Kingscote Airport Business Case - Kangaroo Island Council - SA ...

Kangaroo Island Airport Upgrade Business Case
a
b
Option 1 is not shown as there are no construction costs associated with this option.
Excluded contingencies, taxes and levies.
Source: Tonkin Consulting 2012
Option numbers match the Scenario numbers in the EconSearch report (Scenario 2 economic outputs relate to Option 2
costing etc)
Gross regional product (GRP)
GRP is a measure of the net contribution of an activity or industry to the regional
economy. It represents payments to the primary inputs of production (labour, capital
and land) and is a regional level equivalent of gross domestic product. Estimates for
the 1-year construction period are provided in the table below for Options 2 to 4. The
total contribution to GRP as a result of the construction expenditure to upgrade the
Kangaroo Island Airport was almost $270,000 for Option 2, $1.4 million for Option 3
and almost $3.9 million for Option 4.
In 2011/12 Kangaroo Island GRP was approximately $217 million. On this basis, the
projected GRP total impact would boost the region’s total by around 0.1 per cent for
Option 2, 0.7 per cent for Option 3 and 1.8 per cent for Option 4. Whilst the
percentages are modest, the benefits are adding real value to the local economy.
Table 7: Economic Impact of the Kangaroo Island Airport upgrade options, construction phase
Source: EconSearch, 2013
Employment
The EconSearch report states full time equivalent (FTE) employment in the region was
2,330 in 2011/12. The projected employment impact (direct and flow-on) during the
construction phase of an airport upgrade would boost the region’s total by around 0.1
per cent (3 FTE) for Option 2, 0.7 per cent (17 FTE) for Option 3 and 2.0 per cent (47
FTE) for Option 4, see above table.
The construction impacts of an airport upgrade will be relatively small given the limited
capacity of business on the Island to provide the required products and services at the
scale demanded. Option 3 is expected to result in $2.3 million in local (Kangaroo
Island) expenditure; a contribution to GRP of $1.4m; and employment of approximately
17 fte from the region.
8.1.2 Operating phase
The annual operating and maintenance expenditure, as estimated by Tonkin
Consulting, for each upgrade option is detailed in the below table. The estimates for
Option 3 are largely reflected in the financial analysis estimates presented in section 7.
The total operating costs included in the financial models actually exceed the below
estimates by year 4 or 5. Consequently, the following economic analysis is a
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May 2013