Kingscote Airport Business Case Appendices - Kangaroo Island ...

Kangaroo Island Futures Authority Draft Economic Impact of Agriculture and TourismThese estimates are reported in Table 1. Note that data are preliminary estimates for 2011/12in the case of South Australia and Kangaroo Island and 2008/09 for Australia.Table 1: Expenditure on transport services as a percentage of total intermediate expenditureKangarooIsland(2011/12)SouthAustralia(2011/12)Australia(2008/09)Intermediate expenditure on transport services ($m) 22 2,601 39,113Total intermediate expenditure ($m) 117 68,733 1,255,894Transport expenditure as a proportion of total 18.4% 3.8% 3.1%Source: Kangaroo Island and South Australian data are drawn from preliminary RISE models for2011/12 prepared by EconSearch as part of a study undertaken for the Kangaroo Island FuturesAuthority. Australian data are drawn from ABS (2012e).Despite the different years, the transport expenditure data show the stark difference betweenKangaroo Island and comparable estimates at the state and national levels. On KangarooIsland, transport expenditure as a percentage of total intermediate expenditure is estimated tobe 18.4 per cent compared with 3.8 per cent for South Australia and 3.1 per cent for Australiaas a whole.Based on these figures, it would suggest that around 15 per cent more (on average across allindustries) is spent on transport services on Kangaroo Island compared to South Australia andAustralia. The difference could be partly explained by the difference in industry mix onKangaroo Island to that found in the state and national economies. If the industries onKangaroo Island are more reliant on freight services than those in the rest of the state/country,i.e. if the economy has a higher proportion of primary industries (which are high users oftransport services) and a lower proportion of service industries (which are relatively low usersof transport services) then the proportion of transport expenditure as a proportion of totalexpenditure would be expected to be above average. While it is true that primary industriesare “over-represented” when compared to the state and national economies, the other mainindustries on the island are the service sectors that support the island’s tourism industry.When considering the cost of doing business differential between Kangaroo Island andelsewhere, it is not just transport costs that are relevant. For example, when sourcing servicesthat are not available on the Island, there can be additional costs involved. On abuilding/construction project if contractors from the mainland are required, not only will thecost of materials be greater than on the mainland (due to the freight differential), but therewill be additional travel time (labour costs) and possibly accommodation costs that would notbe incurred on an equivalent mainland project. Consequently, while the task of quantifying thecost of doing business on Kangaroo Island would be a complex analysis and quite beyond thescope of this study, based on the transport expenditure data discussed above the additionalcosts of doing business on Kangaroo Island are likely to be significantly above those forbusinesses in communities a similar distance from the State’s capital.e c o n s e a r c hPage| 85