economic significance of the property industry to the south australian economy

Economic Significance of the

Property Industry to the South

Australian Economy

Property Council Australia

South Australia Division

Final Report

August, 2011

Economic Significance of the Property Industry to the SA Economy Final Report

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Document Control

Job ID: 15945

Job Name: Economic Significance of the Property Industry to the South Australian Economy

Project Director: Simon Smith

Project Manager: Ashley Page

Company: Property Council of Australia – SA Division

Job Contacts: Nathan Paine

Document Name: PCA SA Economic Significance of the Property Sector Final Report

Last Saved: 19/8/2011 12:19 PM

Version Date Reviewed PM Approved PD

Draft Report v1.0 15 July, 2011 ARP SS

Final Report 19 August, 2011 ARP SS

Disclaimer:

Whilst all care and diligence have been exercised in the preparation of this report, AEC Group Limited does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of AEC Group Limited or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.


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Executive Summary

The South Australian Property Industry...

Consists of organisations and individuals involved in developing, operating and facilitating

activities within the property industry to meet the dwelling and non-dwelling needs of South Australia. Typically this includes residential and non-residential construction along with finance, property and business services associated with property development and operation. While many of these industries are also involved in non-property related activities, this report examines the contribution of the property related components of these industries to the South Australian economy only.

The definition of the property industry used in this report does not include ownership of dwellings, which are rents paid by tenants to landlords and imputed rents to owner occupiers.

The Property Industry is a key contributor to South Australia’s

economic growth...

The property industry is the largest industry in the South Australian economy, and is estimated to have contributed approximately $8.1 billion to total South Australian Gross State Product (GSP) in 2009-10. This accounted for 10.0% of GSP for the year of $80.4

billion, above other key sectors such as ownership of dwellings, manufacturing, financial and insurance services and mining.

Figure ES.1. Direct Contribution to Gross State Product by Industry, 2009-10

Source: AECgroup, ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).

Manufacturing was the largest contributor to GSP in 2006-07, however strong growth in

the property industry in recent years has resulted in the property industry overtaking manufacturing to be the largest contributor in 2009-10. Gross product in the property industry increased by 22.7% between 2006-07 and 2009-10, equating to average annual growth of 7.1%. This is 1.9 percentage points higher than the average growth of the South Australian economy over the same period.

$0 $2 $4 $6 $8 $10

Rental, hiring and real estate services

Arts and recreation services

Construction

Other services

Administrative and support services

Accommodation and food services

Electricity, gas, water and waste services

Information, media and telecommunications

Agriculture, forestry and fishing

Education and training

Transport, postal and warehousing

Professional, scientific and technical services

Wholesale trade

Retail trade

Public administration and safety

Health care and social assistance

Mining

Financial and insurance services

Manufacturing

Ownership of dwellings

Property industry

Gross Product ($ Billion)


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The Property Industry is South Australia’s second largest

employer...

The property industry is South Australia’s second largest employer, with estimated employment of 73,033 full time equivalent (FTE) jobs in 2009-10, accounting for 11.5% of total South Australian jobs for the year. The largest employer was the health care and

social assistance industry (e.g., hospital and other medical services, ambulance services, allied health care, aged and child care, welfare services) employing 73,272 FTE employees.

Figure ES.2. Direct Contribution to Employment by Industry, 2009-10


In line with gross product, employment in the property industry increased considerably since 2006-07, increasing on average by 5.5% per annum. The annual growth in employment in the property market was 2.0 percentage points higher than growth in employment for South Australia, meaning the property industry’s contribution in terms of employment has increased over this period. In 2006-07, the property industry was the third largest employing industry, behind manufacturing and health care and social services.

The Property Industry is also a strong contributor to the South Australian economy through flow-on activity...

In addition to the direct contribution of the property industry to the South Australian economy, the property industry is estimated to have contributed a further $11.8 billion to South Australian GSP through flow-on demand for goods and services, including production induced1 and consumption induced2 effects.

Flow-on demand for goods and services resulting from property industry activity primarily supports activity in the industries of financial and insurance services, manufacturing,

ownership of dwellings, professional, scientific and technical services, retail trade and transport, postal and warehousing.

1 Represents the combination of activity required from all industries that supply goods and services to the property sector, as well as the induced activity from all industries to support the production of industries supplying the property sector. 2 Represents the subsequent induced activity due to spending by the wage and salary earners across all industries arising from the compensation received for their labour as part of the direct and production induced effects.

0 10 20 30 40 50 60 70 80



Construction


Mining





Wholesale trade

Other services







Retail trade

Manufacturing

Property industry


Employment ('000 FTEs)


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Table ES.1. Estimated Direct and Flow-On Contribution of the Property Industry to the South Australian Economy, 2009-10

Contribution Gross Product ($M)

Gross Value Add ($M)

Incomes ($M)

Employment (FTE)

Direct Contribution $8,064.7 $7,476.0 $3,483.9 73,033

Flow-On Contribution

Production Induced (Type I) $4,952.2 $4,568.1 $2,861.8 35,710

Consumption Induced (Type II) $6,817.2 $6,288.4 $3,017.9 52,224

Total Flow-On Contribution $11,769.4 $10,856.5 $5,879.7 87,933

Agriculture, forestry and fishing $254.0 $234.3 $73.1 2,842

Mining $276.1 $254.7 $42.0 425

Manufacturing $1,621.9 $1,496.1 $916.7 14,018

Electricity, gas, water and waste services $449.6 $414.7 $168.4 1,992

Construction $4.1 $3.8 $2.6 23

Wholesale trade $574.0 $529.5 $352.7 3,963

Retail trade $680.4 $627.6 $430.8 11,464

Accommodation and food services $397.1 $366.3 $237.0 7,080

Transport, postal and warehousing $659.3 $608.2 $294.1 5,479

Information, media and telecommunications $486.3 $448.6 $165.5 2,734

Financial and insurance services $2,120.4 $1,955.9 $1,076.2 5,512

Rental, hiring and real estate services $132.0 $121.8 $55.7 584

Professional, scientific and technical services $775.4 $715.3 $546.2 8,245

Administrative and support services $618.3 $570.3 $511.6 5,711

Public administration and safety $151.7 $140.0 $119.5 1,751

Education and training $344.4 $317.7 $285.5 4,069

Health care and social assistance $383.5 $353.8 $292.5 4,656

Arts and recreation services $112.8 $104.1 $66.1 1,494

Other services $375.6 $346.5 $243.3 5,891

Ownership of dwellings $1,352.4 $1,247.5 $0.0 0

TOTAL CONTRIBUTION TO SOUTH AUSTRALIA $19,834.1 $18,332.5 $9,363.6 160,966

Notes: Totals may not sum due to rounding.

Sources: AECgroup, ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).

The Residential Property Sub-Sector provides the majority of Property Industry economic activity...

The property sector consists of a range of sub-sectors of property types. Residential property is estimated to provide the largest contribution to the South Australian economy of all property industry sub-sectors, accounting for around 60% of gross product, gross value add, employment and incomes provided by the property industry in 2009-10.

Table ES.2. Estimated Contribution of Property Sub-Sectors to Overall Property Industry Activity, 2009-10

Property Sub-Sector/ Type Gross Product (%)

Gross Value Add (%)

Incomes (%)

Employment (%)

Residential 59.8% 59.8% 58.8% 61.1%

Retail 6.0% 6.0% 6.2% 5.9%

Commercial 7.1% 7.1% 7.3% 6.9%

Industrial 6.8% 6.8% 7.0% 6.6%

Health 4.9% 4.9% 5.1% 4.8%

Education 9.1% 9.1% 9.3% 8.8%

Entertainment/ Recreation 2.1% 2.1% 2.2% 2.1%

Other 4.0% 4.0% 4.1% 3.9%

Total % of Direct Contribution 100.0% 100.0% 100.0% 100.0%


Source: AECgroup, ABS (2011a), ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).


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The Property Industry is the largest single contributor to South

Australian State taxes...

Property related activities are estimated to have been the largest single industry contributing to State taxes and royalty revenues in 2009-10, contributing $1.6 billion or 42.5% of the total State tax revenue for the year of $3.8 billion. The contribution of

property related activity to State taxes was generated through a combination of payroll tax (for businesses directly employed in the property industry), transfer duties (for properties purchased), land tax and other property related taxes.

In terms of contribution per dollar of gross product, property related activities are the second most highly taxed in the State, providing $0.20 for every dollar of gross product. Arts and recreation service, which primarily involves taxes on gambling and gaming, are the most highly taxed per dollar of production at $0.77 for every dollar of gross product

(although this only provides one quarter the tax revenues of the property industry in total), while financial and insurance services is the third most highly taxed industry per dollar of product at $0.06 per dollar of gross product.

Table ES.3. Contribution to State Taxes, Comparison of Property Related Activities to Other Industries of the Economy, 2009-10

Industry Tax Estimates ($M)

Contribution to GSP ($M)

Tax Per $1 of GSP Contributed ($)

Property related taxes $1,605.2 $8,064.7 $0.20

Agriculture, forestry and fishing $17.9 $2,945.3 $0.01

Mining $144.4 $6,761.4 $0.02

Manufacturing $98.5 $7,723.1 $0.01

Electricity, gas, water and waste services $15.6 $1,966.7 $0.01

Construction $9.4 $624.1 $0.02

Wholesale trade $55.4 $3,849.3 $0.01

Retail trade $58.9 $3,969.8 $0.01

Accommodation and food services $26.3 $1,896.1 $0.01

Transport, postal and warehousing $35.7 $3,487.3 $0.01

Information, media and telecommunications $16.8 $2,089.0 $0.01

Financial and insurance services $438.0 $7,081.9 $0.06

Rental, hiring and real estate services $5.1 $519.8 $0.01

Professional, scientific and technical services $60.1 $3,597.1 $0.02

Administrative and support services $35.7 $1,840.2 $0.02

Public administration and safety $116.6 $4,995.3 $0.02

Education and training $63.2 $3,252.6 $0.02

Health care and social assistance $101.8 $5,658.1 $0.02

Arts and recreation services $409.2 $531.1 $0.77

Other services $26.2 $1,714.3 $0.02

Ownership of dwellings $0.0 $7,789.0 $0.00

Not allocated (a) $435.0 - -

Total South Australia $3,775.0 $80,356.0 $0.05

Note: (a) Taxes that have not been allocated to an industry include stamp duties on motor vehicle and other vehicle registrations.

While a part of these taxes are payable by industry, the majority of these taxes are paid by households. Due to data limitations it is not possible to allocate the portion of these taxes that are paid by industry. Source: AECgroup, ABS (2011c), South Australian Department of Treasury and Finance (2011).


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Table of Contents

DOCUMENT CONTROL .......................................................................................... I

EXECUTIVE SUMMARY ........................................................................................ II

TABLE OF CONTENTS......................................................................................... VI

1. INTRODUCTION .......................................................................................... 1

1.1 BACKGROUND .................................................................................................. 1

1.2 DEFINITION OF THE PROPERTY INDUSTRY ................................................................... 1

1.3 GEOGRAPHIC SCOPE .......................................................................................... 1

1.4 METHODOLOGY ................................................................................................ 1

2. OPERATING CHARACTERISTICS .................................................................. 3

2.1 VALUE OF PROPERTY INDUSTRY ACTIVITY AND EMPLOYMENT ............................................. 3

2.2 PROPERTY INDUSTRY BUILDING ACTIVITY .................................................................. 4

2.2.1 COMMENCED AND COMPLETED DEVELOPMENTS .................................................. 4

2.2.2 BUILDING APPROVALS .............................................................................. 5

3. ECONOMIC SIGNIFICANCE ASSESSMENT .................................................... 7

3.1 CONTRIBUTION OF THE PROPERTY INDUSTRY TO SOUTH AUSTRALIA .................................... 7

3.2 REGIONAL CONTRIBUTION OF THE PROPERTY INDUSTRY .................................................. 9

3.3 CONTRIBUTION OF THE PROPERTY INDUSTRY TO SOUTH AUSTRALIA BY INDUSTRY .................. 12

3.4 CONTRIBUTION OF PROPERTY SUB-SECTORS TO SOUTH AUSTRALIA .................................. 15

3.5 CONTRIBUTION TO STATE TAXES .......................................................................... 16

4. COMPARISONS WITH OTHER INDUSTRIES................................................ 17

4.1 ECONOMIC CONTRIBUTION ................................................................................. 17

4.1.1 GROSS STATE PRODUCT AND GROSS VALUE ADD ............................................. 17

4.1.2 INCOMES ........................................................................................... 17

4.1.3 EMPLOYMENT ....................................................................................... 18

4.2 STATE TAXES ................................................................................................ 19

REFERENCES ..................................................................................................... 20

APPENDIX A: DEFINITION OF THE PROPERTY INDUSTRY ................................. 22

APPENDIX B: MAPS OF GEOGRAPHIC BOUNDARIES .......................................... 29

APPENDIX C: SIGNIFICANCE ASSESSMENT METHODOLOGY ............................. 32

APPENDIX D: ALLOCATION OF STATE TAXES .................................................... 36


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1. Introduction

1.1 Background

The Property Council of Australia (South Australian Division) commissioned AEC Group

Limited (AECgroup) to prepare estimates of the economic significance associated with the property industry in South Australia. The industry consists of organisations and individuals involved in developing, operating and facilitating activities within the property industry to meet the dwelling and non-dwelling needs of South Australia.

1.2 Definition of the Property Industry

For the purposes of this assessment the industry classifications as defined by the Australian Bureau of Statistics (ABS) in the Australian and New Zealand Standard Industrial Classifications (ANZSIC), 2006 publication (ABS, 2008) were utilised. The property industry has been defined as incorporating:

Parts of the construction industry focussed on the development of residential and

non-residential buildings, as well as all construction services;

Architectural, engineering and professional services involved in the development of property;

Non-residential property operators and real estate services; and

Parts of banking, non-bank finance and other financial and insurance services that facilitate the development of property.

While many of these industries are also involved in non-property related activities, this

report examines the contribution of the property related components of these industries to the South Australian economy only.

The definition of the property industry used in this report does not include ownership of dwellings, which are rents paid by tenants to landlords and imputed rents to owner occupiers.

A full list of ANZSIC classes included in the definition of the property industry is provided

in Appendix A.

1.3 Geographic Scope

The scope of this report is to assess the economic significance of the property industry in South Australia as well as in key sub-regions, as follows:

Greater Adelaide (ABS Statistical Divisions of Adelaide and Outer Adelaide);

Sub-regions within Greater Adelaide, based on the ABS Statistical Sub-Divisions (SSDs) of:

o Eastern Adelaide (which includes the Adelaide Central Business District (CBD)); o Northern Adelaide; o Southern Adelaide; o Western Adelaide;

o Barossa; o Mt Lofty Ranges;

o Fleurieu; and o Kangaroo Island;

Rest of South Australia.

Maps of the major sub-regions included in this study can be found in Appendix B.

1.4 Methodology

The estimates in this report are produced using Input-Output transaction tables and models developed by AECgroup for the purposes of this assessment, combined with data from a range of sources, including State Accounts data and various industry specific data


2

from the ABS. The Input-Output models were used to produce estimates of the direct and

flow-on contribution of the property industry to the South Australian economy in terms of Gross State Product (GSP), gross value added activity, employment and income (i.e., wages and salaries). A detailed description of the methodology employed in this report is

provided in Appendix C.

The information presented on the significance of the property industry in South Australia is for the 2009-10 financial year unless otherwise stated.


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2. Operating Characteristics

This chapter provides an overview of the South Australian property industry in terms of its overall value and contribution to employment and incomes (wages and salaries), as well as historic performance. An overview of building activity and approvals is also presented.

2.1 Value of Property Industry Activity and Employment

The South Australian property industry is estimated to have directly3 contributed the following to the South Australian economy in 2009-10:

Approximately $8.1 billion towards South Australia’s Gross State Product (GSP);

Approximately $7.5 billion in total gross value added activity;

Approximately $3.5 billion in wages and salaries.

Approximately 73,033 full time equivalent4 (FTE) jobs.

Refer to Appendix C for a description of the economic measures used in this section.

Table 2.1. Estimated Direct Economic Contribution of the Property Industry to the South Australian Economy, 2009-10

Property Industry Component Gross Product

($M)

Gross Value Add

($M)

Incomes ($M)

Employment (FTE)

Residential Building Construction (a) $938.0 $869.6 $264.8 8,333

Non-Residential Building Construction (a) $700.1 $649.0 $268.5 4,652

Construction Services (a) $3,312.0 $3,070.2 $1,574.1 40,898

Finance $662.9 $614.6 $193.1 3,079

Insurance and Superannuation Funds $122.5 $113.6 $52.1 299

Non-Residential Property Operators and Real Estate Services $1,410.3 $1,307.3 $498.0 6,429

Professional, Scientific and Technical Services $918.8 $851.8 $633.3 9,343

Total Property Industry Direct Contribution $8,064.7 $7,476.0 $3,483.9 73,033

Notes: Totals may not sum due to rounding. (a) It should be noted that many construction industry employees work more than the standard FTE

of 40 hours per week, and as such the total number of construction employees may be less than that depicted in the table. Sources: AECgroup, ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).

Between 2006-07 and 2009-10 the property industry’s contribution to industry output increased from $6.6 billion to $8.1 billion, representing total growth of 22.7% for the period. Growth in the property industry was greater than that of the South Australian economy in total, which grew by 16.3% between 2006-07 and 2009-10 (refer to Table 2.2).

The other economic measures of gross value added activity, wages and salaries and employment also increased at a higher rate than the South Australian totals between

2006-07 and 2009-10. Gross value add increased by 22.8% (compared to 16.5%), wages and salaries increased by 24.3% (compared to 14.3%) and employment increased by 17.5% (compared to 11.0%) over this period.

Strong growth in the property industry was particularly noticeable in the latest year, with all economic measures growing by two to three times that of the State total in 2009-10

following relatively slower growth in 2008-09 as global economic pressures subdued both

the State and national economies.

3 The direct contribution of the property sector refers to the value of final products and services generated by the

sector itself, as well as the jobs and incomes of employees directly employed in the sector. However, the

economic contribution of the property sector extends beyond the sector itself through flow-on effects, which are

discussed in Chapter 3.

4 Where one FTE is equivalent to one person working full time for one year.


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Table 2.2. Estimated Property Industry Growth in South Australia Compared to Total South Australian Economy Growth

Economic Measure 2006-07 2007-08 2008-09 2009-10 % Change 2006-07 to

2009-10

% Change 2008-09 to

2009-10

South Australia Property Industry

Gross Product ($M) $6,573.1 $7,152.4 $7,419.4 $8,064.7 22.7% 8.7%

Gross Value Add ($M) $6,086.4 $6,572.2 $6,830.5 $7,476.0 22.8% 9.5%

Incomes ($M) $2,802.7 $3,027.8 $3,165.1 $3,483.9 24.3% 10.1%

Employment (FTEs) 62,176 65,169 66,557 73,033 17.5% 9.7%

South Australia Total Economy

Gross State Product ($M) $69,073.0 $75,597.0 $77,407.0 $80,356.0 16.3% 3.8%

Gross Value Add ($M) $63,958.0 $69,465.0 $71,263.0 $74,490.0 16.5% 4.5%

Incomes ($M) $33,366.8 $36,077.3 $36,579.0 $38,133.8 14.3% 4.3%

Employment (FTEs) 574,348 627,172 621,439 637,693 11.0% 2.6%



2.2 Property Industry Building Activity

2.2.1 Commenced and Completed Developments

South Australia recorded the fifth largest number of residential buildings commenced (11,989 dwellings, or 7.2% of total) and completed (12,061 dwellings, or 8.2% of total) in Australia in 2009-10, behind Victoria, Queensland, New South Wales and Western Australia for the year.

In terms of value, South Australia also recorded the fifth highest value of residential and non-residential buildings commenced ($2.79 billion and $2.77 billion, respectively),

representing 5.6% of total value of residential buildings in Australia in 2009-10 and 7.2% of total value of non-residential buildings.

Table 2.3. Building Activity – Commenced and Completed Development, 2009-10

Region Residential Non-Residential

Commenced Completed Commenced Completed

Number Value ($M) Number Value ($M) Value ($M) Value ($M)

Victoria 54,424 $14,858 46,218 $12,932 $8,818 $9,217

New South Wales 31,897 $10,683 25,663 $9,243 $10,365 $7,272

Queensland 33,178 $9,539 33,628 $10,302 $7,975 $6,080

Western Australia 25,118 $7,290 22,293 $7,292 $6,363 $3,846

South Australia 11,989 $2,790 12,061 $2,866 $2,768 $1,814

Australian Capital Territory 4,433 $1,235 3,334 $936 $1,117 $1,044

Tasmania 3,120 $803 2,767 $725 $777 $547

Northern Territory 1,244 $464 1,304 $483 $473 $409

Australia 165,403 $47,662 147,268 $44,779 $38,656 $30,229

Source: ABS (2011a).

Despite being only the fifth largest Australian State or Territory in terms of building

activity, South Australia is the fastest growing State over the past four years. South Australia’s construction industry has experienced a 60.9% increase in the total value of buildings commenced between 2006-07 and 2009-10, significantly higher than the 22.6% increase experienced in Australia over this period.

The value of non-residential buildings commenced in particular has increased strongly, with the $2.77 billion of non-residential buildings commenced in 2009-10 approximately 135.4% higher than in 2006-07.


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Table 2.4. Comparison of Building Activity Commenced, 2006-07 and 2009-10

Region 2006-07 ($M) 2009-10 ($M) % Change, 2006-07 to

2009-10

South Australia

Residential $2,278 $2,790 22.5%

Non-Residential $1,176 $2,768 135.4%

Total $3,454 $5,558 60.9%

Australia

Residential $41,269 $47,662 15.5%

Non-Residential $29,128 $38,656 32.7%

Total $70,397 $86,318 22.6%


Figure 2.1 outlines the proportion of total value of buildings commenced in South Australia between 2001-02 and 2009-10 for each property type. The figure highlights that residential buildings have accounted for over 60% of total building commencement

value over the nine year period.

Of the non-residential property types, education buildings (9.0%) have accounted for the largest share of total building value in South Australia between 2001-02 and 2009-10, followed by commercial (7.0%), industrial (6.7%) and retail (5.9%) buildings.

Figure 2.1. Proportion of Total Value of Works Commenced by Property Industry Type in South Australia, 2001-02 to 2009-10


2.2.2 Building Approvals

In line with building activity (commencements and completions), South Australia recorded the fifth largest number of residential building approvals of all Australian States and Territories in 2009-10, with 25,208 dwellings approved. This accounted for 7.4% of all residential buildings approved in Australia in 2009-10. Victoria recorded the most residential building approvals for the year with 113,884 approvals.

South Australia was also the fifth largest State in terms of value of building approvals, for both residential and non-residential buildings. South Australia recorded residential building approvals valued at a total $5.39 billion and non-residential building approvals to the value of $5.35 billion.

Residential

60.4%

Retail

5.9%

Commercial

7.0%

Industrial

6.7%

Health

4.9%

Education

9.0%

Entertainment/

Recreation

2.1%

Other

4.0%


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Table 2.5. Building Approvals by State, 2009-10


Number Value ($M) Value Per Approval ($)

Value ($M)

New South Wales 66,622 $20,345.0 $305,379 $21,525.0

Victoria 113,884 $30,169.1 $264,911 $17,793.0

Queensland 67,444 $18,965.8 $281,208 $17,263.5

South Australia 25,208 $5,386.4 $213,679 $5,354.8

Western Australia 50,660 $14,060.2 $277,540 $12,562.0

Tasmania 6,464 $1,602.8 $247,956 $1,506.2

Northern Territory 2,642 $925.7 $350,379 $1,246.1

Australian Capital Territory 9,074 $2,261.0 $249,174 $2,520.7

Australia 341,998 $93,716.0 $274,025 $79,771.4


Source: ABS (2011b).

Within South Australia, Northern Adelaide SSD accounted for the largest share of total

residential building approvals in 2009-10, recording 7,462 dwellings approved valued at $1.3 billion. This represented almost 30% of the total number of residential building approvals in South Australia, with Southern Adelaide SSD (5,366 dwellings) and Western

Adelaide SSD (3,184 dwellings) recording the next highest number of dwelling approvals in 2009-10.

Eastern Adelaide SSD accounted for the largest share of total value of non-residential building approvals in South Australia in 2009-10, recording $1.5 billion (or 28.6% of South Australian total). Northern Adelaide SSD was the next largest contributor to non-residential building approvals with $898.6 million (or 16.8% of total), followed by Southern Adelaide SSD with $844.9 million (or 15.8% of total).

Table 2.6. Building Approvals in South Australia and Major Sub-Regions, 2009-10


Number Value ($M) Value ($M)

Greater Adelaide 21,168 $4,511.8 $4,412.3

Eastern Adelaide 1,734 $698.5 $1,532.6

Northern Adelaide 7,462 $1,320.2 $898.6

Southern Adelaide 5,366 $1,140.5 $844.9

Western Adelaide 3,184 $621.3 $732.8

Barossa 914 $185.8 $215.3

Mt Lofty Ranges 1,248 $261.9 $89.5

Fleurieu 1,136 $258.7 $87.1

Kangaroo Island 124 $25.0 $11.5

Rest of South Australia 4,040 $874.6 $942.5

South Australia 25,208 $5,386.4 $5,354.8


Source: ABS (2011b).


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3. Economic Significance Assessment

This chapter describes the economic contribution (or significance) of the property industry to the South Australian economy, including estimates of the industry’s contribution to major sub-regions in South Australia. The chapter also presents the flow-on contribution of property industry activity to other industries, as well as the direct

contribution of property related activities to South Australian tax revenues.

3.1 Contribution of the Property Industry to South Australia

The economic contribution of the property industry to the South Australian economy has been estimated across four key measures:

Gross Product: Refers to the value of all outputs of an industry including taxes/ subsidies on its final products after deducting the cost of goods and services inputs in the production process. Gross State Product (GSP) is the measure of a State’s total gross production;

Gross Value Add: Refers to the value of all outputs of an industry excluding taxes/ subsidies on its final products after deducting the cost of goods and services inputs in the production process;

Incomes: Measures the level of wages and salaries paid to employees of each industry; and

Employment: Refers to the part-time and full-time employment positions supported by an industry, both directly and indirectly through flow-on activity, and is expressed in terms of full time equivalent (FTE) positions.

In 2009-10, the property industry is estimated to have contributed approximately $19.8 billion or 24.7% of South Australia’s total GSP of $80.4 billion in 2009-10, including

generation of $8.1 billion in gross product directly, as well as supporting $11.8 billion in gross product through flow-on activity (refer to Table 3.1 and Table 3.2). The property industry contributes a similar proportion to State gross value add (GVA).

In terms of employment, the property industry is estimated to have supported

approximately 160,966 FTE jobs in 2009-10, or 25.2% of total employment in South Australia for the year, through both direct (73,033 FTE jobs) and flow-on (87,933 FTE

jobs) activity. These jobs supported a total of approximately $9.4 billion in incomes (wages and salaries), representing 24.6% of total wages and salaries paid in the State.

Table 3.1. Estimated Direct and Flow-On Contribution of the Property Industry to the South Australian Economy, 2009-10


($M)

Gross Value

Add ($M)

Incomes ($M)

Employment (FTE)

Direct Contribution

Residential Building Construction $938.0 $869.6 $264.8 8,333

Non-Residential Building Construction $700.1 $649.0 $268.5 4,652

Construction Services $3,312.0 $3,070.2 $1,574.1 40,898

Finance $662.9 $614.6 $193.1 3,079

Insurance and Superannuation Funds $122.5 $113.6 $52.1 299

Non-Residential Property Operators and Real Estate Services $1,410.3 $1,307.3 $498.0 6,429

Professional, Scientific and Technical Services $918.8 $851.8 $633.3 9,343

Total Direct Contribution $8,064.7 $7,476.0 $3,483.9 73,033


Production Induced (Type I) $4,952.2 $4,568.1 $2,861.8 35,710

Consumption Induced (Type II) $6,817.2 $6,288.4 $3,017.9 52,224

Total Flow-On Contribution $11,769.4 $10,856.5 $5,879.7 87,933

TOTAL CONTRIBUTION TO SOUTH AUSTRALIA $19,834.1 $18,332.5 $9,363.6 160,966

Notes: Totals may not sum due to rounding. Sources: AECgroup, ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).


8

The sub-industries within the South Australian property industry that contributed the

most to total GSP in 2009-10 were:

Construction services, supporting $3.3 billion in gross product (or 4.1% of GSP);

Non-residential property operators and real estate services, supporting $1.4 billion in

gross product (or 1.8% of GSP); and

Residential building construction, supporting $938.0 million in gross product (or 1.2% of GSP).

In terms of employment generation, the largest contributors to the South Australian economy within the property industry in 2009-10 were:

Construction services, supporting 40,898 FTE jobs (or 6.4% of total South Australian FTE jobs);

Professional, scientific and technical services, supporting 9,343 FTE jobs (or 1.5% of total South Australia FTE jobs); and

Residential building construction, supporting 8,333 FTE jobs (or 1.3% of total South

Australia FTE jobs).

Table 3.2. Estimated % Contribution of the Property Industry to the South Australian Economy, 2009-10


(%)

Gross Value

Add (%)

Incomes (%)

Employment (%)

Direct Contribution

Residential Building Construction 1.2% 1.2% 0.7% 1.3%

Non-Residential Building Construction 0.9% 0.9% 0.7% 0.7%

Construction Services 4.1% 4.1% 4.1% 6.4%

Finance 0.8% 0.8% 0.5% 0.5%

Insurance and Superannuation Funds 0.2% 0.2% 0.1% 0.0%

Non-Residential Property Operators and Real Estate Services 1.8% 1.8% 1.3% 1.0%

Professional, Scientific and Technical Services 1.1% 1.1% 1.7% 1.5%

Total Direct Contribution 10.0% 10.0% 9.1% 11.5%


Production Induced (Type I) 6.2% 6.1% 7.5% 5.6%

Consumption Induced (Type II) 8.5% 8.4% 7.9% 8.2%

Total Flow-On Contribution 14.6% 14.6% 15.4% 13.8%

TOTAL CONTRIBUTION TO SOUTH AUSTRALIA 24.7% 24.6% 24.6% 25.2%



As outlined in section 2.1, the property industry grew at a faster rate than the overall South Australian economy between 2006-07 and 2009-10, which has resulted in the contribution of the property industry to the South Australian economy increasing over the

period. The property industry’s contribution to GSP and gross value add has increased by 1.3 percentage points over the four year period, while the contribution to total incomes and employment increased by 2.0 and 1.4 percentage points, respectively.


9

Table 3.3. Estimated Change in Property Industry Contribution to the South Australian Economy, 2006-07 to 2009-10

Year/ Effect Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employment (%)

2006-07

Direct Contribution 9.5% 9.5% 8.4% 10.8%

Production Induced (Type I) Contribution 5.8% 5.8% 6.9% 5.3%

Consumption Induced (Type II) Contribution 8.0% 8.0% 7.3% 7.7%

Total 2006-07 Contribution 23.3% 23.3% 22.6% 23.9%

2009-10




Total 2009-10 Contribution 24.7% 24.6% 24.6% 25.2%

Change, 2006-07 to 2009-10 (a)




Total Change in Contribution 1.3% 1.3% 2.0% 1.4%

Notes: Totals may not sum due to rounding. (a) The percentage change estimates represent percentage point differences between 2006-07 and 2009-10.


3.2 Regional Contribution of the Property Industry

The economic contribution of the property industry to major SSDs in South Australia (as defined in Section 1.3) is outlined in Table 3.4, Table 3.5 and Table 3.6 below. The information described in each table is as follows:

Table 3.4 outlines the economic contribution of the property industry to major SSDs in South Australia in value terms;

Table 3.5 outlines the economic contribution of the property industry to major SSDs

in South Australia as a percent of total South Australian economic activity; and

Table 3.6 outlines the percent contribution of each major SSD to total direct and flow-on contributions of the property industry to the South Australian economy.

The tables highlight that:

The Greater Adelaide region is the centre for South Australian property industry activity, generating just under 90% of all property industry-related (direct and flow-

on) activity in the State. Greater Adelaide SD is estimated to have contributed in 2009-10:

o $17.5 billion in gross product, or 88.2% of total property industry contribution to GSP;

o $16.2 billion in GVA, or 88.2% of total property industry contribution to South Australian GVA;

o $8.3 billion in incomes, or 88.7% of total property industry contribution to South

Australian incomes; and

o 140,263 FTE jobs, or 87.1% of total property industry contribution to South Australian FTE jobs.

Within Greater Adelaide, the Eastern Adelaide SSD is the largest contributor to property industry impacts, accounting for over 30% of total direct and flow-on contributions by the property industry to the South Australian economy (as shown in Table 3.6), including $6.4 billion in gross product, 46,209 FTE jobs and $3.1 billion in

gross incomes; and

Western Adelaide SSD and Southern Adelaide SSD are the next largest contributors to total property industry impacts in South Australia.


10

Table 3.4. Estimated Regional Economic Contribution of the Property Industry in South Australia, 2009-10

Region Direct Contribution Flow-On (Type I + Type II) Contribution Total Contribution

Gross Product

($M)

Gross Value

Add ($M)

Incomes ($M)

Employ. (FTE)

Gross Product

($M)

Gross Value

Add ($M)

Incomes ($M)

Employ. (FTE)

Gross Product

($M)

Gross Value

Add ($M)

Incomes ($M)

Employ. (FTE)

Greater Adelaide $6,918.4 $6,411.2 $2,991.3 61,695 $10,575.8 $9,751.9 $5,313.3 78,568 $17,494.2 $16,163.0 $8,304.6 140,263

Eastern Adelaide $2,463.3 $2,282.9 $1,080.9 19,161 $3,973.3 $3,659.0 $1,982.5 27,048 $6,436.6 $5,941.8 $3,063.4 46,209

Northern Adelaide $1,300.8 $1,205.4 $557.0 12,474 $834.4 $769.6 $472.6 6,352 $2,135.2 $1,975.0 $1,029.6 18,826

Southern Adelaide $1,226.2 $1,136.3 $521.6 11,340 $1,652.3 $1,523.4 $822.6 12,924 $2,878.5 $2,659.7 $1,344.1 24,265

Western Adelaide $1,357.2 $1,257.6 $589.0 13,255 $2,381.3 $2,200.0 $1,230.7 17,890 $3,738.5 $3,457.6 $1,819.8 31,145

Barossa $178.6 $165.5 $77.3 1,747 $219.8 $203.0 $116.0 2,002 $398.4 $368.5 $193.3 3,748

Mt Lofty Ranges $179.5 $166.3 $76.9 1,707 $229.9 $212.0 $115.5 1,961 $409.4 $378.3 $192.4 3,667

Fleurieu $194.3 $180.1 $81.0 1,832 $207.1 $190.8 $100.2 1,713 $401.4 $370.9 $181.3 3,545

Kangaroo Island $18.5 $17.1 $7.6 179 $18.3 $16.9 $8.8 145 $36.8 $34.0 $16.5 325

Rest of South Australia $1,146.3 $1,064.8 $492.6 11,338 $1,193.6 $1,104.7 $566.4 9,365 $2,339.9 $2,169.5 $1,059.0 20,703

South Australia $8,064.7 $7,476.0 $3,483.9 73,033 $11,769.4 $10,856.5 $5,879.7 87,933 $19,834.1 $18,332.5 $9,363.6 160,966



Table 3.5. Estimated % Regional Economic Contribution of the Property Industry to the South Australian Economy, 2009-10


Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Greater Adelaide 8.6% 8.6% 7.8% 9.7% 13.2% 13.1% 13.9% 12.3% 21.8% 21.7% 21.8% 22.0%

Eastern Adelaide 3.1% 3.1% 2.8% 3.0% 4.9% 4.9% 5.2% 4.2% 8.0% 8.0% 8.0% 7.2%

Northern Adelaide 1.6% 1.6% 1.5% 2.0% 1.0% 1.0% 1.2% 1.0% 2.7% 2.7% 2.7% 3.0%

Southern Adelaide 1.5% 1.5% 1.4% 1.8% 2.1% 2.0% 2.2% 2.0% 3.6% 3.6% 3.5% 3.8%

Western Adelaide 1.7% 1.7% 1.5% 2.1% 3.0% 3.0% 3.2% 2.8% 4.7% 4.6% 4.8% 4.9%

Barossa 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.6%

Mt Lofty Ranges 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.6%

Fleurieu 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.6%

Kangaroo Island 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%

Rest of South Australia 1.4% 1.4% 1.3% 1.8% 1.5% 1.5% 1.5% 1.5% 2.9% 2.9% 2.8% 3.2%

South Australia 10.0% 10.0% 9.1% 11.5% 14.6% 14.6% 15.4% 13.8% 24.7% 24.6% 24.6% 25.2%

Notes: Totals may not sum due to rounding. Sources: AECgroup, ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).


11

Table 3.6. Estimated % Regional Contribution to Total Direct and Flow-On South Australian Property Industry Impacts, 2009-10


Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Greater Adelaide 34.9% 35.0% 31.9% 38.3% 53.3% 53.2% 56.7% 48.8% 88.2% 88.2% 88.7% 87.1%

Eastern Adelaide 12.4% 12.5% 11.5% 11.9% 20.0% 20.0% 21.2% 16.8% 32.5% 32.4% 32.7% 28.7%

Northern Adelaide 6.6% 6.6% 5.9% 7.7% 4.2% 4.2% 5.0% 3.9% 10.8% 10.8% 11.0% 11.7%

Southern Adelaide 6.2% 6.2% 5.6% 7.0% 8.3% 8.3% 8.8% 8.0% 14.5% 14.5% 14.4% 15.1%

Western Adelaide 6.8% 6.9% 6.3% 8.2% 12.0% 12.0% 13.1% 11.1% 18.8% 18.9% 19.4% 19.3%

Barossa 0.9% 0.9% 0.8% 1.1% 1.1% 1.1% 1.2% 1.2% 2.0% 2.0% 2.1% 2.3%

Mt Lofty Ranges 0.9% 0.9% 0.8% 1.1% 1.2% 1.2% 1.2% 1.2% 2.1% 2.1% 2.1% 2.3%

Fleurieu 1.0% 1.0% 0.9% 1.1% 1.0% 1.0% 1.1% 1.1% 2.0% 2.0% 1.9% 2.2%

Kangaroo Island 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2%

Rest of South Australia 5.8% 5.8% 5.3% 7.0% 6.0% 6.0% 6.0% 5.8% 11.8% 11.8% 11.3% 12.9%

South Australia 40.7% 40.8% 37.2% 45.4% 59.3% 59.2% 62.8% 54.6% 100.0% 100.0% 100.0% 100.0%




12

In South Australia, it is estimated that the property industry directly employed 73,033

FTE employees in 2009-10, representing 11.5% of total employment in the State. Greater Adelaide (combined) employed a higher proportion of its workforce in the property industry relative to the rest of South Australia, recording an 11.8% share

compared to 9.9%.

Within Greater Adelaide, Fleurieu SSD is estimated to directly employ 16.6% of its workforce (or 1,832 workers) in the property industry – representing the largest proportional contribution to total employment by the property industry of any of the SSDs in Greater Adelaide. Mt Lofty Ranges SSD has the second highest share of total employment in the property industry at 14.3%.

Eastern Adelaide SSD, which includes the Adelaide CBD, employed a lower proportion of

its workforce in the property industry than the State average. This is primarily a reflection of Eastern Adelaide encompassing the Adelaide CBD, the major employment centre for the State, providing a diverse range of private and public sector business and household services.

Table 3.7. Estimated % Direct Contribution of the Property Industry to Regional

Employment, 2009-10

Region Direct Employment in

Property Industry

Total Employed % Share of Property Industry

Greater Adelaide 61,695 523,725 11.8%

Eastern Adelaide 19,161 175,647 10.9%

Northern Adelaide 12,474 109,824 11.4%

Southern Adelaide 11,340 90,923 12.5%

Western Adelaide 13,255 107,411 12.3%

Barossa 1,747 15,039 11.6%

Mt Lofty Ranges 1,707 11,966 14.3%

Fleurieu 1,832 11,042 16.6%

Kangaroo Island 179 1,874 9.6%

Rest of South Australia 11,338 113,967 9.9%

South Australia 73,033 637,693 11.5%



3.3 Contribution of the Property Industry to South Australia by

Industry

Table 3.8 identifies the direct and flow-on contribution of the property industry to the South Australian economy by industry. In terms of flow-on contribution to gross product,

the following is noted:

Non-property related financial and insurance services is the primary beneficiary of property industry activity, with property industry activity contributing to flow-on effects for financial and insurance services of approximately $2.1 billion in gross product, equating to 18.0% of total flow-on gross product effects of $11.8 billion (or 29.9% of total South Australian financial and insurance services gross product);

Manufacturing and ownership of dwellings are the next largest beneficiaries of

property industry activity, accounting for 13.8% ($1.6 billion) and 11.5% ($1.4

billion) of total flow-on gross product effects, respectively;

Other key beneficiaries of activity in the property industry from a gross product perspective include:

o Professional, scientific and technical services (6.6%);

o Retail trade (5.8%);

o Transport, postal and warehousing (5.6%); and

o Administrative and support services (5.3%).


13

In terms of employment, the property industry primarily supports flow-on employment in

the following industries:

Manufacturing (14,018 FTE jobs, or 15.9% of total flow-on employment);

Retail trade (11,464 FTE jobs, or 13.0% of total flow-on employment);

Professional, scientific and technical services (8,245 FTE jobs, or 9.4% of total flow-on employment); and

Accommodation and food services (7,080 FTE jobs, or 8.1% of total flow-on employment).

Table 3.8 highlights that the property industry is a key contributor to total demand for goods and services provided by the industries of:

Administrative and support services;

Financial and insurance services (non-property related);

Rental, hiring and real estate services (non-property related, e.g., hiring of rental cars or machinery);

Information, media and telecommunications;

Electricity, gas, water and waste services;

Other services not defined elsewhere (e.g., repair and maintenance services, personal

services, industry and other professional groups or organisations);

Professional, scientific and technical services;

Manufacturing;

Arts and recreation services; and

Accommodation and food services.

Flow-on activity generated by the property industry accounts for one fifth or more of total economic activity in each of these industries.


14

Table 3.8. Estimated Contribution of the Property Industry to the South Australian Economy by Industry, 2009-10

Industry Value of Contribution % of Total Industry in South Australia

Gross Product

($M)

Gross Value

Add ($M)

Incomes ($M)

Employ. (FTE)

Gross Product

(%)

Gross Value

Add (%)

Incomes (%)

Employ. (%)

Direct Property Industry Contribution

Residential Building Construction $938.0 $869.6 $264.8 8,333 100.0% 100.0% 100.0% 100.0%

Non-Residential Building Construction $700.1 $649.0 $268.5 4,652 100.0% 100.0% 100.0% 100.0%

Construction Services $3,312.0 $3,070.2 $1,574.1 40,898 100.0% 100.0% 100.0% 100.0%

Finance $662.9 $614.6 $193.1 3,079 100.0% 100.0% 100.0% 100.0%

Insurance and Superannuation Funds $122.5 $113.6 $52.1 299 100.0% 100.0% 100.0% 100.0%

Non-Residential Property Operators and Real Estate Services $1,410.3 $1,307.3 $498.0 6,429 100.0% 100.0% 100.0% 100.0%

Professional, Scientific and Technical Services $918.8 $851.8 $633.3 9,343 100.0% 100.0% 100.0% 100.0%

Total Direct Contribution $8,064.7 $7,476.0 $3,483.9 73,033 100.0% 100.0% 100.0% 100.0%

Flow-On (Type I + II) Non-Property Related Industry Contribution

Agriculture, forestry and fishing $254.0 $234.3 $73.1 2,842 8.6% 8.6% 9.6% 9.6%

Mining $276.1 $254.7 $42.0 425 4.1% 4.1% 5.1% 4.6%

Manufacturing $1,621.9 $1,496.1 $916.7 14,018 21.0% 20.9% 22.0% 20.5%

Electricity, gas, water and waste services $449.6 $414.7 $168.4 1,992 22.9% 22.7% 25.5% 20.9%

Construction $4.1 $3.8 $2.6 23 0.7% 0.7% 0.7% 0.7%

Wholesale trade $574.0 $529.5 $352.7 3,963 14.9% 14.8% 15.0% 14.9%

Retail trade $680.4 $627.6 $430.8 11,464 17.1% 17.1% 17.3% 18.1%

Accommodation and food services $397.1 $366.3 $237.0 7,080 20.9% 20.8% 21.3% 18.2%

Transport, postal and warehousing $659.3 $608.2 $294.1 5,479 18.9% 18.8% 19.4% 18.7%

Information, media and telecommunications $486.3 $448.6 $165.5 2,734 23.3% 23.2% 23.3% 26.9%

Financial and insurance services $2,120.4 $1,955.9 $1,076.2 5,512 29.9% 29.8% 33.0% 31.1%

Rental, hiring and real estate services $132.0 $121.8 $55.7 584 25.4% 25.3% 25.6% 27.8%

Professional, scientific and technical services $775.4 $715.3 $546.2 8,245 21.6% 21.5% 21.4% 21.7%

Administrative and support services $618.3 $570.3 $511.6 5,711 33.6% 33.4% 33.8% 31.2%

Public administration and safety $151.7 $140.0 $119.5 1,751 3.0% 3.0% 3.2% 3.5%

Education and training $344.4 $317.7 $285.5 4,069 10.6% 10.5% 10.7% 10.0%

Health care and social assistance $383.5 $353.8 $292.5 4,656 6.8% 6.7% 6.8% 6.4%

Arts and recreation services $112.8 $104.1 $66.1 1,494 21.2% 21.1% 21.7% 20.6%

Other services $375.6 $346.5 $243.3 5,891 21.9% 21.8% 21.9% 20.5%

Ownership of dwellings $1,352.4 $1,247.5 $0.0 0 17.4% 17.3% n.a. n.a.

Total Flow-On Contribution $11,769.4 $10,856.5 $5,879.7 87,933 16.3% 16.2% 17.0% 15.6%

Total Contribution $19,834.1 $18,332.5 $9,363.6 160,966 24.7% 24.6% 24.6% 25.2%




15

3.4 Contribution of Property Sub-Sectors to South Australia

The property industry can be classified into sub-sectors by the range of property types that are developed and managed. In this section the property industry has been disaggregated into the following sub-sectors to examine the direct5 contribution of individual property sub-sectors to the South Australian economy:

Residential; Retail; Commercial;

Industrial; Health; Education; Entertainment/ Recreation; and Other.

The direct contribution of the property industry to the South Australian economy is disaggregated across each of its sub-sectors (or property type) in Table 3.9. The

methodology applied in disaggregating the direct contribution of the property industry to its constituent sub-sectors is described in Appendix C.

The table shows that the residential property sub-sector accounts for around 60% of total direct property contributions to the South Australian economy, in keeping with the high proportional contribution of the residential sector to total value of building activity (refer to Section 2.2). Education, commercial, and industrial property sub-sectors are also key

contributors to property industry activity, as is retail property development.

Table 3.9. Estimated Direct Contribution of the Property Industry to the South Australian Economy by Property Sub-Sector/ Type, 2009-10

Property Sub-Sector/ Type Gross Product ($M)

Gross Value Add ($M)

Incomes ($M)

Employment (FTE)

Direct Contribution

Residential $4,822.8 $4,470.7 $2,048.4 44,631

Retail $487.7 $452.1 $215.9 4,272

Commercial $573.9 $532.0 $254.1 5,028

Industrial $549.4 $509.3 $243.3 4,813

Health $399.0 $369.8 $176.7 3,495

Education $735.4 $681.8 $325.7 6,443

Entertainment/ Recreation $172.4 $159.8 $76.3 1,510

Other $324.1 $300.5 $143.5 2,839

Total Direct Contribution $8,064.7 $7,476.0 $3,483.9 73,033

Percent of Total Direct Contribution

Residential 59.8% 59.8% 58.8% 61.1%

Retail 6.0% 6.0% 6.2% 5.9%

Commercial 7.1% 7.1% 7.3% 6.9%

Industrial 6.8% 6.8% 7.0% 6.6%

Health 4.9% 4.9% 5.1% 4.8%

Education 9.1% 9.1% 9.3% 8.8%

Entertainment/ Recreation 2.1% 2.1% 2.2% 2.1%

Other 4.0% 4.0% 4.1% 3.9%

Total % of Direct Contribution 100.0% 100.0% 100.0% 100.0%

Notes: Totals may not sum due to rounding. Source: AECgroup, ABS (2011a), ABS (2010a, b, c, d and e), APRA (2008), RBA (2011a, b, c and d).

5 Only direct contributions have been examined as insufficient data is available to appropriately identify any

variances between sub-sectors contribution to flow-on effects.


16

3.5 Contribution to State Taxes

Property related activities are estimated to have directly contributed approximately $1.6 billion to South Australian government taxes in 2009-10, equating to 42.5% of total State tax revenue for the year of $3.8 billion. The contribution of property related activity to State taxes was generated through a combination of $82.2 million in payroll tax (for businesses directly employed in the property industry), $787.0 million in transfer (or stamp) duties for property purchased, $553.0 million in land tax and $183.0 million in fire levies (refer to Table 3.10).

The approach utilised in allocating State taxes to property related activities is provided in Appendix D.

Table 3.10. Estimated Regional Contribution of Property Related Activity to State Taxes, 2009-10

Region Payroll Tax

($M)

Transfer Duty ($M)

Land Tax ($M)

Fire Levies ($M)

Total ($M)

Greater Adelaide $70.6 $714.6 $474.3 $149.4 $1,408.9

Eastern Adelaide $25.5 $162.0 $110.6 $26.9 $325.0

Northern Adelaide $13.1 $161.4 $122.3 $43.4 $340.2

Southern Adelaide $12.3 $198.9 $115.4 $38.9 $365.6

Western Adelaide $13.9 $106.3 $93.6 $24.7 $238.5

Barossa $1.8 $21.5 $8.5 $5.1 $36.9

Mt Lofty Ranges $1.8 $30.5 $11.7 $5.2 $49.2

Fleurieu $1.9 $33.0 $10.9 $4.7 $50.6

Kangaroo Island $0.2 $0.9 $1.3 $0.5 $2.9

Rest of South Australia $11.6 $72.4 $78.7 $33.6 $196.3

South Australia $82.2 $787.0 $553.0 $183.0 $1,605.2

Source: AECgroup, ABS (2011c), ABS (2007), South Australian Department of Treasury and Finance (2011), REISA (2011), Revenue SA (2011).


17

4. Comparisons with Other Industries

This chapter examines the direct contribution of the property industry to the South Australian economy and State taxes compared to the contributions of other industries within the economy.

4.1 Economic Contribution

4.1.1 Gross State Product and Gross Value Add

The property industry is the largest industry in the South Australian economy, and is estimated to have contributed approximately $8.1 billion to total South Australian Gross State Product (GSP) in 2009-10. This accounted for 10.0% of GSP for the year of $80.4

billion, above other key sectors such as ownership of dwellings, manufacturing, financial and insurance services and mining.

Figure 4.1. Direct Contribution to Gross State Product by Industry, 2009-10


Manufacturing was the largest contributor to GSP in 2006-07, however, strong growth in

the property industry in recent years has resulted in the property industry overtaking manufacturing to be the largest contributor in 2009-10. Gross product in the property industry increased by 22.7% between 2006-07 and 2009-10, equating to average annual growth of 7.1%. This is 1.9 percentage points higher than the average growth of the South Australian economy over the same period.

4.1.2 Incomes

In terms of total wages and salaries paid, the property industry was the fourth largest

income provider in the State in 2009-10, paying approximately $3.5 billion in wages and salaries during the year. This accounted for 9.1% of total wages and salaries paid in South Australia in 2009-10. The health care and social assistance industry was the highest provider of wages and salaries, paying $4.3 billion in 2009-10, accounting for 11.3% of total salaries and wages for the period.

$0 $2 $4 $6 $8 $10



Construction

Other services









Wholesale trade

Retail trade



Mining


Manufacturing


Property industry

Gross Product ($ Billion)


18

Figure 4.2. Direct Contribution to Incomes by Industry, 2009-10


4.1.3 Employment

The property industry is South Australia’s second largest employer, with estimated employment of 73,033 full time equivalent (FTE) jobs in 2009-10, accounting for 11.5% of total South Australian jobs for the year. The largest employer was the health care and social assistance industry (e.g., hospital and other medical services, ambulance services, allied health care, aged and child care, welfare services) employing 73,272 FTE employees.

Figure 4.3. Direct Contribution to Employment by Industry, 2009-10


In line with gross product, employment in the property industry increased considerably since 2006-07, increasing on average by 5.5% per annum. The annual growth in

$0 $1 $2 $3 $4 $5




Construction




Mining

Other services




Wholesale trade

Retail trade




Property industry


Manufacturing


Incomes ($ Billion)

0 10 20 30 40 50 60 70 80



Construction


Mining





Wholesale trade

Other services







Retail trade

Manufacturing

Property industry


Employment ('000 FTEs)


19

employment in the property industry was 2.0 percentage points higher than growth in

employment for South Australia, meaning the property industry’s contribution in terms of employment has increased over this period. In 2006-07, the property industry was the third largest employing industry, behind manufacturing and health care and social

services.

4.2 State Taxes

Property related activities are estimated to have been the largest single industry contributing to State taxes and royalty revenues in 2009-10, providing $1.6 billion of the

$3.8 billion in taxes and royalties received by the South Australian Government for the year. The next largest contributor to State taxes was finance and insurance services with $438.0 million, followed by arts and recreation services with $409.2 million (primarily through taxes on gambling).

In terms of contribution to taxes per dollar of gross product, property related activities are the second most highly taxed in the State, providing $0.20 for every dollar of gross product. Arts and recreation services, which primarily involves taxes on gambling and

gaming, is the most highly taxed industry per dollar of production at $0.77 for every dollar of gross product (although it provides only one quarter the tax revenues of the property industry in total), while finance and insurance services is the third most highly taxed industry per dollar of production at $0.06 per dollar of gross product.

The contribution to State taxes by property related activities and other industries of the economy has been estimated utilising the approach outlined in Appendix D.

Table 4.1. Contribution to State Taxes, Comparison of Property Related Activities to Other Industries of the Economy, 2009-10

Industry Tax Estimates ($M)

Contribution to GSP ($M)

Tax Per $1 of GSP Contributed ($)

Property related taxes $1,605.2 $8,064.7 $0.20

Agriculture, forestry and fishing $17.9 $2,945.3 $0.01

Mining $144.4 $6,761.4 $0.02

Manufacturing $98.5 $7,723.1 $0.01

Electricity, gas, water and waste services $15.6 $1,966.7 $0.01

Construction $9.4 $624.1 $0.02

Wholesale trade $55.4 $3,849.3 $0.01

Retail trade $58.9 $3,969.8 $0.01

Accommodation and food services $26.3 $1,896.1 $0.01

Transport, postal and warehousing $35.7 $3,487.3 $0.01

Information, media and telecommunications $16.8 $2,089.0 $0.01

Financial and insurance services $438.0 $7,081.9 $0.06

Rental, hiring and real estate services $5.1 $519.8 $0.01

Professional, scientific and technical services $60.1 $3,597.1 $0.02

Administrative and support services $35.7 $1,840.2 $0.02

Public administration and safety $116.6 $4,995.3 $0.02

Education and training $63.2 $3,252.6 $0.02

Health care and social assistance $101.8 $5,658.1 $0.02

Arts and recreation services $409.2 $531.1 $0.77

Other services $26.2 $1,714.3 $0.02

Ownership of dwellings $0.0 $7,789.0 $0.00

Not allocated (a) $435.0 - -

Total South Australia $3,775.0 $80,356.0 $0.05

Note: (a) Taxes that have not been allocated to an industry include stamp duties on motor vehicle and other vehicle registrations. While a part of these taxes are payable by industry, the majority of these taxes are paid by households. Due to data limitations it is

not possible to allocate the portion of these taxes that are paid by industry. Source: AECgroup, ABS (2011c), South Australian Department of Treasury and Finance (2011).


20

References

ABS (2011a). Building Activity, Australia, Sep 2010. Cat. No. 8752.0, Australian Bureau of Statistics, Canberra.

ABS (2011b). Building Approvals, Australia. Cat. No. 8731.0, Australian Bureau of Statistics, Canberra.

ABS (2011c). Taxation Revenue, Australia, 2009-10. Cat. No. 5506.0, Australian Bureau of Statistics, Canberra.

ABS (2011d). Regional Population Growth, Australia, 2009-10. Cat. No. 3218.0, Australian Bureau of Statistics, Canberra.

ABS (2010a). Australian National Accounts: Input-Output Tables – Electronic Publication, Final release 2006-07 tables. Cat. No. 5209.0.55.001, Australian Bureau of Statistics, Canberra.

ABS (2010b). Number of Employed Persons by Industry of Employment (ANZSIC 93 all 4

digit classification levels) by all Place of Work LGAs in Australia. Data provided by Information Consultancy Services, Australian Bureau of Statistics, GPO Box 9817, Brisbane, QLD, 4001.

ABS (2010c). Australian National Accounts: State Accounts, 2009-10. Cat. No. 5220.0, Australian Bureau of Statistics, Canberra.

ABS (2010d). Experimental Estimates of Industry Multifactor Productivity, 2009-10. Cat. No. 5260.0.55.002, Australian Bureau of Statistics, Canberra.

ABS (2010e). Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2009, Business by Industry Class by Main State by Annual Turnover Size Ranges. Cat. No. 8165.0, Australian Bureau of Statistics, Canberra.

ABS (2010f). Australian Standard Geographical Classification (ASGC) Digital Boundaries (Intercensal), Australia, July 2010. Cat. No. 1259.0.30.001, Australian Bureau of

Statistics, Canberra.

ABS (2008). Australian and New Zealand Standard Industrial Classification (ANZSIC),

2006 (Revision 1.0). Cat. No. 1292.0, Australian Bureau of Statistics, Canberra.

ABS (2007). 2006 Census of Population and Housing. Cat No. 2068.0, Australian Bureau of Statistics, Canberra.

APRA (2008). Statistics, Annual Superannuation Bulletin, June 2007. Australian Prudential Regulation Authority. Available from:

http://www.apra.gov.au/Statistics/Annual-Superannuation-Publication.cfm. Last accessed: 4th March 2011.

RBA (2011a). Assets of Financial Institutions – B01. Bulletin Statistical Tables, Reserve Bank of Australia. Available from: http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last accessed: 4th March 2011.

RBA (2011b). Banks – Assets – B02. Bulletin Statistical Tables, Reserve Bank of Australia. Available from: http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last accessed: 4th March 2011.

RBA (2011c). Credit Unions – Selected Assets and Liabilities – B08. Bulletin Statistical Tables, Reserve Bank of Australia. Available from: http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last

accessed: 4th March 2011.

RBA (2011d). Superannuation Funds – Outside Life Offices Table – B15. Bulletin Statistical Tables, Reserve Bank of Australia. Available from: http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities. Last accessed: 4th March 2011.

REISA (2011). House Sales Data. Data provided via email by the Real Estate Institute of South Australia, 4th May 2011.

http://www.apra.gov.au/Statistics/Annual-Superannuation-Publication.cfm

http://www.rba.gov.au/statistics/tables/index.html#assets_liabilities





21

Revenue SA (2011). Stamp Duty on Transfer of Real Property (Land). Revenue SA,

Department of Treasury and Finance. Available from: http://www.revenuesa.sa.gov.au/stamps/sdreal.html. Last accessed: 23rd June 2011.

South Australian Department of Treasury and Finance (2011). 2010-11 Budget Statement. Department of Treasury and Finance, Government of South Australia, Adelaide.

West, G. R. (1993). User’s Guide, Input-Output Analysis for Practitioners An Interactive Input-Output Software Package Version 7.1. Department of Economics. University of Queensland, 1993.

http://www.revenuesa.sa.gov.au/stamps/sdreal.html


22

Appendix A: Definition of the Property Industry

The information contained in this report is obtained from published data produced by the Australian Bureau of Statistics (ABS) as well as other data sources as relevant. The ABS

uses the Australian and New Zealand Standard Industrial Classification (ANZSIC) in the collection and publication of statistics. In 2006 the ABS began transitioning to a new ANZSIC system (2006 ANZSIC) from the previous classification system developed in 1993 (1993 ANSZIC). The 2006 ANZSIC (ABS, 2008) has therefore been used in this report in order to be consistent with most data sets recently produced by the ABS, including the Input-Output Transaction Tables used in this assessment (ABS, 2010a).

The property industry as defined in this report consists of the following industries.

Construction

Class 3011 – House Construction

This class consists of units mainly engaged in the construction of houses (except semi-detached houses) or in carrying out alterations, additions or renovations to houses, or in

organising or managing these activities.

Exclusions:

Off-site production of prefabricated buildings or building components are included in the appropriate classes of Group 222 Structural Metal Product Manufacturing;

Providing special trade repair services such as electrical or plumbing repairs are included in the appropriate classes of Group 323 Building Installation Services; and

Providing architectural or building consultancy services are included in the

appropriate classes of Group 692 Architectural, Engineering and Technical Services.

Class 3019 – Other Residential Building Construction

This class consists of units mainly engaged in the construction of residential buildings (except freestanding houses) or in carrying out alterations, additions or renovations to such buildings or in organising or managing these activities.

Exclusions:

Off-site production of prefabricated buildings or building components are included in the appropriate classes of Group 222 Structural Metal Product Manufacturing;

The construction of hotels, hostels, hospitals and other public buildings are included in Class 3020 Non-Residential Building Construction;




Class 3020 – Non-Residential Building Construction

This class consists of units mainly engaged in the construction of non-residential buildings such as hotels, motels, hostels, hospitals, prisons or other buildings, in carrying out alterations, additions or renovation to such buildings, or in organising or managing these activities.

Exclusions:

Off-site production of prefabricated metal buildings or metal building components are included in the appropriate classes of Group 222 Structural Metal Product Manufacturing;



23



Class 3211 – Land Development and Subdivision

This class consists of units primarily engaged in subdividing land into lots and servicing

land (such as excavation work for the installation of roads and utility lines), for subsequent sale.

Exclusions:

Constructing buildings on lots they subdivide or develop are included in the appropriate classes of Subdivision 30 Building Construction;

Construction of roads on a subcontract basis for land subdividers are included in Class 3101 Road and Bridge Construction; and

Legal subdivision of land without land preparation are included elsewhere in the classification system based on the primary activity of the unit.

Class 3212 – Site Preparation Services

This class consists of units mainly engaged in earthmoving work such as levelling of construction sites, excavation of foundations, trench digging or removal of overburden.

Exclusions:

Quarrying sand or gravel are included in Class 0911 Gravel and Sand Quarrying;

Quarrying earth soil or filling are included in Class 0919 Other Construction Material Mining; and

Selling sand, gravel or other quarried construction materials are included in Class 3339 Other Hardware Goods Wholesaling.

Class 3221 – Concreting Services

This class consists of units mainly engaged in concreting work, concrete pouring or other

concrete work on construction projects.

Exclusions:

Terrazzo laying are included in Class 3243 Tiling and Carpeting Services; and

Brick paving are included in Class 3291 Landscape Construction Services.

Class 3222 – Bricklaying Services

This class consists of units mainly engaged in bricklaying or concrete block laying.

Exclusions:

Units mainly engaged in brick paving are included in Class 3291 Landscape Construction Services

Class 3223 – Roofing Services

This class consists of units mainly engaged in roof tiling, metal roof fixing and the application of roof coatings.

Exclusions:

The installation of insulation materials are included in Class 3239 Other Building Installation Services;

The installation of roof guttering are included in Class 3231 Plumbing Services; and

The installation of wooden roof trusses are included in Class 3242 Carpentry Services.


24

Class 3224 – Structural Steel Erection Services

This class consists of units mainly engaged in the erection (including on-site fabrication) of metal silos, storage tanks or structural steel components for buildings or other structures such as bridges, overhead cranes or electricity transmission towers.

Exclusions:

The construction of buildings (which incorporate structural steel components) are included in the appropriate classes of Subdivision 30 Building Construction; and

The construction of complete structures such as bridges, towers or oil refinery plants (which incorporate structural steel components) are included in the appropriate classes of Subdivision 31 Heavy and Civil Engineering Construction.

Class 3231 – Plumbing Services

This class consists of units mainly engaged in plumbing or drainage (except sewerage or stormwater drainage systems construction). Also included are units mainly engaged in septic tank and other plumbing installation and repair.

Exclusions:

The construction of sewerage or stormwater drainage systems are included in Class 3109 Other Heavy and Civil Engineering Construction;

Installation of fire sprinkler systems are included in Class 3234 Fire and Security Alarm Installation Services;

Repairing gas appliances are included in Class 9421 Domestic Appliance Repair and Maintenance; and

Pumping or cleaning septic tanks are included in Class 2921 Waste Treatment and Disposal Services.

Class 3232 – Electrical Services

This class consists of units mainly engaged in the installation of electrical wiring or fittings in buildings or other construction projects. Electrical work arising from the installation of appliances is included in this class.

Exclusions:

Repairing electricity transmission or distribution lines are included in Class 3109 Other Heavy and Civil Engineering Construction;

Installing fire and/or security systems are included in Class 3234 Fire and Security

Alarm Installation Services; and

Repairing electrical appliances are included in Class 9421 Domestic Appliance Repair and Maintenance.

Class 3233 – Air Conditioning and Heating Services

This class consists of units mainly engaged in the installation of heating equipment, refrigeration equipment, air conditioning equipment, or in the installation of air

conditioning duct work.

Exclusions:

Manufacturing air conditioning duct work are included in Class 2240 Sheet Metal Product Manufacturing (except Metal Structural and Container Products);

The on-site assembly of industrial furnaces from prefabricated components are included in Class 3109 Other Heavy and Civil Engineering Construction; and

Installing motor vehicle air conditioning equipment are included in Class 9411

Automotive Electrical Services.


25

Class 3234 – Fire and Security Alarm Installation Services

This class consists of units mainly engaged in the installation of fire protection, detection and control systems, and in installing security systems.

Exclusions:

Units mainly engaged in the installation and monitoring of security systems are included in Class 7712 Investigation and Security Services.

Class 3239 – Other Building Installation Services

This class consists of units mainly engaged in building installation services not elsewhere classified.

Class 3241 – Plastering and Ceiling Services

This class consists of units mainly engaged in plastering, plaster fixing or finishing.

Class 3242 – Carpentry Services

This class consists of units mainly engaged in carpentry work or the fixing of wooden formwork on construction projects.

Exclusions:

Units mainly engaged in manufacturing prefabricated, wooden built-in cabinets, cupboards or shop fronts and their installation (except on-site fabrication) are

included in Class 1492 Wooden Structural Fitting and Component Manufacturing.

Class 3243 – Tiling and Carpeting Services

This class consists of units mainly engaged in laying carpet, or setting wall or floor tiles

Exclusions:

Installing roofing tiles are included in Class 3223 Roofing Services; and

Installing wooden flooring are included in Class 3242 Carpentry Services

Class 3244 – Painting and Decorating Services

This class consists of units mainly engaged in painting, decorating or wallpapering houses or other structures.

Exclusions:

Units mainly engaged in roof painting, spraying or coating are included in Class 3223 Roofing Services.

Class 3245 – Glazing Services

This class consists of units mainly engaged in glazing, including glass installation and

repair work.

Exclusions:

Units mainly engaged in the fabrication of aluminium and timber framed glass products are included in the appropriate classes of Division C Manufacturing.

Class 3291 – Landscape Construction Services

This class consists of units mainly engaged in constructing landscapes, including

landforming and the provision of retaining walls and paths, decks, fences, ponds and similar structures. Units also engaged in garden planting or installation of sprinkler/drainage systems in conjunction with constructing landscapes are included.

Exclusions:

Landscape consultancy and design services are included in Class 6921 Architectural Services; and


26

Garden maintenance activities and maintenance of lawns are included in Class 7313

Gardening Services.

Class 3292 – Hire of Construction Machinery with Operator

This class consists of units mainly engaged in hiring construction machinery, plant or

equipment with operator(s).

Exclusions:

Units mainly engaged in hiring earthmoving plant and equipment with operator are included in Class 3212 Site Preparation Services.

Class 3299 – Other Construction Services – not elsewhere classified

This class consists of units mainly engaged in construction services not elsewhere classified.

Rental, Hiring and Real Estate Services

Class 6712 – Non-Residential Property Operators

This class consists of units mainly engaged in renting or leasing non-residential properties.

Exclusions:

Units mainly engaged in land development and subdivision are included in Class 3211 Land Development and Subdivision.

Class 6720 – Real Estate Services

This class consists of units mainly engaged in valuing, purchasing, selling (by auction or private treaty), managing or renting real estate for others.

Exclusions:

Providing title transfer or conveyancing service are included in Class 6931 Legal Services; and

Providing engineering or structural property and house inspections are included in Class 6923 Engineering Design and Engineering Consulting Services.

Financial and Insurance Services

Class 6221 – Banking (Partial Only)

This class consists of units mainly engaged in operating banks (except merchant banks). Banks incur liabilities by accepting demand and other deposits and make commercial, industrial and consumer loans.

Exclusions:

Performing central banking functions are included in Class 6210 Central Banking;

Operating building societies are included in Class 6222 Building Society Operation;

Operating credit unions are included in Class 6223 Credit Union Operation; and

Operating merchant banks are included in Class 6229 Other Depository Financial Intermediation.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of loans and advances to the

residential sector in the banks’ total assets. Although part of loans to the commercial sector is property-related, data limitations regarding loans to the commercial sector precluded its inclusion.


27

Class 6222 – Building Society Operation

This class consists of units mainly engaged in operating building societies which accept deposits and provide specialised financing for home building or purchasing purposes.

Exclusions:

Operating development, savings and trading banks are included in Class 6221 Banking; and

Operating credit unions are included in Class 6223 Credit Union Operation.

Class 6223 – Credit Union Operation (Partial Only)

This class consists of units mainly engaged in operating credit unions which accept members’ share deposits and provide loans to their members for various purposes.

Exclusions:

Operating development, savings and trading banks are included in Class 6221 Banking; and

Operating building societies are included in Class 6222 Building Society Operation.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of loans and advances to the residential sector in credit union’s total assets. Although part of loans to the commercial

sector is property-related, data limitations regarding loans to the commercial sector precluded its inclusion.

Class 6322 – General Insurance (Partial Only)

This class consists of units mainly engaged in providing general insurance cover (except life and health insurance).

Exclusions:

Providing insurance broking services are included in Class 6420 Auxiliary Insurance

Services;

Providing insurance cover for hospital, medical, dental, pharmaceutical or funeral

expenses or costs are included in Class 6321 Health Insurance; and

Providing life insurance and life reinsurance cover are included in Class 6310 Life Insurance.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of property industry assets in the

total assets of general insurance.

Class 6330 – Superannuation Funds (Partial Only)

This class consists of units of separately constituted funds mainly engaged in providing retirement benefits.

Exclusions:

Investing money on their own account in predominantly financial assets (e.g. shares,

bonds, bills etc, including mortgages) are included in Class 6240 Financial Asset Investing; and

Managing or in carrying out the operations of separately constituted superannuation funds on a commission or fee basis are included in Class 6419 Other Auxiliary Finance and Investment Services.

Not all of this class has been allocated to the property industry. The allocation of this class to the property industry is based on the share of land and buildings in

superannuation total investment. Although part of equities and units in trusts is property-related, data limitations regarding loans to the commercial sector precluded its inclusion.


28

Professional, Scientific and Technical Services

Class 6921 – Architectural Services

This class consists of units mainly engaged in providing architectural services such as planning and designing buildings and structures; or planning and designing the development of land. Units apply knowledge of design, construction procedures, zoning regulations, location and land use, building codes and building materials.

Exclusions:

Units mainly engaged in managing or organising construction projects as the prime

contractor are included in the appropriate classes of Division E Construction.

Class 6922 – Surveying and Mapping Services

This class consists of units mainly engaged in providing surveying and mapping services (including exploration surveying services on contract). Units in this class use a variety of surveying techniques depending on the purpose of the survey, including magnetic surveys, gravity surveys, seismic surveys or electrical and electromagnetic surveys.

These services may also include surveying and mapping of areas above or below the

surface of the earth.

Exclusions:

Units mainly engaged in exploring for petroleum or minerals are included in the appropriate classes of Group 101 Exploration.

Class 6923 – Engineering Design and Engineering Consulting Services

This class consists of units mainly engaged in providing engineering consulting services.

These units are primarily involved in applying physical laws and principles of engineering in the design, development and utilisation of machines, materials, instruments, structures, processes and systems. Units provide advice, prepare feasibility studies, prepare preliminary and final plans and designs, provide technical services during the construction or installation phase, inspect and evaluate engineering projects, and related services.

Exclusions:

The physical or chemical transformation of materials into new products are included in the appropriate classes of Division C Manufacturing;

Managing or organising construction projects as the prime contractor are included in the appropriate classes of Division E Construction;

Undertaking scientific research are included in Class 6910 Scientific Research Services; and

Providing scientific or technical laboratory or testing services are included in Class

6925 Scientific Testing and Analysis Services.


29

Appendix B: Maps of Geographic Boundaries

Figure B.1. Map of SDs in South Australia

Note: The SDs of Adelaide and Outer Adelaide constitute the region of Greater Adelaide used in this report. Source: ABS (2010f).


30

Figure B.2. Map of SSDs in the Adelaide SD

Source: ABS (2010f).


31

Figure B.3. Map of SSDs in the Adelaide and Outer Adelaide SDs

Source: ABS (2010f).


32

Appendix C: Significance Assessment Methodology

The economic significance estimates in this report are produced using Input-Output transaction tables and models developed by AECgroup for the purposes of this

assessment, combined with data from a range of sources, including State Accounts data and various industry specific data from the ABS. The Input-Output models were used to produce estimates of the direct and flow-on contribution of the property industry to the South Australian economy in terms of output, gross value added activity, employment and income (i.e., wages and salaries).

Overview of IO Modelling

Input-Output (IO) analysis demonstrates inter-industry relationships within an economy, depicting how the output of one industry is purchased by other industries, households, the government and external parties (i.e. exports), as well as expenditure on other factors of

production such as labour, capital and imports. IO analysis shows the direct and indirect (flow-on) effects of one industry on other industries and the general economy. As such, IO

modelling can be used to demonstrate the economic contribution of an industry on the overall economy and how much the economy relies on this industry or to examine a change in final demand of any one industry and the resultant change in activity of its supporting industries.

The economic contribution can be traced through the economic system via:

Direct impacts, which are the first round of effects from direct operational expenditure on goods and services; and

Flow-on impacts, which comprise the second and subsequent round effects of increased purchases by suppliers in response to increased sales.

These effects can be identified through the examination of five types of impacts:

Output: Refers to the gross value of goods and services transacted, including the costs of goods and services used in the development and provision of the final

product. Output typically overstates the economic impacts as it counts all goods and

services used in one stage of production as an input to later stages of production, hence counting their contribution more than once;

Value added: Refers to the value of output after deducting the cost of goods and services inputs in the production process. Value added defines the true net contribution and is subsequently the preferred measure for assessing economic impacts;

Gross product: Gross product (or more commonly known as Gross Domestic/ State/

Regional Product) is a similar measure to value added, but also includes taxes less subsidies on the final goods and services produced. Gross product is the most commonly used headline measure of economic activity;

Income: Measures the level of wages and salaries paid to employees of the industry under consideration and to other industries through flow-on activity; and

Employment: Refers to the part-time and full-time employment positions generated

by the economic shock, both directly and indirectly through flow-on activity, and is

expressed in terms of full time equivalent (FTE) positions.

IO Assumptions

The key assumptions and limitations of Input-Output analysis include:

The inputs purchased by each industry are a function only of the level of output of

that industry. The input function is generally assumed linear and homogenous of degree one (which implies constant returns to scale and no substitution between inputs);


33

Each commodity (or group of commodities) is supplied by a single industry or sector

of production. This implies that there is only one method used to produce each commodity and that each industry or sector has only one primary output;

The total effect of carrying on several types of production is the sum of the separate

effects. This rules out external economies and diseconomies and is known simply as the additivity assumption. This generally does not reflect real world operations;

The system is in equilibrium at given prices. This is not the case in an economic system subject to external influences; and

In the static input-output model, there are no capacity constraints so that the supply of each good is perfectly elastic. Each industry can supply whatever quantity is demanded of it and there are no capital restrictions. This assumption would come into

play depending upon the magnitude of the changes in quantities demanded.

Despite these limitations, IO techniques provide a solid approach for taking account of the inter-relationships between the various sectors of the economy in the short-term and provide useful insight into the quantum of final demand for goods and services, both directly and indirectly, generated by the property industry in South Australia.

Significance Assessment Versus Impact Assessment

The framework employed in significance assessment differs from that employed in economic impact analysis in that economic significance assessment primarily seeks the contribution of an existing industry as opposed to the impact of a “stimulus” in a particular industry or in several industries (West, 1993). The usual approach of

comparing what the economy would be with and without the industries whose contributions are to be assessed does not work because the inter-relationship between industries means whether or not the industries to be assessed exist, there will still be demand for their outputs (e.g., a complete vehicle needs tyres so that whether or not the entire tyre manufacturer is closed down, the car manufacturer’s demand for tyres still exists). From a modelling stance, this problem is solved by assuming that demand for outputs of the industries to be assessed will instead be met by imports.

Model Development

The models used in this assessment are derived from sub-regional transaction tables developed specifically for this project. The process of developing a sub-regional transaction table involves developing regional estimates of gross production and

purchasing patterns based on a parent table, in this case the 2006-07 Australian transaction table (ABS, 2010a).

Estimates of gross production (by industry) in the study areas (South Australia and major

sub-regions) were developed based on the percent contribution to employment (by place of work) of the study areas to the Australian economy (ABS, 2010b), and applied to Australian gross output identified in the 2006-07 Australian table.

Industry purchasing patterns within study areas were estimated using a process of cross

industry location quotients and demand-supply pool production functions as described in West (1993).

In addition to the general limitations of Input-Output analysis, there are two other factors that need to be considered when assessing the outputs of sub-regional transaction table developed using this approach, namely:

It is assumed the sub-region has similar technology and demand/ consumption

patterns as the parent (Australia) table (e.g. the ratio of employee compensation to employees for each industry is held constant); and

Intra-regional cross-industry purchasing patterns for a given industry vary from the national tables depending on the prominence of the industry in the regional economy compared to its input industries. Typically, industries that are more prominent in the region (compared to the national economy) will be assessed as purchasing a higher proportion of imports from input industries than at the national level, and vice versa.


34

Input-Output tables utilise an aggregated system of industry classifications based on the

ANZSIC system. In total, the 2006-07 Input-Output tables produced by the ABS (2010a) define 111 distinct industries, some of which are aggregates of the industry classes outlined in Appendix A. Some of the property related industries in the Input-Output

tables consist of both property and non-property related sub-sectors, and it is necessary to separate the property component from the non-property component in the related Input-Output industry.

The industries defined in the Input-Output tables that are included in the property industry are as follows:

Residential Building Construction (all);

Non-Residential Building Construction (all);

Construction Services (all);

Finance (partially);

Insurance and Superannuation Funds (partially);

Non-Residential Property Operators and Real Estate Services (all); and

Professional, Scientific and Technical Services (partially).

The separation of property from non-property related operation for those Input-Output

industries listed as “partially” included in the property industry is based on either:

1. The share of total income (revenue) of the sub-sectors listed in Appendix A in the total income (revenue) of all sub-sectors grouped under the same Input-Output industry classification code6; or

2. The share of asset (loans and advances to as well as investment in) in the property industry in the total assets of all sub-sectors grouped under the same Input-Output industry classification code7.

These shares are then utilised to expand the original Input-Output table to separate these industries into their property related and non-property related components to facilitate the economic significance assessment of the property industry in isolation. Once the transaction table is complete, the significance model is developed through the development of coefficients as per West (1993).

Significance Assessment Approach

Contribution to South Australia and its Regions

The significance assessment is initially undertaken for the 2006-07 financial year to be consistent with the Input-Output transaction tables utilised. These estimates are then “rebased” to 2009-10 values using:

Data from the South Australia State Accounts (ABS, 2010c) to identify growth

between 2006-07 and 2009-10 in gross product and gross value add for each industry of the economy;

Data on labour productivity increases (ABS, 2010d) to identify changes in productivity per employee for each industry between 2006-07 and 2009-10. These estimates were then applied to 2009-10 production (estimated above) to identify 2009-10 employment for each industry; and

Estimates of incomes in 2009-10 were obtained assuming that the relationship between income and output in 2006-07 remains constant, which is consistent with the stylised fact of cost shares of output being close to constant over the long-term.

6 The “Professional, Scientific and Technical Services” Input-Output sector uses this approach based on data from

the ABS (2010e).

7 The “Finance” and “Insurance and Superannuation Funds” sectors use this approach based on data from the RBA

(2011a, b, c and d) and APRA (2008).


35

Estimates of the flow-on effects of the property industry in 2009-10 are obtained

assuming constant proportion between individual industries’ flow-on effects and the direct (total) effects (output, GVA, income and employment) in 2006-07. Since the relationship between industries is likely to have changed over this period, the estimates

produced are indicative only. In the absence of a more recent Input-Output transaction table, which forms the basis to quantify the inter-relationships between industries, the estimates produced represent the flow-on effects of the property industry assuming no significant structural changes in the relationship between industries.

Regional allocation of the direct and flow-on effects is performed in three steps:

1. Individual Input-Output transaction tables and significance assessment models were developed for each major sub-region examined (as described in the “Model

Development” section of this Appendix). This approach produces regional estimates of direct and flow-on property industry contributions assuming each region operates in isolation, and therefore does not account for any inter-regional flow-on relationships (i.e., flow-on demand by the property industry in, for example, the Barossa region for goods and services produced in the Eastern Adelaide region are not captured in the regional models as this is considered an “import” to the Barossa

regional economy);

2. To account for inter-regional flows of demand for goods and services between Greater Adelaide and Rest of South Australia, the difference between the total South Australian flow-on effects and the sum of flow-on effects for Greater Adelaide and Rest of South Australia by industry (the “inter-regional” flow-on effects) has been redistributed between Greater Adelaide and Rest of South Australia based on the proportion that each region contributes to total South Australian activity in each

industry (i.e., if Greater Adelaide accounts for 75% of total South Australian output in retail trade, then 75% of the inter-regional retail trade flow-on effects have been allocated to Greater Adelaide); and

3. To allocate to each SSD in Greater Adelaide the same approach is used as in Step 2 in redistributing inter-regional flows, but uses the proportional contribution of each SSD to Greater Adelaide to allocate inter-regional flows within Greater Adelaide rather than the State (i.e., if Eastern Adelaide accounts for 50% of total Greater

Adelaide output in retail trade, then 50% of the inter-regional retail trade flow-on effects within Greater Adelaide have been allocated to Eastern Adelaide).

Contribution to South Australia by Property Sub-Sector

The direct contribution of the property industry to the South Australian economy has also been disaggregated across the following property sub-sectors:

Residential;

Retail; Commercial; Industrial; Health; Education; Entertainment/ Recreation; and Other.

The direct contribution of each property sub-sector has been estimated based on allocation of each of the Input-Output industry contributions to the sub-sectors. Allocations have been based on:

Direct “Residential Building Construction” effects is entirely allocated to the Residential property sub-sector;

Direct “Non-Residential Building Construction” effects is allocated across all non-residential property sub-sectors based on long term (2001-02 to 2009-10)

proportional splits of value of non-residential building works commenced for each non-residential property sub-sector (ABS, 2011a); and

All other property related Input-Output industry effects are allocated based on long term (2001-02 to 2009-10) proportional splits of value of total building works commenced for each sub-sector (ABS, 2011a).


36

Appendix D: Allocation of State Taxes

State Government taxation and royalty revenues have been allocated to property related activities and other industries based on the following allocation approach.

Table D.1. Allocation of 2009-10 State Taxes to Property Related Activities and Other Industries

Tax Item Tax ($M) How Allocated

Payroll Tax $900 Allocated across each industry based on contribution to incomes

Duties

Transfer $787 Property related activity

Vehicle Registration $145 Not allocated

Insurance $361 Financial and insurance services

Total duties $1,293

Gambling Taxes and Levies $401 Arts and recreation services

Other Taxes

Land Tax $553 Property related activity

Motor Vehicle Registration $290 Not allocated

Fire Levy $183 Property related activity

Guarantee Fees $29 Public administration and safety

Total Other Taxes $1,055

Royalties from Mining $125 Mining

Total Taxation and Royalty Revenue $3,775

Source: ABS (2011c), South Australian Department of Treasury and Finance (2011).

Taxes attributable to property related activities were allocated across major sub-regions as follows:

Payroll tax: Payroll tax of property related activities (estimated using the approach

outlined in Table D.1) was allocated to each major sub-region based on the share of each major sub-region to total property industry incomes;

Transfer Duty: Indicative estimates of transfer duties were calculated based on the

average value of property (house prices) sales in each major sub-region during 2009-10 and the total number of sales in each major sub-region during the year (REISA, 2011). The proportion each region provided to the indicative estimate of transfer

duties was then applied to the actual transfer duty revenues outlined in Table D.1;

Land Tax: Land tax was allocated to each major sub-region based on estimated total rental value of rental properties outlined in the 2006 Census (ABS, 2007) in each region. The percent contribution of each region to total rental value was applied to the land tax estimate outlined in Table D.1;

Fire Levies: Fire levies have been allocated to each major sub-region based on their share of total South Australia population in 2010 as estimated by the ABS (2011d).

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