Tuesday, July 31, 2012

Building approvals trend continues ....



Building approvals declined less than expected in the ABS June data to continue a slow cautious trend recovery. 

QUEENSLAND

The trend estimate for total number of dwelling units approved in Queensland rose 1.8% in June and has risen for 8 months. The trend estimate for the number of private sector houses rose 0.2% in June after being flat in the previous month.

Also, reports of an RP data survey has placed Cairns among the top 10 buyers markets, which are all in Quieensland. Central West was the only region in Queensland to make it to the top sellers list.

What is tropical expertise?

With the Olympics barely begun there are suggestions that a disappointing performance could lead to calls for more funding for elite athletes. David Penberthy in The Telegraph has taken issue with sports funding: Time to splash a little cold water on funding.
It is now taken as given that our sporting performance is so inextricably linked to our national psyche that Canberra must dutifully pour millions and millions of dollars into elite sports, however obscure the sports might be. We are now spending more money on sport than at any time in our history.

Total sports funding was increased by an unprecedented $195 million to $1.2 billion a few years ago, with an extra $23.3 million being handed to high-performance sport funding for the Olympics and Paralympics under a total outlay of $120 million. In February last year, amid dire warnings from the Australian Olympic Committee about the downward trend in our medal tally (58 in Sydney, 49 in Athens, 46 in Beijing), the feds allocated another $2.5 million under the Green and Gold project. Of that money, $1 million went to swimming, meaning taxpayers could help fund things like Ian Thorpe’s non-comeback, and $50,000 went to equestrian sport, even though it seems to be most popular with the landed gentry.
The AOC suggested that the $120 million was $100 million short of what was required. It's probably inevitable that this will ignite our federal member and his proposals for sports infrastructure and tourism, including a tropical campus of the Australian Institute of Sport in Cairns.

This also has the support of the TTNQ sports events strategy:
 3) Collaboration with James Cook University in the development of a Cairns campus of the Australian Institute of Sport that focuses on tropical expertise in sports.  
The Australian Institute of Sports was founded by the Fraser Guvmint following the poor medal performance at the drug tainted 1976 Montreal Olympics. Promotion of tropical expertise is part of the economic strategy for the Far North. However, when it comes to sport i'm not sure what 'tropical expertise' actually is?

Penberthy is certainly not convinced that elite sport is an appropriate priority for funding:
More pertinently, given that there is always a finite amount of public money which can be spent, I reckon it’s interesting that we have come up with an unchallenged model by which able-bodied people can play sport at the highest level, and travel the world having a hell of a good time doing so, but we still haven’t got a solution to fund the care of people with disabilities so that they can live their lives with dignity.

Sunday, July 29, 2012

Sugar Challenge

Economist Rory Robertson is waging a war against sugar, the Far Norths biggest agricultural industry. The former Macquarie Bank interest rate strategist and self described "former-fattie" has questioned the statistics in a recent paper, The Austtralian Paradox, purporting to show an inverse relationship between sugar consumption and obesity.

The sugar industry was apparently quite pleased for the paper to clear sugar as a cause of obesity. Robertson has alleged that the statistics used to validate the claim are wrong and put up $40,000 to anyone who can dispove his critique, as reported in the Sydney Morning Herald:
“I wrote: “To be clear, I will reward the first successful researcher with $20,000 (cash), if anyone is able show beyond dispute that the available (valid) information really "…indicates a consistent and substantial decline in total refined or added sugar consumption by Australians over the past 30 years”, as concluded in Australian Paradox. Moreover, I will pay a further $20,000 to the charity of choice at the University of Sydney's low-GI school, and publish a genuine public apology in The Sydney Morning Herald, The Australian and The Australian Financial Review. “
So far, there's no sign of anyone trying to win the money. 
Robertson was previously involved in a high profile wager with debt deflationist sensationalist Steve Keen following onset of the GFC. Keen was subsequently forced to walk from Canberra to the top of Mount Kosciuszko wearing a T-shirt that says "I was hopelessly wrong on house prices! Ask me how." when Australian house prices did not fall the 40% he had predicted. Robertson was also a critic of Peter Costello as Australia's highest taxing treasurer.

Meanwhile in other agricultural news there more northern food bowling last week at a forum in Hughendon.

Friday, July 27, 2012

Townsville wiped off map!

It's an interesting map of Queensland that appears on the cover of the QTC investment guide linked in the previous post. Although I would argue that there is no reason for either Brisbane or Cold Coast to appear on the map either?



The only surprise is that it hasn't yet made a front page headline at either the Cairns Post or Townsville Bulletin!

Thursday, July 26, 2012

Ole' Queensland Bonds!

Campbell Newman this week somewhat wildly compared Queensland to Spain and suggested Queensland was on the verge of bankruptcy. At the same time, treasuer Tim Nicholls was in China apparently spinning a somewhat more positive view to investors. QTC has an investor booklet updated as at June 30, 2012 which reflects the positive story.

Consistent with previous posts here let's do a comparison of recent market history of the respective bonds. Here is Spain where bond yields have recently hit new highs:


Here is Queensland where the latest QTC weekly review says  "QTC long term bond yields fell to record low levels last week".

 

Now, we should be able to perceive a clear difference between the two here? Spain is suffering under increased funding costs, while investors continue to buy up highly rated Queensland debt. I haven't yet seen any comment on reduced funding costs?

My theory is that there is a geodetic phenomenon at play when politicians cross the equator and look at their graphs from the other side up, possibly while contemplating the reverse spiral of the water gurgling down the plug-hole of their hotel spa bath.
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Cuts for Tourism Queensland

The Cairns Post reports cuts to Tourism Queensland.TQ seems to polarise opinion so there are sure to be different views on the move. Exiting TQ boss Don Morris has defended the organisation and also chipped in an interesting comment on the current status of tourism.
"It is all too well to say there are zillions of dollars in savings in a government department that is top-heavy in staff. But this is a lean and efficient organisation in an industry that is no longer embattled or troubled and which has had the best school holiday season in seven years in the state’s north.’’
Loose Change has previously commented that there is a case to abolish state tourism bodies in favour of a regional approach however that would require a national approach. Similar comment on this at Queensland Economy Watch: 

Does tourism promotion on a Statewide basis make sense?

The rationale for such state tourism bodies has also previously been questioned by the Productivity Commission. Given yesterday's COAG political debacle on disability insurance the probability of any consensus here is minimal.

Wednesday, July 25, 2012

Weighting our lifestyle on the CPI scale


 
CPI data newly released today is in line with expectations. The headline CPI came in at just 1.2% for the year. The prefered measures of the RBA; weighted median was at 1.9% and the trimmed mean at 2%. These measures reduce the influence of the most volatile items in a period to to better guage underlying inflation.

All measures are at or below the bottom of the RBA target band for inflation of 2% to 3%. Mark the Graph has produced some fantastic charts of CPI sub-groups for the year.

I can only say that I disbelieve the seafood result here unless it is highly weighted to prawns, squid and fish fingers. Obviously Red Emperor does not weight prominently in national consumption?

Tuesday, July 24, 2012

rates ranting revisited

The Blue Marlin Appartment Unit 5. Top floor on righthand side.A quick example of some rates anomalies between different types of property from yesterday's Council budget. Blue Marlin is a small block of 6 units on Vasey Esplanade on 1012 m2. Their land valuation was reduced by 8.7% this year, which is about in line with the average for Cairns as reported in today's Cairns Post : Land valuation swing predicted over next financial year

However, with the valuation rate for unit land being hiked by 23.9% the outcome is a 13.1% increase in the general rate component for owners. A skip and a jump along the street and a free standing house on a small 387 m2 block had the valuation similarly fall 10%. actually the difference between the two is probably in rounding error. The outcome there is a 3% fall in the general rate component.
Same suburb and street. Equivalent valuation outcome. 16% divergence in rates outcome.
The reported comments from Bob Manning in the above link are also interesting: "Mayor Bob Manning said the latest State Government land valuations had impacted rates, with some land values falling by 30 per cent while others rose by 38 per cent." 
I'd sure like to know where the 38% was? As for the values falling by 30% numbers larger than that include Rydges Tradewinds, Holiday Inn, and Vision (Hedley unit block) with associated rate cuts and now some of the lowest comparable valuations on The Esplanade. 





Monday, July 23, 2012

Cairns Regional Council Budget

Cairns Regional Council has released its budget for the 2012/2013 financial year.  Without any analysis there doesn't seem to be too much of interest really, but should play defensively on a spinning pitch until time allows more detailed consideration! Regardless, the operating position is such:


Mind you, the Mayor's speech can only be regarded as somewhat testy and  includes:
It is important for Council in the foreseeable future to start to consider a four-year budget strategy in order to build some discipline around where this term of Council is to take us all. The alternative will lead to a less than optimum outcome.
The current budget preparation has been a somewhat disjointed affair, with the Local Government elections being pushed back a month to accommodate the State elections, thereby leaving too short a time for proper consideration, and then this was compounded with an all too busy and extended Board induction process.
I am not aware that four year budget strategies, and forward estimates, have produced anything beyond misguided propensity for media manipulation and spin? They have more usually become a tool for propoganda by all political parties.

However, I completely agree on the last point. The elections being pushed back a month, also pushing the budget back a month is no different to the last Council. I had cause on an unrelated matter to have a meeting with previous Mayor Val Shier following her election and the same problem existed.

The timing of electing a new Council immediately before having to approve a budget is just stupid? This was well known and the previous Bligh governement failed to act on the bleeding obvious. Moving the Council election was widely proposed but never happened. The biggest problems of the amalgamations is that they were sold as reforms which they were not.

That resulted in the infamous unpromised rate increases after the unlamented Byrne council had failed in matching its cost base with rates policy in its final budget, presumably for entirely political reasons? Rates will always be the most prominent issue of any Council budget and a fave obsession here at Loose Change.

I do have an extensive analysis of this in process if only disaggregated excel files can be aggregated. The 3.7% average rate increase will deliver some anomalous outcomes given divergent valuations. Gordonvale is a winner after distressed receiver sales hammered valuations down 20%. However, I hope there is some understanding in Gordonvale that this will likely be reversed in coming years? The minimum rate increased 3.7% which may include most typical Gordonvale residential properties anyway.

This budget has increased the land value rate for residential houses by 7.6%. Your rate increase will depend on how your valuation was relative to that or whether you are below the minimum rate level. On my own turf the Council responded to plummeting valuations on higher density unit land by hiking the rate payable by 23.9%. That will leave me about line ball with the valuation fall and an almost equivalent general rate component to last year.

However, what a higher rate also does is increase the anomalies. I am aware of units in Trinity Beach which will now be hit with a 14% increase in general rate component while adacent units do not. As previously suggested here the old Park Regis (next to Rydges Esplanade) gets a rate hike while Aquarius gets a cut. That is despite Park Regis owners already paying higher rates than Aquarius.

Situation normal! Ignorance triumphs!



Saturday, July 21, 2012

Delloite Queensland Index: Galah Edition

Delloite Access Economics have released a gala 2012 edition of their Queensland Index. I'm not exactly sure why it's a gala edition, as it doesn't say, and given the definition of Free Online dictionary:
n.
1. A festive occasion, especially a lavish social event or entertainment.
2. Chiefly British An athletic competition, especially a swimming contest.
adj.
1. Marked by lavish or festive celebration: a gala ball after the inaugural ceremony.
2. Characterized by sumptuous social pleasure: the gala life of the very rich.
Perhaps that last description is a reference to Clive Palmer? Never mind. The index itself, which compares listed companies with a link to Qld with the ASX is basically fatuous marketing balloonjuice.

It could be a gala edition because of its effervescent outlook on Queensland despite references to the two speed state:
Queensland’s economy sees the two speed split in Australia writ large. Not only are different sectors doing very differently, so are different cities within the State.
Wow, that's a new perspective?  Cynicism aside, the report is worthwhile skimming particularly for the positive outlook for Queensland and also the contributions on agribusiness and infrastructure funding. The low speed housing sector also attracts comment:
Yet the prospects shown in the chart still aren’t as healthy as they could be. ‘Two speed troubles’ have hit a number of sectors. One of them is the pace of housing construction – a traditional driver of growth for the wider Queensland economy – where the combination of flood replacement, pent-up demand and a bit of Government cash is so far yet to generate much by way of a recovery. Some signs of turnaround are evident in improving housing finance figures, but the real action will be in the levels of building approvals and then housing starts, and so far neither is gaining traction at present.
So what else is needed to start the housing construction revival in this State?
Confidence and population are the keys to turning good prospects into a strong housing sector. The credit crunch that followed the GFC still spooks investors, as does the fear of a repeat performance if the global economy were to stumble. And not only is State population growth closer to the national average than any time since the end of the 1960s, national population growth isn’t that great either.
Yet those negatives are likely to recede somewhat, or even reverse, as the State’s mining development begins to really hit its straps. Once that happens the giant that is residential construction in Queensland may finally return to its usual rude health.
The CRC budget is presented tomorrow. Loose Change has previously commented on the Council policy to target the commercial property sector with relief on headworks charges rather than housing. 

pig trotter smuggling set to boom

There was much excitement this week with the announcement that China Eastern would commence thrice weekly flights from Shanghai. Nobody has been backward in claiming credit including the Cairns Post for breaking the news:
The flights, which The Cairns Post revealed last week, will inject an estimated $35 million a year into the economy.
Related: How The Cairns Post broke the news earlier this month: China Eastern airline to sign off on three Cairns-Shanghai flights per week
Which is odd given that it was posted here a month ago based on reports in The Australian of discussions between the airline and Tourism Australia executives. What hasn't been yet disclosed is the extent of subsidies which should appropriately be public knowledge.

There are also suggestions of increased opportunity for food freight exports. However it was food imports which caused customs confiscations at Cairns Airport from Chinese New Year charter flights, with Bob Katter scathing on biosecurity controls.

With the chinese propensity for packing even pig's trotters in their luggage perhaps there are niche opportunities for local food beyond official freight exports?

Thursday, July 19, 2012

FNQ unemployment stays stuck as Queenslanders take a break from work

The recent unusually consistent unemployment rate for the Far North has continued with the ABS data released today for June. The last 3 months have returned results of 9.3%, 9.1%, and 9.2%. That is despite some positive reports on the current season from Tourism Queensland.

Last weeks national data was regarded as weak and had many pundits peering into their tea leaves on underlying data such as hours worked and participation rates. Conus Consulting noted the odd data for Queensland where unemployment fell because of lower participation rates. The regional stats confirm some odd data particularly in regions such as Gold Coast and Ipswich.

Gold Coast participation rates were 2% lower while the unemployment rate fell from 6.6% to 4.5%.  The Ipswich participation rate fell 4% and male unemployment was an unbelievable 1.2%? Participation rates have been quite stable in the Far North for recent months.

Unusual data was not confined to Queensland and Mark the Graph noted a large jump in the unemployment rate in South Australia. This weeks regional data refute claims that this was because of a Whyalla Wipeout.

Mark the Graph has also posted on gender differences in the labour market. This has been something of a theme here at Loose Change and the updated chart for FNQ is posted below. This is not the unemployment rate but ABS estimates of numbers employed.