Economic contribution of regional, rural and remote Australia

Approximately 67% of the value of Australia’s exports comes from regional, rural and remote areas.  Based on the information below:

  • tourism in regional, rural and remote areas contributes about 1% of Australia’s gross domestic product (GDP) ($16 billion) (Regional Australia Institute);
  • agriculture contributes 3% (about $50 billion) to GDP (or 12% (about $150 billion) if value adding processes etc are included). Agriculture, forestry and fisheries bring in around $40 billion in export income (around 13% of total export income). (National Farmers Federation);
  • The resources sector (mining, oil and gas production) contributes around 10% of GDP ($150 billion (Minerals Council of Australia)), and contributes about the same amount to export income, which amount to around 50% of exports. Wikipedia asserts that mining (excludes oil and gas) contributes about 5.6% of Australia's GDP and around 35% of Australia's exports;
  • Total Australian GDP is around $1,500 billion annually; and
  • Total Australian export income is around $300 billion annually.

‘Regional Australia also plays a critical role in the Australian tourism industry, which makes a direct contribution to Australia’s GDP of $35 billion per year. Around 45% of tourism expenditure occurs in areas outside of Australia's capital cities’.

The National Farmers Federation reports that:

‘There are approximately 134,000 farm businesses in Australia, 99 percent of which are Australian owned.

Each Australian farmer produces enough food to feed 600 people, 150 at home and 450 overseas. Australian farmers produce almost 93 per cent of Australia’s daily domestic food supply.

As of 2010-11, there were 307,000 people employed in agriculture. The complete agricultural supply chain, including the affiliated food and fibre industries, provide over 1.6 million jobs to the Australian economy.

The agricultural sector, at farm-gate, contributes 3 percent to Australia’s total gross domestic product (GDP). The gross value of Australian farm production in 2009-10 was $48.7 billion.

Yet this is only part of the picture. When the vital value-adding processes that food and fibre go through once they leave the farm are added in, along with the value of all the economic activities supporting farm production through farm inputs, agriculture’s contribution to the GDP averages out at around 12 percent (or $155 billion).

Australian farmers export around 60 percent of what they grow and produce. Australia’s farm exports earned the country $32.5 billion in 2010-11, up from $32.1 billion in 2008-09, while the wider agriculture, fisheries and forestry sectors earn the country $36.2 billion in exports. The value of our farm exports, and indeed the future of Australian agriculture, depends largely on conditions in overseas markets, due to our high level of exports.

Australian farmers continue to face the challenge of declining terms of trade in agriculture, yet remain internationally competitive through efficiencies and productivity growth. The growth in the farm sector had increased steadily over the30 year period from 1974-75 to 2003-04 at an average rate of 2.8 percent, consistently out-performing other sectors. In more recent times, agricultural productivity growth has slowed to 1 percent per annum, illustrating the need for an increased spend on research and development to ensure the industry can meet the food and fibre needs of the growing world population’.

The Minerals Council reports that:

The value of minerals exports (excluding oil and gas) increased more than 7 per cent to $163 billion in 2011-12. Reflecting weaker prices, the Bureau of Resources and Energy Economics (BREE) is forecasting exports of $147 billion in 2012-13. Both demand and supply factors suggest Australia has moved past the era of premium export prices. The challenge for the industry, as highlighted in last year’s MCA Pre-Budget Submission, is to transition from an era of price-led growth to volume-led growth in revenues.

BREE puts the total value of ‘committed’ mineral resource projects (mining and infrastructure) at $73 billion at the end of October 2012. Coal and iron ore projects make up almost 90 per cent of this total. Uncommitted projects – those publicly announced or at feasibility stage – stood at $284 billion.

Direct employment in the minerals industry reached 260,000 in May 2012, before declining to 240,000 in November. Even at this lower level, employment in the industry is almost 60 per cent above the level of three years earlier. Wages, workplace training and skills development in the industry continue to be higher than the national average.

Research by the Reserve Bank of Australia has confirmed the extent of positive spill overs from the mining industry to the wider economy. The resources sector as a whole (including resource-related activities) is estimated to account for around 18 per cent of Gross Domestic Product (GDP) in Australia and almost 10 per cent of employment. Claims about the negative impact of mining growth in regional areas have also been debunked in a major demographic study by KPMG. The findings show that mining is stimulating residential population growth crucial to sustainable communities. Far from restricting opportunities, the mining industry is boosting incomes, attracting families and reducing unemployment in nine key mining regions’.

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