Glenelg Shire Business Retention and Expansion Program. Regional Economy and Strategy Report

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1 Glenelg Shire Business Retention and Expansion Program Regional Economy and Strategy Report 2010

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6 Executive Summary This is the third report prepared as part of the Glenelg Business Retention and Expansion Program. It includes the information from Reports 1 and 2, which provide an analysis of the region, its key industry sectors and the major towns that make up the Shire. This report provides an analysis of key sectors (including agriculture and tourism) and a review of strategic issues including transport and land use. The report also outlines an economic development strategy for the region and an implementation plan. Regional Context Glenelg Shire, located in the south west Victoria, is an important part of the Green Triangle Economic Region. The Green Triangle spans the border area between South Australia and Victoria and covers southwest Victoria and the south-east of South Australia. It includes: Warrnambool, Horsham, Mt Gambier, Portland, Hamilton, Naracoorte, Bordertown, Millicent and Penola. Glenelg Shire covers a total area of 6200 square kilometres. The area includes agricultural lands, pine plantations and national parks (inland and coast). The major areas of settlement are Portland, Casterton, Heywood, with population located in small villages including Dartmoor and Nelson. Major industries in the region include timber, agriculture (grazing, dairy farming), commercial fishing, manufacturing (aluminium smelter and engineering) and service industries. Tourism is another activity in the region with some potential to grow. 1 The total population of the LGA was estimated at around 21,000 persons in Population Demographics are a major current and future issue for the region and cover: the size and projected growth in the population; the age structure of the population (population ageing); declining population in the smaller centres; and the loss of younger persons who leave for education and employment reasons. The population of Shire is concentrated in and around the major centre of Portland, with the combined Portland area making up nearly half of the total population of the Shire (Portland South 4881 and Central Portland 4621). The other population areas are in and around the Heywood area (3407); the Casterton area (3274) and the Rural South (3591). Population projections for Glenelg Shire show slow growth over the long term. The Department of Sustainability and Environment projections indicate growth of 7.0% over the period to 2026 (0.3% average annual growth). 2 Based on this growth rate the population would increase by only 1436 and reach 21,961 by

7 Employment in the Shire There are a number of key sectors in the Glenelg LGA, and these are the Port of Portland, the Portland Aluminium Smelter, renewable energy, timber production and processing, commercial fishing, agribusiness and tourism. 4 There is also a significant service sector, which is providing a range of services to residents in the LGA There were a total of 7944 jobs located in the Glenelg LGA in 2006 and 8894 Glenelg residents who were in employment. The major concentrations of jobs were in manufacturing 1607 (20%), agriculture 1194 (15%), retail 900 (11%), health care and social assistance 859 (11%), and education and training 512 (6%). Males held 4401 jobs or 55.4% and females held 3543 jobs or 44.6%. The industries of employment of male and females were substantially different. Males were mainly employed in goods producing (58.3%) or goods related industries (10.5%), with the major sectors being manufacturing (1354); agriculture, forestry and fishing (772); and transport and logistics (347). Females were mainly employed in: in-person services (2290 or 64.6%), with the major sectors being: retail (900); health care and social assistance (859); accommodation and food services (473); and education and training (512). There was some commuting to jobs in the region. Of the 7941 jobs in the Shire, 95% are filled by Glenelg Shire residents and 5% by persons travelling into the region. Around 15% of Glenelg Shire residents commute outside of the LGA for employment. Of 8903 employed persons living within Glenelg Shire, 1367 commuted to jobs in locations outside of the Shire. In all 66% of jobs were located in the Portland SLA. This reflected a number of factors: the share of the regional population in the Portland area, its role as a service centre and the concentration of manufacturing (including the smelter) and transport activity (the Port and logistics). Employment Trends There has been limited growth in the number of jobs in the region between 2001 and It this period total jobs increased by only 335 (males 45 and females by 290). 5 Jobs held by males: The data show that over the period there was limited growth in jobs held by males in the region (except for some growth in manufacturing jobs (+162)and in transport and logistics(+67) and government (+57). In total the number of jobs held by males increased by only 45 over the period (there were declines in a number of sectors. Jobs held by females: The data shows that jobs held by females increased by 290 over the period, with most of this jobs growth being in: health and social assistance (+98), accommodation, cafes and restaurants (+91) and government (+50). There was also spatial dimension to this, with jobs growth being concentrated in Portland and a major decline occurring in the Heywood SLA in the period. Jobs in the Portland SLA increased by 840 or 24% over the period, with these jobs being concentrated in manufacturing (+242), health and social assistance (+168), and accommodation, cafes and restaurants (+158). Jobs in the Heywood SLA declined by 496 or 25%, with the major falls being in manufacturing (-74), retail trade (-97), agriculture, forestry and fishing (-68), and accommodation, cafes and restaurants (-41). Jobs in the North SLA declined by 9, with the major fall being in retail (-45) and growth in several sectors including agriculture, forestry and fishing (+ 26) and transport and logistics (+12).

8 Towns in the Shire Other than Portland, which is the major town, Heywood and Casterton are the only towns with urban area populations above 1000 residents. Each of the towns in the Shire is within commuting distance of towns with populations around 10,000 or more. (eg. Dartmoor and Nelson to Mt Gambier; Casterton to Hamilton; and Heywood to Portland). Portland: Portland is the main population, business and administrative centre of Glenelg Shire. The combined population of Portland Central and Portland South was 9502 in The population grew by 4.1% (373) between 2001 and The dominance of Portland in the regional economy is evidenced by the shares of employment in different sectors. The Portland area accounted for 66% of the jobs in the Glenelg Shire, and dominates all job categories (except agriculture). As the major regional centre and retail and service hub, it accounted for 83% of manufacturing jobs, 83% of transport and logistics jobs, 75% of retail jobs, 70% of health services jobs and 76% of business services jobs. There are a number of major issues in relation to development in Portland and these include the development of the Port and Smelter; planning of industrial areas; expansion in retail and tourism. The Portland Bay development is critical to the future of the area. Heywood: Heywood is one of the larger settlements outside of Portland and is located 27 kilometres north of Portland. In 2006 Heywood (State Suburb) had a population of The median age of the population was 42, which is older than the Victorian and Australian median ages. The population of the Heywood Urban Centre was 1287 and the population was slightly older than age structure of the Shire. The major issues for the future identified relate to the environment and economic development in the Heywood/Portland Corridor. There is some potential to develop tourism and associated businesses. Casterton: Casterton is located 102km from Portland and approximately 42km from the South Australian border. The Casterton Urban Centre had a population of 1962 in 2006, and between 2001 and 2006 experienced a small decline. Casterton is a mainly pastoral community and is reliant on dairy, sheep, cattle, cropping and forestry. There are major concerns in the area about an ageing population, young people leaving the area and the potential for declining business activity. A range of development issues were raised in the consultations. These included: a need to increase the population; develop industrial land to attract businesses; and take a strategic approach to tourism development. Nelson: Nelson is located on the main coastal road between Portland and Mt Gambier. It is situated on the mouth of the Glenelg River approximately four kilometres from the South Australian border. Nelson is a small village with a population of 226 in The town markets itself as a fishing and tourism area due to its proximity to the Glenelg River, Oxbow Lake, Lower Glenelg National Park and the Southern Ocean. The population of can expand to over 4000 in the peak holiday periods. Focus of tourism is on the Glenelg River and Princess Margaret Rose Caves. A number of issues have been identified that are constraining business and social development in the Nelson area. There is a desire to see an expansion in tourism and an increase in residential development.

9 Dartmoor: Dartmoor is a small village approximately 71km north-west of Portland, and is close to the South Australian border. In 2006 it had a population of only 218 in 2006 (down from 248) in The population is ageing and there was a decline in all age categories below 55 suggesting some families were moving out. In residents were in employment. There are only limited jobs in the area and most people would be travelling to jobs outside of Dartmoor. In 2006, the major industry of employment was manufacturing (51 persons). Most of these persons would have been employed at the Dartmoor Timber Mill which closed down in The major economic development issues relate to the future of the village in the light of the loss of its last major industry. The closure of the mill had a major impact on the area, which is still being felt. With the small size of the area population, local services are limited. The town renewal project and carvings has been a way of making Dartmoor a place to visit. Dartmoor is becoming a dormitory suburb for Mt Gambier and Portland, because of housing affordability. Assessment of the Region The strategic context for development of the Glenelg Shire is sustainable development, which embraces economic, social and environmental dimensions. There has been a considerable amount of work undertaken by Glenelg Shire Council on planning issues for the region. This comprises commissioned studies and research and analysis by Council Officers. 6 There are a number of key development issues for the region, and these include: factors impacting on the aluminium sector and support industries, including the global recession, electricity prices and a CPRS; climate change and its impact on agribusiness activities; retention of major industries; development of new industries and activities that are linked to areas of sustainable competitive advantages; development of the Port area, and the strengthening of tourism in the region. The Glenelg Shire has a number of key characteristics which influence the current structure pattern of economic activity and will also influence future patterns of industry development. Advantages The region has a number of identified strategic advantages and these include: the 500kv electricity transmission line from Portland to Latrobe Valley; renewable energy options (including geothermal energy and wind energy and wave energy); 7 zoned industrial land; good transport - sea, road, rail and air; a deep water port; on-shore and off-shore oil and gas exploration and development; rural-based activities including the production of wool, prime lamb, beef cattle, dairy, and other horticultural activities (vegetables, wine grapes); a major commercial fishing fleet; and timber growing and processing. Constraints Slow population growth (and a decline is in the smaller towns and villages) is a major issue. Industry constraints mainly relate to the state of industry sectors including tourism and retail and farm forestry. Infrastructure issues relate the extent of upgrades required in key transport and coast infrastructure and the investment funding that is needed. There are also issues in relation to coastal development the crowding out of rural uses due to coastal housing development and issues in relation to rising sea levels and storms on coastal development.

10 Opportunities The Glenelg Shire Municipal Strategic Statement (MSS) outlines the major directions for the future growth, development and management of land use in the Shire over a 15 year period. 8 The MSS has a focus on: development built on natural assets and land use; continuing to expand the Port; focusing urban growth in and around the existing towns; supporting the tourism sector; managing the environment; improving all transport links; and protecting natural resources and biodiversity. There are several key pillars in terms of future economic development which were identified in the analysis undertaken for this project. These are consistent with the MSS and cover a number of areas. These include regional resource based sectors (timber, agribusiness, and fishing); aluminium; transport and logistics Port and transport activity; energy; tourism; and population driven services including: aged services, light industry and retail. The potential future developments requiring industrial land could include: timber processing; paper manufacturing; engineering and fabrication (related to timber, mineral sands, renewable energy and the exploration industry gas and oil); transport and logistics; food processing; minerals sand processing; and bulky goods retailing/ homemaker centres. Economic Development Strategy There are a number of factors that impact on economic development and these include: a relatively small population; population ageing; proximity to larger population centres (Warrnambool and Mt Gambier); location in the Green Triangle Region; distance from Melbourne and Adelaide; role of the Port; importance of renewable energy; the scale of the forestry sector; an underdeveloped tourism sector; and a need to upgrade infrastructure. The economic development strategy is aimed at delivering a sustainable economy, while maintaining the environment and developing stronger communities. The strategic directions comprise: increasing scale; building on advantages; development of key infrastructure; shaping of communities; building recognition of the region; and securing government and business support for infrastructure projects. The key elements are focused on: strengthening existing industries; developing new directions in key sectors; increasing population; attracting business; and developing a stronger recognition of the region (business, tourists, potential residents and government). The strategy outlines actions that are focused in particular sectors and also identifies required actions in specific towns. However the strategy recognises that given existing population, resources, infrastructure, and industry location, much of the future economic development will be in the Portland area. Some growth will occur in the other towns (ie. Casterton and Heywood), and Nelson has potential to further strengthen its tourism activity. The following diagram provides an outline of the regional economic development strategy for Glenelg Shire. The economic development strategy is aimed at delivering a sustainable economy, while maintaining the environment and developing stronger communities. There are a number of requirements for growth and these include: infrastructure provision; land use planning and development; development of skills; establishment of an energy research centre; business development and business attraction programs; and a focused approach to marketing the region.

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12 1 Introduction This is the third report prepared for Glenelg Shire Council, as part of Glenelg Business Retention and Expansion Program. It includes the information from Reports 1 and 2, which provide an analysis of the region, its key industry sectors and the major towns that make up the Shire. This report provides an analysis of key sectors (including agriculture and tourism) and a review of key strategic issues, including transport, infrastructure and land use. The report details the economic development strategy for the Shire and the actions required to realise future opportunities (Chapter 15). The report also identifies key priorities and provides an implementation plan. The information has been derived from a range of reports and analysis that have been undertaken by (or on behalf of) Glenelg Shire Council. The report also examines broader studies of the region and the key sectors that make up the regional economy. Some new analysis has been undertaken on the structure of employment in the region and recent growth. The data analysis has been complemented by industry consultations that were undertaken in September and October The report has been prepared by Buchan Consulting s Business Strategy Group headed by Michael Connell. Support on research and analysis and consultations has been provided by Mike Bright.

13 2 Glenelg Shire - Area Analysis 2.1 The Economic Region Green Triangle Region Glenelg Shire is part of the Green Triangle Economic Region. The Green Triangle spans the border area between the states of South Australia and Victoria and covers southwest Victoria and the south-east of South Australia. It includes Warrnambool, Horsham and Mt Gambier, and also includes the regional centres of Portland, Hamilton, Naracoorte, Bordertown, Millicent and Penola. The Green Triangle Region covers an area of around 6 million hectares and has a population of 146,000. The name reflects the region s long term role as one of, Australia s major forest regions, with extensive plantation softwood and hardwood resources. Softwood processing industry in the region includes pulp and paper manufacturing, sawn timber, wood panels and woodchip exporting. 9 The name also reflects the fact that the area has tended to be drought free. Glenelg Shire has extensive timber plantations and Portland is the region s port. 10

14 2.1.2 Key Industries The Green Triangle Region s economy is broadly based. The major sectors are: plantation forestry; aluminium; wood processing; tourism; agribusiness: dairy, beef, wine grape production, grain, winemaking; low emissions energy; electricity and gas production; fishing and aquaculture; mineral sands; and transport and logistics. Plantation forestry and forest products is the largest industry sector, contributing 16% of Gross Regional Product (GRP) and 12% of employment, with around 340,000 ha of hardwood and softwood plantations. The region accounts for around 17% of Australia s plantation forestry and wood processing and 10% of Australia s wine grape production. Manufacturing is important in the region, with the Aluminium Smelter and manufacturing facilities for fertilisers (eg. Incitec Pivot) at Portland; and food processing operations in the Warrnambool area. Mining is expanding with Iluka s Douglas Mine and Hamilton processing facility and heavy mineral exploration in the Murray Basin.

15 Significant economic growth is projected for the region. The Green Triangle Region Freight Action Plan has identified $8.7 billion of new investment in the next 5 years, with is occurring in timber processing and in new and emerging industries (eg. mineral sands and low emissions energy). The Action Plan also identifies the major investment required in transport infrastructure to support this. 11 The Port of Portland is fundamental to the success of the area and its exports including aluminium, wood products, fertiliser, grain and livestock. Future growth for the port is being driven by timber, woodchips and mineral sands growth, with large-scale harvesting and chipping of blue gum plantations commencing in The export volumes through the Port will increase by 3.0 million tonnes of blue gum woodchip per year, compared to 0.5 million tonnes currently. 12 This will be combined with growth in mineral sands exports through the Port. The Action Plan recognises the supply change aspects of the industry growth and focuses on: road network enhancements; rail network enhancements; regulatory reform; and job opportunities and skills and training. 13 As well as considering the requirements of the timber and mineral sands sectors, the Action Plan recognised that improvements in the transport network (port, road, and rail) are important for exports and product movements for other sectors. This includes movements related to dairy, agricultural products, horticulture, viticulture, meat processing, construction activity, the oil/gas industries, wind energy and tourism. 14 Transport improvements will improve regional industry productivity and increase the capacity for exports.

16 2.2 Glenelg Local Government Area Overview The Glenelg Shire is situated in the south west area of Victoria and covers a total area of 6200 square kilometres. The area includes agricultural lands, pine plantations and national parks (inland and coastal). The major areas of settlement are in Portland, Casterton, and Heywood, and in smaller villages. Major industries in the region include timber, agriculture (grazing, dairy farming), commercial fishing, manufacturing (aluminium smelter and engineering) and service industries. Tourism is another activity in the region with some potential to grow. 15 The total population of the LGA was estimated at around 21,000 persons in 2008.

17 2.2.2 Population Demographics are a major current and future issue for the region and covers: the size and projected growth in the population; the age structure of the population (population ageing); declining populations in the smaller centres; and the loss of younger persons who leave for education and employment reasons. It is important to understand the current population characteristics. Population Size Glenelg Shire had a population of 19,759 in 2006 (9953 males and 9806 females).there was growth of almost 500 persons between 2001 and More recent estimates by Informed Decisions (ID) indicate that the current population is around 21,000. The population of the Shire is concentrated in and around the major centre of Portland, with the combined Portland area making up nearly half of the total population of the Shire - Portland South (4881) and Central Portland (4621). The other major centres of population are the Heywood area (3407) Casterton area (3274) and Rural South (3591).

18 Age Profile An examination of the age profile of the population highlights a number of issues. The population is ageing. In 2006, 36% of the Shire s population was aged 50 years and over, compared to 32% in Overall, the population of the region had a median age of 41, compared to 37 for Australia as a whole. This ageing is a reflection of several forces: the ageing in place of long term residents; fewer families with children moving into the area; and an exodus of young people, who leave the area for education or for employment reasons.

19 Population Movements Retaining younger people in the community is a significant issue for the region. Between 2001 and 2006, 767 persons aged between 15 and 24 years moved out of the Shire to pursue higher education and other opportunities, compared to only 331 persons in this age bracket who migrated into the area, for a net loss of 436 persons. The most common Local Government Areas (LGAs) that people from Glenelg moved to were Greater Geelong, Warrnambool and Mt Gambier. The following table shows the top ten Local Government Areas to which these young people moved, as well as their proximity to major educational institutions. The only on-campus tertiary education available in Glenelg Shire is that provided by the South West Institute of TAFE in Portland. However in some areas of the Shire it is more convenient to go to the Hamilton Campus. The nearest university, the Deakin University Campus in Warrnambool, is a major commute given the distance of approximately 101 kilometres between Portland and Warrnambool. The data on migration indicates some movement to Warrnambool, Geelong, Mt Gambier and to areas of Melbourne.

20 2.2.3 Educational Attainment Education levels in the region are an issue. The percentage of the population with a university degree is less that than half that seen in the general Australian population. This can be explained by a number of factors including the industry mix in the area: the extent of agribusiness in the region and the importance of the timber industry and the smelter (these sectors are likely to have a significant share of their workforce with no qualifications or with VET qualifications); and the broader profile of employment in the region, with relatively few high level professional jobs. As well as out-migration for education (with many not returning), there are some difficulties in retaining younger professionals in the area for long periods of time, as the industry mix does not provide sufficient opportunity for career development Another key issue in relation to education is that, compared to both Victoria as a whole and the regional Victorian average, Glenelg Shire has a higher proportion of persons aged years of age who are neither employed nor undertaking further study Income Levels The region has a lower income levels relative to Australia as a whole. An analysis of ABS Census 2006 data on individual gross incomes in the LGA shows that: Glenelg Shire has a median weekly gross income of $405, compared with $466 for Australia as a whole. Income data for Portland (median income and the distribution of income) shows that it more closely mirrors that of the aggregate data for the Shire. The North Statistical Local Area (SLA) had both the highest proportion of lowerincome persons and the lowest proportion of higher-income persons compared with other SLAs in the Shire. A total 50% of individuals in the North SLA reported a gross weekly income of $400 or less, while only 9% reported incomes of $1000 per week or higher. The median weekly individual income for the area was $370. In Heywood SLA, 43% of persons reported gross weekly incomes of $400 or below, while 16% of people from this area reported incomes of $1000 or greater. The median weekly individual income for the area was $441. The lower incomes for the North SLA can be attributed in part to the high proportion (45%) of persons aged 50 and over, which translates into an overall lower participation in the labour force.

21 There are similar patterns in household incomes. The median weekly household gross income in the Shire ($831) is significantly lower than that for Australia as a whole ($1027).

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23 2.2.5 Labour Force Participation The following data show participation in the labour force in Glenelg Shire by persons aged 15 years and over. Persons over 15 who are not in the labour force include retired persons, persons still in education, persons at home with children and persons not currently looking for employment. Males were far more likely to be in full-time employment than females: 63.6% of males and 19.5% of females were employed full-time. A further 9.6% of males were employed part-time along with 25.4% of females. The North SLA has the highest proportion of persons not in the labour force (40.5%), followed by Portland (34.8%) and Heywood (30.9%). In 2006 there were 601 persons unemployed in Glenelg Shire, representing an unemployment rate of 6.3% (5.1% in Heywood SLA and 7.7% in Portland). 2.3 Population Projections Population projections for Glenelg Shire show slow growth over the longer term. The Department of Sustainability and Environment projections indicate growth of 7.0% over the period to 2026 (0.3% average annual growth). 16 Based on this growth rate the population would increase by only 1436 and reach 21,961 by The following table shows population projections for regional LGAs. It shows that the highest growth rates tend to be in the larger regional LGAs (eg Geelong, Ballarat, Bendigo) and some of those areas that are closer to Melbourne. Within the Green Triangle Region, Warrnambool s population is projected to increase by 7728 or 24.5% to reach 39,229 in 2026.

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25 Some projections for subregions in the Shire have been prepared by Informed Decisions for the period to The projections show an average annual growth of 0.3%, which is similar to the DSE projections. The projections shows that 70% of the population growth is in the Portland Area (Portland Central and Portland South), with some growth in the Rural South and a decline in Casterton/Rural North. There is a growth in the number of households, which reflects smaller household sizes and greater numbers of single person households as the population ages. Recent projections prepared by Glenelg Shire Council project a fall in the population with a decline from 22,039 to 19,194 over the period 1991 to 2030, a decrease of 2845 persons or a fall of 12.9%. 18

26 2.4 Strategy and Actions: Population A major issue for the region is the relatively small size of the population and the projections of slow population growth. There is a need to ensure that the population grows to increase the scale of the local market. This requires a combination of industry growth (and more jobs) and resident attraction. There is a need to also increase the number of persons living in and around the town centres.

27 3 Structure of the Regional Economy 3.1 Overview There are a number of key sectors in the Glenelg LGA, and these are the Port of Portland, the Portland Aluminium Smelter, renewable energy, timber production and processing, commercial fishing, agribusiness and tourism. 19 There is also a significant service sector, which is providing a range of services to residents in the LGA. There were a total of 7944 jobs located in the Glenelg LGA in 2006 and 8894 Glenelg residents who were in employment. The major concentrations of jobs were in manufacturing 1607 (20%), agriculture 1194(15%), retail 900 (11%), health care and social assistance 859 (11%), and education and training 512 (6%). Males held 4401 jobs or 55% and females held 3543 jobs or 45%. 3.2 Industry Structure Businesses in the Region ABS data shows that there were a total of 2091 businesses in the area. Of these 1221 were non-employing businesses (sole proprietors). The data shows that there are a small number of large employers and a large number of small businesses. It should be noted that due to ABS confidentiality rules, the table does not include several of the large employers (eg. Portland Smelter, Prince Engineering etc.). Additionally, some businesses based outside of the Shire that nevertheless operate within the area may not be counted. On a turnover basis, few businesses had turnovers over $1 million per year, with almost half having turnovers of less than $100,

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29 We also analysed the Glenelg Shire Business Database developed by Council, which has a total of 835 businesses listed Employment in the Region The table below shows the structure of employment in the region. There were a total of 7944 jobs located in the Glenelg LGA in 2006 and 8894 Glenelg residents who were in employment. The major concentrations of jobs were in manufacturing 1607 (20%), agriculture 1194(15%), retail 900 (11%), health care and social assistance 859 (11%), and education and training 512 (6%). Males held 4401 jobs or 55.4% and females held 3543 jobs or 44.6%. The industries of employment of males and females were substantially different. Males were mainly employed in goods producing (58.3%) or goods related industries (10.5%), with the major sectors being manufacturing (1354), Agriculture, forestry & fishing (772) and transport and logistics (347). Females were mainly employed in In Person Services (2290 or 64.6%), with the major sectors being retail (900), health care & social assistance (859), accommodation & food services (473) and education and training (512).

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31 The following table shows jobs located in the Shire in 2001.

32 The following shows jobs in 2006 by industry and occupation. Around 20% of jobs were managers (includes farmers), 13% were in professional occupations, 14% were technicians and trades persons, 11% were machinery operators or drivers and 15% were labourers.

33 The following table shows the industry of employment of employed residents of the Glenelg Shire and their occupation group. In total there were 8894 residents in employment and 7944 jobs located in the LGA -a gap of 950 jobs (see table 25). However there is some commuting to jobs within the broader Green Triangle Region, which is analysed below.

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35 3.3 Regional Job Market Commuting to Jobs There was some commuting to jobs in the region. This has been analysed by Informed Decisions. ABS working population data shows that some jobs within Glenelg Shire are filled by workers living outside of the LGA. Of the 7941 jobs in the Shire, 95% are filled by Glenelg Shire residents and 5% by persons travelling into the region. Southern Grampians Shire was the most common source of inbound commuters, with 118 workers or 1.5% of Glenelg Shire s working population. The two next-largest sources of inbound commuters were Moyne Shire (60 workers, or 0.8% of the working population) and Mt Gambier (50 workers, or 0.6% of the working population).

36 Around 15% of Glenelg Shire residents commute outside of the LGA for employment. Of 8903 employed persons living within Glenelg Shire, commuted to jobs in locations outside of the Shire. The main locations of these jobs were in Southern Grampians Shire, with 221 persons (or 2.5% of employed Glenelg residents working there). The next largest locations were Mt Gambier (with 114 persons, or 1.3% of employed residents) and Warrnambool (52 persons, or 0.6% of employed residents) Jobs by Sub Region The following table shows the location of jobs within the LGA. In all, 66% of jobs were located in the Portland SLA. This reflected a number of factors: the share of the regional population in the Portland area, its role as a service centre and the concentration of manufacturing (including the smelter) and transport activity (the Port and logistics). The following table shows jobs by industry for each of the sub regions and highlights the key employment role of the Portland SLA. The Portland SLA dominates all job categories, with the exception of agriculture, forestry and fishing jobs which are focused in the two other SLAs.

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38 3.3.3 Employment Trends This section provides information on trends in jobs located in the Glenelg Shire and in the sub regions. Tables for males and females are in Appendix B. There has been limited growth in the number of jobs in the region between 2001 and In this period total jobs increased by only 335 (males by 45 and females by 290). 22 Jobs held by males: The data show that over the period there was limited growth in jobs held by males in the region (except for some growth in manufacturing jobs (+162) and in transport and logistics(+67) and government (+57)). In total the number of jobs held by males increased by only 45 over the period (there were declines in a number of sectors). Jobs held by females: The data shows that jobs held by females increased by 290 over the period, with most of this jobs growth being in: health and social assistance (+98); accommodation, cafes and restaurants (+91); and government (+50). There was also a spatial dimension to this, with jobs growth being concentrated in Portland and a major decline occurring in the Heywood SLA in the period. Jobs in the Portland SLA increased by 840 or 24% over the period, with these jobs being concentrated in manufacturing (+242); health and social assistance (+168), and accommodation, cafes and restaurants (+158). Jobs in the Heywood SLA declined by 496 or 25%, with the major falls being in manufacturing (-74); retail trade (-97); agriculture, forestry and fishing (-68); and accommodation, cafes and restaurants (-41). Jobs in the North SLA declined by 9, with a decline in retail (-45) and growth in several sectors including agriculture, forestry and fishing (+ 26) and transport and logistics (+12).

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40 3.4 Businesses in the Region The following table shows the number of businesses in each of the sub regions in the Shire and the share that they represent of industry employment. Appendix C provides detailed information for each Statistical Local Area (SLA). The data shows that Portland accounted for 70% of manufacturing businesses, 72% of health businesses, 66% of construction and 63% of retail businesses. Only 20% of the 972 agriculture, forestry and fishing businesses were located in the Portland SLA.

41 3.5 Major Industries There are a number of key sectors in the Glenelg LGA, and these are the Port of Portland, the Portland Aluminium Smelter, renewable energy, timber production and processing, commercial fishing, agribusiness and tourism. 23 There is also a significant service sector, which is providing a range of services to residents in the LGA.

42 4 Timber Industry 4.1 Overview Timber and forestry is a major activity in the area, due to Glenelg Shire being part of the Green Triangle Region. Timber industry activities in the broader region involve the growing, harvesting, processing and transportation of softwoods and hardwoods. The Victorian Government is developing a new Timber Industry Strategy for Victoria. The strategy will provide a comprehensive plan for production and processing of timber in an environmentally sustainable way Victoria Timber Resources The Victorian timber industry accounts for 24% of Australia s hardwood output and 19 per cent of softwood production. It produces around 30% of wood exports. Around 32,000 persons are employed in the sector covering: tree growing and management, timber harvesting and processing, and paper production. Areas include the South West, Gippsland; Ballarat, Central Highlands and North East Victoria. Woodchips and logs are exported from the Ports of Portland and Geelong. Victoria also exports pulp, paper and paper products, as well as softwood logs and hardwood sawn timber. 31

43 4.3 Green Triangle Region Forestry Activity The forest industry is a driver of economic activity in the Green Triangle Region with over 338,000 ha of plantations, generating $778 million to Gross Regional Product and employing, directly and indirectly, around 8,500 persons. 32 In the period , the volume of wood being harvested in the region will increase from around 4.6 million tonnes to about 8 million tones annually, with the hardwood plantations being harvested Plantations The Green Triangle Region is a major timber and forestry region, accounting for around 17% of Australia s forest plantations. It comprises softwood plantations of 175,000 ha and timber which is predominantly used for solid timber products, pulp logs, particle board and export woodchip. Harwood plantations began in 1988 with plantings for Kimberly Clark Australia s tissue manufacturing mill at Millicent and pulp mill at Tantanoola. More recently the development was driven by investment and foreign investment by Japanese paper companies and trading companies. It is estimated that the area planted to hardwood plantations was 164,000 ha in Companies operating in the region include: Auspine, Carter Holt Harvey, Kimberly-Clark Australia, Van Shaiks BioGro, South West Fibre, ITC, AKD Softwoods, Green Triangle Forest Products, Hancock Plantations Victoria, Forestry SA, Plantation Energy, Oji Paper, Nippon Paper, Midway Ltd, Marubeni and Mitsui. Softwood and hardwood plantations in South Australia tend to be concentrated, whereas the Victorian hardwood plantations are distributed more widely throughout the region. Hardwood plantations have been developed under MIS schemes. Two of the major companies involved in timber and with substantial timber holdings in Glenelg Shire (Timbercorp and Great Southern) went into liquidation in the first half of 2009, following financial pressures on income and investment flows. In addition Gunns recently acquired the other major player in the region, ITC Timber for $100 million. Gunns have also announced that it is actively working on proposals to play a key role in the ongoing operation of assets presently managed by Timbercorp and Great Southern Plantations. 33 However, it was announced in October 2009 that the Timbercorp assets would be acquired by Global Forest Partners for $345 million. 34

44 The following provides estimates of the plantation areas in the Green Triangle Area Timber Processing There has been a trend for processing activities to shift to the Mt Gambier area. This is reflected in the acquisition and closure of the Dartmoor timber mill in 2008 following its acquisition by Carter Holt Harvey. A number of Glenelg residents commute to Mt Gambier for employment in the sector. However new mills are now being developed to process blue gums. These include the South West Fibre woodchip mill at Myamyn, approximately 15 km north of Heywood. This woodchip mill in Myamyn opened in September 2009 and is operated by South West Fibre. The mill represents an investment of $32 million and is expected to have a capacity of 1.4 million tonnes of woodchips per year when operating at full capacity. The number of direct jobs in these new mills is likely to be limited as new mills are higher technology and require less labour to operate. The operation of mills will increase activity in harvesting, transport, maintenance and support activities. The mill employs a total of 20 full-time workers, with

45 support roles (eg. harvesting and transportation) contributing to an estimated 400 other jobs. 35 As part of the establishment of the mill infrastructure contributions were made by Council, and this included provision of a permanent high-voltage power connection for the facility. 36 There is a new mill planned for Heywood. This mill, to be operated by Plantation Energy, would produce biomass wood pellets for export to the European market 37. The $25 million facility would produce up to 250,000 tonnes of pellets annually. It is estimated that the plant would employ 15 full-time workers and would generate approximately 45 indirect jobs in the region (in support activities). Protavia has proposed a pulp mill at Penola (SA), with an estimated output of 750,000 tonnes of pulp per annum. The mill will source timber from South Australia and the Glenelg Shire. The following table shows the number of Glenelg Shire residents directly employed in forestry and/or timber sector in The data does not include those involved in transporting timber products. 4.4 Glenelg Shire Timber Industry Forest Resources Forestry is a major activity in Glenelg Shire, with over 125,000 hectares of forest. The majority of the acreage is plantation forest (either blue gum or pine). Significant areas of Glenelg Shire are suitable for Blue Gums, especially around Portland and Heywood. Forestry will continue to be important for Glenelg Shire s future.

46 4.4.2 Employment Issues ABS data shows that there were 271 residents of Glenelg Shire employed in the sector in 2006, with most persons being involved in saw milling. This data does not include transport operators in the sector. The majority of these persons were resident in the Heywood SLA. The closure of the Dartmoor Mill will have affected the numbers currently employed in the sector. Looking to the future, the identified $8.7 billion in major investments in the Green Triangle Area are estimated to generate up to 5,400 construction jobs, 1000 direct jobs in the blue gum timber industry and up to 1000 jobs in support activities to the timber industry. 38 There are a number of employment issues including an ageing workforce, high turnover (at around 16%, with up to 25% turnover occurring in the sawmilling and processing sector).

47 Surveys in the Green Triangle Region in 2006 and 2007 identified a potential requirement for an additional 1000 employees for blue gum harvesting operations and an additional 1000 indirect jobs generated in other industries linked to the timber industry. 39 Major shortages were anticipated in the harvesting and haulage sectors. There have been a number of responses to these skill issues: The Victorian Department of Transport finalising a Workforce Strategy for Freight Drivers in relation to the timber sector. A national working group has been established under the Australian Transport Council (ATC) to address broader workforce planning and skills issues in the broader transport and logistics industries. There are education and training programs in the area and these include: Degree in Applied Science (Forestry) at Southern Cross University; and a range of VET programs delivered by TAFE and other RTOs. (Certificate II & III in Forestry; Certificate II in Heavy Vehicle; Certificate II & III in Harvesting and Haulage; and Certificate II in Road Construction). A major focus has been on increasing training capacity in the region and becoming involved in schools VET programs and increasing careers awareness of students. The Freight Action Plan indicates that there is the potential population growth associated with the expansion of the blue gum harvesting activities. 40 Population growth generates a demand for housing, facilities and services and provides a boost to local business. The report highlights the need for facilitation of new businesses locating in the area Some Industry Issues Impacts on Farming It is estimated that approximately 300 farmers in the Green Triangle Region (both in south-western Victoria and in south-eastern South Australia) had leased farmland to Timbercorp and Great Southern for the planting of blue gum plantations. 42 Some issues that have arisen from this include: Loss of farmland: Farmland that has been leased for tree growing purposes cannot be used for generating other farming revenue, and is expensive to rehabilitate for farming once the trees are harvested. This is not only problematic for existing farmers, but also reduces the total stock of land available for consolidation and development for other agribusiness activities. The collapse of Timbercorp and Great Southern has meant that farmers are currently owed unpaid rent on their leased land. 43

48 Increase in land prices: MIS schemes resulted in a situation in which farmers looking to acquire new farmland were unable to compete with inflated land prices being affected by MIS investments. A recent report in the Weekly Times indicates that farmland prices in the Green Triangle doubled from approximately $2500 per hectare prior to the entry of the MIS companies into the market to approximately $5000 per hectare, reverting back to around the original level when the companies collapsed Harvesting and Freight Harvesting issues: when blue gums were first planted on local farmland, this occurred largely without regard to the future harvest and transport requirements when the trees reaching maturity. This contrasts with the softwoods which are in long established and planned plantations with minor and major access roads and have replanting and rehabilitation plans. The blue gum farm plantations are in areas that are scattered across the Shire, and this will generate a substantial increase in truck movements. Port capacity: The port will face a major increase in the volume of wood chip exports as the blue gums are harvested. Gunns and the Port have confirmed the contract to build the new woodchip loading facility, with construction to commence in January (an investment of $15 million), in order to be able to ship woodchips to Tasmania for use in the Bell Bay Pulp Mill. 45 The expansion would triple the Port s annual export capability to 4.5 million tonnes of wood chips. There is some broader action on infrastructure issues to address the issue of moving volumes of harvested hardwoods. The Victorian and South Australian Governments have jointly produced the Green Triangle Region Freight Action Plan. The plan is divided into six separate areas: road network enhancements; rail network enhancements; regulatory reform; job opportunities, skills and training; socioeconomic issues; and community development. In order to reduce truck movement along the region s roads, the plan suggests that high productivity freight vehicles, up to 30 metres in length, be used in the transportation of timber products on a number of routes, including: Henty Highway from Hamilton to the Port of Portland; Princes Highway from Heywood to Mt Gambier; and the Riddoch Highway from Penola to Mt Gambier 46. The plan also suggests that it may be economically viable to upgrade and reopen the Heywood-Penola rail freight line in order to avoid increased road traffic. 4.6 Future Opportunities Policy Context The Australian Government has developed the Vision 2020 program for the future growth of the plantation forestry industry. It has a target of increasing the current national plantation area from 1.7 million ha to 3 million ha by There is strong support from the Victorian and South Australian Governments for the maintenance and further development of a sustainable timber industry in the Green Triangle Region. Portland is of strategic importance with the Green Triangle timber industry (softwoods and hardwoods) being within a 150km radius of the Port (Blue Gum Plantations and Port). 48