The Economic Development Plan seeks to maximise the contribution to economic growth and jobs from the various industry sectors of the economy.  The sector strategies in Goal Two supplement and complement the focus on supporting and growing businesses under Goal One.

While all sectors are covered, the emphasis in Goal Two is on where the greatest benefit is to be gained for the whole economy. This is guided by factors such as:

• whether sectors export off-island or have export potential (including to both international and interstate destinations)
• potential to attract major investment that will have wide economic benefit
• the comparative strengths and opportunities present within the Tasmanian economy and community and where there is market-driven growth potential
• where the deepest capabilities reside to contribute to current and future prosperity
• where the Tasmanian economy as a whole is most likely to benefit from focused State Government attention to a sector.

The Economic Development Plan is a dynamic instrument. In future years the focus and priorities will adjust to reflect changing opportunities and advantages in the various sectors’ capacities to add significant value to the overall economy. Sectoral strategies will be updated every two years.

Tasmania is not alone in using a sectoral approach to economic development. It is common in other jurisdictions.  The Australian Government’s Department of Innovation, Industry, Science and Research focuses on manufacturing, engineering, construction, automotive, science and research, pharmaceuticals and aerospace industries. The supplier advocate program covers rail, steel, water, information and communications technology (ICT), clean technology and built environment sectors.  The Victorian Department of Business and Innovation focuses on sectors such as food and beverage, defence and aerospace, tourism, science and technology and international education.  Queensland focuses on tourism, mining, agriculture and food, science and biotechnology. South Australia focuses on advanced manufacturing, clean technology, resources and traded services sectors; while Western Australia focuses on resources and infrastructure.

Figure 1 below shows changes that have occurred in Tasmania’s industry structure over the past two decades in terms of the contributions of broad industry groups to Gross State Product (GSP) and employment.  The most significant growth has been in services; agriculture, forestry and fishing has expanded its contribution to GSP but reduced its employment; while manufacturing (as broadly defined, which will include areas such as food, wood and mineral processing, textiles, clothing and footwear, as well as areas such as machinery, marine, casting and metal products) has had the most significant reduction in GSP contribution.

 
Figure 1:  Changes in Tasmanian industry structure between 1989-90 and 2009-10

Source: ABS, Australian National Accounts: State accounts, 2009-10, Cat No 5220.0, 2010, Labour Force, ABS 6202.0, 2011

In a dynamic global economy, however, past changes in industry structure may not necessarily reflect future opportunities and directions for industry. Future jobs growth and wealth creation will most likely be from industries with a sustainable competitive advantage and that are commensurately socially and environmentally sustainable.  The Innovation Strategy identified some of these key industry sectors as food and agriculture, renewable energy, ICT and tourism.  For the Economic Development Plan the sectoral approach started in the Innovation Strategy is extended to other sectors and deepened to consider a wider range of issues.

The Economic Development Plan uses a value-chain approach to looking at sectors. For example, the sectoral strategy for food and agriculture covers primary production as well as food processing, thereby value-adding through the whole chain from the farm to the plate.  This is important as a key objective is to encourage enterprises moving up or integrating the links of a value chain. Therefore, we need to understand the economy in value chain terms. The methodology for this approach is discussed at Appendix 1. This approach is used in Figure 2 below to demonstrate the relative contribution of different sectors to the Tasmanian economy.

 

Figure 2:  Sectoral Employment Shares

Source: ABS, The Labour Force, Detailed, Cat No 6291.0.55.003; Sustainable Tourism Cooperative Research Centre – The Economic Contribution of Tourism to Australian States and Territories 2007-08; industry sources; internal modeling; REMPLAN. NB: Antarctic and Southern Ocean estimates are included in Science and Research.

Figure 2 separates sectors into three broad categories: those that are predominantly public sector in nature (including Government Business Enterprises in the case of Tasmania’s electricity, gas and water sectors); those that are predominantly involved in the provision of services or that support other sectors; and the key trade and investment sectors that have been identified for inclusion in the Economic Development Plan. Of these, the State Government has the greatest capacity to positively influence the key trade and investment sectors using the policy levers at its disposal.

A total of 17 sectors and sub-sectors are given particular attention.  These include food and agriculture (and its key sub-sectors of dairy, red meat, vegetables, fruit, wine and salmon), tourism,  specialist manufacturing, renewable energy, mining and mineral processing, forestry and related industries, building and construction, science and research, Antarctic and Southern Ocean, and ICT.
Further sectoral strategies, particularly in the services sector in areas such as health and international education services, will be added under this goal in subsequent updates of the Economic Development Plan.

Contribution to Gross State Product of key trade and investment sectors

 
Figure 3:  Key sector contribution to GSP

Sources: Compelling Economics, REMPLAN.

The following chart shows the shares of total employment of the key trade and investment Economic Development Plan sectors for both Tasmania and Australia (some sectors are not included due to a lack of data; the food and agriculture sub-sectors are included in the main food and agriculture sector). This shows those industries where the Tasmanian share of total employment exceeds that for Australia as a whole, namely in food and agriculture, forestry and related products, mineral processing, science and research and tourism.  This is an indicator of Tasmania’s deep capability in these areas.¹

Tasmanian and Australian industry sectors: Share of total employment in the year to May quarter 2011²

 
Figure 4: Sector share of State and National Employment 

Source: ABS, Labour Force Detailed, Quarterly, Cat No 6291.0.55.003, 2011; ABS, Australian National Accounts: Tourism Satellite Account, 2009-10, Cat No 5249.0, 2010; Sustainable Tourism CRC, Tourism Satellite Account Tasmania, 2006-07

The objective of the sectoral strategies is to highlight whole-of-government attention on making the most of Tasmania’s opportunities and overcoming constraints to growth and to identify sources of competitive advantage at a trade and investment sector level.

In developing analysis of opportunities and constraints for the Economic Development Plan, it is apparent that each sector is different in terms of its priority issues. For example, waste is a priority for many industries including mining, mineral processing, and red meat sectors, while water for irrigation is a priority for vegetables, dairy and wine.  Agricultural sectors including dairy, fruit, red meat, vegetables and wine are concerned about the cost and/or availability of labour, while manufacturing, science and research and tourism sectors are concerned with skill shortages. 

All key trade and investment sectors are likely to continue to confront workforce challenges related to recruitment, retention and increasing skill levels of the workforce. Effective responses to these challenges include a commitment from industry to manage their workforce skill development needs by adopting partnership models, such as the mining industry skills excellence network.

The key trade and investment sector strategies in the Economic Development Plan address each issue in more detail including proposed responses as appropriate.  The strategies are based on industry and government views of key constraints and opportunities relevant to each sector identified in the consultation process. 

The government intends to undertake key trade and investment sector strategy work as part of four-year rolling plans based on available resources, and where government strategically believes it can have the greatest impact.

While government initiatives under the Economic Development Plan will primarily be designed to support a sector rather than individual enterprises, exceptions are investment facilitation or crisis response (where an entire supply chain may be impacted by a lead enterprise).  In these cases, direct engagement by government with lead enterprises may occur. 

Of the elements in the government's economic development toolkit the dominant efforts in the key trade and investment sector area occur through:

• Infrastructure
• Skills acquisition and development
• Business enabling environment
• Access to finance
• Investment attraction and facilitation
• Trade promotion
• Business development services
• Facilitation, information exchange and collaboration  

The outcomes for Goal Two can be found here.

¹ Innovation Strategy, J West, p 25`
² Data for Tourism sector are for 2006-07.