce Preparedness Index

MMRF Mode

STRG Assessment

Report

Reiteration

Government initiatives

appendixC Analytical framework

C.1 The State and Territory Government Reference Group (STRG)

The STRG comprised key Federal, State and Territory Governmente-commerce representatives from departments that were invited to join.Throughout the study the consulting team and NOIE liaised extensively withthe STRG. Two workshops were held to obtain input and feedback from theSTRG. All of the STRG members have considerable expertise andunderstanding about the key strategic issues relating to information technologyin general and specifically in relation to e-commerce.

The STRG helped to advise and provide input to the quantitative andqualitative parts of the analysis—the STRG identified factors likely to lead toregional differences in the adoption of e-commerce, and to place reasonablevalues on these direct effects. While drawing on STRG advice and input,decisions about the direct impacts, the nature of the flow on impacts and otherfindings remained the responsibility of the consulting team—The AllenConsulting Group and the Centre of Policy Studies.

C.2 A framework for economic analysis

Once differences in each State’s preparedness were identified, these differenceswere used to modify the earlier national shocks in the E-commerce beyond2000 report. This was undertaken using the Monash Multi-RegionalForecasting (MMRF) model as opposed to the MONASH model that was usedin this earlier E-commerce beyond 2000 report. The MMRF treats each Stateand Territory as a separate economy competing with other States andforeigners for markets, capital and labour—see Figure C.1 for the frameworkand interactions between the STRG and the process for this study.

Figure C.1

Conducting the MMRF modelling



C.3 The Monash Multi-Regional Framework Model (MMRF)

The MMRF used for this study is a dynamic multi-regional, multi-sectoralmodel of the Australian economy. It is able to project annual time paths forvariables describing macroeconomic prospects for the Australian economy andfor the economies of the six States, two Territories and the 57 statisticaldivisions (regions). The MMRF can analyse the regional impacts ofe-commerce. It has the advantage of treating each State and Territory inAustralia as a distinct economy competing for resources and able to trade withthe other States, Territories and the rest of the world.

The model is outlined in more detail below.

Overall structure and dynamics

The MMRF model was developed by the Centre of Policy Studies (CoPS). It isa dynamic model based upon the MONASH model—a dynamic computablegeneral equilibrium (CGE) model of the Australian economy designed forforecasting and policy analysis.

The MONASH model was used in the previous E-commerce beyond 2000report which quantitatively forecast the structural changes to the Australianeconomy that e-commerce may bring.

Both the MONASH and MMRF models have a high level of microeconomicdetail, and unlike the ORANI model, have strong forecasting capabilities. Thisis due to:

• a more detailed specification of intertemporal (i.e. dynamic) relationships;

• greater use of up-to-date data; and

• enhancements that allow the model to take on information from specialistforecasting organisations and from recent trends.

The key to generating realistic forecasts is to use detailed informationavailable from expert groups specialising in the analysis of different aspects ofthe economy. MONASH and MMRF forecasts incorporate a wide variety ofinformation including:

• macro forecasts from the Treasury and Access Economics;

• export forecasts from ABARE and the Tourism Forecasting Council;

• forecasts of changes in technology and consumer tastes derived from trendscalculated at CoPS; and

• results from Dixon and Rimmer (1999) on the effects of the Government’sA New Tax System package.16

16 Dixon, P.B. and Rimmer, M.T. (1999), ‘The government’s Tax Package: Further Analysis Based on theMONASH model’, Report prepared for the Senate Select committee on a Next Tax System, mimeo,January 25. The Central Estimates from that report were used.

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Macro Forecasts(ACCESS)

Exports (ABARE & TFC)

Structure of technical& taste changes

(CoPS)

MMRF forecastSimulation

Changes in tax ratesunder GST package

Output & employment forecasts

Figure C.2

MMRF forecasting system

More about the MMRF

The MMRF is a dynamic multi-regional Applied General Equilibrium model.It distinguishes six States and two Territories and, for this study,31 commodities/industries. The model recognises:

• domestic producers classified by industry and domestic region;

• investors similarly classified;

• eight region-specific household sectors;

• an aggregate foreign purchaser of the domestic economy’s exports;

• a common exchange rate among the eight State and Territory economies;

• eight State and Territory Governments; and

• the Commonwealth Government.

The model contains explicit representations of intra-regional, inter-regionaland international trade flows based on regional input-output data developed atCoPS, and includes detailed data on State and Commonwealth Governments’budgets. The MMRF reflects each State and Territory as a separate economycompeting with the other States and foreigners for markets, capital and labour.As the States and Territories are modelled as individual mini-economies,MMRF is ideally suited to determining the impact of State/Territory-specificeconomic shocks. Second round effects are captured via the model’s input-output linkages and account for economy-wide and international constraints.Outputs from the model include projections of:

• GDP and aggregate national output;

• export earnings, import expenditure and the balance of trade;

• State and Territory revenues and expenditure;

• State and Territory gross output and employment;

• State and Territory sectoral output, value-added and employment; and

• State and Territory international export earnings, international importexpenditures and international balance of payments.

Impacts for the statistical divisions are calculated by disaggregating each Stateand Territory’s results based on the knowledge about where industry is locatedin each division. In total, detailed forecasts for 57 statistical divisions wereproduced in this way.

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Box C.1

The MMRF model

General equilibrium models are ideally suited to an analysis of this type. They specifically factor in

the interconnected value chains of activity that make up a developed economy. They look at a

simplified version of the economy in much the same way that economic activity is measured by the

Australian Bureau of Statistics. The model includes components for businesses, governments and

households as well as trade and capital flows. Using these models it is a relatively simple matter to

estimate the full flow-on implications of changes of the sort that greater use of e-commerce will

bring. Disintermediation brought about by greater use of e-commerce can be directly factored in, as

can new activities implied where e-commerce becomes a new intermediary between buyers and

sellers. The usefulness of the model in this context was identified as a major finding of a scoping

studye undertaken for NOIE in 1998.

The fact that the MMRF is dynamic is a further advantage because it allows the analyst to track

changes over time. This is very useful when looking at diffusion of changed business practices in

time.

The major advantage of the MMRF model is that it provides a framework to assess regional

dimensions of structural change (and changes in government policies). Regions are specified in two

different ways – on a state by state basis or by statistical divisions. The major focus of the model is

upon Australia’s states and territories. MMRF treats Australia as 8 separate state/territory economies

connected by trade links, a common currency, a common income tax system and strongly-linked

wage rates. This approach is termed ‘bottom–up’ because macro–economic results are discerned by

aggregating the interaction of economic agents from a very low level.

Source: The Centre of Policy Studies.

e The Allen Consulting Group, The Sectoral Impact of Electronic Commerce — A Scoping Study, December 1998.

Base case, uniform case and non-uniform case projections

In assessing the impact of greater use of e-commerce, the MMRF model isused to produce a ‘base case’ projection where the use of e-commerce remainslargely static. Then a second projection is produced (called the uniform case)which shows the impact of greater use of e-commerce on the Australian, States’economies where full implementation of e-commerce is assumed to occuruniformly over 10 years in each State.

Finally, a third projection is produced (called the non-uniform case) whichshows the impact of greater use of e-commerce on the economies of the Statesand Territories where full implementation of e-commerce in the States andTerritories is based upon the Allen E-commerce Preparedness Indices. That is,the ACT is assumed to achieve the expected direct change in seven years ratherthan in 10 years, reflecting its greater preparedness. On the other hand, fullimplementation in the Northern Territory is delayed by three years, and so ittakes 13 years to obtain the direct benefits. The States are spread out inbetween, reflecting their index score.

The effects of e-commerce are measured by the differences between the basecase, uniform case and non-uniform case projections.

The base case

Table C.1 shows average annual growth rates for selected macroeconomicvariables used in the base case. The numbers in column one are historicalgrowth rates for the period 1993–94 to 1997–98. The numbers in column twoare forecast growth rates.

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Table C.1

Selected macroeconomic variables (average annual percentage growth rates)

( I ) ( I I )

History Forecast

1993-94 to 1997-98 1997-98 to 2015-16

Real GDP and its components

1. Private consumption 4.01 3.55

2. Public consumption 2.97 2.10

3. Investment 7.42 2.82

4. Exports 7.27 5.27

5. Imports 9.82 5.33

6. GDP 4.22 3.04

Other macroeconomic variables

7. Employment 2.21 1.45

8. Real wage rate -2.10 -0.33

The base case forecasts that real GDP will grow at an average annual rate of3.04 per cent (row six) between 1997–98 and 2015–16. This is in line withthe long-term growth potential for the economy of around three per cent perannum, though it is below the average growth rate of the last four years.Australia has experienced unusually strong growth over recent years.

Real private consumption (row one) and real public consumption (row two)are expected to have slower average growth rates in the forecast period than inthe historical period. Part of the weakening in private consumption growth canbe attributed to the forecast of slower growth in real GDP and hence slowergrowth in real income available for consumption. Another factor that AccessEconomics has identified is demographic factors associated with increasingnumbers of baby boomers moving from their ‘spending years’(30 to 40) into ‘saving years’ (40 to 50). The slowdown in growth in publicconsumption (mainly the real wages of government employees) is consistentwith the expectation of further public service cutbacks.

Growth in real private investment (row three) is forecast to be lower than inrecent history, reflecting different initial conditions. The year 1993–94 was aweak year for investment, while 1997–98 was a strong year. Lower investmentgrowth in the forecast period reflects a return to longer-term average levels ofinvestment/capital ratios from their cyclically high levels in 1997–98.

Between the mid-1980s and 1997–98, aggregate real exports (row four) andimports (row five) grew rapidly relative to real GDP (row six). This was theresult of several factors: declining transport costs; improvements incommunications; reductions in protection in Australia and in our major tradingpartners; and technological changes favouring the use of import-intensivegoods such as computers and communication equipment. All these factors areexpected to continue through the forecast period, leading to further increasesin trade volumes relative to GDP. However, these increases will becomparatively moderate due, in part, to the negative impacts of the Asian crisison Australia’s trade in the first two years of the forecast period.

The base case forecasts that employment will grow at an average annual rate of1.45 per cent (row seven), implying growth in labour productivity of1.6 per cent per annum. This compares with average productivity growth inthe historical period of 2.0 per cent.

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Structure of exports

Table C.2

Structure of exports

( I ) ( I I )

History Forecast

1993-94 to 1997-98 1997-98 to 2015-16

1 Wool -4.6 0.1

2 Sheep -2.2 1.8

3 Wheat 4.2 3.4

4 Barley 4.2 2.7

5 Other coarse grains 4.0 2.7

6 Meat cattle 22.7 4.8

7 Fishing 0.0 0.3

8 Iron ore 5.5 3.3

9 Non-ferrous metal ore 8.3 2.9

10 Black coal 5.8 4.2

11 Oil and gas 10.9 2.5

12 Meat products 1.1 2.3

13 Raw sugar (27) 7.0 3.5

14 Scoured wool and ginned cotton 6.2 1.9

15 Iron and steel 3.5 -2.0

16 Non-ferrous basic metals 1.0 6.0

Memorandum items

17 Total exports: Tourism 7.0 6.0

18 Total exports: Other 9.9 6.3

Forecasts for the structure of exports are summarised in column two of TableC.2. Rows one to 16 show forecasts for average annual growth in exports ofproducts classified as traditional export commodities. Rows 17 and 18 showforecasts for tourism exports and for ‘other’ (i.e. non-traditional) exports17 .

The export forecasts in rows one through 16 are extrapolated from ABAREforecasts. ABARE expects good growth for the exports of meat cattle, blackcoal, raw sugar and non-ferrous basic metals (primarily, alumina andaluminium). Middle prospects are projected for wheat and other grains, ironand non-iron ores, oil and gas and meat products. Poor prospects are given toexports of wool, sheep, fishing, lightly processed wool and cotton, and ironand steel.

For international tourism, the latest forecasts provided by the TourismForecasting Committee (TFC) were used. However, a downward adjustmentfor the effects of the GST was made. The introduction of a GST harms theexport prospects of the tourism industries. Commodity exports will not besubject to a GST. On the other hand, foreign tourists will find that most oftheir purchases in Australia are subject to the GST. For tourists, the projectionssuggest that the foreign-currency price of their holidays in Australia will jumpby about 3.5 per cent. Taking this into account, the forecast rate of growth oftourism was adjusted from the TFC number of 7.4 per cent annual growth tothe number shown in Table C.2, 6.0 per cent annual growth.

17 Non-traditional exports cover all exports other than traditional exports (i.e. exports of commoditiesidentified in rows one to 16 of Table C.2) and tourism services (i.e. exports of air transport, hotels,accommodation, entertainment and personal services).

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Given the macro forecast for aggregate exports in Table C.1 and the forecastsfor traditional exports and tourism exports shown in Table C.2, the modeldeduces an average growth rate for the volume of non-traditional exports.Volumes of these exports are forecast to grow at an average annual rate of6.3 per cent. This is less than the average growth rate of recent years.However, non-traditional export volumes have now reached a level that makescontinued growth at such high rates unlikely.

Assumptions for changes in technology and tastes

Table C.3

Technology and household taste assumptions for sectors (average annual percentage changes)

( I ) ( I I ) (III)

Sector Household Technology

preferences (i) Intermediate Primary-factor

input-using(ii) using(ii i )

1 Agriculture, forestry and fishing 0.2 -0.1 -2.0

2 Mining -0.8 -1.0 -0.6

3 Food, beverages and tobacco 0.1 -0.2 -0.9

4 Textiles, clothing and footwear -1.6 -0.5 -1.9

5 Wood and wood products -0.5 -0.5 0.0

6 Paper, paper products, printing 1.5 -0.3 -0.2

7 Chemicals, petroleum, coal products 0.4 0.5 -0.1

8 Non-metallic construction materials -1.5 -0.3 -0.9

9 Basic metal products -0.1 0.6 -1.0

10 Cars and other transport equipment 0.6 0.9 -1.5

11 Electronic, other specialist equip. 2.5 1.5 -1.5

12 Leather, rubber, plastic products -0.3 -0.7 -0.1

13 Electricity, gas and water 0.2 0.2 -3.4

14 Construction 1.9 -0.1 0.0

15 Wholesale and retail trade -1.9 -1.5 0.0

16 Transport and storage 0.5 -0.3 -1.2

17 Communications 0.0 2.4 -5.5

18 Finance and business services 1.3 1.3 -2.8

19 Dwelling ownership 0.1 0.0 0.6

20 Public administration and defence -1.1 -0.7 -0.3

21 Health, education and welfare 0.7 -0.6 -0.3

22 Hospitality, leisure, other services 0.0 -0.4 0.0

(i) Annual rate of shift of consumption function.(ii) Annual rate of change of use of the commodity identified on the left–hand panel per unit of output of

industries using the commodity.(iii) Annual rate of change of use of all primary factors (labour, capital and agricultural land) per unit of

production of the industry identified on the left.

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Table C.3 shows assumptions for changes in the preferences of households andin the production technologies of industries, divided into 22 sectors. These areaggregations of the preference and technology assumptions introduced toMMRF at its full level of disaggregation, i.e., at the level of 112 industries and114 commodities18 .

Structure of MMRF

The basic theoretical assumptions of MMRF (and MONASH) are outlinedbelow.

The nature of markets

Markets are assumed to be perfectly competitive. Competition guarantees thata level of output is produced in each industry at a point where the producer’sprice equals marginal costs and where zero pure profits are earned. Demand isassumed to equal supply in all markets except in the market for labour whereoversupply is allowed. The government intervenes in a market by imposingsales taxes on commodities. This puts a wedge between the price paid by thepurchaser and price received by the producer. The model also recognises ninemargin commodities (wholesale trade, retail trade, road transport, railtransport, water transport, air transport, transport services, insurance andrestaurants) which are required for each transaction involving a commodity orservice. The costs of the margins are included in the price paid by thepurchaser.

Input demand for industry production

Two broad categories of inputs to the production process are recognised—intermediate inputs and primary factors (labour of various occupations,capital, agricultural land and working capital). Intermediate inputs aredistinguished by commodity type and by source (domestically produced andimported). Firms in each industry are assumed to choose a mix of inputs thatminimises the costs of production for given input and output prices and for agiven level of output. They are constrained in their choice of inputs by aproduction technology that combines intermediate and primary inputs toproduce output.

Households demands

The household determines the composition of consumption by choosingcommodities (distinguished by source) to maximise a utility function subject toan expenditure constraint. A consumption function determines the overallhousehold expenditure as a function of household disposable income.

In MMRF, household preferences are described by a utility function leading todemand functions of the form:

Xi = f (T

i,P

i,C

i)

where:

Xi is consumption of good I per household;

Pi is a vector of commodity prices;

Ci is total consumption expenditure per household; and

Ti is a taste change variable.

18 MONASH recognises two more commodities than industries. Outside of the agricultural sector there is aone-to-one relationship between industries and commodities. For agriculture, the model makes explicitallowance for multi-product industries, with seven agricultural industries producing nine agriculturalcommodities.

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Input demand for investment

Given a level of investment expenditure, an industry chooses inputs(distinguished by type and by source) to minimise the costs of capital creation.The input-demand functions to capital creation are analogous to the input-demand functions for current production, with the exception that there are noprimary factor inputs to capital creation.

Government demands for current production

There is no explicit theory determining governments’ consumptionexpenditures. These can be determined in one of three ways: 1) endogenously,by a rule such as moving government expenditures with householdconsumption expenditure or with overall domestic absorption; 2)endogenously, as a policy instrument which varies in order to accommodate anexogenously determined policy target such as a required outcome for thegovernment’s budget deficit; or 3) exogenously. The second approach wastaken to maintain the government balance and essentially ensure that aninadvertent change in fiscal policy was not factored in.

Foreign demand (international exports)

MMRF cannot explicitly model all of the determinants of foreign demand forAustralian products. It handles export demand by imposing for each exportedcommodity a foreign demand schedule. These schedules, which relate thevolume of exports to the foreign currency price of Australian products, aredownward sloping. Hence, export volumes and foreign-currency prices canrespond to changes in Australian supply conditions.

Capital stocks, investment and rates of return

MMRF allows for two broad treatments of capital and investment. The first,involving explicit assumptions about movements in rates of return andinvestment/capital ratios, is suitable for comparative-static simulations. In suchsimulations, we are concerned with the effects of a policy or other shock afterconsiderable time, say seven years. In these circumstances, MMRF allows theuser to assume that the shock under examination does not affect rates ofreturn. Thus, industries favoured by the shock attract capital until their ratesof return are driven down to their initial levels and that industries for whichthe shock is unfavourable lose capital until their rates of return increase totheir initial levels. Having, in this way, tied down the long-run effect of theshock on capital stocks, the effect on investment by industry can then bedetermined by assuming no change in investment/capital ratios.

The treatment of capital and investment in MMRF (the treatment involved inthis report) involves explicit capital supply functions, and is used in year-to-year simulations (i.e., simulations tracing out the paths of variables for yearst, t+1, t+2, etc.). While the assumption of no change in rates of return maybe suitable for long-run analysis, it is unrealistic to assume that movements inan industry’s rate of return are eliminated by year-to-year movements in theindustry’s capital stock. In each year of year-to-year simulations, industries’capital growth rates (and thus investment) are determined according tofunctions which specify that investors are willing to supply increased funds toindustry j in response to increases in j’s expected rate of return. However,investors are assumed to be cautious. In any year, the capital supply functionsin MMRF limit the growth in industry j’s capital stock so that disturbances inj’s rate of return are eliminated only gradually.

Equations for facilitating dynamic policy simulations

There are a number of mechanisms in MMRF introduced to facilitate dynamicpolicy simulations. Probably the most important mechanisms relate to wageand employment adjustment in the labour market. In comparative staticanalysis, one of the following two assumptions is made about the operations

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of the labour market: 1) real wages adjust so that any policy shock has noeffect on employment; or 2) real wages are unaffected by the shock andemployment adjusts.

MMRF, however, allows an intermediate position for year-to-year policysimulations. In MMRF, real wages can be sticky in the short run but flexible inthe long run and employment can be flexible in the short-run but sticky in thelong run. More specifically, for year-to-year policy simulations it is assumedthat the deviation in the real wage increases in proportion to the deviation inemployment from its base case forecast level. The coefficient of adjustment ischosen so that the employment effects of a shock are largely eliminated aftereight to ten years. This labour market is consistent with macroeconomicmodelling in which the non-accelerating inflation rate of unemployment(NAIRU) is exogenous.

C.4 Evaluation of regional impacts

The MMRF model adopts a ‘tops down’ approach to regional (statisticaldivisions) analysis. Under this approach, State and Territory results aregenerated for each industry. These results are then subdivided into regions’effects based on the industry mix of each statistical division. The model allowsfor the modification of regional results to reflect particular features of a region,with a consequent re-balancing of effects across all other regions, although thisis often limited in practice due to information shortfalls.

The MONASH and MMRF models both identify 57 separate statisticaldivisions in Australia. These divisions are shown in the Table C.4 below with alink to the related Australian Bureau of Statistics’ Statistical Division.

The ‘tops down’ methodology is well suited to showing the regional effects ofnational reforms, but less well suited to tracing the regional effects of reformsor policies that are region specific. Where significant policies differ betweenregions it would be better to use a region specific or ‘bottoms up’ modellingapproach, such as the MMRF model.

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Table C.4

MONASH regions

MONASH region ABS SD Main centre Other selected urban centres

Sydney 105 Sydney Campbelltown, Gosford, Katoomba,

Parramatta, Sutherland

Hunter 110 Newcastle Cessnock, Maitland, Muswellbrook,

Port Stephens, Singleton

Illawarra 115 Wollongong Kiama, Mittagong, Moss Vale,

Shellharbour, Shoalhaven

Richmond-Tweed 120 Lismore Ballina, Byron Bay, Casino, Tweed Heads

Mid-North Coast 125 Coffs Harbour Grafton, Kempsey, Port Macquarie, Taree

Northern 130 Tamworth Armidale, Glen Innes, Gunnedah, Inverell,

Moree, Tenterfield

North Western 135 Dubbo Bourke, Cobar, Coonabarabran, Gilgandra,

Mudgee, Walgett

Central West 140 Orange Bathurst, Blayney, Cowra, Forbes, Lithgow,

Oberon, Parkes

South Eastern 145 Queanbeyan Bega, Bombala, Cooma, Crookwell,

Goulburn, Yass, Young

Murrumbidgee 150 Wagga Wagga Cootamundra, Griffith, Gundagai, Hay,

Narrandera, Tumut

Murray 155 Albury Balranald, Deniliquin, Holbrook,

Tumbarumba, Wentworth

Far West 160 Broken Hill Tibooburra, Wilcannia

Melbourne 205 Melbourne Altona, Dandenong, Lilydale, Mornington

Peninsula, Sunbury

Barwon 210 Geelong Apollo Bay, Colac, Lorne, Queenscliff

Western District 215 Warrnambool Camperdown, Hamilton, Portland

Central Highlands 220 Ballarat Ararat, Bacchus Marsh, Daylesford

Wimmera 225 Horsham Dimboola, St Arnaud, Stawell

Mallee 230 Swan Hill Kerang, Mildura, Ouyen

Loddon 235 Bendigo Castlemaine, Maryborough

Goulburn 240 Shepparton Benalla, Echuca, Kyabram, Rochester

Ovens-Murray 245 Wodonga Beechworth, Bright, Mount Beauty,

Rutherglen, Wangaratta

East Gippsland 250 Sale Bairnsdale, Omeo, Orbost

Gippsland 255 Traralgon Moe, Morwell, Wonthaggi

Source: MONASH data base, ABS cat no 1216.0.

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Table C.4 — continued

MONASH regions

MRES regioni ABS SD Main Centre Other Selected Urban Centres

Brisbane 305 Brisbane Beenleigh, Logan, Mount Gravatt,

Redcliffe

Moreton 310 Coolangatta Burleigh Heads, Caloundra, Ipswich,

Noosa, Surfers Paradise

Wide Bay–Burnett 315 Maryborough Bundaberg, Gympie, Hervey Bay,

Mundubbera

Darling Downs 320 Toowoomba Dalby, Goondiwindi, Stanthorpe, Warwick

South West 325 Charleville Quilpie, Roma, St George

Fitzroy 330 Rockhampton Emerald, Gladstone

Central West 335 Longreach Barcaldine, Blackhall, Winton

Mackay 340 Mackay Clermont, Proserpine

Northern 345 Townsville Ayr, Bowen, Charters Towers, Ingham

Far North 350 Cairns Atherton, Cooktown, Innisfail, Mareeba,

Mosman, Weipa

North West 355 Mount Isa Cloncurry, Hughenden, Normanton

Adelaide 405 Adelaide Glenelg, Henley, Hindmarsh, Marion,

Salisbury

Outer Adelaide 410 Mount Barker Barossa Valley, Kangaroo Island,

Onkaparinga

Yorke & Lower North 415 Yorketown Bute, Riverton, Wallaroo

Murray Lands 420 Renmark Murray Bridge, Pinnaroo

South East 425 Mount Gambier Bordertown, Kingston, Naracoorte

Eyre 430 Port Lincoln Ceduna

Northern 435 Whyalla Coober Pedy, Port Augusta, Port Pirie,

Woomera

Perth 505 Perth Armadale, Fremantle, Joondalup, Stirling,

Wanneroo

Peel 510(p) Rockingham Kwinana, Mandurah

South West 510(p) Bunbury Busselton, Collie, Manjimup,

Margaret River, Pemberton

Great Southern 515 Albany Denmark, Katanning

Wheatbelt 520/525 Northam Merredin, Moora, Narrogin

Goldfields-Esperance 530 Kalgoorlie Boulder, Coolgardie, Esperance

Mid West 535(p) Geraldton Meekatharra, Mount Magnet

Gascoyne 535(p) Carnarvon Exmouth

Pilbara 540 Port Hedland Karratha, Newman, Tom Price

Kimberley 545 Broome Derby, Kununurra, Wyndham

Greater Hobart 605 Hobart Clarence, Glenorchy, Sorell

Southern 610 Geeveston Bicheno, Huonville, Triabunna

Northern 615 Launceston Deloraine, Georgetown, St Helens

Mersey-Lyell 620 Burnie Devonport, Queenstown, Smithton,

Ulverstone, Zeehan

Northern Territory 7 Darwin Alice Springs

Australian Capital Territory 8 Canberra

Source: Monash–RR data base; ABS 1995 (Australian Standard Geographic Classification,

Cat. No. 1216.0) and Productivity Commission (1999, p297).i

MRES: Monash regional economic system; ABS SD: Australian Bureau of Statistics statistical division.

ca p p e n d i x


To understand the findings on output (Gross State Product) and employment inthis report it is necessary to appreciate that e-commerce affects industriesdirectly as well as indirectly. Some industries such as retail will be directlyaffected by e-commerce enabling buyers and producers to transact directly,thereby shrinking the retail sector. Other industries will be impacted indirectly.For example, while mining and agriculture will adopt e-commerce, the mainchanges in these sectors arise from the flow-on effects of the changes in theexchange rate produced by greater use of e-commerce in the economy at large.

This appendix summarises changes that e-commerce will produce in theeconomy that in turn affect the output and employment predictions presentedin this report.

D.1 Output

The overall level of economic output, or GDP, may be higher by around2.9 per cent by the year 2007 if Australia adopts greater use of e-commercethan if it does not. Using the current size of the economy as an indicator, thatincrease is equivalent to more than $14 billion per annum.

D.2 Composition and pattern of growth

Real GDP increases in line with progressive increases in the extent of adoptionof e-commerce in the economy at large. Three broad factors shape thecomposition of growth.

First, the economy makes better use of existing capital and labour. In economicterms there is an increase in total factor productivity. This technological changeaccounts for the majority of the increase in growth.

Second, more capital is invested in the economy raising the availability of thisfactor of production. The capital stock increases because the productivity gainsbrought about by greater use of e-commerce increase wage rates relative tocapital rental rates. This occurs with a lag as investors react cautiously tochanges in rates of return and the change is gradual. In the long run it isexpected that rates of return will come back to levels that would prevailwithout an e-commerce impact (as market forces bring rates back intobalance).

Although additional capital inflows and investment are associated withproductivity gains, and are largest when those gains are being enjoyed, theexpansion in the economy also leads to a sustained increase in investment. It isassumed the additional capital is sourced from abroad through foreign savingsand investment (i.e. it is not assumed that e-commerce changes Australians’savings patterns). These factors will raise the exchange rate.

Finally, there is an increase in the supply of labour, another factor ofproduction. This stems from time savings for consumers.

Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place after a decade. In fact real GDP continuesto rise slightly. This reflects dynamic benefits. E-commerce will be usedintensively in the fastest growing parts of the economy (including services suchas banking, tourism, property and business services). This means thattechnological improvements become progressively more important.

D.3 Aggregate employment and wages

Greater use of e-commerce is expected to generate increases in real wages andemployment. Initially, real wages are fixed and employment adjusts to changesintroduced by e-commerce. As more use is made of e-commerce, activity in the

appendixD

E-commerce impacts that flow through tooutput and employment


economy and employment will rise over time. Real wages will eventually alsorise. In the longer term the increase in employment declines somewhat becauseof higher real wages, but it remains above the base case forecast reflecting theincreased supply of labour associated with the technological change. While jobnumbers may rise or fall in specific industries (discussed in more detail below),the net effect is an increase in employment.

The increase in real wages is a benefit of the expected structural change. It ispart of the means by which employees obtain a share of the productivity gains.The increase in real wages could be brought about in one of two ways. Oneway would be through reductions in prices below their forecast path. Thiswould involve wages staying on their forecast path and producers passing onthe efficiency gains as reductions in their prices. However, it seems morerealistic to expect that the Reserve Bank will preserve its medium termobjective of keeping underlying inflation to within two to three per cent andallow real wages to rise than expect it to permit prices to fall below its targetband.

D.4 Implications for national welfare

But what is the implication for the economic welfare or material wellbeing ofAustralians? To assess the welfare significance of the change, the increase inactivity is translated into an increase in real consumption. Real consumption isa primary purpose of economic activity and is a better measure of welfare ormaterial wellbeing than GDP. While there are many factors which shapewelfare outcomes, including environmental factors and others that are notalways reflected comprehensively in the national accounts, all else being equal,most people would consider themselves better off with an increase in theirability to consume.19

One step in the conversion of the results from changes in activity toconsumption is to note that income is influenced by changes in the terms oftrade. As part of the economic expansion generated by the greater use ofe-commerce, export volumes expand. Despite this, it is likely that e-commercewill increase the prices of exports relative to imports because e-commerce willraise overseas awareness of Australian products, increasing demand for them.The resulting improvement in export prices relative to import prices (i.e. theimprovement in the terms of trade) will increase consumption relative toeconomic activity. Offsetting this to some extent, owners of foreign capitalremit their after tax return on investment, generating a leakage to thedomestic economy and reducing its consumption potential.

The net change in the consumption potential of the economy is projected tobe about 3.9 per cent in the period up to 2010. This shows that increases inconsumption can be expected to be higher than the percentage deviation inactivity (i.e. real GDP). Australians are richer because the economy will beusing its resources better. The economy will essentially be getting more out ofthe capital and labour endowment and there are more jobs.

D.5 External competitiveness

Greater use of e-commerce can be expected to lead to significant changes inexternal competitiveness. Real investment rises as a consequence of theadditional capital that is made available to the economy from greater use ofe-commerce (2.7 per cent increase in the level of Australia’s capital stock by2010). Moreover, aggregate capital increases, reflecting the change ininvestment. Foreigners finance the increase in Australia’s capital requirements.Payment for this capital reduces the portion of the benefits that can beconsumed in Australia.

19 It is also notable that it does not seem likely that greater use of e-commerce would contribute significantlyor disproportionately to greater environmental degradation or higher crime rates or other negative factorsthat would reduce welfare gains from increased consumption.

da p p e n d i x


A key factor is that the real exchange rate is driven by changes in investment.The capital inflow that stems from the opportunities created by greater use ofe-commerce causes upward pressure on the exchange rate.

In the longer term when the investment pressure slackens (i.e. after 2007) theexchange rate moves closer to the base line projections. It does not fall back tothe base case because e-commerce has a favourable long-term impact on theterms of trade. The terms of trade improve because Australia will earn higherunit prices on a slightly smaller volume of exports. Additionally, the prices ofimported items will fall relative to exports.

The appreciation of the real exchange rate is expected to have a significantimpact on aggregate export and import volumes.20 The overall result isdeterioration in the balance of trade at first. This is gradually unwound asexports recover strongly when the exchange rate moves towards base caselevels.

The impact of these changes is not felt evenly through the economy. Tourismand related services exports enjoy a significant boost as a result of thesefactors. Commodity exports face a contraction.

D.6 Industry outcomes

Greater use of e-commerce results in structural changes to the economy. It isexpected to stimulate activity and employment in industries that benefit fromincreased awareness of their products or services, meet the growinge-commerce needs of other institutions or just grow through the productivityenhanced expansion of activity at large. The majority of industries, exceptagriculture and retail trade, are expected to expand for one or more of theabove reasons.

The flip side of structural change is that some industries will experience somedisplacement. Naturally those industries that provide services that can bedisintermediated by greater use of e-commerce face particular challenges. Theyare likely to see less activity than otherwise, although they may still grow inabsolute terms. Other sectors may be disadvantaged by the macroeconomicimpacts identified earlier. Export oriented activities that are sensitive tochanges in the appreciations in the exchange rate are particularly at risk.

The MMRF results were aggregated into 13 industries so that they could bepresented a coherent way. Table D.1 demonstrates the percentage deviation forindustry output in the year 2010 from the base case.

20 Changes in import and export volumes are measured by making a weighted average of the percentagechange in the quantities of each individual commodity (e.g. wool, wheat). These weights are value shares.

da p p e n d i x


Table D.1

Industries (% deviation from base case in 2010)

Industries Percentage deviation

Tourism (Cultural, Recreational & Personal Services & Air Transport) 6.12

Other Services (Government, Administration, Education & Health) 3.4

Property & Business Services 3.9

Finance & Insurance 5.1

Communication Services 5.2

Transport 3.8

Retail Trade -4.8

Wholesale Trade 6.0

Construction 5.0

Electricity, Gas and Water Supply 2.6

Manufacturing 2.0

Mining -1.6

Agriculture, Forestry & Fishing -0.5

Source: MMRF Modelling Results.

Tourism

Activity in the tourism sector will be some 6.12 per cent larger by 2010. Thissector benefits primarily from growth in tourism exports and through thegeneral expansion in consumption at large. Tourism exports grow stronglyrelative to other exports. This sector enjoys the largest expansion from theforecast changes.

Communications

The communications sector will grow by 5.2 per cent by 2010. Costreductions are achieved in this industry through e-commerce. Demand rises forindustry outputs used to facilitate e-commerce activity as investment ine-commerce infrastructure is required.

Property and business services

The property and business services sectors is expected to see an increase inactivity by 3.9 per cent to the year 2010 compared with the base case.Although the sector enjoys major cost reductions via e-commerce, expansionof the sector is limited by the strong link between business services andwholesale and retail trade. That is, a large number of business services act asintermediaries, which are bypassed to some extent by e-commerce supportedactivity.

Finance and insurance

This sector will be larger than the base case forecast by 5.1 per cent by 2010.Major cost reductions are achieved in this sector due to e-commerce enhancingits competitiveness.

Transport

The transport sector grows by 3.8 per cent by 2010. This sector owes itsstrong positive result to air transport, which benefits from increases in tourismdemand. The increase in activity in this sector is sustained well after the initialchanges have absorbed, reflecting the compounding benefits of encouraginggrowth in an activity that is already forecast to grow strongly in the base case.

da p p e n d i x


Retail trade

Retail trade is one of the three industries expected to decline relative to thebase case. The industry is expected to decline by 4.8 per cent by 2010. Retailtrade contracts as e-commerce permits traditional retailing to be bypassed.

Wholesale trade

Wholesale trade increases by 6.0 per cent by 2010. This industry benefitssubstantially from the efficiencies associated from dealing with clients andsuppliers through electronic service delivery.

Construction

The construction industry increases by 5.0 per cent by 2010. Greater use ofe-commerce results in positive flow-on effects to the construction industry.Increases in productivity and real wages from increased e-commerce use, havethe dual effects of freeing up additional investment and improving consumerconfidence, which positively impact on construction and the ownership ofdwellings.

Electricity, gas and water supply

This industry increases from the base case by 2.6 per cent by 2010. Theseindustries benefit from the efficiencies associated from dealing with consumersvia electronic service delivery.

Manufacturing

Manufacturing is anticipated to be larger than the base case forecast by2.0 per cent by 2010. The output path for the manufacturing industry isclosely related to that of investment. Industries highly exposed to importcompetition are adversely affected by real dollar appreciation especially in theearly years of the simulation period. Industries such as this one withconsiderable export potential will perform well.

Mining

The mining industry is one of the three industries forecast to decline comparedto the base case from greater use of e-commerce. The mining industry isprojected to decline by 1.6 per cent by 2010. Real appreciation of theexchange rate from e-commerce productivity improvements negatively impactsupon commodity sectors, such as the mining industry. Commodity exportsbecome relatively more expensive abroad and face greater competitiondomestically from relatively cheaper imported goods. The exchange rateappreciation is caused by real wage increases that arise from e-commercerelated productivity gains in the rest of the economy. Despite this negativeresult, there is potential for this result to change. In the United States:

‘Miners are realising they can sell their commodities moreeffectively through on-line auctioning system: transport andlogistics groups can offer their distribution skills to e-tailers;manufacturers can provide production schedule information tosuppliers so supply runs can be worked around production, andinventory can be reduced. The steel division of Thyssen Krupp,Germay’s biggest steelmaker and the world’s biggest maker ofmachine tools, set up an on-line trading platform and startedInternet auctions for steel products in February.’

Beeby, M, ‘Auto industry changes gear into e-drive’, Australian FinancialReview, 22 March 2000, p.11.

da p p e n d i x


Agriculture, forestry and fishing

The agricultural related industries are forecast to decline by 0.5 per cent by2010 compared to the base case. In the agricultural sectors, industriesproducing export commodities (such as wool, grain and meat) perform poorlyrelative to industries producing food for domestic markets or inputs (such asgrapes) used in emerging export products. This is because, as explained earlier,exports are harmed by real appreciation.

da p p e n d i x

Part 2 –Regional Impacts


fact sheetaustralian

capital territory The impact of e-commerce on output, industries and employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

National Growth (real GDP)

Regional Growth (real GRP)

The statistical division

The Australian Capital Territory (ACT) comprises the metropolitan area ofCanberra, town centres (including Belconnen, Woden, Tuggeranong andGungahlin) and rural and wilderness areas. The ACT has a total area of2 352 km2 or 0.03 per cent of Australia.

In 1998 the resident population was estimated to be 308 000. Populationgrowth has levelled off, falling to an average growth rate of 0.6 per cent overthe last five years.

This division has a diverse industrial base with some agriculture andmanufacturing activity, although services such as tourism, retail trade andpublic administration dominate.

The services sector employs almost 88 per cent of the workforce. A largeportion of this is in the retail and wholesale trade sectors. Tourism is also amajor sector.

Educational infrastructure includes four universities, TAFE colleges and anumber of private sector training councils. The division has a highly educatedpopulation with a higher than average school retention rate. It is also aboveaverage in people holding degrees and highly paid jobs.

The CSIRO, universities and information technology centres provideconsiderable infrastructure for research and advanced technology developments.

Key exhibits

Figure 1

Output deviations caused by e-commerce (% deviation from base case)

Real Gross Regional Product (GRP) is expected to be 3.1 per cent higher thanthe base case by 2009, due to increased use of e-commerce. GRP continues torise over the remainder of the forecast period, reflecting dynamic gains—thatis, increased use of commerce continues to expand sectors that are alreadygrowing from use of e-commerce.



capital territoryHigher levels of activity flow through to the ACT from greater use ofe-commerce due to an increase in productivity. This stems from the ability toproduce more resources with less, as a consequence of disintermediatingtraditional inputs in the value chain. There is also growth from increases inlabour and capital.

It is notable that the ACT outperforms the national increase in GDP over theentire period. This reflects the industrial composition factors discussed below,as well as benefits from an expected ‘first mover’ advantage (although the laterfactor is not large).

Figure 2

Sectoral change caused by e-commerce ($ million)

Figure 2 displays indicative changes in sectoral activity by the year 2010, inyear 2000 prices.

The benefits in the ACT from greater use of e-commerce are enjoyed widely inthe different sectors. Three sectors—tourism, communications andconstruction—obtain increases of close to five per cent. However, in dollarterms the ‘other services’ sector is the clear winner, with an indicative increasein activity of more than $137.5 million per annum. Other services that grow inline with the forecast increase in economic activity in Australia at large arepublic administration, education and health.

The main sector in the ACT that will be challenged by greater use ofe-commerce is retail trade. Value previously added by this sector is expected tobe disintermediated as consumers and businesses increasingly deal with theirsuppliers directly over the Internet.

In contrast to many other divisions/States, the ACT sees very little loss inactivity in agriculture and mining.

Because activity in the ACT either expands or is unhurt (except for retail), theACT’s economy expands by more than the national average. The indicativevalue for the net increase in annual output in the ACT is $319 million perannum.

Tourism

Other Services

Property & Business Services

Finance & Insurance

Communication Services

Transport

Retail Trade

Wholesale Trade

Construction

Electricity, Gas and Water Supply

Manufacturing

Mining

Agriculture

-40 -20 0 20 40 60 80 100 120 140


1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

National Employment

Regional Employment


capital territoryFigure 3

Employment deviations caused by e-commerce (% deviation from base case)

Many productivity improvements that accompany greater use of e-commercemay also have impacts on employment in the division. Disintermediating layersof economic activity between buyers and sellers also results in bypassing jobs.An offsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour. A forecast of thenet impact for the ACT is plotted in Figure 3.

Net employment in the ACT is expected to expand because, as shown inFigure 2, the increases in other activities more than compensate for thereduction in retail. It is expected to peak by 2008 at 1.5 per cent greater thanthe base case and continue on at higher levels thereafter.

It is notable that the increase in employment in the ACT will be higher thanthat forecast for the Australian economy at large. In addition, while theincrease falls away for Australia at large, the increase in the ACT is sustained.This is again related to the ACT’s composition of industry and the fact thatmost of the industries continue to expand.

Source:

Monash simulations conducted by The Allen Consulting Group in conjunction with the Centre for

Policy Studies, for the National Office for the Information Economy




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The Central West statistical division lies to the west of the Blue Mountains andthe metropolitan areas of Sydney, Wollongong and Newcastle. The statisticaldivision encompasses the urban centres of Blayney, Cowra, Forbes, Lithgow,Oberon, and Parkes and the principal cities of Bathurst and Orange.

The division extends across 63 261 km2 or 7.9 per cent of New South Wales(NSW). In recent years the resident population of 172 790 has remainedrelatively stable, accounting for 2.7 per cent of the State’s population.

The Central West is classified as being agricultural by Maxwell and Hite(1991), as it is one of Australia’s prime agricultural areas. The division has anextensive list of produce.

The Central West’s economic base is becoming more diverse. Orange is aregional centre for administration and the home for the relocated NSWDepartment of Agriculture.

The Central West’s economic position has been strengthened by the recentdevelopment of an open cut gold and copper mine, as well as additionaldeposits of copper, iron ore and marble.

This has also led to the development of a strong manufacturing industry.In addition, Cowra wines have won many prestigious awards, resulting in arapidly expanding wine-making industry.

Key exhibits

Figure 1


Real gross regional product (GRP) in the Central West Statistical Division isexpected to peak in 2008, around 2.6 per cent higher than the base case. Thisis only 0.2 per cent lower than the peak in real gross domestic product (GDP)brought about by increased use of e-commerce.

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factorproductivity increases. More capital is injected into these sectors and there isan increase in the supply of labour, stemming from time-savings fromproducers and consumers. These efficiency effects slowly filter through theeconomy until the full effects are felt in 2009.

fact sheetcentral west

new south wales The impact of e-commerce on output, industries and employment



new south walesThe increase in GRP is marginally lower than the increase in GDP after the fulleffect of the modelled-e-commerce changes has taken place. The change in realGRP levels off at around 2.5 per cent by 2016. This reflects dynamic benefits,as e-commerce is used intensively in the fastest growing parts of the economy,such as property and business services, construction, transport, wholesaletrade, tourism and other services.

Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010, inyear 2000 prices. This shows a forecast of the implications of change for eachbroad economic sector of activity, valued in terms of current GDP/GRP.

There will be significant growth in the services sector, with the property andbusiness services, finance and insurance, communication and other servicesectors expanding by $67.8 million. Other sectors expected to expand includetourism (by comprise public administration, education and health, (by$11.2 million), transport (by $10.6 million), wholesale trade (by $10 million),construction (by $11.9 million) and manufacturing (by $9.9 million).

Retail trade, mining and agriculture are expected to experience contractions inoutput of around $20.4 million. Retail trade decreases as a result of thedisintermediation effect—that is, greater use of e-commerce leads to areduction in margins.

Mining and agriculture do not tend to benefit from increased use ofe-commerce, as both sectors are vulnerable to the exchange rate implicationsthat are expected to flow from the productivity boost associated withe-commerce.

While the contractions in these sectors are significant, they are sufficientlyoffset by the expansions in other sectors. The net gain to the Central West isexpected to be $107.2 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -10 0 10 20 30


National Employment

Regional Employment19

97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also have an impact on employment in the division.Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that lower prices forgoods and services stimulate demand in other areas and increase the demandfor labour.

As shown in Figure 3, employment will reach a local maximum in 2002 andthen decrease before rapidly rising after 2006. An increase in employment isexpected to peak in 2008 at 0.4 per cent higher than the base case.

After 2008, employment will begin to fall and level off as lagging States beginto increase the productivity gains associated with increased use of e-commerce.This has the effect of clawing back the productivity gains made in the CentralWest, emphasising the peak in employment (as indicated in Figure 3).

Source:




new south wales




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetfar west



The Far West statistical division lies in the west of New South Wales (NSW),inland from the North Western statistical division, and bordered byQueensland and South Australia. It comprises the metropolitan area of BrokenHill, the Shire of Central Darling, and all of the unincorporated areas of NSW.

With a semi-arid desert climate, the Far West is the most sparsely populatedstatistical division in NSW. It covers 147 142 km2, or 18.4 per cent, of NSW’sarea but only 0.4 per cent of its population, estimated to be 24 603. As withother rural communities there has been a decline in the population of thestatistical division, equal to 2.17 per cent per annum.

Maxwell and Hite (1991) have classified the Far West as remote resourcedevelopment. It has an economy traditionally based on mining (silver, lead andzinc) and pastoral activities for wool production. The hot and dry climate,however, provides excellent horticultural opportunities, which has led to asignificant growth in irrigation and horticulture producing cotton, maltinggrains, Durham wheat, table grapes, wine grapes and stone fruits.

The fact that the division is equidistant to Melbourne and Sydney has createdan advantage over other outback-statistical divisions as a tourist destination.Tourism is a growing industry and is now considered to be the major employerin the division.

Key exhibits

Figure 1


Real gross regional product (GRP) in the Far West statistical division isexpected to peak approximately 2.7 per cent higher than the base case in2009. This is 0.2 per cent less Gross Domestic Product (GDP) in that year.

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factorproductivity increases. More capital is injected into these sectors and there isan increase in the supply of labour stemming from time- savings fromproducers and consumers. These efficiency effects slowly filter through toother sectors of the economy until the full effects are felt in 2008.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-3 -2 -1 0 1 2 3 4 5

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at around 2.5 per cent by 2016.

The overall effect on output brought about by increased use of e-commerce isdetermined by the division’s industry composition, which is detailed inFigure 2.

Figure 2



Although the Far West has diversified its economy, economic growth is stillheavily reliant on the agriculture, mining and retail trade sectors, which do notgenerally benefit from increased use of e-commerce.

The relatively higher price of access to telecommunication networks in ruralareas, combined with expected upwards pressure on the value of the exchangerate from productivity improvements, makes agriculture and mining lesscompetitive. The decline in retail trade will come about as a result of thedisintermediation effect—that is, a reduction of margins associated withgreater use of e-commerce.

Overall though, the economy will expand by around $12.3 million, due togreater efficiencies in dealing with suppliers and clients through e-commerceservice delivery. In particular, the largest growth will emerge from the services(including finance and communications), construction and transport sectors.

fact sheetfar west

new south wales


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also have an impact on employment in the division.Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that lower pricesstimulate demand in other areas and increase the demand for labour.

As shown in Figure 3, efficiency improvements associated with increased use ofe-commerce will stimulate an overall increase in employment of approximately0.4 per cent higher than the base case by 2008. In the long run employment inthe Far West is forecast to be largely unchanged (with a decrease inemployment of around 0.1 per cent). The mutual impact on employmentreduction results mainly from the employment benefits being offset by thecontraction in the outlook for the agriculture, mining and retail sectors (asshown in Figure 2). These industries continue to employ a large proportion ofresidents.

After 2008 employment begins to fall and level off as other lagging States beginto increase the productivity gains associated with increased use of e-commerce.This has the effect of clawing back the productivity gains made in thisstatistical division, emphasising the peak in employment as indicated inFigure 3.

Source:



fact sheetfar west

new south wales


fact sheethunter



The Hunter statistical division lies to the north of Sydney and forms one of thelargest river valleys on the New South Wales (NSW) coast. The Hunterstretches from the waters of Lake Macquarie in the south to the Great Lakes inthe north, and from the plains of Murrurundi in the west, to the Pacific Ocean.This statistical division is home to Newcastle, the State’s second majormetropolitan centre, and encompasses the regional centres of Cessnock,Maitland, Muswellbrook, Port Stephens and Singleton.

The Hunter covers an area of 31 010 km2 or 3.9 per cent of the State, and ishome to approximately 567 000 residents.

Maxwell and Hite (1991) have classified the Hunter statistical division asmanufacturing due to its traditionally strong industrial base. Although this istrue, it in fact has an increasingly diversified economy encompassingagriculture, mining, defence, tourism, manufacturing, aluminium and steelproduction. The service sector is the division’s largest employer.

The Hunter is well positioned between Sydney and Brisbane and is thegateway to the mid- North and North West. The division generates asignificant amount of NSW’s electricity and has a sophisticated and impressiveinfrastructure including universities and NSW’s largest tonnage export port.

The division is progressing towards a substantial presence in technologicalservice with a number of innovative industry networks.

It also includes some of the oldest vineyards in Australia. Winemaking is arapid growth industry in the division. It is also associated with a substantialtourist industry.

Key exhibits

Figure 1


With greater use of e-commerce, the increase in real gross regional product(GRP) in the Hunter division is expected to be higher than Australia’s grossdomestic product (GDP). Real GRP is expected to peak approximately threeper cent higher than the base case in 2009. This is 0.1 percentage point higherthan the increase for real GDP (for Australia at large) which peaks at2.9 per cent in 2010.



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-60 -40 -20 0 20 40 60 80 100

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. As the industries adopt e-commerce, the economymakes better use of existing resources—that is, total factor productivityincreases. More capital is injected into these sectors and there is an increase inthe supply of labour stemming from time savings from producers andconsumers. These efficiency effects slowly filter through the economy until thefull effects are felt in 2009.

GRP is marginally lower than GDP after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at around 2.8 per cent by 2016.

Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010 inyear 2000 prices.

The Hunter division will benefit (in terms of output and employment) becauseits dominant industries are those which will benefit greatest from increased useof e-commerce. That is, the relevant monetary increases brought about fromincreased use of e-commerce outweigh the relevant decreases by approximately$362 million by 2010.

The most substantial gains will be concentrated in the property and businessservices (by $96 million), other services (by $86.5 million) and construction(by $52 million) sectors.

As e-commerce reduces the margins associated with the sale of goods, andencourages consumers to purchase directly from wholesalers and other sectors,retail trade is expected to decrease by $40.5 million. Small contractions willalso be felt in the mining and agriculture, forestry and fishing sectors.

fact sheethunter

new south wales


Figure 3



As shown in Figure 3, increased use of e-commerce will impact positively onemployment in the Hunter. Efficiency improvements in the division’sdeveloping industries will stimulate an overall increase in employment ofapproximately 0.8 per cent higher than the base case by 2008. This will levelout at around 0.1 per cent greater than the base case by 2016.

The low spike in employment in 2008 reflects timing differences in theimplementation of e-commerce in the regions. Because this region lags behindmany others in adopting e-commerce, it obtains a catch-up benefit when theothers have fully absorbed change and this region is still improvingproductivity. After 2008 employment gradually returns to the base case level aswage rates adjust (i.e. rise).

Source:


Policy Studies for the National Office for the Information Economy

fact sheethunter

new south wales

National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetillawarra

new south wales


The Illawarra statistical division is located immediately to the south and south-west of Sydney and the north-east of Canberra. The area stretches 400 kmalong the New South Wales (NSW) east coast and encompasses the key centreof Wollongong. Other major centres include Kiama, Mittagong, Moss Vale,Shellharbour and Shoalhaven.

The statistical division covers 8 484 km2 (1.1 per cent of NSW) and has apopulation of 380 000 (six per cent of NSW). The Illawarra is part ofAustralia’s largest population centre and continues to see growth rates in excessof 1.3 per cent per annum.

Since this division has a long-standing base in industries such as steel making, ithas been classified as manufacturing by Maxwell and Hite (1991). Themanufacturing sector has diversified its range of products over the past decade,and the engineering sector has developed sophisticated networks designed toaccess national and international projects.

Coal mining continues to be a significant economic activity, with the divisionexporting 22 per cent of NSW’s coal exports.

In more recent times, the division has diversified its economic base to include asubstantial presence in services such as wholesale and retail trade, transport,communications, finance and tourism.

The division has substantial educational infrastructure including WollongongUniversity, which will be NSW’s centre for excellence in telecommunications.

Key exhibits

Figure 1


The change in gross regional product (GRP) in the Illawarra division isexpected to be higher than the forecast increase in Australia’s gross domesticproduct (GDP). The increase in real GRP is expected to peak at approximately3.3 per cent higher than the base case by 2008.

Real GRP initially increases as industries and consumers progressively adopte-commerce in the economy. With greater adoption, the economy makes betteruse of existing resources—that is, total factor productivity increases. Morecapital is injected into sectors with the highest productivity gains and there is

The impact of e-commerce on output, industries and employment


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-40 -20 0 20 40 60

an increase in the supply of labour stemming from time savings from producersand consumers. These effects slowly filter through to other sectors of theeconomy.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place by 2008, with the change in real GRPlevelling off at around 3 per cent greater than the base case by 2016.

Figure 2



The benefits from the flow-on efficiencies of greater use of e-commerce arebroadly spread across the different industry sectors in the division. Expandingsectors include property and business services (including accounting, law andsome e-commerce services), other services, construction, tourism and wholesaletrade. Offsetting the expansion somewhat are contractions in retail trade andmining sectors.

Increased use of e-commerce will be to the detriment of the retail trade sectorbecause of disintermediation. E-commerce reduces the margins associated withthe sale of goods, encouraging purchases to be made directly from wholesalers(and direct from other sectors). Activity in the retail trade sector will contractby about four per cent compared to the base case. The contraction in miningactivity in the division is forecast to be 2.3 per cent.

The net impact is an increase in value-added in the division, with an indicativevalue of $247 million per annum.

fact sheetillawarra

new south wales


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3



As shown in Figure 3, increased use of e-commerce will impact positively onnet employment in the Illawarra. Efficiency improvements in the division’sdeveloping industries (construction, property and business services, tourism andother services) will stimulate an overall increase in employment ofapproximately 1.1 per cent by 2008. This is 0.4 per cent higher than the peakin national employment, which occurs in 2006.

The low spike in employment in 2008 reflects timing differences in theimplementation of e-commerce in the regions. Because this region lags behindmany others in adopting e-commerce, it obtains a catch-up benefit when theothers have fully absorbed change and this region is still improvingproductivity. After 2008, employment gradually returns to the base case level aswage rates adjust (i.e. rise).

Source:



fact sheetillawarra

new south wales


fact sheetmid-north coastnew south wales The impact of e-commerce on output, industries and employment


The Mid-North Coast statistical division lies on the coast of New South Wales(NSW) midway between Brisbane and Sydney. The division extends fromWallis Lake in the south to the Richmond Range in the north, and comprises aseries of valleys running generally east to west (valleys of the Clarence,Macleay, Hastings and Manning Rivers). The major urban centres includeCoffs Harbour, Grafton, Kempsey, Port Macquarie and Taree.

The division covers approximately 25 949 km2 (3.2 per cent of NSW), with apopulation of 268 697. It has been experiencing continued growth at anaverage rate of 1.75 per cent per annum. The population of this statisticaldivision accounts for 4.2 per cent of the State.

Maxwell and Hite (1991) have classified the Mid-North Coast as warmclimate coastal due to its geographical location.

As the valleys have been intensively developed for agriculture, this statisticaldivision has a traditional base of dairying, beef cattle production and forestry.Recent major investment in these industries has introduced much moreprocessing and value-adding activities with export opportunities resulting.

Manufacturing, which is largely related to the processing of timber andprimary produce, will continue to play a role in the development of thestatistical division. While Taree is rapidly becoming the manufacturing centreof regional NSW, activities such as Akubra Hats thrive in Kempsey. Tourismalso continues to make a major contribution to the development of thestatistical division.

Key exhibits

Figure 1


With greater use of e-commerce, gross regional product (GRP) in the Mid-North Coast division is expected to be higher than Australia’s gross domesticproduct (GDP). Real GRP is expected to peak approximately 3.5 per centhigher than the base case in 2008. This is 0.6 per cent higher than the increasein real GDP in 2008.

Real GRP initially increases as industries progressively adopte-commerce in the regional economy. As the industries continue to adopte-commerce, the economy makes better use of existing resources—that is, totalfactor productivity increases. More capital is injected into these sectors and



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


there is an increase in the supply of labour stemming from time savings fromproducers and consumers. These efficiency effects slowly filter through toother sectors of the economy until the full effects are felt in 2008.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at around three per cent by 2016. This reflects the dynamic benefits ofe-commerce.

Figure 2



The Mid-North Coast division will benefit (in terms of output andemployment) because the region’s dominant industries are those which willbenefit greatest from increased use of e-commerce. That is, the relevantmonetary increases brought about from increased use of e-commerce outweighthe relevant decreases by approximately $150 million per annum.

Although the Mid-North Coast has a base in agriculture, which does notbenefit from increased use of e-commerce, the subsequent processing andvalue-added industries are those that are expected to expand. Other sectorswhich are expected to make substantial gains include construction, tourism,property and business services and other services. These four sectors contribute$118.7 million to the growth of the division, or around 80 per cent of the netgrowth of the division.

Increased use of e-commerce will be to the detriment of the retail trade sectorbecause of disintermediation. E-commerce reduces the margins associated withthe sale of goods, encouraging purchases to be made directly from wholesalers(and direct from other sectors).

fact sheetmid-north coastnew south wales

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-30 -20 -10 0 10 20 30 40


Figure 3



Figure 3 indicates that for the Mid-North Coast the overall impact is a forecastnet increase in jobs, with employment expected to increase to a peak ofapproximately 1.4 per cent higher than the base case by 2008. This is0.7 per cent higher than the peak in national employment that occurs in 2006.

The low spike in employment in 2008 reflects timing differences in theimplementation of e-commerce in the regions. Because this region lags behindmany others in adopting e-commerce, it obtains a catch-up benefit when theothers have fully absorbed change and this region is still improvingproductivity. After 2008, employment gradually returns to the base case levelas wage rates adjust (i.e. rise).

Source:



fact sheetmid-north coastnew south wales

National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetmurray

new south wales


The Murray River on the New South Wales (NSW) border marks the southernboundary of this statistical division, which stretches from the Snowy Mountainsin the east to the South Australian border in the west. Albury is the key centreof the division. Other local government areas include Balranald, Deniliquin,Holbrook, Tumbarumba and Wentworth.

The division covers around 90 000 km2 (11.2 per cent of NSW) and has aresident population of around 112 800. Population levels have remained fairlysteady in recent years, equivalent to 1.8 per cent of the population of NSW.

The Murray statistical division has been categorised as agricultural/manufacturing by Maxwell and Hite (1991) due to the diversity of industry.The enterprise and innovation upon which the prosperous Murray statisticaldivision is founded has resulted in a diverse range of enterprises. These rangefrom traditional broadacre agriculture and specialist horticultural crops, tomanufacturing, engineering, computer technology and specialist serviceindustries.

In conjunction with a very productive and highly diversified agricultural sector,the division also has a major food processing industry. Products include: citrus,flour-related products, sheep, cattle and milk products, rice, tomato paste,wine, and dehydrated products. Other developing industries include forestry,hardwoods, textiles and tourism.

Due to its location the Murray has strong economic and social ties withVictoria and its river towns such as Wodonga, Swan Hill and Mildura.

Key exhibits

Figure 1


The change in real gross regional product (GRP) in the Murray statisticaldivision is expected to peak in 2010, around 2.6 per cent higher than the basecase. This is only 0.3 per cent lower than the peak in real gross domesticproduct (GDP) brought about by increased use of e-commerce.

Real GRP initially increases as industries progressively adopt e-commerce in theregional economy. As industries continue to adopt e-commerce, the economymakes better use of existing resources—that is, total factor productivityincreases. More capital is injected into these sectors and there is an increase in



Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-10 -5 0 5 10 15 20

fact sheetmurray

new south walesthe supply of labour stemming from time savings from producers andconsumers. These efficiency effects slowly filter through the economy until thefull effects are felt in 2008.

Change in GRP is marginally lower than GDP after the full effect of themodelled e-commerce changes have taken place, with the change in real GRPlevelling off at around 2.5 per cent by 2016.

Figure 2



There will be significant growth in property and business services, tourism andother services. These sectors will expand by $44 million due to greaterefficiencies in dealing with suppliers and clients through electronic servicedelivery. Other industries expected to expand include wholesale trade (by$7.9 million), construction (by $7.6 million), transport (by $5.8 million) andfinance and insurance (by $3.8 million).

Agriculture and mining do not tend to benefit from increased use ofe-commerce, as both sectors are vulnerable to the exchange rate implicationsthat are expected to flow on from the productivity boost associated withe-commerce. Increased use of e-commerce will also be to the detriment of theretail trade sector because of disintermediation. E-commerce reduces themargins associated with the sale of goods and services encouraging purchasesto be made directly from wholesalers or other sectors.


fact sheetmurray

new south walesFigure 3



As the Murray division has a broad mix of industry, but also a reliance uponsectors which are not likely to benefit from e-commerce (mainly agricultureand retail trade), the employment gains from e-commerce are variable. By2008, the Murray will experience an increase in employment of around0.4 per cent higher than the base case.


Source:



National Employment


97

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

1998




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetmurrumbidgee



The Murrumbidgee statistical division in New South Wales (NSW) lies to thewest of the Australian Capital Territory and north of the Murray statisticaldivision. The Murrumbidgee River traverses the division which stretches500 km east to west from the Kosciuzsko National Park to the Hay plains.Wagga Wagga is the major centre located in the east of the division. Otherregional centres include Cootamundra, Griffith, Gundagai, Hay, Narranderaand Tumut.

Covering around 63 521 km2 (7.9 per cent of NSW), the statistical division hasa resident population of 149 150. The population level has remained relativelystable, accounting for 2.4 per cent of the State’s population.

The Murrumbidgee division is categorised as agricultural by Maxwell and Hite(1991) due to the significant contribution it makes to NSW’s agriculture. TheMurrumbidgee provides a great diversity of products, and supplies one-seventh of NSW’s agriculture and over one- quarter of all fruit and vegetableproduction. In addition, the statistical division is one of Australia’s largestexporters of bulk wines.

The Murrumbidgee has an increasingly diverse economic base. The productionof large quantities of fine wool supports a well-developed textiles industry.This includes several processing mills for wool and skin products as well as thelargest wooltop making plant in the Southern Hemisphere. Other industriescontributing to the division’s economic development include forestry, tourism,education and defence.

Key exhibits

Figure 1


With greater use of e-commerce, gross regional product (GRP) in theMurrumbidgee division is expected to be lower than Australia’s gross domesticproduct (GDP). Real GRP is expected to peak approximately 2.8 per centhigher than the base case in 2008. This is 0.1 per cent less than the increase inreal national GDP for the same year.

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. As industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factor


productivity increases. More capital is injected into these sectors and there isan increase in the supply of labour stemming from time savings from producersand consumers. These efficiency effects slowly filter through the economy untilthe full effects are felt in 2008.

Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place, with the change in real GRP levelling offat around 2.6 per cent by 2016.

Figure 2



With significant strengths in a diverse range of agricultural produce, thisdivision does not experience economic growth through this sector. This reflectsthe impact of an expected real appreciation in the exchange rate due to highercapital inflows.

The Murrumbidgee will experience growth in its fastest growing industries.These include manufacturing of premium wines, wholesale trade, construction,and other services.

Increased use of e-commerce will be to the detriment of agriculture and retailtrade, the latter being adversely affected by disintermediation. E-commercereduces the margins associated with the sale of goods encouraging purchases tobe made directly from wholesalers (and direct from other sectors).

On balance, the increases in industrial activity exceed the losses, resulting in anet increase of $99 million per annum.


new south wales

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-15 -10 -5 0 5 10 15 20 25 30


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3



Figure 3 indicates that for the Murrumbidgee division, the overall impact is aforecast net increase in jobs, with employment expected to increase to a peakof 0.6 per cent above the base case by 2008.

The low spike in employment in 2008 reflects timing differences in theimplementation of e-commerce in the regions. Because this region lags behindmany others in adopting e-commerce, it obtains a catch-up benefit when theothers have fully absorbed change and this region is still improving itsproductivity. After 2008, employment gradually returns to around the basecase level as wage rates adjust (i.e. rise).

Source:




new south wales




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The New South Wales (NSW) Northern Statistical Division comprises thenorthern tablelands, the northern slopes to the west of the tablelands, and theflat north central plains. The Macintyre, Gwydir and Namoi rivers flowthrough the division. Tamworth is the principal metropolitan area of thedivision, encompassing over 20 local government areas including Armidale,Glen Innes, Gunnedah, Inverell, Moree, Narrabri and Tenterfield.

The division has an area of more than 98 600 km2 (12.3 per cent of NSW)with a population of 175 883. The population in this statistical division isequivalent to 2.8 per of NSW and has been slowly decreasing since 1991, at anaverage annual rate of around 0.7 per cent.

This division is categorised as agricultural by Maxwell and Hite (1991). Whilethe division has an increasingly diversified economic base, its developmentcontinues to be dominated by its diverse agricultural production incombination with the downstream processing of grains, cotton, oil seeds, meatand hides. The statistical division also boasts an active mining industryproducing a variety of minerals, and a world-class wool industry.

Other areas contributing to the economic development of the division includetourism and significant manufacturing and engineering sectors, associated withmajor vehicle body-building and agricultural equipment.

The division has a substantial presence in the knowledge economy. It offers arange of public and private secondary schools, TAFE colleges, the University ofNew England and other specialised training centres such as the world standardBritish Aerospace Flight Training College at Tamworth.

Key exhibits

Figure 1


With greater use of e-commerce, gross regional product in the NorthernDivision is expected to be lower than Australia’s Gross Domestic Product(GDP). Real GRP is expected to peak approximately 2.7 per cent higher thanbase case in 2008.

fact sheetnorthern



The real GRP initially increases as industries progressively adopt e-commercein the regional economy. Total factor productivity increases as the industriescontinue to adopt e-commerce. More capital is injected into these sectors andthere is an increase in the supply of labour stemming from time savings fromproducers and consumers. These efficiency effects slowly filter through toother sectors of the economy until the full effects are felt in 2008.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at around 2.5 per cent by 2016.

Figure 2



Although the Northern Division has a relatively diverse economic base, itseconomy is still heavily dependent on the agriculture and retail trade sectors.These sectors do not generally benefit from the use of e-commerce. The higherexchange rate makes agriculture less competitive. The decline in retail trade isbecause of disintermediation—that is, greater use of e-commerce leads to areduction in margins.

Overall, output will expand by around $106 million per annum due to greaterefficiencies in dealing with suppliers and clients through e-commerce servicedelivery. In particular, the largest growth area will be in the other servicessector (which includes educational services). These are expected to grow byapproximately $32.6 million. Other sectors expected to expand includeproperty and business services (by $28.5 million), wholesale trade(by $11.4 million), tourism (by $11.2 million) and construction(by $11.2 million).

fact sheetnorthern

new south wales

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -10 0 10 20 30 40


Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers also results in bypassingjobs. An offsetting factor would be that lower prices stimulate demand in otherareas and increase the demand for labour.

As shown in Figure 3, efficiency improvements associated with increased use ofe-commerce will result in an increase in net employment of approximately0.5 per cent higher than the base case by 2008. After 2008, the increasemoderates as other lagging States begin to increase the productivity gainsassociated with increased use of e-commerce. This has the effect of clawingback the productivity gains made in this statistical division, emphasising thepeak in employment as indicated in Figure 3.

In the long run employment essentially returns to base case levels. This largelyreflects an adjustment in wages.

Source:



fact sheetnorthern

new south wales

National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The North Western Statistical Division is the largest in New South Wales.Located in mid north-west NSW, it borders Queensland and the Far West,Northern and Central West statistical divisions. The statistical divisionencompasses the local government areas of Bourke, Cobar, Coonabarabran,Gilgandra, Mudgee, Walgett and Dubbo.

This Division extends over 199 078 km2 (24.8 per cent of NSW) and has apopulation of 117 144. The population in this statistical division is equivalentto 1.8 per cent of NSW and has remained relatively stable in recent years.

The North West has been categorised as agricultural by Maxwell and Hite(1991) due to the dominance of agriculture in the economy. Agriculture isexpected to continue to dominate, as a more diversified and systematicapproach is taken in combination with better management practices, andefficient use of irrigation water.

The statistical division also has considerable strengths in value-added foodprocessing, tourism, minerals and wine.

The workforce is primarily skilled in agriculture and public sectoradministration. Mining, farming management and horticulture are othersubstantial areas of employment.

Key exhibits

Figure 1


Real gross regional product (GRP) in the North Western statistical division isexpected to peak approximately 2.3 per cent higher than the base case in 2010.This is 1.3 per cent less than the peak in Gross Domestic Product (GDP)in 2008.

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. Total factor productivity increases as the industriescontinue to adopt e-commerce. More capital is injected into these sectors andthere is an increase in the supply of labour stemming from time savings fromproducers and consumers. These efficiency effects slowly filter through theeconomy until the full effects are felt in 2010.

fact sheetnorth western



Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-10 -5 0 5 10 15 20

Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place. The change in real GRP levels off ataround 2.2 per cent by 2016. This reflects dynamic benefits, as e-commerce isused intensively in the fastest growing parts of the economy.

The overall effect on output brought about by increase use of e-commerce isdetermined by the division’s industry composition, which is detailed inFigure 2.

Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010, in2000 prices.

Most industries in the North Western statistical division will expand with theadoption of e-commerce. In particular, there will be significant growth inproperty and business services and other services—which will expand by$36.6 million due to greater efficiencies in dealing with suppliers and clientsthrough electronic service delivery. Other industries that will expand includetourism (by $8 million), construction (by $7.8 million), wholesale trade(by $7.4 million) and transport (by $6.5 million).

The industries which are likely to experience a decline in output as a result ofincreased use of e-commerce include mining (by $4.1 million), agriculture(by $3.8 million), and retail trade (by $8.4 million).

Retail trade is expected to decline due to disintermediation while agricultureand mining are expected to contract because they are vulnerable to theexchange rate implications that are expected to flow on from the productivityboost associated with e-commerce.


new south wales


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that lower prices forgoods and services stimulate demand in other areas and increase the demandfor labour.

As indicated in Figure 3, the impact on employment in this division is expectedto be modest. As the division is dominated by agricultural activity, and has lessreliance on sectors that are more likely to benefit from e-commerce, thedivision is expected to experience an increase in employment of only0.02 per cent higher than the base case by 2008. After this time employmentbegins to fall as other lagging States begin to increase the productivity gainsassociated with increased use of e-commerce. This has the effect of clawingback the productivity gains made by the North Western statistical division,leading to a fall in employment and showing a peak at around 2008-09.

By 2016, the increase in productivity associated with increased use ofe-commerce has led to increases in the real wage rate. This, in turn, leads todecreases in employment of approximately 0.4 per cent than otherwise wouldhave been experienced without increased use of e-commerce.

Source:




new south wales


1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5



fact sheetrichmond-tweednew south wales


The Richmond-Tweed statistical division is located on the north-east coast ofNew South Wales (NSW), bordering Queensland. It consists of threegeographical sub-regions defined by the Tweed, Richmond and Clarence rivers.The statistical division includes the local government areas of Lismore, Ballina,Byron Bay, Casino and Tweed Heads

This division covers 9 757 km2 (1.2 per cent of NSW) and has a population of206 000 (3.3 per cent of NSW). It is one of the fastest growing statisticaldivisions in the State, averaging 2.2 per cent per year since 1991, led by themajor growth area of Byron Bay.

The Richmond-Tweed has been categorised as primarily an agricultural/warmclimate coastal division (Maxwell and Hite, 1991). It has a diverse agriculturebase that includes tropical and sub-tropical fruits, sugar cane, macadamia nutsand livestock products.

Developing industries include plantation forests, fishing, aquaculture andmedicinal plant crops. The medicinal plant sector is supported by research,development and training institutions.

The division also has strengths in many services including retail trade, propertyand business services and a rapidly developing tourism industry.

Key exhibits

Figure 1


With greater use of e-commerce, gross regional product (GRP) in theRichmond-Tweed Division is expected to be higher than Australia’s grossdomestic product (GDP). Real GRP is expected to peak approximately3.5 per cent higher than the base case by 2008. This is 0.2 per cent higher thanAustralia’s GDP in 2008.

Real GRP initially increases as industries progressively adopt e-commerce inthe regional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factorproductivity increases. More capital is injected into these sectors and there is anincrease in the supply of labour stemming from time savings from producersand consumers. These efficiency effects slowly filter through the economy untilthe full effects are felt in 2008.



Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place, with the change in real GRP levelling offat around three per cent by 2016. This reflects dynamic benefits ase-commerce is used intensively in the fastest growing parts of the economy.

Figure 2



The Richmond-Tweed division will benefit (in terms of output andemployment) because the division’s dominant industries are those which willbenefit greatest from increased use of e-commerce. That is, the relevantmonetary increases brought about from increased use of e-commerce outweighthe relevant decreases by approximately $121 million per annum.

With one of the fastest growing populations in Australia, the Richmond-Tweedwill experience growth in the areas of property and business services, (by$32.3 million), tourism (by $15.3 million), construction (by $20.4 million) anda variety of other service-based sectors. Together these sectors account fornearly 95 per cent of the net increase in productivity.

Increased use of e-commerce will be to the detriment of the retail trade sectorbecause of disintermediation. This is because e-commerce reduces the marginsassociated with the sale of goods and encourages purchases to be made directlyfrom wholesalers (and direct from other sectors).

Contractions are also felt in the agriculture, forestry and fishing sector($2.1 million) which does not benefit from use of e-commerce. This is becausethe expected increase in the exchange rate makes these industries lesscompetitive.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -10 0 10 20 30 40


Figure 3



Figure 3 indicates that for Richmond-Tweed the overall impact is a strong netincrease in jobs with employment expected to increase to a peak of around1.4 per cent greater than the base case by 2008. After the full effect ofincreased use of e-commerce is felt, employment will level off toapproximately 0.5 per cent greater than the base case by 2016.


Source:




National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetsouth eastern



The New South Wales South Eastern statistical division comprises the lowerSouth Coast, the Snowy Mountains and the southern tablelands, andencompasses selected urban centres including Queanbeyan, Bega, Bombala,Cooma, Crookwell, Goulburn, Yass and Young.

The statistical division covers an estimated area of 52 137 km2 (6.5 per cent ofNSW) with a population of 180 594. The population in this statistical divisionrepresents 2.8 per cent of the population of NSW, and has been graduallyincreasing at an annual rate of 1.2 per cent.

This division has a diverse industry base and has been simply categorised asother by Maxwell and Hite (1991). It has particular strengths in services,tourism and agriculture. As it surrounds the Australian Capital Territory (ACT),a high proportion of the workforce is employed in the tertiary sector. The skillsbase provides considerable opportunities in traded services such as publicadministration, defence, education and community services.

Tourism is a major industry, particularly in the Snowy Mountains during thewinter and coastal areas during the summer months. The manufacturing sectoralso accounts for a substantial percentage of employment with manufacturing-based skills tending to be located in the Sydney to Canberra corridor.

The main agricultural activities include animal husbandry (wool, dairying,grazing), crop cultivation, forestry, fishing, mining, horse breeding and racing,and horticulture.

Key exhibits

Figure 1


With greater use of e-commerce, gross regional product (GRP) in the SouthEastern division is expected to be higher than Australia’s gross domesticproduct (GDP). Real GRP is expected to peak approximately 3.2 per centhigher than the base case in 2008.

Real GRP initially increases as industries progressively adopt e-commerce in theregional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources, that is, total factor productivityincreases. More capital is injected into these sectors and there is an increase in


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -10 0 10 20 30 40

the supply of labour stemming from time savings from producers andconsumers. These efficiency effects slowly filter through to other sectors of theeconomy until the full effects are felt in 2008.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at around three per cent by 2016.

Figure 2



The South Eastern division will benefit (in terms of output and employment)because the region’s dominant industries are those which will benefit greatestfrom increased use of e-commerce. That is, the relevant monetary increasesbrought about from increased use of e-commerce outweigh the relevantdecreases by approximately $120.4 million per annum.

With such a diversified economic base, there are a number of sectors in theSouth Eastern division that will benefit from increased use of e-commerce.The property and business services sector is expected to experience the biggestgain, in the order of $32.3 million. Other sectors to experience large gainsinclude tourism (by $16.7 million), construction (by $16 million), wholesaletrade (by $10.7 million), transport (by $10.2 million) and other services(by $29.5 million).

Increased use of e-commerce will be to the detriment of the agricultural andmining sectors due to the appreciation of the exchange rate brought about byincreases in productivity. The retail trade sector will also contract becausee-commerce reduces the margins associated with the sale of goods and services,encouraging purchases to be made directly from wholesalers and other sectors.


new south wales


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3



As shown in Figure 3 increased use of e-commerce will impact positively onemployment in the South Eastern division. Efficiency improvements in theDivision’s developing industries (including construction, property and businessservices, tourism, transport and other services) will stimulate an overall increasein employment of approximately 1.1 per cent by 2008.

The peak in 2008 is driven by timing differences. This district peaks whenother regions have fully absorbed their productivity gains. Some of the laggingStates then claw back gains in the period after 2009. Thereafter, the increase inemployment slips towards the base case, as wages continue to adjust(i.e. increase). This leave employment a little above the base case in the longerterm (i.e. 0.4 per cent above by 2016).

Source:




new south wales



This statistical division consists broadly of the New South Wales (NSW)Cumberland Plain. To the north it includes the Hornsby plateau and, beyondthe Hawkesbury River, the central coastal plains containing Gosford andWyong. To the north-west, north and south-west of the Cumberland Plain, thedivision comprises the Blue Mountains and other associated ranges. Thesouthern part of the division is mainly composed of the Woronora Plateau.Sydney is the economic and financial centre of the division, providing extensiverail, road, air and port facilities.

A total of 62.6 per cent of the population of NSW (or 3 986 723 residents)inhabit this area of 14 407 km2. Significant growth rates in the areas ofCamden, Liverpool, Gosford and Hawkesbury have contributed to the annualregional growth rate of 1.11 per cent.

While this division is classified as metropolitan, it has a diversified economicbase. In addition to an extensive range of business services, and retail activitiesthat are associated with Australia’s largest city, a measurable amount ofagricultural (mainly market gardening) and mining activity takes place withinthe division.

Sydney is also a major centre for State administration.

A substantial number of e-commerce support businesses, such as firms thatoffer e-commerce solutions and communications and IT equipment providers,have a major presence in the division. The division hosts substantial knowledgeeconomy assets such as universities, research centres and training facilities.The Sydney International Airport also forms the international gateway formany business and tourist visitors to Australia.

Key exhibits

Figure 1


With the greater use of e-commerce real Gross Regional Product (GRP) isprojected to be 4.2 per cent higher than the base case by 2008. This is1.3 per cent higher than GDP, which peaks at 2.9 per cent by 2010.

As shown in Figure 1, higher activity is sustained after the full effects of themodelled changes have taken place. After peaking in 2008 GRP begins to leveloff at approximately 3.8 per cent greater than the base case by 2016.

fact sheetsydney




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010 in year2000 prices.

Most of the industries within this statistical division are forecast to experiencea substantial boost in economic activity.

The most substantial gains will be concentrated in the services sector. Propertyand business services (accounting, law, some e-commerce activities, etc.) areexpected to expand the most with an increase in activity of approximately$920 million dollars per annum by 2010. Other sectors also expected toincrease include other services (by $613 million), finance and insurance(by $538 million), construction (by $414 million), wholesale trade(by $397 million) and tourism (by $335 million).

The modelling results suggest that the main sector that receives a setback fromgreater use of e-commerce is the retail sector. Retail trade is expected to fall ase-commerce enables business to sell a larger proportion of its output direct tocustomers (this also explains the large expansion of the wholesale trade sector).Nearly $282 million of value added by the retail sector is lost to more efficiente-commerce activities.

Although the retail trade sector is expected to experience a significantcontraction, it is clear that the overall gains more than outweigh the lossesexperienced by sectors. Overall, the Sydney statistical division is forecast toexperience a very large net increase in activity of about $3.65 billion.

fact sheetsydney

new south wales

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-600 -400 -200 0 200 400 600 800 1000


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3



Figure 3 indicates that for Sydney the overall impact is a very large net increasein jobs with employment expected to increase to a peak of more than1.8 per cent above the base case by 2008.

The small spike in employment in 2008 reflects timing differences. Sydneyobtains a boost in productivity after major competitors in Victoria haveaccommodated the full effect of their gains. This is pinched somewhat whenlagged States obtain their final productivity gains. The increase in employmentafter 2009 eases somewhat, reflecting continued adjustments in wages(i.e. increases). Nevertheless, reflecting strong activity and output growth inthe Sydney division, employment remains about one per cent higher than thebase case in the long run (i.e. up to 2016).

Source:



fact sheetsydney

new south wales


1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5



fact sheetnorthern territory



The NT has a total area of 1,346,200 km2, extending 1,610 km from north tosouth and 934 km from east to west.

The population level in the NT has been experiencing a relatively steady rateof increase over a number of years. In the twelve months from July 1997 toJune 1998, the estimated resident population increased 1.7 per cent to reach190,000. The population is younger than the Australian average.

Mining is the major contributor to the NT economy, although its dominancehas diminished in recent years. Tourism also generates much economic activity,mainly through retail and service industries, transport and construction oftourism infrastructure. Housing and construction is also a major contributor,consistent with relatively high rates of population and economic growth.

The Territory has been classified as Agricultural/Remote resource developmentby Maxwell and Hite (1991) It has an increasingly diversified economy withthe four major industries accounting for only 36 per cent of gross regionalproduct.

The largest employing industry in the NT is retail trade, followed at a distanceby health and community services, government administration and defence.Mining only employs 3 per cent of wage and salary earners.

Key exhibits

Figure 1


The Northern Territory is projected to see an increase in real Gross RegionalProduct (GRP) of 2 per cent by 2010 due to greater use of e-commerce. Thiswill be largely sustained thereafter reflecting the dynamic gains of a region thatwas already forecast to grow rapidly.

Additional growth comes about as greater use of e-commerce anddisintermediation of some activities raises efficiency, as well as increases in theavailability of capital and labour.

The NT does not expand as much as the national average (ie, the change inGDP) to the extent that inflows of capital are expected to result in anappreciation of the real exchange rate that disadvantages mining.


fact sheetnorthern territory Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010 in2000 prices.

The majority of industry sectors in the NT expand with greater use ofe-commerce. Tourism, communications and wholesale trade are foreshadowedto increase by 4 per cent or more (but off a low base). Reflecting its relativelylarge base, a 2.9 per cent increase in other services (which includes publicadministration) results in an indicative increase in this activity of $33.5 millionper annum.

Most of the service sectors benefit from greater efficiencies in dealing withsuppliers and clients through electronic service delivery.

The main sector that is challenged is the retail sector. The fall in this sector isdominated by the disintermediation effect – that is, that greater use of e-commerce leads to a reduction in margins.

In the NT there is also a forecast reduction in mining and to a lesser extent, inagriculture. This relates to broader flow on macro–economic effects whichimpact on these sector’s competitiveness.

The net increase in annual output is forecast to be $80.5 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-30 -20 -10 0 10 20 30 40


Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also have impacts on employment in the Division.Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that the lower prices forgoods and services stimulates demand in other areas and increases the demandfor labour.

The net impact over time is plotted in Figure 3. The initial decline inemployment is largely an artefact of the significance of retail trade employmentin the Territory. It takes some years for the increase in activity and employmentto soak up the jobs displaced in retail. A decline in mining jobs contributes tothe dip. Eventually, the efficiencies brought about by e-commerce and theincrease in activity will lead to a net increase in employment. It is also notablethat the dip is small in relation to the rapid background growth rate inemployment in the Territory.

Source:

Monash Simulations conducted by The Allen Consulting Group in conjunction with the Centre for


fact sheetnorthern territory

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

National Employment

Regional Employment




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5



The Brisbane Statistical Division surrounds Moreton Bay and extends fromCaboolture in the north to Ipswich in the west and Ormeau in the south. WhileBrisbane is the financial and administrative centre for Queensland, the Divisionalso includes the Metropolitan area of Redcliffe, the Metropolitan area ofLogan, the Redland Shire and the Pine Rivers Shire.

The Division accounts for only 0.3 per cent of Queensland’s total area(4,643km2) but 45.5 per cent of the estimated resident population (1,546,247).It has been experiencing an annual growth rate of 1.7 percent, primarily led bystrong growth rates in the Shires of Redlands, Pine Rivers and Caboolture.

While this Division is classified as Metropolitan, it has a diversified economicbase. In addition to an extensive range of manufacturing, business and retailservices it is also a producer of a wide range of fruit and vegetables.

Brisbane is also a major centre for State administration and has a majorpresence in terms of e-commerce support. The Division also boasts a welldeveloped knowledge economy consisting of a number of universities, researchcentres and training facilities.

Tourism continues to be a growth industry with Moreton Bay and StradbrokeIsland, one of the world’s largest sand islands, on Brisbane’s doorstep.

Key exhibits

Figure 1


Real gross regional product (GRP) is projected to be higher with greater use ofe-commerce. GRP will rise to a level 1.9 per cent greater than the base case by2009 before increasing slightly and stabilising at 2.1 per cent greater than thebase case by 2016.

With increased use of e-commerce GRP in the Brisbane Statistical Divisioninitially increases at a slow and steady rate. This is because Queensland, incomparison to the national average, is relatively slower in adopting increaseduse of e-commerce. In the medium term, however, the increase in activityaccelerates in Brisbane as it catches up over the period 2006 to 2009.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, with the change in real GRP levellingoff at 2.1 per cent greater than the base case.

fact sheetbrisbane queensland


Although Brisbane is primarily a metropolitan centre, it still has a relativelylarge agricultural sector. The capital inflow resulting from the use ofe-commerce leads to an appreciation of the exchange rate. This impactsnegatively on the agricultural exports and leads to a contraction in output. Thisexplains why GRP for Brisbane is lower than national GDP.

Figure 2



Most industries are forecast to experience a substantial boost in economicactivity. Industries to gain from increased use of e-commerce include otherservices (by $158.8 million), property and business services (by $120.4 million),wholesale trade (by $106.3 million), construction (by $90 million) and tourism(by $88.5 million). These sectors will benefit from greater efficiencies in dealingwith suppliers and clients through electronic service delivery.

Retail trade is expected to contract significantly (by $159.6 million) due to thedisintermediation effect – that is, greater use of e-commerce leads to areduction in margins. The mining and agriculture sectors will also contract by$12.3 million primarily due to the exchange rate effects associated withincreased use of e-commerce.

Overall, the gains from increased use of e-commerce outweigh the losses.Brisbane is expected to experience a net increase in activity of approximately$583 million per annum.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-200 -150 -100 -50 0 50 100 150 200


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009 2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment in the Division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that the lower prices for goods and serviceswould stimulate demand in other areas and increase the demand for labour.

Figure 3 shows that employment is expected to be less than the base case inBrisbane. In particular, employment initially falls from the base case to reach1 per cent less in 2006. This is primarily due to the early contraction in theretail trade sector. As productivity gains are realised and the service sectorsbegin to expand, employment increases, approaching the base case and peakingat just under 0.7 per cent less than the base case by 2010.

After this time, employment levels begin to stabilise, dropping slightly awayfrom the base case levels as national wages adjust. It terminates at to around0.7 per cent less than the base case in 2016. This assumes that there are noother changes to the economy over what is in fact a very long period. Inaddition, this outlook assumes that governments take no policy actions toaddress adverse trends. With appropriate action this modest adverseimplication could be corrected.

Source:







1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetcentral westqueensland The impact of e-commerce on output, industries and employment


The Central West Statistical Division borders South Australia in the south andthe Northern Territory in the west. The Division encompasses 11 localgovernment areas (LGAs) with the largest population centre being Longreach,approximately 700 kms west of Rockhampton. Blackall, Barcaldine andWinton are other major population centres in the region.

The Central West Division extends across 3,870,089 km2 or 21.4 per cent ofthe State’s total area. The Division is Queensland’s least populated area with anestimated resident population of 12,374, representing only 0.4 per cent ofQueensland’s population. In the Central West, population levels continue todecline in the order of 1.2 per cent per annum. The only Shires to experiencepositive growth rates are Boulia and Diamantina, the two most western Shires.

Maxwell and Hite (1991) have classified the Central West as Agriculturalalthough it has a relatively diversified economic base. It has the highest area ofagricultural holdings in Queensland (32,618,336 hectares or 21.6 per cent oftotal land) despite accounting for only 2.3 per cent of establishments. Keyagricultural industries include meat cattle and wool growing. Other majorindustries include mining and pet food manufacturing.

The Central West continues to attract tourists from around Australia andinternationally. Tourist attractions in the Division include the Stockman’s Hallof Fame at Longreach, the Black Stump at Blackall and the Jolly Swagman atWinton.

Key exhibits

Figure 1


Real gross regional product (GRP) in the Division is projected to rise at a lowerrate than the forecast increase in Australia’s real gross domestic product (GRP).Initially GRP increases slowly as Queensland lags may other states in theimplementation of e-commerce. GRP rises quickly between 2007 and 2009 toaround 1.3 per cent greater than the base case by 2009. This reflects a ‘catchup’ dividend. From there it plateaus at around 1.6 per cent greater than thebase case in 2016.

The simulation results indicate that an increase in the use of e-commerce willimpact negatively on the agriculture sector because it is vulnerable to theincreased exchange rate resulting from capital inflows.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-1.5 -1 -0.5 0 0.5 1 1.5 2

This appreciation increases the relative price of agricultural exports and leadsto a contraction in output. This explains why GRP for the Central West showsa low level of GRP growth up until 2006 and why it fails to increase in linewith GDP.

Figure 2



Wholesale trade and tourism are the fastest expanding industries but onlycontribute an extra $1.4 million to activity. Other sectors forecast to expandquickly include construction, property and business services, finance andinsurance, communications services and other services.

Offsetting the expansion somewhat are contractions in the agriculture andmanufacturing industries and a more significant contraction in retail trade.

Increased use of e-commerce will contract the retail trade sector because ofdisintermediation. E-commerce encourages purchases to be made directly fromwholesalers (and direct from other sectors) reducing the margins associatedwith the retail sale of goods.

The net impact is an increase in value added in the Division with an indicativevalue of $3.8 million.

fact sheetcentral westqueensland


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Disintermediating layers of economic activity between buyers and sellersresults in bypassing jobs. An offsetting factor would be that the lower prices forgoods and services would stimulate demand in other areas and increase thedemand for labour.

Figure 3 shows that the net reduction in employment is expected in the CentralWest. Employment initially falls to reach a minimum level 2.1 per cent lessthan the base case by 2007. This is due to the contraction of the agriculture,mining and retail trade sectors. As productivity gains are realised and theservice sectors begin to expand, employment increases towards the base case toreach a maximum level just under 1.5 per cent less than the base case by 2011.

Employment levels then begin to stabilise as productivity gains are equalisedacross the Divisions and national wages adjust (ie, rise reflecting higherproductivity). Employment smooths out to around 1.5 per cent less than thebase case in 2016.

Note that the reduction in employment assumes no other changes in economicoutcomes or government policy. Effective government policy could counteractthis small reduction. It should also be noted that this is a forecast of theisolated impact of e-commerce – it is not a prediction that actual employmentwill fall as other factors could have a positive outcome for employment.

Source:



fact sheetcentral westqueensland


fact sheetdarling downs

queensland The impact of e-commerce on output, industries and employment


Darling Downs is a rich pastoral and agricultural region that is bounded on thenorth east by the Great Dividing Range. It lies to the west of the MoretonDivision with the Condamine River and its tributaries flowing through theregion. Toowoomba is the hub of commercial and industrial activity and theregional centre for higher education. Other major population centres areWarwick, Stanthorpe and Dalby.

The Darling Downs Statistical Division covers 90,080 km2, representing5.2 per cent of the State. Its estimated resident population of 200,132 personsat 30 June 1997 represented 5.9 per cent of the State’s population.

Darling Downs has been categorised as Agricultural by Maxwell and Hite(1991) as there is a strong agricultural and primary industry base underpinningthe regional economy. The area is Queensland’s largest producer of agriculturalproduce, and also has the largest number of dairy cattle and pigs.

With 23 private schools, a technical and a further education college and theUniversity of Southern Queensland, Toowoomba is regarded nationally as amajor educational centre. The University is home to the National Centre forEngineering in Agriculture, helping to maintain the Division’s reputation asone of Australia’s major agricultural machinery manufacturers.

Centred in an area known for expertise in horticulture, Toowoomba hosts theannual Carnival of Flowers each spring attracting visitors from all over theworld. Stanthorpe, traditionally famous for its apples, has developed a rapidlyexpanding wine industry.

Key exhibits

Figure 1


Real gross regional product (GRP) is projected to be higher with greater use ofe-commerce. GRP is hardly changed in the medium term to 2006 asQueensland is expected to lag many other states. There is a growth spurt overthe period 2007 to 2009 as the Division catches up. Thereafter, the increase inactivity stabilises at 1.3 per cent higher than the base case.

Although the Darling Downs has a relatively diversified economic base,agriculture and primary produce underpin the regional economy. Any increasein the use of e-commerce will impact negatively on the agriculture sectorbecause it is vulnerable to the increase in the exchange rate resulting from



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4.5


capital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in agriculture and mining. This explains whyGRP for the Darling Downs shows very little growth up until 2006 and why itfails to increase in line with GDP.

Figure 2



As emphasised above, economic growth in the Darling Downs still remainshighly dependent on the agriculture sector which is expected to contract by$6.6 million. Other contracting sectors include mining (by $1.5 million),manufacturing (by $1.6 million) and retail trade (by $20.3 million).

The contraction in the mining sector is a result of the exchange rate effects thatalso effect agriculture. The subsequent contraction in the manufacturing sectoris a flow on effect of the contraction in the agricultural sector. Retail tradecontracts due to disintermediation – the reduction in margins.

These industry contractions however, will be offset by expansions in manyother sectors. In particular there will be significant growth in other services(which include education, health and community services, general andadministrative services) by around $21.7 million. Other sectors that willexpand include wholesale trade (by $10.6 million), tourism (by $9 million) andconstruction (by $8.6 million).


queensland

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-25 -20 -15 -10 -5 0 5 10 15 20 25


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment in the Division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that the lower prices for goods and serviceswould stimulate demand in other areas and increase the demand for labour.

Figure 3 shows that employment is expected to be less than the base case in theDarling Downs. As shown, employment initially falls from the base case toreach a minimum level 1.6 per cent less than the base case by 2006. This isprimarily due to the contraction of the agriculture and retail trade sectors.As productivity gains are realised and the service sectors begin to expand,employment increases towards the base case to reach a maximum level1 per cent less than the base case by 2010.

After this time, employment levels begin to stabilise as productivity gains andwages are equalised across the Divisions. Employment then smooths out to justover 1 per cent less than the base case in 2016.

Note that the reduction in employment assumes no other changes in economicoutcomes or government policy. It is quite likely that effective governmentpolicy could counteract this small reduction. It is also notable that this forecastdoes not imply a fall in employment, but rather that it will be smaller thancurrently forecast.

Source:




queensland




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetfar north queensland



The Far North Statistical Division is a region comprising 13 local governmentareas (LGAs). The Division is bounded to the east by the Great Barrier Reefand partially to the west by the Gulf of Carpentaria. It extends from CroydenShire in the south to Thursday Island in the north. Cairns is the largestpopulation centre in the area and is also the focus for much of the hospitalityindustry activity in the area. Other major population centres include Mareebaand Gordonvale.

The Far North is one of Queensland’s larger Statistical Divisions covering anarea of 268,306 km2 or 15.5 per cent of Queensland’s total area. The Divisionhas an estimated resident population of 219,277 persons.

The Far North Statistical Division is classified as Agricultural/Warm climatecoastal by Maxwell and Hite (1991). Significant industries include tourism,mining, and agriculture. Given the Division’s proximity to Asia and spectacularnatural scenery, tourism is a major contributor to economic growth.Opportunities include the Great Barrier Reef, the Wet Tropics Rainforest, thepristine beaches of Port Douglas, and the magnificent waterfalls of theAtherton Tablelands.

The Far North is the largest fruit growing area in Queensland, accounting fornearly 95 per cent of Queensland’s bananas and nearly 65 per cent of pawpaws. Other produce includes sugar cane, tropical fruit, peanuts, cut flowers,cashews, tea, dairying and beef cattle.

There are 5 coastal sugar mills in the Division producing 14 per cent ofQueensland’s raw sugar. Dairy processing is carried out at Malanda.

Other important industries include engineering, forestry and wood products,aquaculture, seafood processing, pearling and sport fishing.

Key exhibits

Figure 1



Real gross regional product (GRP) is projected to be higher with greater use ofe-commerce. GRP is hardly changed in the medium term to 2006 asQueensland is expected to lag many other states. There is a growth spurt overthe period 2007 to 2009 as the Division catches up. Thereafter, the increase inactivity stabilises at a level 1.5 per cent higher than the base case.

Although the Far North has a relatively diversified economic base, its mostsignificant industries include tourism, mining and agriculture. Any increase inthe use of e-commerce will impact negatively on the agriculture and miningsectors because it is vulnerable to the rise in the exchange rate resulting fromcapital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in agriculture and mining. This explainswhy GRP for the Far North shows a low level of growth up until 2007 andwhy it fails to increase in line with GDP.

Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010 inyear 2000 prices.

Although the Division has a relatively diverse economic base its economy isstill dependent on the agriculture, mining and retail trade sectors. Theagriculture and mining sectors contract by $3.5 million and $7.4 millionrespectively because of the exchange rate effects associated with increases inproductivity. Retail trade contracts by $23.6 million due to disintermediation.

Overall the economy will expand by $58.6 million due to greater efficienciesin dealing with suppliers and clients through e-commerce service delivery. Inparticular, the largest areas of growth will be in the wholesale trade(5.7 percent) and tourism (5.2 percent) sectors. Other sectors expected toexpand include construction, other services, property and business services,and transport.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-25 -20 -15 -10 -5 0 5 10 15 20 25


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment in the Division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor IS that the lower prices for goods and services wouldstimulate demand in other areas and increase the demand for labour.

As agriculture and mining, which are not favoured by e-commerce, play animportant role in the economic development of the Far North Division,employment in the region falls to a level 1.5 per cent below the base case by2005. Employment then begins to increase as displaced labour is re-employedin the fastest growing sectors of the economy (tourism and wholesale trade) toreach 1 per cent below the base case in 2010.

Employment levels then begin to stabilise as productivity gains and wages areequalised across the Divisions. Employment smooths out to around1.5 per cent less than the base case in 2016.

Note that the reduction in employment assumes no other changes in economicoutcomes or government policy. It is quite likely that effective governmentpolicy could counteract this small reduction. It is also notable that this forecastdoes not mean that employment will actually fall, but rather that e-commercewill tend to reduce job numbers.

Source:







1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetfitzroy queensland



The Fitzroy Statistical Division is a region comprising 12 local governmentareas (LGAs). It lies on the east coast of Queensland, north of the Wide Bay-Burnett and Darling Downs Statistical Divisions. Rockhampton is the main cityof the Division. Other significant centres are Gladstone, Blackwater, Emeraldand Biloela.

The Division extends across 123,354 km2 and has an estimated residentpopulation of 180,474 persons.

The Fitzroy Division is generally classified as a combination of Agriculture,Manufacturing and Warm climate coastal. Key industries includemanufacturing, mining, tourism and agriculture. The Port of Gladstone isQueensland’s largest multi cargo port, and the second largest on the east coast.

This Division is also home to the world’s largest alumina refinery. As therefinery requires huge amounts of electricity, the power stations (Callide,Stanwell and Gladstone), fuelled by coal from the mines at Blackwater, Mouraand Callide, produce more than half of the State’s electricity. Natural resourcesinclude oil shale, salt, limestone, silica sands, mineral sands, gypsum andmagnesite.

This Division produces a large variety of fruit, has large pine forests producingtimber as well as grain, cotton, fodder crops, citrus, grapes, canola andsunflowers.

The fishing industry serves local, state and interstate markets and the area isnoted for its abundant seafood. The Great Barrier Reef, a premiere touristattraction, lies on the east coast of this Division.

Key exhibits

Figure 1


Real gross regional product (GRP) is projected to be higher with greater use ofe-commerce. GRP is hardly changed in the medium term to 2006 asQueensland is expected to lag many other states. There is a growth spurt overthe period 2007 to 2009 as the Division catches up. Thereafter the increase inactivity stabilises at a level 1.1 per cent higher than the base case.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -15 -10 -5 0 5 10 15 20

Although the Fitzroy Division has a diversified economic base, key industriesinclude manufacturing, mining and agriculture. Any increase in the use ofe-commerce will impact negatively on the agriculture and mining sectorsbecause it is vulnerable to the increase in the exchange rate resulting fromcapital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in agriculture and mining.. Manufacturingwill also contract because it is value added industry dependent on eitheragriculture or mining.

Figure 2



The overall effect on activity will be a net increase in output of around$36.7 million. This occurs because the benefits from increased use ofe-commerce are broadly spread across a variety of sectors in the Divisionalthough three of the major industries are forecast to contract.

Sectors with high growth rates include tourism, wholesale trade, constructionand communication services. As these sectors are relatively small they areexpected to contribute $29.2 million. Larger expansions will be felt in thedeveloped sectors of property and business services (by $8.9 million), transport(by $9 million) and other services (by $16.7 million).

The $13 million contraction in mining, as well as smaller contractions inagriculture and manufacturing are due to the exchange rate effects discussedearlier. The $17.6 million contraction in retail trade is because ofdisintermediation – that is, a reduction in margins associated with the sale ofgoods.



National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment. An important consequence ofdisintermediating layers of economic activity between buyers and sellers is thatit results in the bypassing of jobs.

As shown in Figure 3, employment is expected to be less than the base case.It initially falls to reach a minimum level of 1.9 per cent less than the base caseby 2006. The reason for this is threefold: firstly, increases in productivity willdirectly contribute to a fall in employment; secondly, disintermediation resultsin a contraction in output of the retail sector; and thirdly, the exchange rateeffect results in a contraction in output of the mining, manufacturing andagriculture sectors.

As productivity gains are realised and the service sectors begin to expand,employment increases towards the base case to reach a maximum level1.3 per cent less than the base case in 2011. After this time employment levelsbegin to stabilise as productivity gains and wages are equalised across theDivisions. Employment then smooths out to under 1.4 per cent less than basecase by 2016.


Source:





fact sheetmackay queensland



The Mackay Statistical Division is bordered to the east by the Great BarrierReef and offshore islands, and to the west by the Central West StatisticalDivision. The Division includes the main population centre of Mackay, as wellas the Shires of Whitsunday, Sarina, Broadsound, Mirani, Nebo and Belyando.

Covering 68,997 km2, or 4 per cent of Queensland, this Division has beenexperiencing steady growth rates (1.5 percent) over the past decade. Theestimated resident population is currently 124,309 persons, or 3.6 per cent ofthe total population of Queensland.

This Division enjoys a more stable base than most other parts of Australia, duelargely to the diversity of local industry. It has therefore been classified asOther by Maxwell and Hite (1991). The main industries are sugar canegrowing and processing, coal mining, cattle grazing and hospitality.

The coastal region surrounding Mackay produces nearly one third ofQueensland’s sugar cane crop. The region is home to six sugar mills, a sugarrefinery, and the largest bulk sugar terminal in the world.

The Division is also home to the Bowen Basin, an area with 20 coal minesproducing in excess of $2 billion of coal per year. The Port of Hay Point, whichcomprises Hay Point and Dalrymple Bay coal terminals, is the largest coalloading facility in the Southern hemisphere.

Many southern companies have re-established or opened additional offices inthe Division to support the local industry. These businesses range fromengineering firms which service heavy coal-mining equipment through tomanufacturers of electrical switchgear for open cut and underground mining.

Tourism is a major industry in the Division. The area has a multitude ofattractions that draw tourists from around Queensland, Australia and theworld: the Great Barrier Reef, the Whitsunday Islands, National Parks, wildlifeand flora, history, culture, lifestyle and climate.

Key exhibits

Figure 1




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


fact sheetmackay queensland Real gross regional product (GRP) is projected to be higher with greater use of

e-commerce. GRP is hardly changed in the medium term to 2006 asQueensland is expected to lag many other states. There is a growth spurt overthe period 2007 to 2009 as the Division catches up. Thereafter the increase inactivity stabilises at a level 1 per cent higher than the base case.

Although Mackay has a relatively stable economic base, the main industries aresugar cane growing and processing, coal mining, cattle grazing and hospitality.Any increase in the use of e-commerce will impact negatively on the agricultureand mining sectors because it is vulnerable to the increase in the exchange rateresulting from capital inflows. This appreciation increases the relative price ofAustralian exports and leads to a contraction in agriculture and mining. Asmanufacturing is either a value added industry or developed specifically tosupport the local mining or agriculture sectors, this sector will also contract.

Figure 2


Figure 2 displays indicative changes in sectoral activity by the year 2010 in2000 prices.

Increased use of e-commerce will result in contractions in Mackay’s majorindustries: agriculture and mining. As explained previously, these industries donot tend to benefit from increased use of e-commerce.

In addition, retail trade contracts by $12.7 million due to disintermediation.That is, e-commerce reduces the margins associated with the sale of goods,encouraging consumers to purchase directly from other sectors.

These contractions however, are offset by substantial growth in the wholesaletrade, tourism and communications services sectors. These sectors will expandby approximately $18.6 million due to greater efficiencies associated withdealing with clients and suppliers through electronic service delivery. Othersectors expected to expand include other services (by $9.2 million), propertyand business services (by $5.9 million), construction (by $7.5 million) andtransport (by $7.1 million).

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-15 -10 -5 0 5 10


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetmackay queensland Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment. An important consequence ofdisintermediating layers of economic activity between buyers and sellers is thatit results in the bypassing of jobs.

As shown in Figure 3, employment is expected to be less than the base case.It initially falls to reach a minimum level of 2.1 per cent less than the base caseby 2006. The reason for this is threefold: firstly, increases in productivity willdirectly contribute to a fall in employment; secondly, disintermediation resultsin a contraction in output of the retail sector; and thirdly, the exchange rateeffects result in a contraction in output of the mining, manufacturing andagriculture sectors.

As productivity gains are realised and the service sectors begin to expand,employment increases towards the base case to reach a maximum of1.5 per cent less than the base case in 2011 which continues on to 2016.


Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetmoreton queensland



The Moreton Statistical Division borders the Brisbane Statistical Division,taking in the Gold Coast and Sunshine Coast and the Shires of Esk, Kilcoy,Gatton, Laidley, Boonah and Beaudesert.

Moreton covers an area of 17,666 km2 and accounts for 1 per cent ofQueensland’s total area. In recent years the Division has shown strong growthrates in the vicinity of 3.3 per cent per annum to reach a population of638,378 (which is equivalent to 18.8 per cent of the State’s population). Thestrong growth in this Division has been facilitated by particularly high growthrates on the Gold and Sunshine Coasts.

Maxwell and Hite (1991) generally classify the Moreton Statistical Division asWarm climate coastal.

The Lockyer Valley is Queensland’s largest producer of a wide range ofagricultural produce. It is also a major supplier of horticultural, beef and dairyproducts, as well as a wide range of agricultural and cattle handling equipment.

The University of Queensland’s Gatton College is located in the Lockyer Valleywith a student population of nearly 3000. The University’s Faculty of NaturalResources Agriculture and Veterinary Science, with its headquarters at Gatton,has a rapidly growing research profile.

Tourism based Gold and Sunshine Coasts rely heavily on the hospitalityindustry for employment. These areas also offer significant property andbusiness services, as well as retail trade, and construction industries.

Key exhibits

Figure 1


Real gross regional product (GRP) is projected to be higher with greater use ofe-commerce. GRP is hardly changed in the medium term to 2006 asQueensland is expected to lag many other states. There is a growth spurt overthe period 2007 to 2009 as the Division catches up. Thereafter the increase inactivity stabilises at a level 1.9 per cent higher than the base case.

Although Moreton has rapidly growing construction, tourism and servicesectors, it still has a large agriculture sector. Any increase in the use ofe-commerce will impact negatively on agriculture because it is vulnerable to the


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-80 -60 -40 -20 0 20 40 60

fact sheetmoreton queensland rise in the exchange rate resulting from capital inflows. This appreciation

increases the relative price of Australian exports and leads to a contraction inagriculture. This largely explains why GRP for Moreton is lower than nationalGDP.

Figure 2



The benefits from the flow-on efficiencies of grater use of e-commerce arebroadly spread across a number of sectors in the Division. Expanding sectorsinclude tourism (by $48.6 million), other services (by $46.7 million),construction (by $45.6 million) and property and business services(by $42.4 million). In total the expanding sectors contribute $262.4 millionto output.

Other sectors are forecast to contract. Small contractions will be felt in theagriculture (by $4.6 million) and mining (by $3.4 million) industries, while a$70.7 million contraction will be felt in the retail trade sector. This is becauseof disintermediation – that is, e-commerce reduces the margins associated withthe sale of goods and services, encouraging purchases to be made directly fromwholesalers and other sectors.


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009 20

10

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetmoreton queensland Figure 3


Disintermediating layers of economic activity between buyers and sellers resultin bypassing jobs. An offsetting factor would be that the lower prices for goodsand services would stimulate demand in other areas and increase the demandfor labour.

Figure 3 shows that employment is expected to be less than the base case inMoreton. As shown, employment initially falls from the base case to reach aminimum level 1.1 per cent less than the base case by 2006. This is primarilydue to an early contraction in the retail trade sector. As productivity gains arerealised and the service sectors begin to expand, employment increases towardsthe base case to reach a maximum level 0.4 per cent less than the base caseby 2011.

After this time employment levels begin to stabilise as productivity gains areequalised across the Division. Employment then smooths out to 0.6 per centless than the base case in 2016.

Note that the reduction in employment assumes no other changes in economicoutcomes or government policy. It is quite likely that effective governmentpolicy could counteract this small reduction. Any increase in the use ofe-commerce will impact negatively on the agriculture and mining sectorsbecause it is vulnerable to the increase in the exchange rate resulting fromcapital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in agriculture and mining.

Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The Northern Statistical Division is bordered in the west by the Great DividingRange, and in the east by the Great Barrier Reef. It lies north of the MackayStatistical Division encompassing the shires of Dalrymple, Bowen, Burdekinand Hinchinbrook and the Cities of Charters Towers and Townsville-Thuringowa.

The Division is spread across 100,951 km2 or 5.8 per cent of Queensland.The population, of 194,958 persons (or 5.6 per cent of the State), is centred inTownsville-Thuringowa, the major growth centre of the region. Townsville-Thuringowa is also the hub of commercial and industrial activity in theDivision, the regional centre of government administration and highereducation and an important international port.

The Northern Division has been classified as Other by Maxwell and Hite(1991). It contributes over 11.1 per cent of gross value of agriculturalcommodities produced in Queensland, including sugar, beef and horticulturalcrops such as tomatoes and mangoes. It is the largest producer of sugar canecut for crushing with 6 sugar mills in the Herbert/Burdekin district and TheVictoria Mill at Ingham, which is the largest in Australia and one of the largestin the world. The Division is also a major producer of a number of vegetablesand fruits.

The mining industry makes a valuable contribution to the Division’s economicgrowth predominantly through coal and gold resources. Nickel, cobalt, copperand zinc refineries also add considerable value.

Tourism is an expanding industry in North Queensland. The Great BarrierReef, Hinchinbrook Island and Magnetic Island continue to be popularattractions.

Key exhibits

Figure 1


Real gross domestic product (GRP) is expected to be higher if the NorthernDivision adopts greater use of e-commerce. GRP is hardly changed in themedium term to 2006 as Queensland is expected to lag many other states.

fact sheetnorthern queensland



Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-25 -20 -15 -10 -5 0 5 10 15 20 25

There is a growth spurt over the period 2007 to 2009 as the Division catchesup. Thereafter the increase in activity stabilises at a level 1.4 per cent higherthan the base case.

Any increase in the use of e-commerce will impact negatively on the agriculturesector because it is vulnerable to the increase in the exchange rate resultingfrom capital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in agriculture and mining. As manufacturingis either a value added industry or developed specifically to support the localmining or agriculture sectors, this sector will also contract.

Figure 2



With the Division’s economy dependent on the mining industry and to a lesserextent agriculture, these industries are forecast to contract by $7.6 million and$2.3 million respectively. This contraction feeds through to the manufacturingindustry which also contracts by $2.3 million. Contractions are also felt in theretail trade sector (by $20.3 million) due to disintermediation.

These contractions are offset by growth in a variety of other sectors.The wholesale trade, tourism and communication services sectors are forecastto experience the highest rates of growth. Other sectors including property andbusiness services, transport, construction and other services are expected tobenefit from greater efficiencies associated with increased use of e-commerce.The net impact is an increase in value added in the Division with an indicativevalue of $47.2 million.



National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment in the Division. An importantconsequence of disintermediating layers of economic activity between buyersand sellers is that it results in bypassing jobs.

As shown in Figure 3, employment is expected to be less than the base case.It initially falls to reach a minimum level of 1.6 per cent less than the base caseby 2006. The reason for this is threefold: firstly, increases in productivity willdirectly contribute to a fall in employment; secondly, disintermediation resultsin a contraction in output of the retail sector; and thirdly, the exchange rateeffects result in a contraction in output of the mining, manufacturing andagriculture sectors.

As productivity gains are realised and the service sectors begin to expand,employment increases towards the base case to reach a maximum level0.9 per cent less than the base case in 2011. After this time employment levelsbegin to stabilise as productivity gains are equalised across the Divisions.Employment then smooths out to 1 per cent less than the base case by 2016.


Source:







1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008 2009

2010 2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetnorth west



The North West statistical division comprises eight local government areas,stretching to the Northern Territory boundary in the west and the Gulf ofCarpentaria to the north. The major population centre is Mount Isa, which ishome to 61.8 per cent of the division’s population. Other significantpopulation centres are Cloncurry, Hughenden and Normanton.

The North West covers 311 286 km2 (18 per cent of total Queensland) with anestimated resident population of 35 782—equivalent to 1.1 per cent of theState’s population. In recent years the division has experienced a small declinein its population levels (minus 0.2 per cent). However between June 1997 andJune 1998, Cloncurry Shire recorded the fastest rate of growth (3 per cent),followed by Carpentaria Shire (2.2 per cent) and Mornington Shire(1.9 per cent).

This statistical division has been classified as remote resource development byMaxwell and Hite (1991) as it has a rural and mining based economy. Miningactivity in the division has occurred for more than 100 years, and recentdevelopment has brought significant economic growth to the division. TheMount Isa Mine is one of the world’s largest mining and metallurgicalcomplexes, producing copper anode, crude silver/lead, zinc and zinc-leadconcentrates. In addition, the Carpentaria-Mount Isa Minerals Province hasextensive reserves of base metals (copper, lead, zinc, silver) and economicallysignificant deposits of gold, phosphate and uranium.

Mining services also contribute to the division’s development throughengineering, fabrication maintenance and construction. Other key industries inthe division include beef, cattle grazing, wool growing and tourism.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce.

As the economy of the North West is built on its large mining industry, anincrease in the use of e-commerce will result in a very small decrease in GRP.This is because the increase in the use of e-commerce will impact negatively onthe mining sector, which is vulnerable to the rise in the exchange rate resulting


from capital inflows. This appreciation increases the relative price of Australianexports and leads to a contraction in mining and a decrease in GRP in theshort run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandas resources are diverted from the mining sector into services. The service andmining sectors begin to realise productivity gains and GRP begins to increaseslowly to reach around 0.3 per cent less than the base case by 2016.

Figure 2



The results of the simulation indicate that the mining sector (includingpetroleum) will experience a contraction in output of $13.6 million (or lessthan one per cent of the total value of the division’s mining industry in1997–98. Retail trade is also expected to experience a small contraction in thevicinity of $2.4 million.

Modest increases in sectoral activity offset the reduction in the mining andretail sectors. This includes a 5.2 per cent increase in the level of tourismactivity and a 5.7 per cent increase in wholesale trade, although these are, onceagain, from a relatively small base.

Overall, the net reduction in activity in the division by the year 2010 has anindicative value of $6.2 million in current prices.


queensland

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-16 -14 -12 -10 -8 -6 -4 -2 0 2 4


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that greater use of e-commerce maybring, also have impacts on employment in the division. An importantconsequence of disintermediating layers of economic activity between buyersand sellers is that it results in bypassing jobs.

Figure 3 shows that net employment will fall in the North West. The reason forthis is threefold: firstly, increases in productivity associated with use ofe-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly and most importantly, the exchange rate effects result in a contractionin output of the mining sector.

After falling to 2.9 per cent less than the base case in 2008, employment beginsto recover as resources are directed into the faster growing sectors of theeconomy, such as services. Employment stabilises at 2.4 per cent less than thebase case by 2016.

Note that the reduction in employment assumes no other changes in economicoutcomes or government policy. It is quite likely that effective governmentpolicy could counteract this small reduction. It is also notable that this forecastdoes not imply a fall in employment, but rather that it will be smaller thancurrently forecast.

Source:




queensland




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetsouth west



The South West statistical division is situated in the south west corner ofQueensland, bordering on South Australia and New South Wales. The SouthWest incorporates nine local government areas (LGAs) and the Town Councilof Roma, which is the regional centre for the division. Other major populationcentres include Charleville, St George and Cunnamulla.

The South West covers 322 655 km2, 18.6 per cent of Queensland’s total area.As with other regional divisions, the population of the South West has beenslowly decreasing across all LGAs. The estimated resident population, which isequivalent to 0.8 per cent of Queensland, is 26 175.

The South West statistical division has been classified as agricultural byMaxwell and Hite (1991). Key activities include wool growing and meat cattlegrazing as well as cotton and grain growing. Developing industries include redclaw crayfish, kangaroo meat and hides, ostriches and commercial goatfarming.

Opal mining has been a traditionally important activity in the South West, butoil and gas have become vital industries. The Wallumbilla pipeline transmitsgas from the Ballera Gas Centre to Brisbane and Gladstone. The Centre is alsolinked to Mt Isa and Moomba in South Australia, supplying gas to Adelaide,Melbourne and Sydney.

The South West has enviable artesian water resources, a cypress pine industryand a local wine industry dating back to 1863. Carnarvon Gorge NationalPark, located in the Bungil Shire, is internationally renowned for its Aboriginalart and spectacular scenery. Developing industries include flowering gums,dates, Geraldton wax and olive farming.

Key exhibits

Figure 1


The real gross regional product (GRP) is projected to be higher with greateruse of e-commerce. GRP is hardly changed in the medium-term to 2006 asQueensland is expected to lag behind many other States. There is a growthspurt from 2007 to 2009, as the division catches up. After that, the increase inactivity stabilises at 1.1 per cent higher than the base case.



queensland

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-3 -2 -1 0 1 2 3 4

Although the South West has a relatively diversified economic base, it isclassified as agricultural. Any increase in the use of e-commerce will impactnegatively on agriculture because it is vulnerable to the rise in the exchangerate resulting from capital inflows. This appreciation increases the relativeprice of Australian exports and leads to a contraction in agriculture. Thisexplains why GRP for the South West shows very little growth up until 2006and why it fails to increase in line with GDP.

Figure 2



The benefits from the flow on efficiencies of greater use of e-commerce arebroadly spread across the different industry sectors in the division. Expandingsectors include other services (government, education, health, community andpersonal services), property and business services, transport, wholesale tradeand tourism.

Offsetting the expansion are contractions in the retail trade (by $2.6 million),agriculture (by $1.5 million) and mining sectors (by $0.9 million).

Increased use of e-commerce will shrink retail trade sectors becausee-commerce reduces the margins associated with the sale of goods andencourages purchases to be made directly from wholesalers and other sectors.Both mining and agriculture contract because they are overly sensitive to theexchange rate effects brought about by increases in productivity.

The net impact is an increase in output of the division with an indicative valueof $6.2 million.


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5


queenslandFigure 3


Figure 3 shows that in the South West, employment is expected to be lowerthan the base case. As shown, employment initially falls from the base case toreach a minimum level of 1.8 per cent less than the base case by 2006. This isdue to the contraction of the agriculture, mining and retail trade sectors.As productivity gains are realised and the service sectors begin to expand,employment increases to just under 1.2 per cent less than the base case by2010.

Employment levels then begin to stabilise as productivity gains are equalisedacross the divisions. Employment smooths out to just under one per cent lessthan the base case in 2016.


Source:




fact sheetwide bay-burnett




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The Wide Bay-Burnett statistical division is on the east coast of Queensland,just north of the Moreton statistical division. While Wide Bay-Burnett iscentred on Bundaberg, approximately 368 km north of Brisbane, othersignificant population centres include Hervey Bay, Maryborough, Gympie andKingaroy.

It has an estimated resident population of 230 642, representing 6.7 per centof the total Queensland population. The division covers 52 283 km2, or threeper cent of the total area of Queensland, and comprises 21 local governmentareas.

The Wide Bay-Burnett statistical division has been classified as other(by Maxwell and Hite, 1991) due to the diversity of industry in the region.Bundaberg Rum has made this traditional sugar region famous. Crops andpastures contribute to the region’s economic growth, with sugar canecontinuing to be the main crop.

The division is the largest producer of peanuts in Australia, and Queensland’slargest producer of a wide range of vegetables. The Wide Bay-Burnett statisticaldivision also has the largest area devoted to orchard trees (including nuts), andhas the largest production of citrus fruit.

Fuelled by the phenomenal growth in whale-watching, Hervey Bay’s tourismhas developed into a professional and profitable industry. It has justifiablyclaimed the title of ‘whale-watching capital of the world’. The World Heritage-listed Fraser Island has led growth in eco-tourism, the boom segment of theQueensland tourism industry.

Manufacturing and engineering industries continue to mature, withQueensland’s new tilt trains being built in Maryborough. Other industriesinclude horticulture, timber, fishing and seafood processing.

Key exhibits

Figure 1


The real gross regional product (GRP) is projected to be higher with greateruse of e-commerce. The GRP will rise to a level 1.1 per cent higher than thebase case by 2009, before increasing slightly and stabilising at 1.3 per centgreater than the base case by 2016.



queensland

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-25 -20 -15 -10 -5 0 5 10 15 20

With increased use of e-commerce, GRP in the Wide Bay-Burnett division—like other Queensland divisions—initially increases at a slow and steady rate.This is because Queensland, in comparison to the national average, is relativelyslower in adopting e-commerce. Therefore, during 2006 to 2009 when otherdivisions are experiencing fluctuations in GRP due to rapid growth inproductivity levels, Wide Bay-Burnett will experience continual GRP growth.

After 2009, GRP rises from the base case as Wide Bay-Burnett achieves thelarger productivity gains previously achieved by other divisions. From 2011,GRP stabilises, and levels out to 1.3 per cent greater than the base case in2016.

Although Wide Bay-Burnett has a well- diversified economic base, there is stilla significant agriculture (including fishing) sector. Any increase in the use ofe-commerce will impact negatively on agriculture because it is vulnerable to therise in the exchange rate resulting from capital inflows. This appreciationincreases the relative price of Australian exports and leads to a contraction inagriculture. This explains why GRP growth for Wide Bay-Burnett fails toincrease in line with GDP.

Figure 2



The benefits from the flow-on efficiencies of greater use of e-commerce arespread across the different industry sectors. Expanding sectors includewholesale trade (by $9 million), construction (by $9.3 million), tourism(by $9.1 million), property and business services (by $11.2 million) and otherservices (by $18.5 million).

Offsetting theses expansions are contractions in agriculture (by $4.9 million),mining (by $2.4 million) and most importantly retail trade (by $20.8 million).The mining and agriculture industries contract because they are vulnerable tothe exchange rate effects that are expected to flow on from the productivityboost associated with e-commerce. The retail trade sector will contract becauseof disintermediation – that is e-commerce reduces the margins associated withthe sale of goods and encourages purchases to be made directly fromwholesalers and from other sectors.


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5


queenslandFigure 3


Figure 3 shows that employment is expected to be less than the base case inWide Bay-Burnett. As shown, employment initially falls from the base case toreach a minimum level 1.6 per cent less than the base case by 2006. This isprimarily due to an early contraction in the retail trade sector. As productivitygains are realised and the service sectors begin to expand, employmentincreases towards the base case to reach a maximum level 0.9 per cent less thanthe base case by 2011.

After this time, employment levels begin to stabilise as productivity gains areequalised across the divisions. Employment then smooths out to one per centless than the base case in 2016.


Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetadelaide

south australia The impact of e-commerce on output, industries and employment


The Adelaide statistical division is located to the west of the Outer Adelaidestatistical division and covers an area equal to 1 820 km2. It extends to theMount Lofty Ranges in the east and St Vincent Gulf in the west and stretchessouthwards to where the coastal plains meet the sea beyond Willunga.

More than one million people (73 per cent of the State’s population) reside inthe Adelaide Division. The metropolitan area of Adelaide is the division’sfinancial and commercial focal point. Other selected urban centres includeGlenelg, Henley, Hindmarsh, Marion, Salisbury and Port Adelaide.

Although classified as metropolitan, the division’s industrial base is strong anddiverse, supporting a full range of activities including automotive, defence andelectronics industries. These provide a strong engineering focus as well asexport revenue. Substantial automotive component manufacturing is clusteredaround the General Motors Holden assembly plant at Elizabeth. Similarly, asignificant defence industry cluster has evolved around the FederalGovernment’s Defence, Science and Technology Organisation (DTSO) atSalisbury—the largest defence related R&D establishment in the SouthernHemisphere.

As the State’s capital, Adelaide is also the centre of finance, business and retailservices. As with most parts of the division, the previously commercial PortAdelaide now contains many industrial sites including manufacturing, transportand storage.

At its northern extremity the division has significant horticulture activity(vegetables, almonds, wine grapes, flowers and nursery products). In theeastern hill areas, agricultural activities, mainly fruit growing, are also evident.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce, peaking at a level 3.5 per cent greater than the base caseby 2007.

South Australia is expected to be a more rapid adopter of e-commerce thanmany other States. As a result, output in this division will expand by more thanthe national average, peaking in 2007. After this peak, GRP will slowly


fact sheetadelaide

south australiadecrease as regions that have been slower in the uptake of e-commerceexperience increased productivity gains associated with increased use ofe-commerce. This has the effect of slowing the productivity gains made in thisdivision and emphasising the peak in GRP, which is indicated in Figure 1.

Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place, with the change in real GRP levelling offat around 2.9 per cent greater than the base case by 2016.

Figure 2


Figure 2 displays the indicative changes in sectoral activity by the year 2010, inyear 2000 prices

Given the division’s broad industrial base it is reasonable to expect that thebenefits of e-commerce will be broadly felt across industries.

In particular, there will be significant growth in communications, property,business and other services. These sectors will expand by $347.1 million due togreater efficiencies in dealing with suppliers and clients through electronicservice delivery. Other industries that will expand include finance andinsurance (by $85.3 million), wholesale trade (by $79.4 million), construction(by $78.3 million) and tourism (by $59.8 million).

Retail trade is expected to decline significantly (by $79.1 million) because ofthe disintermediation effect—that is, a reduction in margins associated withgreater use of e-commerce.

The net impact is an increase in annual GRP with an indicative value of$687.3 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-100 -50 0 50 100 150 200


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetadelaide

south australiaFigure 3


Many of the productivity improvements associated with greater use ofe-commerce also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers result in bypassing jobs.An offsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

The employment impact in Adelaide is positive because the division has abroad mix of industry which means it is less reliant on sectors which are lesslikely to benefit from e-commerce (particularly mining and agriculturalindustries). Consequently, greater use of e-commerce is expected to lead to anet increase in employment of 1.5 per cent by 2007. This is 0.6 per cent higherthan the increase in national employment.

The significant peak in employment at 2007 is due to the peak in output at thesame time. Productivity gains decrease as other States, which are slower toadopt e-commerce, claw back the early productivity gains realised in SouthAustralia.

Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheeteyre south australia



The Eyre statistical division is a large coastal region situated in the south westof South Australia. It extends to the Spencer Gulf in the east and stretchesnearly 1 000 km in a westerly direction to the Western Australia border. PortLincoln is the division’s southern-most point while the Gawler Ranges forms itsnortherly border. The division includes the city of Port Lincoln and nineDistrict Councils.

It occupies an area of 55 000 km2 (which is roughly equivalent to the area ofTasmania) and supports a population of approximately 32 698 persons(less than two per cent of the State’s population).

The Eyre division is classified as agricultural by Maxwell and Hite (1991) as itwas founded on a strong primary industry base. This continues today withmuch of the division relying on agriculture (chiefly wheat, barley, wool andlivestock).

The division produces 60 per cent of the State’s seafood harvest with80 per cent of the total catch providing valuable export dollars for the State.Port Lincoln is home to the largest commercial fishing fleet in Australia and hasa number of seafood processing plants. The booming aquaculture industry hasshown great opportunity for growth following the success of the division’s tunafarming.

Tourism has developed into a strong industry sector in the division. There isconsiderable potential for growth, especially in the rapidly expanding nature-based and eco-tourism market segments.

Mining is expected to be one of the division’s star performers in the 21stcentury with many prospects already under exploration. The division alsoboasts a large manufacturing and processing industry supporting its primaryand resource industries.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Eyre Division is projected to riseat a lower rate than the forecast increase in Australia’s Gross Domestic Product(GDP). The increase in real GRP will peak in 2007 at around 2.1 per centhigher than the base case.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-3 -2 -1 0 1 2 3 4 5 6

This division does not benefit as much as the average increase in output inAustralia because of its strong primary industry base. Increased use ofe-commerce will result in an increase in GDP up until 2007. After this, regionsthat have been slower in the uptake of e-commerce begin to increase theirproductivity gains associated with increased use of e-commerce. This slows theproductivity gains made in this division and emphases the peak in GRP, whichare indicated in Figure 1.

Figure 2



The benefits from the flow-on efficiencies of greater use of e-commerce arebroadly spread across the different industry sectors in the division.

While tourism, wholesale trade and communications services will expand mostrapidly, these sectors are currently small in value in the division and will onlyadd around $3.7 million per annum. However, the more modest growth inbusiness and other services is worth around $8.6 million per annum.

Offsetting the expansion somewhat are contractions in the agriculture, miningand retail trade sectors. Increased use of e-commerce contracts the retail tradesector because of disintermediation. This is because e-commerce encouragespurchases to be made directly from wholesalers (and direct from other sectors)reducing the margins associated with the retail sale of goods.

Activity in the retail trade sector will contract by about 4.5 per cent, or$2.2 million per annum, compared to the base case. The contraction inagricultural activity in the division is forecast to be 0.8 per cent, which given itsimportance in the division, equates to around $1 million per annum.

The net impact is an increase in output in the division with an indicative valueof $15.1 million per annum.



National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements associated with greater use ofe-commerce also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

Figure 3 shows that employment in the Eyre division slowly increases to reacha peak of around 0.2 per cent greater than base case by 2007. After this timeother regions begin to claw back the rapid productivity gains achieved bySouth Australia. For example, regions that have been slower to adopte-commerce will achieve larger productivity gains in the period between 2008and 2010, leading to decreases in the productivity gains achieved by thisdivision. As a result, employment will decrease and level out to the longer runlevel of around 0.4 per cent less than the base case.

Source:







1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetmurray lands



The Murray Lands statistical division is located in eastern South Australia oneither side of the River Murray. It extends up to 80 kms north of the RiverMurray, to the Coorong in the south west and the Victorian and New SouthWales borders in the east. The division encompasses eight local governmentareas, as well as the Riverland and Lake Alexandrina.

The Murray Lands covers an area of 40 330 km2 representing around4.1 per cent of the area of SA. It has a population of 68 450, equivalent to4.6 per cent of the State’s population. As a whole, the division has experienceda relatively stable population since 1991.

The Murray Lands has been classified by Maxwell and Hite (1991) asagricultural. Although the regional economy is now characterised by a highlevel of diversification, agriculture remains the main component. Agriculturein the region ranges from broadacre cropping to horticulture and livestockproduction.

The southern region has large tracts of land used for cereal cropping and sheepgrazing. There are also large numbers of pigs and dairy cattle concentrated onthe lower reaches of the Murray and the reclaimed river flats. Along the riverthere are extensive irrigated citrus and stonefruit orchards and vineyards.

Over recent years a number of small and medium sized manufacturingestablishments have developed to support the division’s agricultural base.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Murray Lands Division isprojected to rise at a slightly lower rate than the forecast increase in Australia’sGross Domestic Product (GDP). The increase in real GRP will peak in 2007 ataround 2.3 per cent higher than the base case.

The real GRP initially increases as industries and consumers progressivelyadopt e-commerce in the economy. With greater adoption, the economy makesbetter use of existing resources—that is, total factor productivity increases.More capital is injected into sectors with the highest productivity gains and


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-6 -4 -2 0 2 4 6 8


south australiathere is an increase in the supply of labour stemming from time savings fromproducers and consumers. These effects slowly filter through to other sectorsof the economy.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place by 2007, with the change in real GRPlevelling off at around 2.1 per cent greater than the base case by 2016.

Figure 2



While tourism and communication services will expand rapidly, these sectorsare currently small in value in the division and will only add around$3.8 million per annum. However, one of the fastest growth sectors, wholesaletrade, will grow at 6.8 per cent, and will be worth around $5.1 million perannum. In addition, more modest growth in business and other services isworth around $14.1 million per annum.

Offsetting the expansion somewhat are contractions in the agriculture andretail trade sectors. Increased use of e-commerce will be to the detriment of theretail trade sector because of disintermediation. E-commerce encouragespurchases to be made directly from wholesalers (and direct from other sectors)reducing the margins associated with the retail sale of goods. Activity in theretail trade sector will contract by about 4.5 per cent, or $4.4 million perannum, compared to the base case.

Agricultural activity in the division is likely to contract by around $1.6 millionper annum. Manufacturing activity, which is largely based around the division’sagricultural pursuits, is expected to increase by $3.9 million.



National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




Many of the productivity improvements that accompany greater use ofe-commerce may also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers also results in bypassingjobs. An offsetting factor would be that lower prices for goods and servicesstimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment in the Murray Lands Division is largelyunchanged with a variance between plus 0.4 per cent or minus 0.2 per cent.Initially, employment is slightly above the base case, peaking at 0.4 per cent in2007. After this, other regions begin to claw back the rapid productivity gainsachieved by South Australia. For example, regions that have been slower toadopt e-commerce will achieve larger productivity gains in the period between2008 and 2010, leading to decreases in the productivity gains achieved by thisdivision. As a result, employment will decrease and level out to the longer runlevel of around 0.2 per cent less than the base case.

Source:




fact sheetnorthern



The Northern statistical division is the largest division in the State, covering82.1 per cent of South Australia, or some 808 340 km2. It takes in the sparselysettled territory in the north of the State, extending west to the WesternAustralian border and east to the Victorian and New South Wales borders.Port Augusta is the economic hub of the division, which also incorporates theareas of Whyalla, Port Pirie and the Flinders Ranges. Major regional centresinclude Peterborough, the Flinders Ranges settlements, and the far northoutback areas of Coober Pedy, Roxby Downs, Woomera and Leigh Creek.

With an estimated resident population of 82 964 persons (5.5 per cent ofSouth Australia), the Northern Division’s population has steadily decline since1991.

With a strong economic base of coal mining, power generation and railservicing, the Northern Division has been classified as manufacturing byMaxwell and Hite (1991). Two coal-fired power stations are located at PortAugusta and produce over 40 per cent of the State’s power requirements.The mining of iron ore, silver, gold and uranium is undertaken by the WesternMining Corporation at Olympic Dam. Brown coal is mined at Leigh Creek andopal mining occurs at Coober Pedy, Andamooka and Mintabie.

Strong potential exists to market the region as an eco-tourism destination dueto its natural beauty and stunning outback wilderness.

Although in the past the division has been predominantly used for sheep andcattle grazing, and to a lesser degree, wheat and barley production, there areindications that new growth areas will centre around tourism, horticulture(Australian native foods and foliage), aquaculture and other mining ventures.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Northern Division is projectedto rise at a slightly lower rate than the forecast increase in Australia’s GrossDomestic Product (GDP). The increase in real GRP will peak by 2007, ataround 2.3 per cent higher than the base case.



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


Tourism

Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-8 -6 -4 -2 0 2 4 6 8 10 12

Other Services


fact sheetnorthern

south australiaThe real GRP initially increases as industries and consumers progressivelyadopt e-commerce in the economy. With greater adoption, the economy makesbetter use of existing resources—that is, total factor productivity increases.More capital is injected into sectors with the highest productivity gains andthere is an increase in the supply of labour stemming from time savings fromproducers and consumers. These effects slowly filter through to other sectorsof the economy.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place by 2007, with the change in real GRPlevelling off at around 2.1 per cent greater than the base case by 2016.

Figure 2



The benefits from the flow on efficiencies of greater use of e-commerce arebroadly spread across the different industry sectors in the division.

While tourism, wholesale trade and communications services will expand mostrapidly, these sectors are currently small in value in the division, and will onlyadd around $7.8 million per annum. The more modest growth in business andother services, however, is worth around $19.3 million per annum.

Offsetting the expansion somewhat are contractions in the agriculture, miningand retail trade sectors. Increased use of e-commerce will contract the retailtrade sector because of disintermediation. E-commerce encourages purchasesto be made directly from wholesalers (and direct from other sectors) reducingthe margins associated with the retail sale of goods and services. Activity in theretail trade sector will contract by $4.9 million per annum, compared to thebase case. The contraction in agricultural and mining activity in the division islikely to be in the vicinity of $1.4 million.



National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetnorthern




Figure 3 shows that employment in the Northern Division is not greatlyinfluenced by greater use of e-commerce. Net employment slowly increases toreach a peak of around 0.3 per cent greater than the base case by 2007. Afterthis time other regions begin to claw back the rapid productivity gains achievedby South Australia. For example, regions that have been slower to adopte-commerce will achieve larger productivity gains from 2008 to 2010, leadingto decreases in the productivity gains achieved by this division. As a result,employment will decrease slightly and level out to around 0.3 per cent lessthan the base case.

Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


The Outer Adelaide statistical division is located to the west of the MurrayLands Statistical Division, covering an area of 11 626km2. It extends west tothe Gulf of St Vincent, and down the Mount Lofty Ranges, through to thecoast bordering the Southern Ocean. Kangaroo Island, situated 16 km off thetip of the Fleurieu Peninsula, marks the southern-most point of this division.

With an estimated resident population of 107 729 persons (7.2 per cent of theState’s population), this is the fastest growing division in South Australia. Since1993, it has experienced a growth rate of 11.23 per cent, over six times thegrowth rate of South Australia for the same period.

Although classified as agricultural/manufacturing by Maxwell and Hite (1991),this division boasts an extremely diverse industry base. The Mount LoftyRanges support a combination of land uses such as dairying, sheep grazing,fruit orchards, vegetable growing and horse breeding. The Barossa Valley isintensively planted with vineyards and is one of the nation’s most famous wineregions, producing one quarter of Australia’s wine.

Tourism, farming and fishing are traditionally the stable areas of KangarooIsland’s economy. Its environment has also provided the impetus for alternativeand value-added products, including honey, eucalyptus oil, speciality cheeses,preserves and free-range poultry.

The division produces livestock products, forest products, salt, gypsum,limestone, marble, slate, sand, quartzite and clay. Tourism, particularly based inwine and food, continues to be an important industry for the Outer Adelaideeconomy.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if OuterAdelaide adopts greater use of e-commerce. The real GRP will rise to a level of3.1 per cent by 2007.

South Australia is experiencing significant productivity gains through its use ofe-commerce, so greater use of e-commerce will result in a steady increase inGDP up until 2007. After this peak, GRP will slowly decrease as regions that

fact sheetouter adelaide



Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-10 -5 0 5 10 15

have been slower in the uptake of e-commerce begin to increase theirproductivity gains associated with increased use of e-commerce. This has theeffect of slowing the productivity gains made in this division and emphasisingthe peak in GRP, which is indicated in Figure 1.

Higher activity is sustained even after the full effect of the modellede-commerce changes has taken place. The change in real GRP levels off ataround 2.7 per cent greater than the base case by 2016, reflecting the dynamicbenefits of increased use of e-commerce.

Figure 2


Figure 2 displays the indicative changes in sectoral activity by the year 2010, inyear 2000 prices.

The majority of industries in Outer Adelaide will expand with the adoption ofe-commerce.

In particular, there will be significant growth in communications, property,business and other services. These sectors will expand by $28.5 million due togreater efficiencies in dealing with suppliers and clients through electronicservice delivery. Other industries that will expand include tourism(by $5.4 million), manufacturing (by $8.3 million), wholesale trade(by $6.5 million) and construction (by $8.9 million).

The industries that are likely to experience a decline in output as a result ofe-commerce include mining (by $0.3 million), agriculture (by $1 million), andmost significantly, retail trade (by $6.6 million). These declines will comeabout as a result of the disintermediation effect—that is, a reduction in marginsassociated with greater use of e-commerce.

The net impact is an increase in industry output with an indicative value of$59.5 million per annum.


south australia


National Employment


97

1998

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2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to anincrease in employment each year, peaking in 2007 at 1.2 per cent. After thistime other regions begin to claw back the rapid productivity gains achieved byOuter Adelaide. For example, regions that have been slower to adopte-commerce will achieve larger productivity gains in between 2008 and 2010,and will have the comparative effect of decreasing the gains achieved by theOuter Adelaide Division. Employment then levels out to around 0.3 per centhigher than it would have otherwise been without increased use ofe-commerce.

Source:




south australia




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fact sheetsouth east



The south east corner of the State, extending south from the Tatiara district inthe north, forms the South East Statistical Division. Lying on the Victoriaborder, the division includes the metropolitan area of Mount Gambier and theDistrict Councils of Lacepede, Lucindale, Naracoorte, Robe, Tatiara, Grant andWattle Range.

Covering an area of 21 325 km2, or 2.1 per cent of the State, the South EastDivision is home to 4.2 per cent of the population.

The South East has been classified as agricultural/remote resource developmentby Maxwell and Hite (1991). Eco-tourism, country club style accommodationand conference facilities, as well as a reputation for being a premier food andwine district has made tourism a major growth industry in this division.

A total of 85 per cent of the State’s forest plantations are in the South East,comprising 100 00 hectares of Pinus Radiata (softwood). There is also anemerging hardwood plantation base of Eucalypt ‘Blue Gum’. The forest andforest products industries are major employers with sawn timber woodchips,woodpulp and their products manufactured in the division.

The agricultural industry continues to make a significant contribution to theSouth East’s economic development. A total of 48 per cent of the State’s meatproduction comes from the division, as well as a sizeable portion of sheepmeat, wool and dairy products. Broadacre farming of crops as well ashorticulture, floriculture and viticulture are rapidly expanding industries.

Port MacDonnell is Australia’s southern rock lobster capital, exporting themajority of the catch to south east Asia and Japan. Other commercial speciesinclude shark, abalone, octopus, king crabs and fresh water yabbies.Aquaculture and mariculture developments are adding diversity to thedivision’s economic base and providing investment opportunities.

Key exhibits

Figure 1




south australia

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-6 -4 -2 0 2 4 6 8

The real Gross Regional Product (GRP) is projected to be higher if the southeast adopts greater use of e-commerce. The real GRP will rise to a level of2.6 per cent, greater than base case by 2007.

As South Australia is currently experiencing significant productivity gainsthrough its use of e-commerce, increased use of e-commerce will result in asteady increase in GDP up until 2007. After this peak, GRP will slowlydecrease and level off as regions that have been slower in the uptake ofe-commerce begin to increase their productivity gains associated with increaseduse of e-commerce. This has the effect of slowing the productivity gains madein this division, and emphasising the peak in GRP, which is indicated inFigure 1.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place, after a decade. The change in real GRPlevels at around 2.2 per cent greater than the base case, reflecting the dynamicbenefits of increased use of e-commerce.

Figure 2


Figure 2 displays the indicative changes in sectoral activity by the year 2010, inyear 2000 prices.

There will be significant growth in communications, property, business andother services. These sectors will expand by $14.5 million due to greaterefficiencies in dealing with suppliers and clients through electronic servicedelivery. Other industries that will expand include tourism (by $2.9 million),manufacturing (by $4.7 million), wholesale trade (by $4.4 million) andconstruction (by $5 million).

While the region’s economy is highly dependent on the agriculture, forestryand fishing sectors (both directly and as a spur to tourism), these sectors areexpected to shrink by 0.4 per cent (by $1 million) from 2000 levels.

Other industries that are forecast to shrink include the mining industry(by 0.8 per cent or $0.1 million) and retail trade (by 4.5 per cent or$4.6 million) due to the disintermediation effect—that is, that greater use ofe-commerce leads to a reduction in margins.

The net impact is an increase in industry output with an indicative output of$31.8 million per annum.



south australia

National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

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Figure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to aninitial boost in employment until 2007, when it peaks at 0.7 per cent above thebase case. After this, other regions begin to claw back the productivity gainsachieved by South Australia. For example, regions that have been slower toadopt e-commerce will achieve larger productivity gains between 2008 and2010 and will have the comparative effect of decreasing the gains achieved bythe South East Division. Employment then levels out to close to the base case.

Source:


Policy Studies, for the National Office for the Economy



The Yorke and Lower North statistical division consists of two distinct regions:the Yorke and the Lower North. The Yorke region covers the Yorke Peninsulaand a small area to the north, extending as far as Port Broughton. The LowerNorth region, situated 75 kms north of Adelaide, extends from the HummockRange in the west, to the Eudunda Range in the east. Yorketown is the maincentre of the division which comprises six District Councils and theunincorporated area of Wardang Island.

The Yorke and Lower North Division covers an area approximately20 355 km2 or just over two per cent of South Australia’s total land area. Whilethe overall population of the division has remained relatively stable (decreasingfrom 44 488 in June 1993 to 44 103 in June 1998) the population in theLower North has decreased by 2.3 per cent over the same period.

The Yorke and Lower North division is classified as agricultural by Maxwelland Hite (1991). The area produces around 8.5 per cent of the State’s totalvalue of agricultural production with wheat and barley crops being the mainactivity. Other significant agricultural activity includes wool and prime lambproduction.

Wheat, sheep and wine are the main agricultural activities throughout theLower North, with sheep grazing predominant in the northern region andorchards and vineyards extensively planted in the Clare and Watervale areas.

Other valuable industries in the division include minerals and constructionmaterials such as gypsum, dolomite, limestone, salt and copper. The ClareValley wine industry, copper mines at Burra and commercial fishingopportunities attract a significant proportion of tourists to South Australia.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Yorke and Lower North divisionis projected to rise at a lower rate than the forecast increase in Australia’s GrossDomestic Product (GDP). The increase in real GRP will peak in 2007, ataround 2.1 per cent higher than the base case.

fact sheetyorke & lower north




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The real GRP initially increases as industries and consumers progressivelyadopt e-commerce in the economy. With greater adoption, the economy makesbetter use of existing resources—that is, total factor productivity increases.More capital is injected into sectors with the highest productivity gains andthere is an increase in the supply of labour stemming from time savings fromproducers and consumers. These effects slowly filter through to other sectorsof the economy.

Figure 2



The benefits from the flow-on efficiencies of greater use of e-commerce arebroadly spread across the different industry sectors in the division.

While tourism, wholesale trade and communications services will expand mostrapidly, these sectors currently have a small value in the division and will onlyadd around $4.6 million per annum. The more modest growth in business andother services, however, is worth around $8.9 million per annum.

Offsetting the expansion somewhat are contractions in the agriculture, miningand retail trade sectors. Increased use of e-commerce will shrink the retailtrade sector because of disintermediation. E-commerce encourages purchasesto be made directly from wholesalers (and direct from other sectors), reducingthe margins associated with the retail sale of goods. Activity in the retail tradesector will contract by $2.6 million, compared to the base case.

Agricultural activity in the division is likely to contract by around $1.1 millionper annum, while the small amount of mining conducted in the division willalso contract slightly.



south australia

Tourism

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Transport

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Construction


Manufacturing

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Figure 3


Many of the productivity improvements associated with greater use ofe-commerce may also impact on employment in the division.Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that lower prices forgoods and services stimulate demand in other areas and increase the demandfor labour.

Figure 3 shows that employment in the Yorke and Lower North Divisionremains relatively stable in the short term, increasing by about 0.2 per centfrom the base case by 2007. After this time, other regions begin to claw backthe productivity gains achieved by South Australia. For example, regions thathave been slower to adopt e-commerce will achieve larger productivity gainsbetween 2008 and 2010, leading to decreases in the productivity gainsachieved by this division. As a result, employment will decrease and level outto around 0.4 per cent less than the base case.

Source:




south australia

National Employment


97

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4.5

fact sheetgreater hobart

tasmania The impact of e-commerce on output, industries and employment


The Greater Hobart statistical division is the smallest in Tasmania. It is locatedon the east coast of the State surrounding the metropolitan area of Hobart—the State’s capital. This division includes the local government areas (LGAs) ofClarence, Glenorchy and Brighton as well as small percentages of Sorell, theDerwent Valley and Kingborough.

The population of this division has fluctuated in recent years. Between 1994and 1998 the LGAs of Hobart, Glenorchy, and Clarence experienced declinesin population, while the LGAs of Kingborough and Sorell have experiencedsignificant population growth. The highest growth in population in the Stateduring that time occurred in the Sorell LGA where the population increased by1 065 or 10.9 per cent.

Greater Hobart is classified as metropolitan. As Hobart is the State capital, thehead offices of many government departments are located in this division,making the State government a large employer.

The Greater Hobart area also has a large manufacturing base. Industriesinclude shipbuilding, the Cadbury Schweppes chocolate factory and theElectrolytic Zinc works. Other towns south of Hobart, such as Geeveston, alsohost sizeable forestry-related businesses.

Tourism continues to play a strong role in the division’s economicdevelopment, with some of the region’s best beaches located south of theClarence-Bellervie area. Further up the Derwent River is Risdon Cove, theoriginal site selected for European settlement in the south. There are threevineyards—Crosswinds, Orani, and Plamara on the eastern shore. MorillaEstate, one of Tasmania’s oldest vineyards, is located at Berridale, just north ofHobart.

Key exhibits

Figure 1


The real gross regional product (GRP) in the Greater Hobart statistical divisionis projected to initially rise at a slower rate than the forecast increase inAustralia’s Gross Domestic Product (GDP). The increase in real GRP isexpected to peak at approximately 2.8 per cent higher than the base casein 2009.


Real GRP initially increases as industries and consumers progressively adopte-commerce in the economy. With greater adoption, the economy makes betteruse of existing resources—that is, total factor productivity increases. Morecapital is injected into sectors with the highest productivity gains and there isan increase in the supply of labour stemming from time savings fromproducers and consumers. These effects slowly filter through to other sectorsof the economy.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place after 2010, with the change in GRPlevelling off at just over 2.8 per cent by 2016.

Figure 2



The benefits from the flow-on efficiencies of greater use of e-commerce arespread across the different industry sectors in the division. While wholesaletrade, transport and tourism are the fastest expanding sectors of the economythey only add around $29.9 million per annum. The more modest growth inservices, and construction, however, add around $62.2 million.

The expansion of these industries is somewhat offset by small contractions inthe mining and agriculture industries and a more significant contraction ofaround $17.9 million in the retail trade sector.

The retail sector is expected to contract with increased use of e-commercebecause of disintermediation. The net effect is an increase in industrial activitywith an indicative value of $96 million per annum.


tasmania

Tourism

Other Services


Finance & Insurance


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-25 -15 -5 5 15 25 35


National Employment


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Figure 3



As shown in Figure 3, increased use of e-commerce will impact positively onemployment in the Greater Hobart division. Efficiency improvements in thedivision’s developing industries (construction, wholesale trade, transport,tourism and services) will stimulate an overall increase in employment ofapproximately 0.6 per cent greater than the base case by 2009.

The increase in employment from 2008 to 2010 reflects a catch-up benefitafter lagging other States. That is, Tasmania obtains productivity gains over thisperiod, when other States are expected to have fully accommodatede-commerce changes. The increase in employment levels out after that asgrowth plateaus.

Source:




tasmania


fact sheetmersey-lyell

tasmania The impact of e-commerce on output, industries and employment



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The Mersey-Lyell statistical division covers a vast area including the majorityof Tasmania’s west coast, and the towns of Devonport, Burnie, Strahan andQueenstown and the Cradle Mountain National Park. The division consists ofnine local government areas (LGAs), including the Council of King Island,which lies off the north-west tip of Tasmania.

Extending over 22 507 km2 (or 33.1 per cent of the State) Mersey-Lyell isTasmania’s second largest division with a population of 109 653. Tasmania’spopulation declined by 0.2 per cent between 1994 and 1998, with Mersey-Lyell recording the largest decline of 1.6 per cent over that period.

Mersey-Lyell is classified as other by Maxwell and Hite (1991) due to itsdiversity. Tasmania’s north-west coast is one of the State’s most prosperousfarming areas. The rich, volcanic soil is ideal for prime beef, dairy cattle andvegetable production. Approximately 65 per cent of all vegetable productioncomes from this division. Major produce includes onions, potatoes, beans,broccoli, carrots, cauliflowers, pumpkins and green peas.

Mersey-Lyell is also known for its mineral wealth. The Mt Read Volcanics(MRV) belt in the west coast region is host to several world-class base-metaldeposits including copper, zinc, lead, silver and gold.

King Island is internationally known for its fine produce: cream, specialtycheeses, beef and rock lobster. Kelp is harvested from the shore, dried and thenexported for use in various products.

A growing tourism industry, incorporating features such as Cradle Mountain-Lake St Clair National Park, in Tasmania’s World Heritage Wilderness Area,and the rugged west coast region, makes a substantial contribution to thedivision’s economy.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if Mersey-Lyell adopts increased use of e-commerce. GRP is expected to rise toapproximately 2.1 per cent more than the base case by 2010, which is0.7 per cent less than the GRP, which peaks the same year.


Tourism

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tasmaniaReal GRP initially increases as industries and consumers progressively adopte-commerce in the economy. With greater adoption, the economy makes betteruse of existing resources—that is, total factor productivity increases. Morecapital is injected into sectors with the highest productivity gains and there isan increase in the supply of labour stemming from time savings from producersand consumers. These effects slowly filter through to other sectors of theeconomy.

Higher activity is sustained even after the full effect of the modellede-commerce changes have taken place after 2010, with the change in real GRPcontinuing to increase and level off at around 2.3 per cent by 2016.

Figure 2



Given the division’s broad industrial base, it is reasonable to expect that thebenefits of e-commerce will be broadly felt across industries.

In particular, the fastest growing industry will be wholesale trade(by 8.4 per cent). Other industries to experience significant rates of growthinclude property, business, transport, construction and other services.The increase in efficiency brought about through increased use of e-commercewill expand these sectors by $37.8 million.

Contractions will be experienced in the mining and retail trade industries.Mining tends not to benefit from e-commerce as it is vulnerable to theexchange rate implications expected to flow on from the productivity boostassociated with e-commerce. Retail trade contracts significantly(by $9.3 million) because of the disintermediation effect—that is, greater use ofe-commerce leads to a reduction in margins.

The net impact is an increase in activity of $40.5 million per annum.


National Employment

Regional Employment

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tasmaniaFigure 3


Many of the productivity improvements associated with greater use ofe-commerce may impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers also results in bypassingjobs. An offsetting factor would be that lower prices for goods and servicesstimulate demand in other areas and increase the demand for labour.

Although the division has a fairly diverse economy, it is still heavily reliant onthe agricultural sector. This dependency largely explains why the Mersey-Lyellis forecast to experience a fall in employment. Employment recovers after2007, as Tasmania begins to realise the productivity gains associated withincreased use of e-commerce, and reaches a level of approximately 0.2 per centless than the base case by 2010.

The simulation is built on the premise that governments do not respond toincrease use of e-commerce with policy changes. If they do, the contractions inoutput and employment could be offset.

Source:

Monash simulations conducted by The Allen Consulting Group in conjunction with the Centre

for Policy Studies, for the National Office for the Information Economy


fact sheetnorthern tasmania



The Northern statistical division is located in the north east of Tasmania,extending westwards to include the local government area (LGA) of MeanderValley and southwards to include the Northern Midlands LGA. Flinders Island,located off the north-east tip of Tasmania is one of the eight LGAs whichmakes up the Northern division. Launceston, is the principal metropolitan areaof the division.

The Northern statistical division is Tasmania’s second smallest covering19 935 km2 or 29.3 per cent of the State. Between 1994 and 1996, populationlevels initially rose, before falling from 1996 to 1998. This has resulted in anoverall decrease of only four people.

Maxwell and Hite (1991) classify the Northern Division as agricultural/manufacturing. By and large, the north east relies upon farming and the timberindustry for its economic prosperity. The Northern division dominates cerealsfor grain production and cereal crops, accounting for 69.3 per cent and60 per cent respectively of the State’s total. This division is responsible for themajority of the State’s pig, sheep and lamb production, as well as a largeproportion of the production of cattle for meat and milk.

There are a variety of other industries in the division, including manufacturing.For example, one of Tasmania’s largest industries, the aluminium smelter, islocated at Bell Bay, close to George Town. There are also a substantial numberof vineyards in the division, and timber milling employs a significant number oflocal residents.

In some areas, notably resort towns, income from tourism represents a largepercentage of earnings. The best skifields are located in the north east atBen Lomond, and there are several noteworthy historic towns in the area.The region’s largest town, Scottsdale, boasts the Southern Hemisphere’s largestlavender farm.

Key exhibits

Figure 1




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The real Gross Regional Product (GRP) in the Northern Division is expectedto peak at approximately 2.6 per cent greater than the base case by 2010.

The real GRP initially increases as industries progressively adopt e-commercein the regional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factorproductivity increases. More capital is injected into these sectors and there isan increase in the supply of labour stemming from time savings from producersand consumers. These efficiency effects slowly filter through the economy untilthe full effects are felt in 2010.

GRP is marginally lower than GDP after the full effect of the modellede-commerce changes have taken place, with the change in real GRP slowlyincreasing to around 2.7 per cent by 2016. This reflects dynamic benefits ase-commerce is used intensively in the fastest growing parts of the economy.

Figure 2



The Northern Division will benefit (in terms of output and employment)because its dominant industries are those that will experience the greatestbenefits from increased use of e-commerce. That is, the relevant monetaryincreases brought about from increased use of e-commerce outweigh therelevant decreases by approximately $59.2 million.

As e-commerce reduces the margins associated with the sale of goods andservices and encourages consumers to purchase directly from wholesalers (andfrom other sectors), retail trade is expected to significantly decrease(by $12 million). Both mining and agriculture also do not benefit frome-commerce and are forecast to experience relatively small contractions.

These contractions are offset by expansions in a number of sectors.In particular, wholesale trade and services are expected to expand byapproximately $41 million. Other sectors expected to benefit includetransport, tourism and construction.


Tourism

Other Services


Finance & Insurance


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-15 -10 -5 0 5 10 15


National Employment


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Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also impact on employment in the division.Disintermediating layers of economic activity between buyers and sellers alsoresults in bypassing jobs. An offsetting factor would be that lower prices forgoods and services stimulate demand in other areas and increase the demandfor labour.

As the Northern Division has a relatively high reliance on agriculture andmanufacturing, which are not particularly favoured by e-commerce,employment will initially decrease. There will, however, be an up-turn inemployment between 2007 and 2009 as e-commerce is fully integrated intothe regional economy. Consequently, greater use of e-commerce is expected toimpact positively on employment, leading to an increase in employment ofaround 0.3 per cent greater than the base case by 2010.

Source:





fact sheetsouthern tasmania



The Southern statistical division is located in the south east corner of the State,encompassing the local government areas (LGAs) of the Central Highlands,Southern Midlands, Huon Valley, Glamorgan/Spring Bay and the TasmanPeninsula. It also incorporates a large percentage of the Derwent Valley, Sorelland Kingborough LGAs.

This division is the only one in Tasmania to record an increase in populationlevels, with a growth rate of 0.4 per cent between 1994 and 1998. The highestgrowth in population in Tasmania during this period occurred in the Sorellarea where the population increased by 1 065 or 10.9 per cent.

Maxwell and Hite (1991) have classified the Southern Division as agriculturaldue to the abundance of rural land. This division is responsible for more than76 per cent of the State’s fruit production. Fruit farms in the Huon Valley stilldemonstrate why Tasmania was nicknamed the ‘Apple Isle’, and there are sheepand hops farms in the Derwent Valley.

The east coast economy is anchored on the tourism and fishing industries.Abalone, oysters, scallops, crayfish and deep-sea species form the bulk of thecatch. There are a substantial number of vineyards in the region, and timbermilling employs a significant number of local residents.

The central highlands is the site of many of Tasmania’s hydro-electric powerstations, historically a major regional employer. With hydro-electricconstruction currently on the wane, agriculture, forestry and tourism havebecome more important employers.

The Tasman Peninsula relies largely on the historic sites and breathtakingscenery as tourist drawcards. The Port Arthur Historic Site is one of Tasmania’spremiere tourist attractions.

Key exhibits

Figure 1




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4.5


The real Gross Regional Product (GRP) in the Southern Division is projectedto rise at a lower rate than the forecast increase in Australia’s gross domesticproduct (GDP). GRP is expected to rise by an estimated 2.1 per cent greaterthan the base case by 2009. It then continues to rise slowly, reaching themaximum level of 2.4 per cent by 2016.

The real GRP initially increases as industries progressively adopt e-commercein the regional economy. As the industries continue to adopt e-commerce, theeconomy makes better use of existing resources—that is, total factorproductivity increases. More capital is injected into these sectors and there isan increase in the supply of labour stemming from time savings from producersand consumers. These efficiency effects slowly filter through the economy untilthe full effects are felt in 2016.

Figure 2



The majority of industries in the Southern Division will expand with increasedadoption of e-commerce.

There will be significant growth in the wholesale trade, transport and tourismsectors. However, as these sectors are in their infancy in this division, they willonly add around $4.7 million to output. Greater additions to output will beachieved by sectors with more modest growth levels, including property,business and other services, and transport, construction and manufacturingbecause they are the larger industries.

The gains achieved by the expansion of these sectors are offset by contractionsin the mining, agriculture and retail trade sectors. The contraction of the retailtrade sector is dominated by the disintermediation effect. That is, greater useof e-commerce encourages consumers to purchase directly from wholesalersand other sectors, leading to a reduction in margins.

The net impact is an increase in industrial activity with a value of $14 millionper annum.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-3 -2 -1 0 1 2 3 4


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements that accompany greater use ofe-commerce may also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers also results in bypassingjobs. An offsetting factor would be that lower prices for goods and servicesstimulate demand in other areas and increase the demand for labour.

As the Southern Division is dominated by agriculture, which is not particularlyfavoured by e-commerce, employment will initially decrease. However, therewill be an increase in employment between 2005 and 2009 as e-commerce isfully integrated into the regional economy. Consequently, greater use ofe-commerce is expected to impact positively on employment, leading to anincrease in employment of around 0.2 per cent greater than the base case by2010.

Source:






The Barwon statistical division is situated on the western side of Port PhillipBay and south west along the Bass Strait coast. The metropolitan area ofGeelong is the regional centre of the division, which comprises the localgovernment areas of Golden Plains, Colac-Otway, Surf Coast and GreaterGeelong.

The Barwon division covers 8 947 km2 (or 3.9 per cent of the State) and ishome to a resident population of approximately 241 539. Greater Geelong isthe most populous municipality in Victoria, with an estimated population of185 000 persons.

The division has been classified by Maxwell and Hite (1991) as agricultural.Most of this division is devoted to agriculture, sheep, dairying and tourism.The majority of industrial activity is situated in and around Geelong andincludes manufacturing, processing and wool selling and a large petroleumrefinery.

The Shire of Colac-Otway in the west of the division is the centre of aprosperous agricultural area surrounded by rich pastoral hinterlands. The Shireis at the heart of Australia’s dairy industry and is home to a number of dairy-related industries.

The Great Ocean Road begins near Geelong and runs along the coastal edge ofthis division. Most towns along this road are resort or tourist centres and arepopular with day-trippers from Melbourne.

Other industries contributing to the economic development of the divisioninclude beef, lamb, chicken and veal production, grains, horticulture, and fishand seafood.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if Barwonadopts greater use of e-commerce. Real GRP will rise to a level of 3.8 per centgreater than the base case.

fact sheetbarwon victoria




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


As Victoria has been one of the States leading the uptake of e-commerce,Barwon is expected to experience large productivity gains from the increaseduse of e-commerce. These productivity gains will result in a steep increase inGRP up until 2006, when it peaks at 3.8 per cent. This will be greater than thenational average. As other States will be a little slower to adopt e-commerce,they only begin to maximise productivity gains from around 2007. This has theeffect of clawing back the large productivity gains made by Barwon andemphasising the peak in GRP that is shown in Figure 1.

Most States have realised their maximum productivity gains by 2010, by whichtime the GRP for Barwon begins to flatten out towards around 3.3 per centgreater than the base case by 2016.

Figure 2



Given the division’s broad industrial base it is reasonable to expect that thebenefits of e-commerce will generally be felt across a number of industries.With the division’s economy highly dependent on the tourism, services andagricultural industries, the impact on those sectors is of greatest interest.

The simulation shows that with a greater use of e-commerce, the tourismindustry experiences the highest growth rate in the division. It is expected tobe 6.8 per cent higher than the base case in 2010, which will result in anincrease in output of around $16.7 million.

Other sectors to experience significant growth include property and businessservices (by $37.1 million), other services (by $43.1 million), construction(by $20.8 million) and wholesale trade (by $12.7 million). These services willbenefit from greater efficiencies in dealing with suppliers and clients throughelectronic service delivery.

Victoria gains the most from increased use of e-commerce. The flow on to allits industries offsets the negative impact of the exchange rate appreciation onmining and agriculture seen in other States.

As Barwon is close to the major centre of Melbourne, the costs saving broughtabout by more efficient markets will lead to small growth in the agriculturalsector (0.1 per cent).


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-25 -15 -5 5 15 25 35 45


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

The retail trade industry is expected to decline the most (3.9 per cent). The fallin this sector is dominated by the disintermediation effect—that is, a reductionin margins associated with greater use of e-commerce.

Figure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to a largenet increase in employment until 2006. Barwon will experience a largerincrease than the national average. After peaking at two per cent greater thanthe base case, employment begins to quickly fall towards the base case forecastas other regions that have been slower to adopt e-commerce start to increasetheir rate of e-commerce adoption. As the majority of regions begin to achievelarge productivity gains from 2007 and 2010, they claw back the large gainsachieved by Barwon. In the longer run, employment levels out to over0.8 per cent greater than the base case.

Source:





fact sheetcentral highlands

victoria The impact of e-commerce on output, industries and employment


The Central Highlands statistical division is situated north west of Melbourneand covers approximately 12 660 km2. The metropolitan area of Ballarat playsa strong role as a provincial service and manufacturing centre for the division’slocal government areas of Ararat, Pyrenees, Hepburn, Ballarat and Moorabool.

The Shire of Moorabool is the fastest growing Shire in the Central Highlands,experiencing annual average growth rates of around two per cent per year. It isnow home to nearly 24 000 people or 17 per cent of the division’s 140 543residents.

The Central Highlands is often classified as agricultural/manufacturing as it ischaracterised by a rich agricultural hinterland that produces fruit, vegetablesand livestock products. Conveniently located between Melbourne andextensive farming areas in the Mallee and Wimmera statistical divisions, theCentral Highlands division is in an ideal position to develop industries forprocessing farm products.

More recently, the division has diversified to include health services, education,tourism, retail trade and a rapidly expanding information technology industry.

A number of Victorian Government initiatives have established Ballarat as aregional centre of Information Technology and Telecommunications (IT&T)industries. In particular the State Data Centre was set up to provide itsGeographic Information Systems services and IBM Global Services has set upits headquarters for IBM’s computing services for South East Asia.

The mining and tourism industries continue to play a prominent role in theeconomic development of the division. The Pyrenees wineries, Ballarat’shistoric sites, and the mineral springs at Ballan, Blackwood and Daylesfordcontinue to attract a significant number of tourists per year.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if the CentralHighlands adopts increased use of e-commerce. GRP is expected to rise to alevel approximately 3.7 per cent greater than the base case by 2006.



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5



victoriaAs Victoria has been one of the States leading the uptake of e-commerce, theCentral Highlands is expected to experience large productivity gains fromincreasing use of e-commerce. These productivity gains will result in a steepincrease in GRP up until 2006, when it peaks at 3.7 per cent. This will beabove the national average. As other States have been a little slower to adopte-commerce, they gradually begin to maximise productivity gains from around2007. This has the effect of clawing back the large productivity gains made bythe Central Highlands and emphasising the peak in GRP that is shown inFigure 1.

Most States will have realised their maximum productivity gains by 2010, bywhich time GRP for the Central Highlands begins to flatten out to around3.3 per cent greater than the base case by 2016.

Figure 2



The simulation shows that with a greater use of e-commerce the other servicesindustry will increase by $26.4 million in the period to 2010. Other areas toexperience significant increases include the tourism, and property and businessservices with respective output increases of $9.9 million and $19.3 millionin 2010.

The retail trade industry is the only industry expected to decline(by 3.9 per cent or $8.5 million). The fall in this sector is dominated by thedisintermediation effect—that is, a reduction in margins associated with greateruse of e-commerce.

Victoria gains the most from increased use of e-commerce. The flow on to allits industries offsets the negative impact of the exchange rate appreciation onmining and agriculture seen in other states.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-15 -10 -5 0 5 10 15 20 25 30


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5


victoriaFigure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment until 2006. After peaking at just over two per centgreater than the base case, employment falls as other regions that have beenslower to adopt e-commerce start to increase their rate of e-commerceadoption. As the majority of regions begin to achieve large productivity gainsfrom 2007 to 2010, they claw back the gains achieved by the CentralHighlands. In the longer run employment levels out to over 0.8 per centgreater than the base case. Overall, the increase in employment is higher thanthe national average throughout the forecast period.

Source:




fact sheeteast gippsland



The East Gippsland statistical division is located in the south east of Victoria.It borders on New South Wales in the north, Bass Strait in the south andGippsland in the west. East Gippsland covers approximately 27 790 km2

(12.2 per cent of the State). It incorporates the Shires of Wellington and EastGippsland and includes the regional centres of Sale and Bairnsdale.

With the majority of the division covering public land, the resident populationof approximately 82 379 is relatively small compared to other divisions.It accounts for only 1.8 per cent of Victoria’s population.

East Gippsland has been classified as agricultural by Maxwell and Hite (1991)because of its extensive agricultural and forestry activities. The division isnoted for its timber, fishing, oil and gas processing plants, and national parks.The central location of East Gippsland provides good access to both theSydney and Melbourne markets.

East Gippsland’s agricultural industries include beef, dairy, wool, vegetables,vegetable seed production, horticulture and the alternative industries ofostrich, deer and emu farming. The East Gippsland Forest Management Areacovers five per cent of the State’s tree-covered land. Twenty-one sawmillsproduce 12.5 per cent of the State’s sawn hardwood. It is also a leadingprovider of high quality value-added timber products (especially finefurniture)—a developing niche market.

East Gippsland’s proximity to the Bass Strait gives Australia’s largest fishingfleet access to the highly productive trawl area in the south east.

The division’s image of a natural, clean environment places it in a perfectposition to take advantage, over the long term, of the growing eco-tourismmarket. The division’s wine makers, who produce some of Australia’s finestwines, have contributed to the rapid development of this industry.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce. GRP will rise by 2.5 per cent greater than the base case(1.1 per cent higher than the real GDP) by 2006.



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5



victoriaAs Victoria has been one of the States leading the uptake of e-commerce, EastGippsland is expected to experience large productivity gains from increasinguse of e-commerce. These productivity gains will result in a steep increase inGRP up until 2006 when it peaks at 2.5 per cent. As other States have been alittle slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by East Gippsland and emphasising the peak inGRP (evident in Figure 1).

By 2010, most States will have realised their maximum productivity gains fromincreased use of e-commerce so that all regions will be competing on an equalbasis. Consequently, GRP in East Gippsland will stabilise to reach 2.6 per centby 2016.

Figure 2



The benefits from greater use of e-commerce are broadly spread across thedifferent industry sectors in the division. Expanding sectors include propertyand business services (by $9.7 million), other services (by $13.2 million),tourism (by $5.5 million) and construction (by $5.4 million).

Offsetting the expansion somewhat is a small contraction in agriculture and asubstantial contraction in retail trade.

Victoria gains the most from increased use of e-commerce. The flow on to allof its industries offsets the negative impact of the exchange rate appreciationon mining and agriculture seen in other states. However, because of EastGippsland’s narrow industrial base, agriculture declines marginally.

Increased use of e-commerce will be to the detriment of the retail trade sectorbecause of disintermediation. E-commerce reduces the margins associated withthe sale of goods, encouraging purchases to be made directly from wholesalers(and direct from other sectors).

The net increase in East Gippsland’s output is expected to be $43.7 millionto 2010.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-8 -6 -4 -2 0 2 4 6 8 10 12 14


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5


victoriaFigure 3


Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment, above the national average over the forecast period.After peaking at 1.6 per cent greater than the base case, employment begins tofall as other regions that have been slower to adopt e-commerce acceleratetheir rate of e-commerce adoption. As the majority of regions begin to achievelarge productivity gains between 2007 and 2010, they claw back the gainsachieved by East Gippsland. This will have the effect of emphasising the peakin employment that is evident in Figure 3.

After 2010, employment levels begin to stabilise as productivity gains even out.Employment then smooths out to 0.6 per cent greater than the base case.

Source:




fact sheetgippsland victoria



The Gippsland statistical division is situated on the eastern side of theMelbourne statistical division, with its coastline running along Bass Strait.It covers approximately 13 575 km2 and incorporates part of the Shire of YarraRange, Baw Baw, La Trobe, South Gippsland, Bass Coast, and the YallournWorks Area.

An estimated 151 307 people (or 3.5 per cent of Victoria’s population) residein Gippsland.

The Gippsland Statistical Division has been classified as other by Maxwell andHite (1991) due to the diversity of industry. Major employers includeagriculture, forestry and fishing, manufacturing, construction, retail trade andthe supply of electricity, gas and water.

Most of Victoria’s electricity is generated in the Latrobe Valley, in the east ofthe division. These power stations are fuelled from nearby open-cut coal mineswhich hold the world’s largest known brown coal deposits. Reserves areestimated at 35 000 million tonnes and the seam is more than 60 km long.The division also has some major service facilities including several large retailcentres.

The Baw Baw Shire is a rich horticultural and dairying area, supplying much ofMelbourne’s milk. There are diverse farming activities in the area, and a timberindustry in the foothills of the Great Dividing Range. The South Gippslandregion also has a strong agricultural sector.

Gippsland is one of the few diverse regions in Australia. It comprisessnowfields, rainforest, beaches and farmlands. In addition, the splendour of thepopular Penguin Parade at Phillip Island—Australia’s second most visitednatural attraction—has made tourism the growth industry of the future.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if Gippslandadopts a greater use of e-commerce. GRP is expected to rise to a levelapproximately 3.3 per cent greater than the base case, reaching 0.8 per centgreater than GDP by 2006.



1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-15 -10 -5 0 5 10 15 20 25

fact sheetgippsland victoria As Victoria has been one of the States leading the uptake of e-commerce,

Gippsland is expected to experience large productivity gains from increasinguse of e-commerce. These productivity gains will result in a steep increase inGRP up until 2006, when it peaks at 3.3 per cent. As other States have been alittle slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by Gippsland and emphasising the peak in GRPthat is evident in Figure 1.

By 2010, most States will have realised their maximum productivity gains fromincreased use of e-commerce, so that all regions will be competing on an equalbasis. Consequently, GRP in Gippsland will stabilise to reach three per centgreater than the base case by 2016.

Figure 2



E-commerce will be used intensively in the fastest growing parts of theeconomy, such as tourism, which will be 6.7 per cent higher ($9.1 million)in 2010.

All sectors, except retail trade, experience growth in output from greater useof e-commerce. Other areas experiencing significant output growth includecommunication services, finance and insurance sectors.

However, the property and business and other services sectors experience thegreatest increase in value of output due to the scale of activity. Property andbusiness services’ output increases by $21.2 million and other services’ outputincreases by $24.1 million up to 2010.

Retail trade is expected to decline. The fall in this sector is dominated by thedisintermediation effect—that is, a reduction in margins associated withgreater use of e-commerce .

Of all the States and Territories, Victoria gains the most from increased use ofe-commerce. The flow on to all its industries offsets the negative impact of theexchange rate appreciation on mining and agriculture seen in other States.

Overall Gippsland’s industries experience a net increase in output of$106.9 million.


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetgippsland victoria Figure 3


Many of the productivity improvements associated with greater use ofe-commerce impact on employment in the division. Disintermediating layers ofeconomic activity between buyers and sellers results in bypassing jobs. Anoffsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment over the forecast period. In fact this increase will beabove the national average. After peaking at 1.9 per cent greater than the basecase, employment falls as other regions that have been slower to adopte-commerce accelerate their rate of e-commerce adoption. As the majority ofregions begin to achieve large productivity gains between 2007 and 2010, theyclaw back the gains achieved by Gippsland. This will have the effect ofemphasising the peak in employment that is evident in Figure 3.

After 2010 employment levels begin to stabilise as productivity gains even out.Employment then smooths out to 0.8 per cent greater than the base case overthe longer term.

Source:




fact sheetgoulburn victoria



The Goulburn statistical division lies in the north of the State, borderingthe River Murray and New South Wales in the north. It covers anapproximately 23 385 km2 and comprises the City of Greater Sheppartonand the Shires of Moira, Campaspe, Strathbogie, Delatite, Mitchell andMurrindindi.

The Goulburn division has demonstrated a consistent average annualgrowth rate in the order of one per cent a year. Approximately 30 per centof the division’s population (184 354) resides in Greater Shepparton,which is the growth centre of the division.

With just under 37 per cent of people employed in the agriculture andmanufacturing industries, Hite and Maxwelll (1991) have classified thisdivision as agricultural/manufacturing. A significant proportion of Victoria’sagricultural production is generated in the Goulburn division.

The north of the division runs along the River Murray and is part of thelargest irrigated area in Australia. It produces the bulk of the State’s fruit,vegetables and dairy products as well as cereal crops, grapes and wine,beef, wool and lambs.

Greater Shepparton is situated in the heart of the fertile Goulburn Valley.This rapidly developing region is the State’s leading centre for intensiveagriculture and food processing industries, with canneries capable ofprocessing more than 70 000 tonnes of fruit each year. Further south, inthe Strathbogie region, the agricultural activities continue with wool,dairying and mixed crops and orchards.

The traditional economic base of the Goulburn division is supplemented bystrong growth in the areas of viticulture and thoroughbred horse breedingand training. Other areas of growth include education—with La TrobeUniversity’s campus at Shepparton—and retail, wholesale trade andproperty and construction.

Key exhibits

Figure 1




1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5


fact sheetgoulburn victoria The real Gross Regional Product (GRP) is projected to be higher with

greater use of e-commerce. GRP is predicted to rise to a level 3.4 per centgreater than the base case and 0.9 per cent higher than GDP in 2006.

As Victoria has been one of the States leading the uptake of e-commerce,Goulburn is expected to experience large productivity gains from increasinguse of e-commerce. These productivity gains will result in a steep increasein GRP up to 2006, when it peaks at 3.4 per cent. As other States havebeen a little slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing backthe large productivity gains made by Goulburn and emphasising the peakin GRP that is evident in Figure 1.

Most States will have realised their maximum productivity gains by 2010,by which time GRP for Goulburn begins to stabilise to aroundthree per cent greater than the base case by 2016.

Figure 2



The only sector to experience a decline is retail trade, contracting by$11.7 million in 2010 compared to the base forecast. The contraction inthis sector is dominated by the disintermediation effect—that is, areduction in margins associated with greater use of e-commerce.

Despite the decline in retail trade, greater use of e-commerce results in anet gain in output of approximately $115.8 million. These gains arespread across a variety of sectors, including property and business services,other services, wholesale trade, communication services and construction.In addition, Goulburn’s tourism industry continues to experience thehighest growth rate in the Division. It is expected to be 6.8 per cent largerin 2010.

Of all the States and Territories, Victoria gains the most from increaseduse of e-commerce. The flow on to all its industries offsets the negativeimpact of the exchange rate appreciation on mining and agriculture seenin other States.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -10 0 10 20 30


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetgoulburn victoria Figure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to anet increase in employment. In fact the increase in employment is higherthan the national average over the whole forecast period. After peakingat 1.7 per cent above the base case, employment falls, as other regionsthat have been slower to adopt e-commerce start to accelerate theiradoption. As the majority of regions begin to achieve large productivitygains from 2007 to 2010, they claw back the gains achieved by Goulburn.This will have the effect of emphasising the peak in employment that isevident in Figure 3.

After 2010, employment levels begin to stabilise as productivity gains evenout. Employment then smooths out to 0.5 per cent greater than the basecase .

Source:






1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetloddon victoria



The Loddon statistical division lies to the north of Melbourne in the centralnorth-western area of Victoria—stretching from the Macedon Ranges outsideMelbourne to just south of the River Murray. It includes Greater Bendigo,which is the second most populous municipality in regional Victoria and amajor regional centre servicing a diverse rural hinterland. Other majorregional centres include Maryborough, Castlemaine, Kyneton andWedderburn.

A total of 159 842 people or 3.5 per cent of Victoria’s population reside inthis division, which covers approximately 19 200 km2 or 8.4 per cent of theState. The division’s population has grown at an average annual rate of1.6 per cent since 1991.

Hite and Maxwell (1991) have classified Loddon as predominantlyagricultural/manufacturing as the Division has 28 per cent of employment inthe agriculture and manufacturing industries. Historically this division was amajor gold mining region but now Loddon is dominated by the rural sector—mainly grain and livestock production. Near the River Murray the landsupports irrigation areas, vineyards and wineries. Further south the landsupports wheat, fruit, dairy products and market gardens. Bendigo also has alarge sheep market.

Gold mining is once again beginning to make its mark on the local economywith Bendigo Mining acquiring the gold fields in 1997.

By individual industry comparison, retail trade is the second largest employerin the division. Construction, education, health and community services, andgovernment administration are also major employers.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce. GRP will rise to a level of 3.7 per cent above the base case,reaching 1.2 per cent higher than GDP by 2006.


fact sheetloddon victoria As Victoria has been one of the States leading the uptake of e-commerce,

Lodden is expected to experience large productivity gains form increasing useof e-commerce. These productivity gains will result in a steep increase in GRPup until 2006 when it peaks at around 3.7 per cent. As other States have beena little slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by Loddon and emphasising the peak in GRPthat is shown in Figure 1.

Most States will have realised their maximum productivity gains by 2010. Aftera slight low, GRP for Loddon begins to stabilise at its longer-term rate ofaround 3.2 per cent greater than the base case by 2016. This reflects thedynamic benefits of greater use of e-commerce.

Figure 2



The benefits from efficiencies of greater use of e-commerce are broadly spreadacross the different industry sectors in the division. All sectors except retailtrade show positive growth from greater use of e-commerce.

Retail trade is expected to be smaller by 3.9 per cent or $10.1 million.Increased use of e-commerce will be to the detriment of the retail trade sectorbecause of disintermediation. E-commerce reduces the margins associated withthe sale of goods, encouraging purchases to be made directly from wholesalersand other sectors.

The simulation shows that with greater use of e-commerce, tourismexperiences the highest growth rate in the division. It is expected to be6.8 per cent larger in the period to 2010. Other areas to experience significantgrowth rates include communication services, property and business servicesand other services. These services will benefit from greater efficiencies indealing with suppliers and clients through electronic service delivery.


The indicative value for the net increase in annual output for Loddon is$104.1 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-20 -15 -10 -5 0 5 10 15 20 25 30


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetloddon victoria Figure 3


Many of the productivity improvements associated with greater use ofe-commerce impact on employment in the division. Disintermediating layersof economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services increasethe demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. In fact, employment will be higher than the nationalaverage increase throughout the forecast period. After peaking at two per centgreater than the base case, employment falls as other regions that have beenslower to adopt e-commerce accelerate their rate of e-commerce adoption.As the majority of regions begin to achieve large productivity gains from 2007to 2010, they claw back the gains achieved by Loddon. This will have theeffect of emphasising a peak in GRP.

In the longer run as all regions begin to compete on an equal level,employment will eventually level out to around 0.8 per cent greater than thebase case by 2016.

Source:




fact sheetmallee victoria



The Mallee is Victoria’s most northern division bordering South Australia inthe west and the Wimmera and Loddon Statistical Divisions in the south.The Murray River on the New South Wales border marks the northernboundary of this statistical division. The river cities of Mildura and Swan Hillare the regional centres of the division, which also includes the associated CityCouncils and Shires of Gannawarra and Buloke.

Covering 41 035 km2, or 18 per cent of the State, the Mallee is Victoria’slargest statistical division. More than 52.6 per cent of the division’s residentpopulation of 87 012 is concentrated in the Rural Council of Mildura. Mildurais the only Council that continues to show steady, yet small, increases inpopulation levels.

Maxwell and Hite classify the Mallee Statistical Division as agricultural.The greatest share of western Victoria’s agricultural production comes fromthe Mallee Division, where crops (particularly cereals for grain) account for80 per cent of the division’s agricultural produce, and 29 per cent of Victoria’scrop output.

Lying in the heart of the Sunraysia District, Mildura is renowned worldwidefor its produce of high quality Golden Valencia and Navel oranges and melons.The well-irrigated areas along the Murray are profitable for growing stonefruits and grapes.

Behind primary industries, manufacturing, retail, wholesale trade andconstruction are the next biggest employers. Manufacturing is predominantlylocated in the rural city of Swan Hill. Tourism also makes a significantcontribution to the division’s economic development in the areas surroundingthe Murray.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce. GRP will rise to a level of 3.1 per cent above the base case,reaching 0.6 per cent higher than GDP by 2006.

As Victoria has been one of the States leading the uptake of e-commerce, theMallee is expected to experience large productivity gains from increasing useof e-commerce. These productivity gains will result in a steep increase in GRP



1997

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2007

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-1.5

-0.5

0.5

1.5

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3.5

4.5


fact sheetmallee victoria up until 2006, when it peaks at around 3.1 per cent. As other States have been

a little slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by the Mallee and emphasising the peak in GRPthat is shown in Figure 1.

Most States have realised their maximum productivity gains by 2010. After aslight low, GRP for the Mallee begins to stabilise at its longer term rate ofaround 2.8 per cent greater than the base case by 2016.

Figure 2



E-commerce will be used intensively in the fastest growing parts of theeconomy such as tourism, communication, and finance and insurance services.Other industries forecast to expand include property and business services(by $13.1 million), other services (by $15.3 million) and wholesale trade(by $8.8 million). These services will benefit from greater efficiencies indealing with suppliers and clients through electronic service delivery.

The only industry that declines is retail trade. The fall in this sector isdominated by the disintermediation effect—that is, a reduction in marginsassociated with greater use of e-commerce.

Of all the States and Territories, Victoria gains the most from increased use ofe-commerce. The flow on to all of its industries offsets the negative impact ofthe exchange rate appreciation on mining and agriculture seen in other States.

The indicative value for the net increase in annual activity for the Mallee is$58.3 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-10 -5 0 5 10 15 20


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetmallee victoria Figure 3


Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services increasethe demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. After peaking at 1.5 per cent above the base case,employment falls as other regions that have been slower to adopt e-commerceaccelerate their rate of e-commerce adoption. As the majority of regions beginto achieve large productivity gains from 2007 to 2010, they claw back thegains achieved by the Mallee. This will have the effect of emphasising a peak inGRP.

In the longer run, as all regions begin to compete on an equal level,employment will level out to around 0.5 per cent greater than the base caseby 2016.

Source:






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2006

2007

2008

2009

2010

2011

2012

2013

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-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetmelbourne victoria



The Melbourne statistical division extends approximately 8 880 km2 aroundPort Phillip Bay in Victoria. It is divided further into four metropolitansubdivisions: Western, Northern, Eastern and Southern Melbourne whichincludes the Greater Dandenong and the Mornington Peninsula.

Although Melbourne is the smallest statistical division in Victoria, covering just3.8 per cent of the State, it is by far the most populated. More than 3.3 millionpeople are estimated to live in Melbourne.

While this division is classified as metropolitan, it has a diversified economicbase. In addition to an extensive range of business and retail services, there is amoderate amount of manufacturing and a small amount of agricultural activity.

Melbourne is in an ideal location for international business, being in anexcellent strategic location in the Asia-Pacific region. Built on two waterways,the Yarra River and Port Phillip Bay, it is a bustling sea port and is the nation’stransport hub—a legacy of its highly developed infrastructure. It has asophisticated industry base and skilled workforce.

Melbourne is a world-class city, noted for its diversity, vitality andsophistication, all of which have made it one of the world’s most livable cities.Melbourne is known as the arts capital of Australia and is also famous for itscafé culture, international sporting events and multiculturalism.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce. GRP is projected to be 4.3 per cent higher than the basecase in 2006, which is 1.8 per cent higher than the GDP projection for thatyear.

As Victoria has been one of the States leading the uptake of e-commerce,Melbourne is expected to experience large productivity gains from increasinguse of e-commerce. These productivity gains will result in a steep increase inGRP up until 2006, when it peaks at 4.3 per cent. As other States have been alittle slower to adopt e-commerce, they gradually begin to maximiseproductivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by Melbourne and emphasising the peak in GRPthat is shown in Figure 1.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-400 -200 0 200 400 600

fact sheetmelbourne victoria Most States will have realised their maximum productivity gains by 2010, by

which time GRP for Melbourne begins to flatten out to around 3.7 per centgreater than the base case by 2016. The maintenance of higher activity afterthe full effects of the modelled e-commerce changes have taken place, reflectsthe dynamic benefits of increased use of e-commerce, expanding activities thatare already forecast to grow rapidly.

Figure 2



The simulation shows that with a greater use of e-commerce, the property andbusiness services sector experiences the highest growth rate in this division.It is expected to be larger by $630.7 million in 2010 with increased use ofe-commerce.

Other areas to experience significant growth include the financial andinsurance industry (by $371.7 million), the other services industry(by $577.4 million), wholesale trade (by $291.6 million) and the constructionindustry (by $275.6 million). These services will benefit from greaterefficiencies in dealing with suppliers and clients through electronic servicedelivery.

The retail trade industry is expected to decline by around $219 million in 2010with increased use of e-commerce. The fall in this sector relative to the basecase is dominated by the disintermediation effect—that is, a reduction inmargins associated with greater use of e-commerce. This decline in retail tradeis substantially outweighed by the associated growth of Melbourne’s otherindustries throughout the period, from the greater use of e-commerce, leadingto a net benefit of around $2.8 billion.


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetmelbourne victoria Figure 3


Many of the productivity improvements associated with greater use ofe-commerce may also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. In fact, this increase is expected to be above thenational average over the forecast period. After peaking at 2.3 per cent higherthan the base case, employment falls as other regions that have been slower toadopt e-commerce accelerate their rate of adoption. As the majority of regionsbegin to achieve large productivity gains between 2007 and 2010, they clawback the gains achieved by Melbourne. This will have the effect of emphasisingthe peaked effect. In the longer run, employment levels out to overone per cent greater than the base case.

Source:






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2001

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2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-4.5

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetovens-murray victoria



The Ovens-Murray statistical division is situated in the north east of the State,covering approximately 18 160 km2 (eight per cent of Victoria). New SouthWales marks the northern extremity of the division, which borders theGoulburn division in the west and the East Gippsland division in the south.Local government areas include the rural councils of Wodonga and Wangarattaand the Shires of Indigo, Alpine and Towong.

Wodonga, part of the Albury-Wodonga region, is a major growth centre whichservices a wide rural hinterland, both in Victoria and New South Wales.Approximately one-third of the division’s 120 706 residents live in this area.

With 30 per cent of the labour force employed in either agriculture ormanufacturing, this division has been classified by Maxwell and Hite (1991) asagricultural/manufacturing.

The area around the upper Murray was the first in the regional area to beirrigated and has been transformed into rich farmland producing citrus fruitsand world-class wine. Further inland, the economy is based on farming(predominantly beef, sheep and dairying and local primary produce), and has alarge business base.

Tourism is a booming industry in this division, which is home to some ofAustralia’s oldest wineries and boasts leading ski resorts like Falls Creek, Mt.Hotham and Mt. Buller.

Retail trade is the second largest employer in the division behindmanufacturing. Other industries employing a significant portion of theworkforce include government administration and defence, wholesale trade,construction and education.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be 3.8 per cent higherthan the base case by 2006. This is 1.3 per cent greater than the forecastincrease in GDP for the same period.

As Victoria has been one of the States leading the uptake of e-commerce, theOvens-Murray division is forecast to experience large productivity gains fromincreased use of e-commerce. These productivity gains will result in a steep


fact sheetovens-murray victoria increase in GRP up until 2006, when it peaks at 3.8 per cent. As other States

have been a little slower to adopt e-commerce, they gradually begin tomaximise their productivity gains from around 2007. This has the effect ofclawing back the large productivity gains made by the Ovens-Murray division,emphasising the peak in GRP that is evident in Figure 1.

By 2010 most States will have realised their maximum productivity gains fromincreased use of e-commerce, so that all regions will be competing on an equalbasis. Consequently, GRP in the Ovens-Murray division will stabilise to reach0.8 per cent greater than the base case by 2016.

Figure 2



The benefits from the efficiencies of greater use of e-commerce are broadlyspread across all sectors, except retail trade. Retail trade does not benefitbecause of the disintermediation effects of e-commerce. That is, e-commercereduces the margins associated with the sale of goods, encouraging purchasesto be made directly from wholesalers (and direct from other sectors).

Victoria gains the most from increased use of e-commerce. The flow on to allof its industries offsets the negative impact of the exchange rate appreciationon mining and agriculture seen in other states.

Expansions in all other sectors, including agriculture and mining, more thanoffset the contraction in retail trade. In particular, greatest expansions will befelt in property and business services (by $13.5 million), other services (by$18.2 million), manufacturing (by $7.2 million), construction (by $6.8 million)and tourism (by $6.7 million).

The forecast net increase in output for the Ovens-Murray division is$64 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-10 -5 0 5 10 15 20


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetovens-murray victoria Figure 3


Many of the productivity improvements associated with greater use ofe-commerce impact on employment in the division. Disintermediating layers ofeconomic activity between buyers and sellers result in bypassing jobs. Anoffsetting factor would be that lower prices for goods and services stimulatedemand in other areas and increase the demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. After peaking at two per cent higher than the basecase, employment falls as other regions that have been slower to adopte-commerce accelerate their rate of adoption. As the majority of regions beginto achieve large productivity gains between 2007 and 2010, they claw backgains achieved by the Ovens-Murray division. This will have the effect ofemphasising the peak in employment that is evident in Figure 3.

After 2010, employment levels begin to stabilise as productivity gains even out.Employment then smooths out to 0.8 per cent greater than the base case.

Source:




fact sheetwestern district



The Western District statistical division is located in the south western cornerof the State, extending eastwards from the South Australian border to CapeOtway. Warrnambool is located approximately 265km south west of WesternDistrict and is the principal service centre for South West Victoria. Othermajor regional centres included in the division are Portland, Port Fairy,Camperdown and Hamilton and the unincorporated Lady Julia Percy Island.

The Western District covers approximately 24 065 km2 or 10.6 per cent ofthe State, and is home to an estimated 101 000 residents (2.2 per cent of theState population).

The Western District is known for its sheep and dairy country, vegetable farms,cereal crops, belts of timber and tourism industry. The Great Ocean Roadwinds its way around the rugged coastline, with attractions such as the TwelveApostles and the nursery for the southern right whale.

The Southern Grampians region is dominated by the rural sector with large-scale sheep grazing, and wool production. An abundance of dairy farms in theareas has led to the development of a major dairy processing industry.

Portland is the only deep-water port between Western District and Adelaide,and is the industrial and commercial centre for the division. It is also home toone of the world’s largest and most efficient aluminium smelters producing300 0000 tonnes of aluminium per year and employing 650 people.

Pine and blue gum plantations cover more than 60 000 hectares in the GlenelgShire and are expanding at 5 000 hectares per year. There are also sevensubstantial vineyards covering over 1 000 hectares of land, and a fishing fleetemploying over 300 people.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher if theWestern District adopts increased use of e-commerce. GRP is expected to riseto a level approximately 3.1 per cent greater than the base case by 2006,reaching 0.6 per cent higher than GDP for 2006.



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victoriaAs Victoria has been one of the States leading the uptake of e-commerce,Western District is forecast to experience large productivity gains fromincreasing use of e-commerce. These productivity gains will result in a steepincrease in GRP up until 2006, when it peaks at 3.1 per cent. As other Stateshave been a little slower to adopt e-commerce, they gradually begin tomaximise productivity gains from around 2007. This has the effect of clawingback the large productivity gains made by Western District and emphasisingthe peak in GRP that is shown in Figure 1.

Most States have realised their maximum productivity gains by 2010, by whichtime GRP for Western District begins to flatten out to around 2.7 per centgreater than the base case by 2016. The maintenance of higher activity afterthe full effects of the modelled e-commerce changes have taken place, reflectsthe dynamic benefits of increased use of e-commerce.

Figure 2



With a greater use of e-commerce the tourism industry experiences the highestgrowth rate in the division. Although tourism is expected to grow by6.8 per cent, it does not have the greatest increase in monetary value.

Other areas to experience significant growth include construction,communication services, finance and insurance services and other services.Other services’ output increases by $18.8 million in 2010. These services willbenefit from greater efficiencies in dealing with suppliers and clients throughelectronic service delivery.

Retail trade is expected to decline. The fall in this sector is dominated by thedisintermediation effect—that is, a reduction in margins associated withgreater use of e-commerce.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-15 -10 -5 0 5 10 15 20


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5


victoriaFigure 3



As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. After peaking at 1.4 per cent higher than the basecase, employment falls as other regions that have been slower to adopte-commerce accelerate their rate of adoption. As the majority of regions beginto achieve large productivity gains between 2007 and 2010, they claw back thegains achieved by the Western District. This will have the effect of emphasisingthe peak. In the longer run, employment levels out to over 0.4 per cent greaterthan the base case.

Source:




fact sheetwimmera victoria



The Wimmera statistical division is situated in the west of Victoria, adjacent toSouth Australia. It is bordered by the Mallee in the north, and the WesternDistrict and the Central Highlands in the south. Horsham is the major regionalcentre, servicing the rural hinterland. Other regional centres include Nhill,Stawell, Edenhope and Warracknabeal.

Wimmera is the second largest statistical division in Victoria coveringapproximately 30 437 km2 or 13.4 per cent of the State. It is the most sparselypopulated, home to an estimated 52 175 people representing just 1.1 per centof Victoria’s population.

The Wimmera statistical division is classified as agricultural by Maxwell andHite (1991). The economy of the western and northern parts of the division isbased primarily on wheat, sheep, cereal crops and vegetables but, in recenttimes, has diversified to include the production of niche market products suchas oilseeds and legumes and high quality grapes for wine production.

The division is host to a number of other important industries includingmanufacturing, tourism, health services, retail and wholesale trade, commerceand community services. In particular Horsham is home to the Centre forWheat Research.

The Northern Grampians Shire, in the south east of the division, is the centreof its prosperous tourism industry. Largely based on the natural environment,it includes attractions such as the Grampians wineries, the Grampians NationalPark and the Stawell Easter Gift.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) is projected to be higher with greateruse of e-commerce. GRP will increase to a level of around 2.5 per cent abovethe base case by 2006.

As Victoria has been one of the States leading the uptake of e-commerce, theWimmera is forecast to experience large productivity gains from increased useof e-commerce. These productivity gains will result in a steep increase in GRPup until 2006, when it peaks at around 2.5 per cent. As other States have beena little slower to adopt e-commerce, they gradually begin to maximise



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productivity gains from around 2007. This has the effect of clawing back thelarge productivity gains made by the Wimmera and emphasising the peak inGRP that is shown in Figure 1.

Most States have realised their maximum productivity gains by 2010. After aslight low, GRP for the Wimmera begins to stabilise at its longer term rate ofaround 2.4 per cent greater than the base case by 2016. The maintenance ofhigher activity after the full effects of the modelled e-commerce changes havetaken place reflects the dynamic benefits of increased use of e-commerce.

Figure 2



The tourism industry experiences the highest growth rate in the division with agreater use of e-commerce. It is expected to increase by 6.7 per cent in 2010,which is associated with a net increase in output of $3.2 million.

Other areas to experience significant growth include communication, finance,insurance, property, business and other services. These will benefit from greaterefficiencies in dealing with suppliers and clients through electronic servicedelivery. Other services will experience the greatest increase in output of$10.6 million in 2010, compared to the base case.

Retail trade is expected to decline with the contraction in this sector dominatedby the disintermediation effect—that is, a reduction in margins associated withgreater use of e-commerce.

Of all the States and Territories, Victoria gains the most from increased use ofe-commerce. The flow on to all of its industries offsets the negative impact ofthe exchange rate appreciation on mining and agriculture seen in other States.

The net gain in industry output is $34.9 million.


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-6 -4 -2 0 2 4 6 8 10 12


National Employment


97

1998

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2007

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2011

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-3.5

-2.5

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Figure 3


Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and services increasethe demand for labour.

As shown in Figure 3, greater use of e-commerce is expected to lead to a netincrease in employment. After peaking at 0.9 per cent above the base case,employment moderates as other regions that have been slower to adopte-commerce accelerate their rate of adoption. As the majority of regions beginto achieve large productivity gains between 2007 and 2010, they claw back thegains achieved by the Wimmera.

In the longer run, as all regions begin to compete on an equal level, theincrease in employment in the Wimmera levels out to just above the base caseforecast.

Source:





fact sheetgascoyne

western australia The impact of e-commerce on output, industries and employment


The Gascoyne statistical division is located in the lower north west of WesternAustralia. The area stretches over 600km of coast from the Zuytdorp Cliffs tothe West Cape and the Ningaloo Reef, and over 300km inland to MountAugustus. The division is made up of four local government municipalities: theShires of Carnarvon, Exmouth, Shark Bay and Upper Gascoyne.

This Division has the smallest resident population of Western Australia, with9 717 people (representing 0.5 per cent of the State’s population) dispersedover 140 912 km2.

With more than 80 per cent of the division involved in to pastoral activity, ithas been classified by Maxwell and Hite (1991) as agricultural. While wool andmeat remain the primary activities, stations are now diversifying to takeadvantage of opportunities in goat domestication, floriculture/horticulture,inland aquaculture and tourism.

The fishing industry continues to be one of the division’s major industries, withaquaculture continuing to grow in importance.

Tourism is the fastest growing sector in the division. Features such as MonkeyMia and Shark Bay World Heritage Area have made tourism a majorcomponent of the economy.

Key exhibits

Figure 1


Real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce. After a small decrease, GRP will riseto a level approximately 0.3 per cent greater than the base case by 2007. It thencontinues to rise slowly, reaching a maximum level approximately 1.1 per centgreater than the base case in 2016.

As agriculture (including fishing and forestry) is a large contributor to thedivision’s economic development, increased use of e-commerce will result, inthe short term, in a small decrease in GRP. This is because increases in nationalproductivity associated with the adoption of e-commerce results in increases incapital inflows and an appreciation of the exchange rate. This appreciationimpacts negatively on agriculture as it increases the relative price of Australianexports. This then leads to a contraction in output in the mining andagriculture sectors and a decrease in GRP in the short run.



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fact sheetgascoyne

western australiaAs e-commerce continues to be adopted, the service sectors begin to expand asresources are diverted from the mining and agriculture sectors into services.The mining, agriculture and service sectors all begin to experience productivitygains and GRP rises to 0.3 per cent greater than the base case by 2007.

There is a modest spike in 2008 as other regions that have adoptede-commerce at a slower rate begin to claw back some of the productivity gainsachieved by the Gascoyne division. However, in the longer run this isinsufficient to offset the overall productivity gains, and GRP continues itsupward trend to reach a figure of 1.1 per cent greater than the base case.

Figure 2



Increased use of e-commerce will result in contractions in the Gascoyne’smajor industries: agriculture (including fishing) and mining. As previouslyexplained, these industries do not tend to benefit from e-commerce.

Retail trade also contracts due to disintermediation. That is, e-commercereduces the margins associated with the sale of goods and encouragesconsumers to purchase directly from wholesalers and other sectors.

However these contractions, are offset by substantial growth in the tourism,communications, wholesale trade, construction and service sectors. Thesesectors will expand by approximately $5.3 million due to greater efficienciesassociated with dealing with clients and suppliers through electronic servicedelivery.

The net impact will be a modest increase in output of the division with anindicative value of $2.5 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetgascoyne

western australiaFigure 3


Many of the productivity improvements associated with greater use ofe-commerce, also have impacts on employment in the division.Disintermediating layers of economic activity between buyers and sellers resultsin bypassing jobs. An offsetting factor would be that lower prices for goods andservices stimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Gascoyne. The reason forthis is threefold: firstly, increases in productivity associated with use ofe-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in the retail sector; and thirdly, therise in the exchange rate results in a contraction in mining and agriculture.

After reaching 1.8 per cent less than the base case in 2007, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to rise to reachone per cent less than the base case by 2016.

Source:




fact sheetgoldfields-esperance



The Goldfields-Esperance statistical division is located in the south easterncorner of Western Australia, and is bounded by the Great Victoria Desert to thenorth and the South Australian border to the east. The city of Kalgoorlie-Boulder is the economic centre. Other Shires include Coolgardie, Dunda,Esperance, Laverton, Lenora, Menzies, Ngaanyatjarraku and Ravensthorpe.

Covering more than 778 558 km2, the division is over twice the size of Victoriaand represents approximately a quarter of Western Australia’s total area.The Goldfields-Esperance division is home to 58 391 people making up3.2 per cent of the State’s population. Since 1991 the population has beenincreasing at an average annual rate of 1.5 per cent per annum.

Maxwell and Hite (1991) have classified this division as agricultural/remoteresource development. The economy in the northern and central parts of thedivision is built on extraction and processing of mineral resources includinggold, nickel, cobalt, platinum, silver, palladium and lime. More recently, theavailability of gas has provided additional opportunities in downstreamprocessing, chemicals and general manufacturing.

The agricultural and fishing sectors are dominant industries in the southernpart of the division.

The tourism industry has been identified as an industry with major growthpotential.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce, and is projected to fall toapproximately 0.4 per cent less than the base case in 2007.

As the economy in the division is built on mining (and to a lesser extentagriculture), an increase in the use of e-commerce will result in a decrease inGRP. This is because increases in national productivity associated with theadoption of e-commerce results in increases in capital inflows and anappreciation of the exchange rate. This appreciation impacts negatively onmining (and to a smaller extent agriculture) as it increases the relative price ofAustralian exports. This then leads to a contraction in output in the mining andagriculture sectors and a small decrease in GRP in the short run.



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4.5


As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are diverted from the mining and agriculture sectors intoservices. The mining, agriculture and service sectors all begin to experienceproductivity gains and GRP begins to steady at around 0.4 per cent less thanthe base case by 2007.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved bythe Goldfields-Esperance. However, in the longer run this is insufficient tooffset the overall productivity gains, and the GRP continues its upward trendto reach a long run figure of just under 0.1 per cent greater than the base case.

Figure 2



The overall effect on activity in 2010 will be a net decrease in output ofapproximately $5.7 million. The results of the simulation indicate that this islargely a result of a $11.2 million contraction in mining. In 1997–98 the totalvalue of the division’s mining was $5 billion, so this is equivalent to only a0.22 per cent contraction in output.

The retail trade sector is also forecast to contract by $4.7 million, becauseincreases in efficiency reduce the margins associated with the sale of goods.

Although other sectors such as tourism, communications services andwholesale trade all experience growth rates in excess of 3.5 per cent, thesesectors are still relatively small and growth is insufficient to offset the largecontractions in mining and retail trade.


western australia

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-12 -10 -8 -6 -4 -2 0 2 4


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

Figure 3


Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and servicesstimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Goldfields-Esperance.The reason for this is threefold: firstly, increases in productivity associatedwith use of e-commerce will directly contribute to a fall in employment;secondly, disintermediation results in a contraction in output of the retailsector; and thirdly, the exchange rate effects result in a contraction in outputof the mining and agriculture sectors.

After reaching 2.6 per cent less than the base case in 2007, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to rise,reaching 1.8 per cent less than the base case by 2016.

The simulation is built on the premise that governments do not respond toincrease use of e-commerce with policy changes. If they do, the modestcontractions in output and employment could easily be offset.

Source:




western australia


fact sheetgreat southern



The Great Southern statistical division is located on the south coast of WesternAustralia, bordering the Southern Ocean. It extends approximately 250 kmalong the coast and 200 km north. The division consists of 12 municipalities,including the metropolitan area of Albany.

The total land area is 38 917 km2, representing approximately 1.5 per cent ofthe State’s total area. The resident population is 51 389, currently making up2.8 per cent of the State’s population.

The Great Southern statistical division has been classified as agricultural byMaxwell and Hite (1991). It is the second largest producer of agriculturalcommodities in Western Australia. Dominant industries are wool production,broad acre cropping, livestock and horticulture. Small quantities of fruit andvegetables are grown, and increasing quantities of grapes are produced tosupport a rapidly expanding wine industry.

Manufacturing activity is primarily based in Albany and is focused onsupplying equipment and machinery to the agriculture sectors as well asprocessing agricultural commodities.

The division has a substantial timber industry, based on plantation ofTasmanian blue gum with the harvesting, chipping and export of woodchipsdue to commence in 2002. Tourism is also a significant contributor toeconomic growth.

The division is one of the State’s more significant producers of fish productswith expected increases in production when higher value aquaculture productssuch as oysters, mussels and abalone come on stream.

Key exhibits

Figure 1


The real Gross Regional Product in this division is not particularly responsiveto greater use of e-commerce. By 2009, GRP increases by 0.3 per cent,increasing by 0.9 per cent by 2016.

As the agriculture and mining sectors are large contributors to the division’seconomic development, increased use of e-commerce will result, in the shortterm, in a decrease in GRP. This is because increases in national productivity



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4.5



western australiaassociated with the adoption of e-commerce results in increases in capitalinflows and an appreciation of the exchange rate. This appreciation impactsnegatively on the mining (and to a smaller extent agriculture) industry as itincreases the relative price of Australian exports. This then leads to acontraction in output in the mining and agriculture sectors and a decrease inGRP in the short run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are directed from the mining and agriculture sectors intoservices. The mining, agriculture and service sectors all begin to experienceproductivity gains and GRP rises to 0.2 per cent greater than the base caseby 2007.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved bythe Great Southern. However, in the longer run this is insufficient to offset theoverall productivity gains, and GRP continues its upward trend to reach a1.7 per cent greater than the base case.

Figure 2



As shown in Figure 2, the benefits of e-commerce are spread over a number ofindustries. Tourism, construction and wholesale trade contribute the most tothe increase in output due to greater efficiencies associated with e-commerce.

Retail trade and agriculture will experience contractions in output. Retail tradeis forecast to contract by $6.5 million due to disintermediation. That is,e-commerce reduces the margins associated with the sale and goods andencourages consumers to purchase directly from other sectors.

Given that the gain from e-commerce outweighs the losses, the net result willbe an increase in activity of around $5.2 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-8 -6 -4 -2 0 2 4


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5




Disintermediating layers of economic activity between buyers and sellers resultsin bypassing jobs. An offsetting factor would be that lower prices for goods andservices stimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Great Southern division.The reason for this is threefold: firstly, increases in productivity associated withuse of e-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly, the exchange rate effects result in a contraction in output of the miningand agriculture sectors.

After reaching 1.9 per cent less than the base case in 2007, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to rise,reaching 1.1 per cent less than the base case by 2016.


Source:






1997

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1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

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-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

fact sheetkimberley



The Kimberley statistical division is the State’s most northern region and isbordered by the Great Sandy Desert in the south and the Northern Territory inthe east. It consists of the Shires of Broome, Derby-West Kimberley, HallsCreek and Wyndham-East Kimberley.

Covering 421 451 km2, the division has a population of 27 716. The majorpopulation centres are the towns of Broome, Kununurra, Derby, Halls Creek,Wyndham and Fitzroy Crossing. There are also over 100 Aboriginalcommunities of various population sizes scattered throughout the division.

Maxwell and Hite (1991) have classified the Kimberley Division as agricultural/remote resource development. The main contributors to the division’sdevelopment are agriculture, tourism, mining and pearling.

The economic contribution by the mining industry is led by the ArgyleDiamond Mine which is the sole producer of diamonds in Australia, and thelargest diamond producer in the world by volume. Other major contributorsinclude iron ore, zinc, lead, oil and gas.

Major agricultural activities include irrigated land holdings and the pastoralindustry. The pearling industry has become Western Australia’s highest valueaquaculture industry. A significant part of the State’s prawn fishery is alsosourced from the Kimberley.

The Kimberley has a unique and spectacular environment, and as aconsequence tourism is a rapidly expanding industry.

Key exhibits

Figure 1


After an initial decrease, real gross regional product (GRP) is expected to riseto a level approximately 0.8 per cent greater than the base case by 2007. Aftera slight spike, GRP then continues to rise to 1.7 per cent greater than the basecase by 2016.

As the economies of the Kimberley and Pilbara are built upon the agricultureand mining sectors, an increase in the use of e-commerce will result in adecrease in GRP. This is because increases in national productivity associatedwith the adoption of e-commerce will result in increases in capital inflows andan appreciation of the exchange rate. This appreciation impacts negatively on


Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-3 -2 -1 0 1 2 3 4

fact sheetkimberley

western australiathe mining (and to a lesser extent agriculture) industry as it increases therelative price of Australian exports. This then leads to a contraction in outputand a decrease in GRP.

As e-commerce is adopted at a faster rate, the service sectors begin to expandas resources are diverted from the mining and agriculture sectors into services.The service, agriculture and mining sectors begin to realise productivity gainsand GRP rises to 0.8 per cent greater than the base case by 2007.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved bythe Kimberley. However, in the longer run this is insufficient to offset theoverall productivity gains, and GRP continues its upward trend to reach along-run figure of 1.7 per cent greater than the base case.

Figure 2



The net impact to the Kimberley division is an indicative increase in activity ofaround $5.3 million. Although the division is somewhat diversified, it still hasa moderate dependence on agriculture, mining and retail trade sectors whichdo not tend to benefit from increased use of e-commerce.

The largest contraction ($2 million) will be felt in the retail trade sector due todisintermediation. Small contractions are also felt in the agriculture($0.3 million) and mining ($0.5 million) industries.

The increases in productivity also stimulate expansions in other sectors.In particular, there will be significant growth in education, personal and healthand community services (represented by other services), which will expand by$3.4 million. Other expanding sectors include tourism (by $1.4 million),property and business services (by $1.1 million) and construction(by $1 million).


National Employment


97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009 20

10 2011 2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

fact sheetkimberley



Many of the productivity improvements associated with greater use ofe-commerce also have impacts on employment in the division.Disintermediating layers of economic activity between buyers and sellersresults in bypassing jobs. However, the lower prices for goods and services willstimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will be less than base case in theKimberley. The reason for this is threefold: firstly, increases in productivityassociated with use of e-commerce will directly contribute to a fall inemployment; secondly, disintermediation results in a contraction in output ofthe retail sector; and thirdly and most importantly, the exchange rate effectsresult in a contraction in output of the mining and agriculture sectors.

After falling to 0.9 per cent less than the base case in 2008, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to increase steadily as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to risereaching 0.1 per cent less than the base case by 2016.

Source:




fact sheetmid west



The Mid West statistical division extends along the coast from Greenhead inthe south to beyond Kalbarri in the north and more than 800 km east into theGibson Desert. It covers 19 local government authorities, including the port ofGeraldton, which is also the division’s commercial and administrative centre.

Covering around 470 000 km2 (nearly 20 per cent of Western Australia) thestatistical division has a resident population of 58 583. The division currentlymakes up 2.8 per cent of the State’s population and, as is the case with manyregions, this proportion has been declining slowly over a number of years.

The Mid West has a reasonably diverse economy, although it is predominantlybased on the mining, agriculture, fishing and tourism industries. It is thereforegenerally classified as agricultural/warm climate coastal (Maxwell and Hite,1991).

The largest source of income comes from mining, which includes gold, mineralsands, natural gas, garnet, zinc, copper, talc and lead. There is an increasingemphasis on downstream processing of mineral resources.

Agricultural production is dominated by wheat, lupins, wool and meatproduction, with increasing horticultural and floricultural productionincreasing.

The Mid West has the highest value fishing industry, which is dominated by thewestern rock lobster catch. The largest single aquaculture project in WesternAustralia is located in the Mid West, and there is strong support for the furtherdevelopment of this industry.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce. GRP initially decreases by0.3 per cent by 2004, and increases eventually by 0.4 per cent by 2012.By 2016, GRP increases by 0.6 per cent.

As the agriculture and mining sectors are large contributors to the division’seconomic development, an increase in the use of e-commerce will result, in theshort term, in a small decrease in GRP. This is because increases in productivityassociated with the adoption of e-commerce will result in increases in capital



1997

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fact sheetmid west

western australiainflows and an appreciation of the exchange rate. This appreciation impactsnegatively on the mining (and to a smaller extent agriculture) industry as itincreases the relative price of Australian exports. This then leads to acontraction in output in the mining and agriculture sectors and a decrease inGRP in the short run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandas resources are diverted from the mining and agriculture sectors into services.The mining, agriculture and service sectors all begin to experience productivitygains and GRP rises to be equal with the base case by 2007.

There is a slight spike in 2008 as other regions, which have adoptede-commerce at a slower rate begin to claw back some of the productivity gainsachieved by the Mid West. However, in the longer run this is insufficient tooffset the overall productivity gains, and GRP continues its upward trend toreach a 0.6 per cent greater than the base case.

Figure 2


The disparity between GRP and GDP is primarily due to the division’s industrycomposition. Figure 2 outlines this and displays the indicative changes insectoral activity in year 2000 prices, for the year 2010.

Although the division has a relatively diversified economic base, its economy isstill heavily dependent on the agriculture (including fishing), mining and retailtrade sectors. The decline in agriculture (by $2.3 million) and mining(by $5.8 million) are brought about because of the industries sensitivity toexchange rate fluctuations. Retail trade will decline (by $6 million) becausegreater use of e-commerce leads to a reduction in margins.

Many sectors will experience productivity improvements. Expanding sectorsinclude other services (by $4.2 million), construction (by $2.6 million) andwholesale trade (by $2.4 million). The net impact is an indicative increase inoutput of approximately $1.4 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-6 -4 -2 0 2 4 6


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-3.5

-2.5

-1.5

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0.5

1.5

2.5

3.5

fact sheetmid west




Figure 3 shows that net employment will fall in the Mid West. The reason forthis is threefold: firstly, increases in productivity associated with the use ofe-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly, the exchange rate effects result in a contraction in output of miningand agriculture.

After reaching 2.2 per cent less than the base case in 2006, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to rise to reach1.3 per cent less than the base case by 2016.


Source:




fact sheetpeel



The Peel statistical division is located immediately to the south of the Peelmetropolitan area. It comprises the metropolitan area of Mandurah and theShires of Murray, Serpentine-Jarrahdale, Waroona and Buddington.

Peel is the smallest statistical division in Western Australia, covering 5 500 km2.It has a population of 69 153. Over the past 20 years the number of peopleliving in the division has more than tripled.

The Peel statistical division has been classified as agricultural/warm climatecoastal. It supports one of the most diverse economies in the State,predominantly based on mining and mineral processing, although agriculture,the equine industry, timber production, fishing and tourism also make valuablecontributions.

Mining is dominated by large reserves of bauxite, which is processed intoalumina. The region supplies feedstock that accounts for 20 per cent of theworld’s alumina production. Gold yields and mineral sand production alsomakes an important contribution.

Agriculture is based predominantly on dairy and beef cattle, and orchard fruitproduction. However, vegetables, wool, pigs, eggs, flowers and grains are alsoproduced in considerable quantities.

Commercial fishing includes part of the West Coast rock lobster fishery, whichdominates the industry. Other catches include whitebait, prawn, crab andmollusc. Tourism is also an important contributor to the economy.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Peel Division is projected to riseto 0.5 per cent greater than the base case in 2007, after an initial marginaldecrease.

As the mining and agriculture sectors are large contributors to WesternAustralia’s economic development, an increase in the use of e-commerce willresult, in the short term, in a decrease in GRP. This is because increases innational productivity associated with the adoption of e-commerce will result inincreases in capital inflows and an appreciation of the exchange rate. Thisappreciation impacts negatively on the mining (and to a smaller extent



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fact sheetpeel

western australiaagriculture) industry as it increases the relative price of Australian exports. Thisthen leads to a contraction in output of the mining sector and a decrease inGRP in the short run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are direct from the mining and agriculture sectors into services.The mining, agriculture and service sectors all begin to experience productivitygains and GRP rises to 0.5 per cent greater than the base case by 2007.

There is a slight spike in 2008 as other regions who have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved byPeel. However, in the longer run this is insufficient to offset the overallproductivity gains, and GRP continues its upward trend to reach 1.3 per centgreater than the base case, reflecting the dynamic benefits of e-commerce.

Figure 2


Figure 2 displays changes in sectoral activity by the year 2010, in year 2000prices.

Increased use of e-commerce will result in contractions in agriculture(including forestry and fishing), mining and retail trade. Agriculture andmining contract by $0.7 million and $2 million respectively because they arevulnerable to the exchange rate implications that are expected to flow on fromincreases in productivity. The retail trade sector contracts (by $11.8 million)due to disintermediation.

These contractions are offset by expansions in a number of industries includingconstruction and other services sectors, which will expand output by around$13.3 million. The net benefit to the Peel Division is an increase in output of$14 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-12 -10 -8 -6 -4 -2 0 2 4 6 8


National Employment

Regional Employment

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

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-1.5

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0.5

1.5

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3.5

fact sheetpeel



Disintermediating layers of economic activity between buyers and sellersresults in bypassing jobs. An offsetting factor would be that the lower priceswould stimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Peel Division. The reasonfor this is threefold: firstly, increases in productivity will directly contribute toa fall in employment; secondly, disintermediation results in a contraction inoutput of the retail sector; and thirdly, the exchange rate effects result in acontraction in output of the mining and agriculture sectors.



Source:




fact sheetperth



The Perth statistical division is located on the coast of Western Australia, northof the Peel statistical division. It is bordered by the Wheatbelt statisticaldivision in the north and east, and by the Indian Ocean in the west. Thedivision incorporates the City of Perth, the cosmopolitan port City ofFremantle, and Rottnest Island.

The population of the Perth statistical division is approximately 1 331 155,making up 72.7 per cent of the State’s population.

Perth is classified as metropolitan with a predominantly service-based economythat also makes a small contribution to the State’s total mining activity.Professional services, which includes legal, accounting and business services,are amongst the fastest growing components of international trade for Perth,due to its close proximity to Asia.

Many international businesses, predominantly those servicing the minerals andenergy industries, are also selecting Perth as a prime location for their Asianregional operations. In areas such as electronics, communications, remotesensing and geo-science, Western Australia service companies have risen tobecome world leaders.

Tourism offers tremendous opportunities for this division, with the growth ofinternational, national and intrastate tourism generating increasing demand fortourist facilities. Other service sectors making a valuable contribution to thedivision’s economy include environmental management and engineering.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in the Perth division is projected to riseat a lower rate than the forecast increase in Australia’s real gross domesticproduct (GDP). There will be an initial brief period when GRP will fall slightly,before rising to 0.8 per cent greater than the base case in 2007.

As the mining sector is a large contributor to Western Australia’s economicdevelopment, increased in the use of e-commerce will result, in the short term,in a decrease in GRP. This is because increases in national productivityassociated with the adoption of e-commerce will result in increases in capital



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fact sheetperth

western australiainflows and an appreciation of the exchange rate. This appreciation impactsnegatively on the mining (and to a smaller extent agriculture) industry as itincreases the relative price of Australian exports. This then leads to acontraction in output of the mining sector and a decrease in GRP in the shortrun.

As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are direct from the mining and agriculture sectors into services.The mining, agriculture and service sectors all begin to experience productivitygains and GRP rises to 0.8 per cent greater than the base case by 2007.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved byPerth. However, in the longer run this is insufficient to offset the overallproductivity gains. GRP continues its upward trend to reach a long-run figureof 1.7 per cent greater than base case (reflecting the dynamic benefits ofe-commerce).

Figure 2



The benefits from greater use of e-commerce are broadly spread in thedivision. In particular, there will be significant expansions in the servicesectors, with property and business, finance and insurance, communication andother services contributing over $262 million to the expansion of the economy.Other important sectors include tourism, construction and wholesale trade.

Offsetting the expansion are contractions in the mining (by $25.7 million) andretail trade (by $167.6 million) sectors. The retail trade sector contractsbecause of disintermediation—that is, e-commerce encourages purchases to bemade directly from wholesalers (and other sectors).

The net impact is an increase in output with an indicative value of$304.5 million.

Tourism

Other Services


Finance & Insurance


Transport

Retail Trade

Wholesale Trade

Construction


Manufacturing

Mining

Agriculture

-180 -130 -80 -30 20 70 120


National Employment

Regional Employment

1997

1998

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2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

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fact sheetperth



Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassing jobs.An offsetting factor would be that lower prices for goods and servicesstimulate demand in other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Perth division. The reasonfor this is threefold: firstly, increases in productivity associated with use ofe-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly, the exchange rate effects result in a contraction in output of the miningand agriculture sectors.

After reaching 1.5 per cent less than the base case in 2007, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to risereaching 0.5 per cent less than the base case by 2016.

Source:




fact sheetpilbara



Situated in the vast North West of Western Australia, the Pilbara statisticaldivision is surrounded by the Indian Ocean to the west and Northern Territoryborder to the east, and encompasses the Great Sandy Desert to the north east.The division has four local government areas—the Shires of Ashburton,East Pilbara, Roebourne and the town of Port Hedland.

Covering more than 50 500 km2, the Pilbara is home to 41 773 people(or 2.3 per cent of the State’s population). As one of two Western Australiandivisions to experience population declines during the 1980s, the Pilbara hasrecently seen a marginal increase in population levels. However, the Pilbara’spopulation continues to be subject to strong fluctuation associated withresources activity.

The Pilbara division is classified as remote resource development by Maxwelland Hite (1991). Today the Pilbara economy is crucial to the State, providingtwo of the largest export revenue earners—iron ore and liquefied natural gas.Significant contributions also come from crude oil, petroleum–condensate,gold and salt. The Pilbara is the focus of a drive to increase downstreamprocessing to add value to its mineral and energy resources.

The division’s agricultural production primarily consists of cattle and wool andis low compared to other regions.

Although small, the catch of the three major commercial fisheries in thedivision has been growing steadily since 1991. The aquaculture/mariculture industry has been steadily growing over the last five years.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce.

As the economy of the Pilbara is built on its large mining industry, an increasein the use of e-commerce will result in a very small decrease in GRP. This isbecause increases in national productivity associated with the adoption ofe-commerce will result in increases in capital inflows and an appreciation ofthe exchange rate. This appreciation impacts negatively on the mining industry



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fact sheetpilbara

western australiaas it increases the relative price of Australian exports. This then leads to acontraction in output in the mining sector and a decrease in GRP in the shortrun.

As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are diverted from the mining sector into services. The serviceand mining sectors begin to realise productivity gains and GRP begins toincrease slowly to reach a longer run figure of around 0.06 per cent less thanthe base case.

Figure 2



The results of the simulation indicate that the mining sector (includingpetroleum) will experience a contraction in output of $11.1 million.In 1997–98, the total value of the division’s mining and petroleum industrieswas $9.1 billion, so this is equivalent to only a 0.12 per cent contraction inoutput.

As a result of disintermediation, the retail trade sector will experience a declineof $2.9 million. This is because e-commerce reduces the margins associatedwith the sale of goods and encouraging purchases to be made directly fromwholesalers (and from other sectors).

However, there are a number of sectors that are expected to expand. Theseinclude other services, wholesale trade, construction, tourism and property andbusiness services. The overall result is a net decline in output with an indicativevalue of $5.9 million per annum.

Tourism

Other Services


Finance & Insurance


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fact sheetpilbara



Many of the productivity improvements associated with greater use ofe-commerce, also impact on employment in the division. Disintermediatinglayers of economic activity between buyers and sellers results in bypassingjobs. However, the lower prices for goods and services will stimulate demandin other areas and increase the demand for labour.

Figure 3 shows that net employment will fall in the Pilbara. The reason forthis is threefold: firstly, increases in productivity associated with use ofe-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly and most importantly, the exchange rate effects result in a contractionin output of the mining sector.

After falling to 2.6 per cent less than the base case in 2008, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment stabilises at 1.8 per centless than the base case by 2016.


Source:

Monash simulations conducted by The Allen Consulting Group in conjunction with the Centre

for Policy Studies, for the National Office for the Information Economy


fact sheetsouth western



The South West statistical division lies in the south west corner of WesternAustralia. The division consists of 12 municipalities including the metropolitanarea of Bunbury.

The South West division covers 23 970 km2 and is home to 119 407 residents(6.5 per cent of the State). This division has one of the fastest growingpopulations of the regional areas, growing at an average rate of 2.1 per centper annum from 1991 to 1998.

Mineral extraction, processing and manufacturing make the largestcontribution to the regional economy. The South West produces all of WesternAustralia’s coal and nearly 50 per cent of mineral sand production. Aluminaproduction and manufacturing of titanium dioxide pigment are also significantactivities.

The South West’s environment provides the basis for a wide range ofagricultural industries, including beef and dairy cattle, vegetables, orchardfruit, viticulture and wool production. In recent years other industries such asfloriculture, deer, emu, ostrich, buffalo and goat production have emerged.

The wine industry is experiencing strong, unprecedented growth and isrecognised as a world class producer of premium wines.

Timber and forestry products are a growing industry, particularly with respectto value adding. Commercial fishing, aquaculture, and tourism are also majorcontributors.

Key Exhibits

Figure 1


The real Gross Regional Product (GRP) in the South West division is projectedto rise at a lower rate than the forecast increase in Australia’s real grossdomestic product (GDP). There will be an initial brief period when the GRPwill fall slightly, before rising to be equal to the base case around 2009–10.

As the mining and agriculture sectors are large contributors to WesternAustralia’s economic development, increased use of e-commerce will result, inthe short term, in a decrease in GRP. This is because increases in nationalproductivity associated with the adoption of e-commerce will result inincreases in capital inflows and an appreciation of the exchange rate. This



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western australiaappreciation impacts negatively on the mining industry (and to a smaller extentagriculture) as it increases the relative price of Australian exports. This thenleads to a contraction in output of the mining sector and a decrease in GRP inthe short run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandwhen resources are direct from the mining and agriculture sectors. The mining,agriculture and service sectors all begin to experience productivity gains andGRP rises to be equal to the base case around 2009–10.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved bythe South West. However, in the longer run this is insufficient to offset theoverall productivity gains, and GRP continues its upward trend to reach0.5 per cent greater than the base case, reflecting the dynamic benefits ofe-commerce.

Figure 2


Figure 2 displays changes in sectoral activity by the year 2010, in year 2000prices.

Significant growth will be experienced in the construction, wholesale trade andtourism sectors. These sectors will expand by $12.2 million in total due togreater efficiencies associated with electronic service delivery. Other industriesanticipated to expand include other services (by $6.3 million) and property andbusiness services (by $3.2 million).

As illustrated, the major industries to experience a contraction in output in2010 include agriculture (by $4 million), retail trade (by $10.8 million) andmining (by $11 million). Agriculture and mining contract because of theexchange rate implications associated with use of e-commerce. The retail tradesector contracts because of disintermediation.

As the gains from e-commerce outweigh the losses, the net result will be anincrease in output of around $1 million.

Tourism

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Disintermediating layers of economic activity between buyers and sellers resultsin bypassing jobs. An offsetting factor would be that lower prices stimulatedemand in other areas and increase the demand for labour.

Figure 3 shows that employment will fall in the South West division. Thereason for this is threefold: firstly, increases in productivity associated with useof e-commerce will directly contribute to a fall in employment; secondly,disintermediation results in a contraction in output of the retail sector; andthirdly, the exchange rate effects result in a contraction in output of the miningand agriculture sectors.



Source:




fact sheetwheatbelt



The Wheatbelt statistical division adjoins Perth and extends from the IndianOcean in the north west, to the edge of the Goldfields and to the northernborder of the Great Southern Region. The division covers 44 local governmentareas, consisting of 42 Shires and the town Councils of Northam and Narrogin.

The Wheatbelt has the second largest population of the State’s statisticaldivision, but the most widely dispersed. There are 72 145 people (3.9 per centof Western Australia) living in an area of 154 000 km2. The parts of thedivision closest to the Perth metropolitan area are experiencing annual growthrates of between 8 and 14 per cent.

The Wheatbelt statistical division has been classified by Maxwell and Hite(1991) as agricultural. Its economy has been traditionally based on agricultureand this remains the most dominant industry. Agricultural activities aredominated by wheat and wool production but also include other cereals,oilseeds, legumes, fruit and vegetable crops and the raising of livestock forslaughter. Non-traditional crops such as canola, field peas, chick peas andlentils are also being produced in increasing quantities.

A strong mining industry is dominated by gold production but also includes theextraction of heavy mineral sands, nickel and salt. The division also has avaluable fishing industry, with rock lobster accounting for about 97 per cent ofthe catch.

Tourism has been growing steadily due to the division’s proximity to Perth.Given the positive trend and the opportunities for development, investment isrecognised as being of growing economic importance to the division.

Key exhibits

Figure 1


The real Gross Regional Product (GRP) in this division is not particularlyresponsive to greater use of e-commerce. GRP in the Wheatbelt is expected toinitially fall to around 0.2 per cent less than the base case by 2006. After thistime, GRP begins to slowly increase reaching a maximum level of 0.6 per centgreater than the base case by 2016.



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fact sheetwheatbelt

western australiaAs the agriculture sector is the major contributor to the division’s economicdevelopment, an increase in the use of e-commerce will result, in the shortterm, in a decrease in GRP. This is because increases in national productivityassociated with the adoption of e-commerce will result in increases in capitalinflows and an appreciation of the exchange rate. This appreciation impactsnegatively on the agriculture sector as it increases the relative price ofAustralian exports. This then leads to a decrease in GRP in the short run.

As e-commerce is adopted at a faster rate, the service sectors begin to expandas resources are direct from the agriculture sector into services. The agricultureand service sectors begin to experience productivity gains and GRP rises to0.2 per cent greater than the base case by 2007.

There is a slight spike in 2008 as other regions that have adopted e-commerceat a slower rate begin to claw back some of the productivity gains achieved bythe Wheatbelt. However, in the longer run this is insufficient to offset theoverall productivity gains, and GRP continues its upward trend to reach0.6 per cent greater than the base case.

Figure 2



The Wheatbelt’s performance (in terms of output and employment) isdominated by contractions in the mining, agriculture and retail tradeindustries. Although agriculture is forecast to contract by around $9.3 million,this is only a 0.8 per cent contraction. Retail trade contracts because ofdisintermediation.

Expansions in the remaining industries are only just sufficient to counteract thecontractions. Sectors forecast to expand include other services (by $7.9million), wholesale trade (by $4.0 million), construction (by $2.8 million),property and business services (by $2.7 million) and tourism (by $2.6 million).

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fact sheetwheatbelt



Disintermediating layers of economic activity between buyers and sellersresults in bypassing jobs. An offsetting factor would be that lower pricesstimulate demand in other areas and increase the demand for labour.

Figure 3 shows that employment will fall in the Wheatbelt. The reason for thisis threefold: firstly, increases in productivity associated with use of e-commercewill directly contribute to a fall in employment; secondly, disintermediationresults in a contraction in output of the retail sector; and thirdly, the exchangerate effects result in a contraction in output of the mining and agriculturesectors.

After reaching 2.2 per cent less than the base case in 2007, there is a smallspike in 2008 corresponding to the spike in output. From 2009, employmentbegins to steadily increase as resources are directed into the fastest growingsectors of the economy, such as services. Employment continues to rise toreach 1.4 per cent less than the base case by 2016.


Source:



e-commerce across australia - united nationsunpan1.un.org/intradoc/groups/public/documents/... ·...

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