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Microsoft Word - ECON1061_Assignment_Semester 1 2020 ECON1061 – Group Assignment, Semester 1, 2020 Page 1 of 11 SCHOOL OF ECONOMICS, FINANCE AND MARKETING ECON1061 – QUANTITATIVE ANALYSIS SEMESTER 1 2020 Group (WIL) Assignment Marks: 50 Due: Friday, Week 11, 11.59 PM INITIAL INSTRUCTIONS: 1. This assignment consists of one practical application with eight aspects to your report. 2. Ensure this assignment, and the related dataset corresponds to your enrolled lecture class (Monday, Wednesday or Friday). 3. You must submit this assignment online via the Canvas link a. Do not include the Excel document in your submission b. Only the written report is required. 4. Before beginning work read both Appendix 1 and Appendix 2 (the marking rubric) for important information. Appendix 3 is important to the work you will need to do. 5. This is a group assignment. The minimum group size is two and the maximum is five. You must submit the following table completed with your agreed percentage of contribution for each group member. All group members will receive marks according to the percentage of contribution mutually agreed by the whole group. If it is decided that everyone contributed equally, indicate the contribution % as 100% for each group member. Any issues in regard to this must be resolved before submission. Group Members: First name Last name Student ID Contribution % Signature ECON1061 – Group Assignment, Semester 1, 2020 Page 2 of 11 6. Complete the Agile Ways of Working micro‐credential (worth 2 marks). You may access this through ECON1061Canvas site by clicking "Modules" on the left‐hand sidebar and navigating to the Creds module. The unique URL is required for submission in this assignment. Please include the link in the cover sheet/front sheet of the assessment (see Assignments ‐ Group Assignment (WIL Project) information in CANVAS for more details). 7. You can find industry feedback from KPMG, one of Australia's Big Four on our (past) WIL project under ‘Assignments – Group Assignment (WIL Project) Information’ in Canvas. Reflect on this feedback from a different industry (Australian Cattle & Sheep), to identify similarities and links between your WIL project and the type of work done by an industry leader in the economics sector. 1 Introduction and Overview In this assessment task you will take the role of an expert Quantitative Analyst employed by a government organization in Australia. Government decision makers heavily rely on the advice of experts like you when formulating policy or making important developmental decisions. You are to conduct an in‐depth industry analysis, as outlined in Section 2. As you write the report, keep in mind that the audience is other expert economists. Employ the correct economic terminology and assume the readers have an understanding of the underlying economic theory. Your report must be short but comprehensive, including all key facts and details. Your report should not exceed six pages of A4 (including references and any Appendix). The font used should be Arial 12pt. Margins should be set at 2.54cm and header & footer at 1.25cm, include page numbers in either the header or footer. 2 Task The Australian Agriculture, Forestry and Fishing Support Services industry plays a significant role in the Australian economy. Recently climate change and its impacts have attracted much attention globally. Climate change poses challenges for all sectors of the Australian economy but particularly for those sectors dependent on natural resources, such as agriculture, forestry and fisheries. ECON1061 – Group Assignment, Semester 1, 2020 Page 3 of 11 You are tasked with producing an Economic Impact Assessment of Australia’s Agriculture, Forestry and Fishing Support Services industry. In addition, you need to assess in general terms how climate change impacts in developing countries, e.g. China can impact Australia’s Agriculture, Forestry and Fishing Support Services industry in the long run. Economic impact assessment is about how one industry sector (or a project or activity within that sector) affects other sectors in the economy. Input‐output tables are often used to identify relationships between sectors within an economy. The data required for this task can be found in the ‘Assignment Data’ Excel file1. This data consists of 32 Australian industries, including the Agriculture, Forestry and Fishing Support Services industry. The external demand (e.g. from the government, exports, etc.) of the dollar amounts for each industry is also provided. 3 Benchmark Report and Expectations For the expected report style see Appendix 1. You should treat the KPMG2 2015 Economic Impact Assessment of the Tasmanian Aquaculture Industry as the benchmark for your report writing style. This report is available in Canvas under “Assignments”. If you need any additional statistics about the designated industry, please use the following link: http://www.abs.gov.au. Some other useful references are given in Appendix 1. 1 If you are interested, the full and original data can be found using the following link: http://www.abs.gov.au/Ausstats/abs@.nsf/0/65123D449688A658CA2576470014F947?OpenDocument 2 KPMG is a global professional service company, one of the Big Four, https://home.kpmg.com/au/en/home.html ECON1061 – Group Assignment, Semester 1, 2020 Page 4 of 11 It is expected that your report should cover: a) The significance of the Australian Agriculture, Forestry and Fishing Support Services industry to the Australian economy in general (note: only a discussion similar to Section 2 (including Table 1) of the KPMG report is expected). b) A discussion of the challenges the Australian Agriculture, Forestry and Fishing Support Services industry faces now and the impact these challenges may have on the Australian Agriculture, Forestry and Fishing Support Services industry in the long term (note: only a discussion is expected). c) i. Calculate and report the Type I multipliers for all 32 industries. (To equip you for calculating the technology matrix, first watch the video podcast on calculating a technology matrix for a larger economy, that is available under “Assignment help” on Canvas. Also refer to Appendix 3 for a simple explanation using a three‐sector economy)3. ii. Explain the Australian Agriculture, Forestry and Fishing Support Services industry’s Type I multiplier. iii. Among the 32 industries identified, name two Australian industries that are important to the Australian Agriculture, Forestry and Fishing Support Services industry (note: use the technology matrix developed in Part C(i) to make your decisions). Discuss why you think they are important to the Australian Agriculture, Forestry and Fishing Support Services industry (note: only a discussion is expected). d) A supposition that in the latest budget that the Australian Government has declared significant cuts to the transport and support services industry and to the poultry and other livestock industry. In fact, it has decided to cut the external demand for transport and support services by 20% and for the poultry and other livestock industry by 15%. Discuss the impact of this on the Australian Agriculture, Forestry and Fishing Support Services industry. Discuss which industry (outside transport and support services and poultry and other livestock industry and Australian Agriculture, Forestry and Fishing Support Services industry) will be most heavily 3 A similar type of analysis is carried out in the KPMG report, page 11. The formula the KPMG report used is suitable for calculating the individual multiplier for each individual industry, whereas the one explained in Appendix 3 is suitable for collectively calculating multipliers for all industries at once. ECON1061 – Group Assignment, Semester 1, 2020 Page 5 of 11 impacted by these budget cuts and possible reasons for why this other industry would be affected. Express the change in the other industry’s output in percentage (note: Leontief Input‐ Output analysis, that is, total output = is expected (please refer to tutorial or lecture examples), you can use the same 1I M matrix developed in part c(i)). e) Climate scientists say there will be winners and losers from climate change. Take China as an example and discuss in detail whether China will be a winner or loser and how this in turn will impact (positively or negatively) Australian agribusiness sector in the long run. f) Discuss how climate change can impact Australia’s exports in general. Outline three things you can do to reduce the impact of climate change in Australia. g) Provide a brief literature review (similar to Table (2) of the KPMG Report) explaining the main findings of at least two research papers relevant to your research report. More references, where appropriate, are welcome. h) Based on your analysis on the Australian Agriculture, Forestry and Fishing Support Services, provide recommendation(s) to the Australian government (if any). ECON1061 – Group Assignment, Semester 1, 2020 Page 6 of 11 Appendix 1 1. Finding the inverse There are a couple of options to find the inverse of a matrix. The simplest is through Excel. Please use the following website as a rough guide: http://www.excelfunctions.net/Excel‐Minverse‐Function.html Important note: The numbers in the table that you wish to find the inverse of must be rounded to 2 decimal places before using the inverse formula. You will need to use the round formula [=round(array,2)] to achieve this outcome (where array is the range of cells containing the numbers you want to round). Do not use the ‘increasing/decreasing the number of place’ command (the function as shown in the picture below) as this will only ‘visually’ round the solutions to the number chosen. You may, however, use this command when presenting solutions. 2. Excel tips You will be performing most (if not all) of your calculations in Excel. Various skills in Excel that may be useful to you can be found in this video: https://www.youtube.com/watch?v=G8w‐d9U3PJM You may also want to freeze certain cells when dragging formulas down: https://www.youtube.com/watch?v=mvwmNxuiXO8 ECON1061 – Group Assignment, Semester 1, 2020 Page 7 of 11 3. Some useful research links: a) https://acola.org.au/wp/PDF/SAF07/social%20and%20political%20context.pdf b) https://www.futurefarmers.com.au/young‐carbon‐farmers/carbon‐farming/climate‐ threats‐to‐australiaa‐agriculture c) https://www.inxsoftware.com/media/transfer/doc/agriculture_forestry_and_fishing_ind ustry_report.pdf d) https://www.climatecouncil.org.au/resources/foodsecurityreport2015/ e) https://www.science.org.au/learning/general‐audience/science‐climate‐change/7‐what‐ are‐impacts‐of‐climate‐change 4. Expected format of the report: i) Abstract: a brief outline of the report and the main findings ii) Introduction: you can answer questions (a) – (f) here. Please include question numbers for marking purposes. iii) Literature Review: you can answer part (g) here iv) Methodology: you can give a brief introduction to input‐output analysis v) Conclusions: a brief summary of your findings vi) Recommendations: you can answer part(h) here Note: ideally, we prefer 6 pages in total or less. However, a little over (say 7 or 8 pages) is also fine. ECON1061 – Group Assignment, Semester 1, 2020 Page 8 of 11 Appendix 2: Marking Rubric Criteria (refer Section 3 above) Unsatisfactory Satisfactory Good Very Good to Outstanding Task (a) Does not adequately discuss (a) (0 – 1 marks) Partially discusses (a), without providing adequate details (1.5 – 3 marks) Somewhat acceptable, but could have discussed more and provided more details (3.5 – 4 marks) (4.5 ‐ 5 marks) Task (b) Does not adequately discuss (b) (0 – 1 mark) Partially discusses (b), (1.5 – 3 marks) Somewhat acceptable, but could have discussed more (3.5 – 5.5 marks) (6 ‐ 8 marks) Task (c) Calculations and discussions were wrong (0 ‐ 0.5 mark) Calculations correct but the discussions were wrong (1 – 2.5 marks) Calculations correct but could have discussed more (3 to 4.5 marks) (5 ‐ 7 marks) Task (d) Calculations and discussions were wrong (0 ‐ 0.5 mark) Calculations correct but the discussions were wrong (1 – 1.5 marks) Calculations correct but could have discussed more (2 to 5 marks) (5.5 ‐ 8 marks) Task (e) Does not adequately discuss (e) (0 – 0.5 marks) Partially discusses (e) (1 – 2.5 marks) Somewhat acceptable, but could have discussed more (3 – 3.5 marks) (4 – 5 marks) Task (f) Does not adequately discuss (f) (0 – 0.5 marks) Partially discusses (f) (1 – 1.5 marks) Somewhat acceptable, but could have discussed more (2 – 2.5 marks) (3 – 4.5 marks) Task (g) Literature Review is not done/does not provide any references (0 marks) Literature Review is not meaningful/only one relevant reference provided throughout the report (0.5 – 1 mark) Literature Review is somewhat acceptable/only two relevant references provided throughout the report (1.5 – 2 marks) Excellent Literature Review/more relevant references provided throughout the report (2.5 – 3.5 marks) Task (h) No recommendation provided (0 mark) Meaningless recommendation is provided (0.5 – 1 mark) Recommendation is inadequate (1.5 – 2 marks) Solid recommendation provided with reasoning (2.5 – 3 marks) Overall business report style and presentation (compared to the benchmark report) Not impressive (0 – 0.5 mark) Somewhat acceptable (1 – 1.5 marks) Good effort (2 – 3 marks) (3.5 ‐ 4 marks) Micro‐credential (Agile Ways of Working) Completion Not completed (0 mark) Completed as evidenced by unique URL submitted with the assignment (2 marks) ECON1061 – Group Assignment, Semester 1, 2020 Page 9 of 11 Appendix 3: Explaining Type I multiplier calculation using a three‐sector economy Multipliers measure total change throughout the economy from a one unit change for a given sector. In economics, three types of multipliers are calculated from model 1] output, 2] income and 3] employment and these are referred to as the Type I multiplier, Type II multiplier and Type III multiplier, respectively. Your assignment task covers only Type I multiplier which is calculated as follows: Type I multiplier calculation and Interpretation: Type I multiplier includes direct or initial spending + indirect spending or businesses buying and spending to each other. Consider the input/output table for the three‐sector economy: Input to ($million) Agric. Health Services Other demands Total output Output from ($million) Agric. 150 225 125 100 600 Health 210 250 140 300 900 Services 170 0 30 100 300 Step 1: Use the underlying assumption total input = total output to complete the following input/output table Input to Agric. Health Services Other demands Total output Output from Agric. 150 225 125 100 600 Health 210 250 140 300 900 Services 170 0 30 100 300 Other inputs 70 425 5 Total input 600 900 300 ECON1061 – Group Assignment, Semester 1, 2020 Page 10 of 11 Step 2: Calculate the technology matrix, M, by dividing each column of inputs by total input Input to Agric. Health Services Other demands Total output Output from Agric. 150/600 225/900 125/300 100 600 Health 210/600 250/900 140/300 300 900 Services 170/600 0/900 30/300 100 300 Total input 600/600 900/900 300/300 Thus = 150/600 225/900 125/300 210/600 250/900 140/300 170/600 0/900 30/300 = 0.25 0.25 0.42 0.35 0.28 0.47 0.28 0.00 0.10 Step 3: Determine the inverse of ( – ) – = 1 0 0 0 1 0 0 0 1 0.25 0.25 0.42 0.35 0.28 0.47 0.28 0.00 0.10 = 0.75 0.25 0.42 0.35 0.72 0.47 0.28 0.00 0.90 = 2.24 0.78 1.45 1.54 1.92 1.72 0.70 0.24 1.56 Note: You can use the Excel minverse function to calculate above inverse (please refer to Appendix 1 for more detail). Remember to press ctrl, shift and enter keys together to get the inverse. ECON1061 – Group Assignment, Semester 1, 2020 Page 11 of 11 Step 4: Total requirements table and interpretation Input to Agriculture Health Services Output from Agriculture 2.24 0.78 1.45 Health 1.54 1.92 1.72 Services 0.70 0.24 1.56 Total 4.48 2.94 4.73 The output multipliers are simply the column totals for each industry. Interpretation: For example, agriculture Type I multiplier = 4.48. For a $1 change in final demand sales in the local economy, the total direct and indirect impacts on the Agriculture sector is $4.48. Microsoft Word - TSGA15- Economic Impact Report FINAL 2805.docx Economic Impact Assessment Tasmanian Aquaculture Industry Tasmanian Salmonid Growers Association May 2015 kpmg.com.au © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Tasmanian Salmonid Growers Association PO Box 321 Sandy Bay TAS 7005 28 May 2015 Dear Adam, Economic Impact Assessment: Tasmanian Aquaculture Industry KPMG, in association with Professor John Mangan from the University of Queensland, is pleased to provide our study into the current economic contribution of the salmonid (Atlantic salmon and Ocean trout) aquaculture industry to the Tasmanian economy. In summary, our analysis has found that in terms of state wide economic impacts, the industry in Tasmania currently generates the following results per annum: • average annual Turnover or Gross Output of $1.12 billion (the total value of industry production) • annual Value added or net additions to Gross State Product (GSP) of $625.9 million (the added value of industry production, equivalent to the GSP definition, as used by the Australian Bureau of Statistics) • annual gain to factor income of $366.8 million (income paid to individuals and firms), and • support for approximately 2,786 FTE jobs (full time positions employed in, or supported by the industry). The report also includes analysis of the economic significance of the industry’s leakage effect on the rest of the Australian economy. The results highlight the importance of the industry to Tasmania and the rest of Australia. Yours sincerely, David Richardson Director © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Executive summary KPMG, in association with Professor John Mangan from the University of Queensland is pleased to provide this report, which examines the current economic contribution of the Tasmanian salmonid (Atlantic salmon and Ocean trout) aquaculture industry to the Tasmanian economy and the economic significance of its leakage effect on the rest of the Australian economy. Key points to note are as follows: • To undertake the analysis the combined economic operations of TSGA, Saltas, Huon, Petuna, Van Diemen and Tassal were considered in aggregate, averaged over the period 2013/14. • To estimate the total economic impacts of the operations in Tasmania, the combined expenditure (cost) data from these companies were applied to the Tasmanian Non-Linear Model. • This model was developed from an original table supplied by KPMG and modified to have marginal coefficient properties by the IOW methodology developed at the University of Queensland. • It is believed that this form of modelling is superior to traditional forms of Input/output modelling and the most suitable form of economic model for this task. • In the absence of a separate Aquaculture sector (not provided in sufficient detail by the ABS for Tasmania) the coefficients from the Agricultural, Forestry and Fishing sector were modified to more closely fit the expenditure patterns detected in the aquaculture industry and used to mirror the structure of the industry in Tasmania. • In view of the leakage of activity to the rest of Australia a separate estimate of “Rest of Australia” impacts was also estimated. • It was found that the Tasmanian industry is part of a world-wide aquaculture industry that is expanding and is believed to have significant production and commercial advantages in comparison to wild- fisheries. • By 2030, Aquaculture is anticipated to hold over 60% of the world fish market. • It was found that given sufficient capitalisation, the Tasmanian industry has substantial opportunities to expand exports. In terms of state-wide economic impacts, the following results were generated: • an average annual Turnover or Gross Output of $1.12 billion • an annual Value added or net additions to GSP of $625.9 million • an annual gain to factor income of $366.8 million, and • support for approximately 2,786 FTE jobs. This represents, in terms of the contemporary Tasmanian economy, 2.3% of State GSP, and 1.2 % of State employment. In addition, the operations of these companies contribute to the rest of the Australian economy, annually to the tune of: • an average annual Turnover or Gross Output gain of $180.9 million throughout the rest of Australia • an annual Value added to GSP of $115.2 million • an annual gain factor income of $69.1 million, and • support for approximately 417 FTE jobs Appendix 1 provides a summation of the