The economic module is a macroeconomic simulation model that uses census data (2006 and 2011) and ABS data taken from the different economic sectors at the regional and national levels. It projects employment in the Illawarra region from 2012-2036.

For demonstration purposes, the model tests three scenarios:

Baseline: Illawarra industries follow the short run and long run trends that were in evidence prior to 2011
Economic Downturn: Due to negative economic situations, the Metal sector decreases employment by 2,500 people between 2011 and 2016 (such as the sharp decrease that happened in BlueScope).
Bright Future: the negative shock specified in Scenario 2 but the government supports other industries including construction, tourism, health and education between 2017 and 2021.

The simulation results show that the employment average annual growth rates between 2016- 2036 under the three scenarios are as follows:

Baseline: 1.42%

Downturn: 1.39%

Bright Future: 1.56%

A comparison between the total employment in the Illawarra region under the three scenarios reveals that a $370 million investment in the 4 growing sectors of construction, tourism, health and education can not only offset the unemployment due to the BlueScope downsizing, but also increase employment to higher than the baseline scenario.

Additionally, the investment in the region can provide significant employment opportunities for locals as well as for the residents of other regions (such as Sydney) since at the end of simulation period (i.e. 2036) there will be 549 jobs more than the Illawarra labour supply which can be occupied by the labour force from other region.

Baseline v Downturn

Baseline: Illawarra industries follow the short run and long run trends that were in evidence prior to 2011
Economic Downturn: Due to negative economic situations, the Metal sector decreases employment by 2,500 people between 2011 and 2016 (such as the sharp decrease that happened in BlueScope).

Employment in Metal Industry in the Illawarra Region under Base Case Scenario and Economic Downturn Scenario

Baseline v Bright Future

Baseline: Illawarra industries follow the short run and long run trends that were in evidence prior to 2011
Bright Future: the negative shock specified in Scenario 2 occurs in this scenario, however investment and government support to other industries including construction, tourism, health and education between 2017 and 2021.

$19 million investment in construction sector which results in 350 more jobs in this sector
$149 million investment in tourism which will lead to an increase of 200 in accommodation and food services employment and 200 in transport (please note that at national level account, tourism is in the consumption side not the production side, yet it affects accommodation and transport on production side)
$130 million investment in education sector which will result in 800 more jobs in this sector
$72 million investment in health sector which leads to 790 more jobs in this sector
In total, scenario 3 includes total investment of $370 million into the Illawarra region which increases employment by 2,340.

The following chart displays the changes in employment for construction, accommodation, transport, education and health sectors under the Bright Future scenario. By injecting $19 million into the construction sector the region will result in an average job creation of 356 per year between 2017 and 2036 with the maximum of 444 jobs created at the end of simulation period.

The following 2 charts show that by increasing investment in the tourism sector by $149 million we will result in an average number of jobs created of 204 per year in accommodation and food services and 204 per year in transport between 2017 and 2036 with the maximum of 254 jobs created at the end of simulation period in each sector.

The next chart shows the results of injecting $72 million into the health sector will lead to an average job creation of 871 per year between 2017 and 2036 with the maximum of 1,102 jobs created at the end of simulation period.