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Western Sydney: An Economic Profile

Western Sydney: An Economic Profile

Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion.
Briefing Paper No 06/2012 by Daniel Montoya
‚ÄčThis paper identifies key economic facts and figures for Western Sydney, one of NSW's most significant economic, social and political regions. These facts and figures are contextualised by demographic statistics, research on projections for the NSW economy and relevant NSW, Commonwealth and Local Government policies.

Defining Western Sydney

Defining Western Sydney for the purposes of this paper involved a choice between two definitions: the NSW Government definition; and the Australian Bureau of Statistics (ABS) definition, as limited by their labour force regions. The ABS definition was chosen in order to provide the most up-to-date employment data. Consequently, Western Sydney in this paper consists of 12 Local Government Areas (LGAs): Auburn; Blacktown; Blue Mountains; Camden; Campbelltown; Fairfield; Hawkesbury; Holroyd; Liverpool; Parramatta; Penrith; and Wollondilly. These 12 LGAs are grouped into four labour force regions by the ABS: Central Western Sydney; Fairfield-Liverpool; North Western Sydney; and Outer South Western Sydney. Two LGAs included in the definition of Western Sydney by the NSW Government are therefore excluded from this paper's working definition - Bankstown and The Hills. [2.1 to 2.2]

NSW electorates in Western Sydney

Twenty-three NSW electorates lie at least partially within Western Sydney, with 16 located wholly within the region. [2.3]

Key economic features of Western Sydney

Many of Sydney's strategic centres are located in Western Sydney, including all three of Sydney's regional cities - Liverpool, Parramatta and Penrith - three major centres and two specialised centres. The NSW Government also plans to add further strategic centres in Western Sydney. [2.4]

Demographic facts and figures

According to census figures, the population of Western Sydney was 1,571,475 in 2011. This is equivalent to 22.7% of the State's total population. The population of Western Sydney grew by 112,384 people, or 7.7%, between 2006 and 2011. In contrast, the total population of NSW increased by 5.6%. Three of the State's top five fastest growing LGAs between 2010 and 2011 were located in Western Sydney: Camden (2nd); Parramatta (3rd); and Auburn (4th). Three of the State's LGAs which experienced the largest growth were also located in Western Sydney: Blacktown (1st); Parramatta (2nd); and Liverpool (4th). The population of Western Sydney is expected to reach almost 2.5 million by 2036. This represents a 51% increase in population between 2011 and 2036. The LGAs expected to experience the most growth are Camden (182,600 persons), Blacktown (181,900 persons) and Liverpool (138,100 persons). [3.0]

Gross Regional Product

In 2010-11, Western Sydney's Gross Regional Product (GRP) was $78.2 billion. This is equivalent to 26.35% of the total GRP for the Greater Metropolitan Sydney region and 17.83% of NSW's total GSP. Western Sydney's share of Sydney's total GRP declined marginally between 2009-10 and 2010-11, from 26.63% to 26.35%. The LGA with the largest GRP in 2010-11 was Parramatta ($16.3 billion), with approximately 21% of Western Sydney's total GRP. Over half of Western Sydney's GRP is concentrated in four LGAs: Auburn, Blacktown, Holroyd and Parramatta. Western Sydney ($128,547) had a value-add per employed person lower than the Sydney average ($143,404). The three industries that contributed the most to Western Sydney's GRP were "manufacturing", "financial & insurance services" and "transport, postal & warehousing", contributing 13.5%, 8.7% and 6.8% respectively.

Macroeconomic trends in Western Sydney between 2008-09 and 2010-11 generally reflect recent trends in the NSW economy. The manufacturing sector lost part of its output share, falling by 1.9 percentage points to 16.0%. The services sector increased its share of total Western Sydney industry output from 70.1% to 70.6%. [4.1]

Employment and unemployment

In May 2012, 762,371 Western Sydney residents were in employment, an increase of 149,620 since 2006. Total employment fell by 1,391, or 0.2%, between May 2011 and May 2012. Western Sydney had a participation rate of 63.0%, which is lower than the participation rates for Sydney (66.0%) and for NSW (63.6%). In May 2012, almost 26% of employed persons in Western Sydney were working in part-time employment. This was lower than the NSW rate of just over 29%.

In May 2012, the unemployment rate for Western Sydney was 5.5%, 0.5 percentage points above the NSW rate. The unemployment rate varied substantially across Western Sydney. The Fairfield-Liverpool labour force region had the highest unemployment rate of 9.2%, while the North Western Sydney labour force region had the lowest, at 4.2%. Western Sydney had a youth unemployment rate of 17.9%, slightly higher than the NSW rate of 15.3%. Youth unemployment rates also varied substantially across Western Sydney. The Outer South Western Sydney labour force region had the highest rate of 22.4%, while the North Western Sydney labour force region had the lowest, at 15.2%. All Western Sydney labour force regions had youth participation rates lower than the NSW rate of 50.0%. Central Western Sydney had the lowest youth participation rate of 37.8%. Western Sydney had a long-term unemployment rate of 1.42%, compared to the NSW rate of 1.11%. [4.2]

Employment by industry

In May 2012, the four largest industry employers in Western Sydney were "health care & social assistance" (90,752 persons), "manufacturing" (87,300 persons), "retail trade" (80,356 persons) and "construction" (66,679 persons). Three industries had almost one-third of their total NSW workforce located in Western Sydney: "manufacturing"; "transport, postal & warehousing"; and "wholesale trade". [4.3.1] "Health care & social assistance" was the largest employing industry in the Central Western Sydney and North Western Sydney labour force regions. "Manufacturing" was the largest employer in the Fairfield-Liverpool and Outer South Western Sydney labour force regions. [4.3.2]

Between 2006 and May 2012, the biggest increases in employment by industry took place in "health care & social assistance" (31,168 persons), "transport, postal & warehousing" (15,058 persons) and "professional, scientific & technical services" (14,835 persons). Only one industry lost jobs - "manufacturing" lost 1,132 jobs, or 1.3%. The fastest growing industries in terms of employment were "health care & social assistance" (52.3%), "other services" (50.9%) and "mining" (48.9%). [4.3.1]

Between May 2011 and May 2012, 11 industries recorded declines in employment. The three industries which lost the most jobs were "retail trade" (6,704 jobs), "electricity, gas, water & waste services" (5,280 jobs) and "rental, hiring & real estate services" (3,755). In contrast, three industries experienced large increases in employment: "health care & social assistance" (10,152 persons); "financial & insurance services" (6,356 persons); and "other services" (5,327 persons). [4.3.3]

Economic diversity of the Western Sydney economy

According to an economic diversity index, in May 2012 the three most important industries for Western Sydney relative to the Australian economy were: "transport, postal & warehousing"; "wholesale trade"; and "manufacturing". As a whole, the Western Sydney economy had a relatively diverse economy in comparison with the Australian economy. [4.4]

Employers' recruitment experiences

The Commonwealth Department of Education, Employment and Workplace Relations (DEEWR) conducts an annual survey of employers' recruitment experiences. Two of the twenty priority employment areas recently surveyed by DEEWR cover all of Western Sydney, as it is defined in this paper. [4.5]

Four trends can be identified from two surveys conducted in the Sydney West and Blue Mountains Priority Employment Area in August 2009 and October 2011. First, recruitment activity in the region was relatively low in comparison with other surveyed regions. Second, the proportion of employers who recruited in order to expand their business by increasing staff numbers increased between 2009 and 2011. Third, recruitment difficulties increased between 2009 and 2011. Fourth, employer recruitment expectations rose between 2009 and 2011. [4.5.1]

Survey findings for the Canterbury-Bankstown and South Western Sydney Priority Employment Area were generally worse than those for the Sydney West and Blue Mountains Priority Employment Area. Recruitment activity declined in the Canterbury-Bankstown and South Western Sydney Priority Employment Area between 2010 and 2012. With regard to recruitment expectations, employer confidence fell between March 2010 and March 2012. [4.5.2]

Business numbers

In 2011, there were a total of 121,070 businesses operating in Western Sydney. The largest proportions were in "construction" (21.5%), "transport, postal & warehousing" (11.5%) and "professional, scientific & technical services" (9.3%). Four industries recorded a decline in business numbers between 2009 and 2011: "agriculture, forestry & fishing" (-5 businesses); "mining" (-24 businesses); "manufacturing" (-166 businesses); and "public administration & safety" (-40 businesses). The three industries to have recorded the largest increases in business numbers, excluding the "unclassified" businesses (964 businesses), between 2009 and 2011 were: "professional, scientific & technical services" (890 businesses); "transport, postal & warehousing" (722 businesses); and "financial & insurance services" (675 businesses). In total, there were 6,392 more businesses in Western Sydney in 2011 than in 2009.

In 2011, small businesses comprised 96.6% of all businesses located in Western Sydney. This is equivalent to a total of 116,968 - 6,351 more than were present in 2009. Small business trends reflected overall business trends. [4.6]

Employment lands

Employment lands include land that is zoned for industry and/or warehouse uses. As of January 2011, Western Sydney had 9,573.5 hectares of zoned employment lands. This represents 61% of the total zoned employment lands in Sydney. Of the Western Sydney total, 6,508.1 hectares have been developed. 200.6 hectares of zoned employment lands were added to the Western Sydney total between January 2010 and January 2011. The Western Sydney Employment Area is a key employment lands initiative in Western Sydney. It incorporates several zoned employment lands and, as of January 2011, totalled 2061 hectares. Between January 2008 and January 2011, 376.6 hectares of zoned employment lands in Western Sydney were taken-up by industrial development. Almost 50% of this growth took place in the North Western Sydney labour force region. [4.7]

Industrial building activity

In 2009-10, industrial building activity approved in Western Sydney was valued at $293 million. This was equivalent to 73% of the total industrial building activity in Sydney. The majority of industrial building activity expenditure approved in Western Sydney was to be spent on warehouses ($230 million). Almost 47% ($137 million) of all approved Western Sydney industrial building activity was located in the Fairfield-Liverpool labour force region. [4.8]

Manufacturing in Western Sydney

Manufacturing is one of the most significant industries in Western Sydney. In 2010-11, manufacturing was the largest contributor to Western Sydney's Gross Regional Product, worth $10.6 billion. In May 2012, manufacturing was the second largest employer in Western Sydney, employing 87,300 people. However, manufacturing trends identified in Chapter 4 appear to support the argument that manufacturing in Australia is in decline, with GRP, employment and business numbers having all recently declined. [5.1.1]

Manufacturing: key findings

Key findings
Gross Regional Product (2010-11)
Total ($million)$10,585
Change in share of Western Sydney GRP (08-09 to 10-11)-1.67
Growth since 2009-10 ($million) (%)-$191.4 (-1.4%)
% of Sydney's total manufacturing industry48.1%
Employment
Total (May 2012)87,300
Change since 2006 (% annual growth)-1,132 (-0.2%)
Change since May 2011 (%)-2,943 (-3.3%)
% of NSW manufacturing jobs in Western Sydney31.1%
Business numbers
Total (2011)6,734
% change between 2009 and 2011-2.4%

Other selected industries: key findings

Financial & insurance services Transport, postal & warehousing Health care & social assistance
Gross Regional Product (2009-10)
Total ($million)$6,795$5,350$5,209
Change in share of Western Sydney GRP (2008-09 to 2010-11)-0.59+0.28+0.52
Employment
Total (May 2012)38,07857,67890,752
Change since 2006 (% annual growth)7,981 (4.4%)15,058 (5.9%)31,168 (8.7%)

Construction Wholesale trade Retail trade
Gross Regional Product (2009-10)
Total ($million)$4,940$4,843$3,505
Change in share of Western Sydney GRP (2008-09 to 2010-11)+0.69-0.790.04
Employment ‚Äč
Total (May 2012)66,67939,05680,356
Change since 2006 (% annual growth)14,201 (4.5%)2,259 (1.0%)10,096 (2.4%)

NSW Government policies

The O'Farrell Government has four policy areas of particular relevance for the Western Sydney economy. First, final NSW 2021 regional action plans are due for release in mid 2012, including two that cover Western Sydney. [6.1.1] Second, the NSW Government has established industry-led taskforces to develop Industry Action Plans for six industries: Creative Industries; Digital Economy; International Education & Research; Manufacturing; Professional Services; and Tourism & Events. [6.1.2]Third, the O'Farrell Government plans to release a new Metropolitan Strategy for Sydney by the end of 2012. The Government intends to develop the Strategy so that it is strongly aligned with two other 20-year strategies: the State Infrastructure Strategy; and the Long Term Transport Master Plan. [6.1.3] Finally, the NSW Employment Lands Development Program manages the supply of employment lands for the Sydney Region. [6.1.4]

Commonwealth Government policies

The Commonwealth Government has two economic programs of particular relevance to the Western Sydney economy. First, two of twenty priority employment areas together cover all of Western Sydney. Local employment coordinators, appointed for each area, work with relevant stakeholders in developing and implementing local solutions to labour market issues. [6.2.1] The second relevant program is Regional Development Australia (RDA). The RDA Sydney committee has two initiatives of particular relevance for the Western Sydney economy: a Regional Plan for Sydney, released in 2011; and an Employment Lands Policy Position, released in August 2012. [6.2.2]

Local Government policies

In August 2012, the Western Sydney Regional Organisation of Councils (WSROC) released its Future Directions Strategy. The Strategy recommends several courses of action, including the development of a Western Sydney Regional Integrated Planning Strategy and the establishment of a Western Sydney development agency. [6.3]

Employment targets and forecasts

The NSW Government Metropolitan Plan for Sydney 2036, released by the Keneally Government in 2010, set employment capacity targets for every LGA in Sydney. The Plan aimed to increase the number of jobs in Western Sydney by 384,000 between 2006 and 2036, an increase of 53%. Two recent reports have critiqued the capacity targets set in the Plan. The first, released by the Urban Taskforce Australia, identifies a current jobs deficit in Western Sydney of 200,000, and argues that this will increase to 319,000 by 2031 should the Plan's employment capacity targets be realised. The second, released by RDA Sydney, argues that the targets will not be achieved without additional private and public sector stimulus. In particular, RDA Sydney argues that the NSW Government needs to release significant areas of employment lands in order to meet the employment capacity targets. [7.0]