1. Purpose of the study
An input-output model of Toowoomba for the year 1970-71 was developed primarily as a means of studying the economic structure of the City. In particular, the model would be used to measure the extent to which the economy as a whole, and each individual sector, depended on two major elements of final demand, i.e. the Hinterland of Toowoomba and Government. Other planned applications of the model were:
(i) To estimate the impact of such hypothetical events as the closure of an existing enterprise which is a major source of employment and the transfer, to Toowoomba, of a State Government department.
(ii) To evaluate the extent to which recent growth of Toowoomba's economy and population could be attributed to two specific government initiatives, i.e. the establishment of the Army Aviation Centre at Oakey, near Toowoomba, and the development of the Darling Downs Institute of Advanced Education. A subsidiary objective was to evaluate regional input-output methodo1ogy and establish a model specification appropriate to the study of provincial Australian cities.
Data collection is always a major problem in input-output analysis. For a provincial city there is less secondary data available than for larger regions. Furthermore, in an economy of the size1 and complexity of Toowoomba, the extent of coverage which could be achieved by primary data collection was limited by cost and time.
After initial attempts to acquire data by mail questionnaires failed, personal interviews were used to gather information from enterprises which employed 44 percent of the workforce. Some sectors were not surveyed -at all.
Their structure was estimated from secondary data when available. Use was also made of coefficients from other regional input-output models for certain service sectors whose structure is presumed to be stable between regions.
An attempt was made to produce two estimates of the value of each element of the transaction matrix - one based on sales data and one based on purchases data. A procedure was developed to achieve a single estimate for each element by using reliability weights to average the two estimates. The single estimates, derived by that means, were then adjusted by the R.A.S. technique to ensure that row and column sums of the elements were equal to the total gross output and outlay for each sector.
The effect on the model of the alternative methods of treating imports and of valuing transactions was analysed. It was established that a method of valuing transactions could not be chosen independently of the method of treating imports. Direct allocation of all imports and valuation of transactions in producers' prices were used.
Since one of the aims of the study was to examine the city's dependence on its Hinterland and on Government, disaggregation of final demand was important. In a number of sectors there was insufficient primary data on which to base an estimate of exports to the Hinterland. Among the methods used to produce such estimates was an application of location quotients.
It was found that the estimate of the dependence of Toowoomba on its Hinterland depended on the way in which Government transactions were treated.
Two models were constructed which differed in their treatment of such transactions. In model A, the value of services provided by Government, without charge to recipients, is treated as a purchase by the Government sector of final demand. However, in model B, services provided by Government to individuals residing in Toowoomba, the Hinterland or elsewhere are treated as purchases by those individuals.
In models, closed with respect to Households, the second approach (model B) yielded considerably larger multiplier estimates and a larger measure of the city's dependence on its Hinterland.
3. Applications of the Model
Model A was used to estimate the city's dependence on Government Model was preferred for estimation of dependence on the Hinterland. Model B was also regarded as the more appropriate for impact analysis since the value of services, such as Education, provided by Government depend on the size of Toowoomba's population, which in turn depends on its economy.
The closed, static model B was used to estimate the impact of the hypothetical events described above on the city's income, employment and population. In analysing the contribution made by the Army Aviation Centre and the Institute of Advanced Education, the static input-output analysis was supplemented by an analysis of accelerator effects using a range of assumptions- about the extent to which Building and Construction activity depended upon population growth.