Sunday, September 30, 2012

Ships ahoy?

The Cairns Post this weekend has featured the proposals to dredge Trinity Inlet: Ships ahoy as report shows dredging will allow mega liners to dock in Cairns.
A Ports North confidential report on forward projections estimated that by 2015 there would be about 19 mega ships, some on multiple visits, docking at Cairns instead of Yorkeys Knob, doubling to 41 in 2020 and tripling to 61 by 2025. 
This will be "injecting an estimated $436 million into the region’s economy." I love the way things get "injected" into an economy. It excites me almost as much as multipliers! Reporting of "confidential reports" is also always a thing of interest.

The previous post here on this noted that the estimated cost had blown out to between $85million and $110 million according to Minister Seeney. However, the budget estimates since have only provided for the $40 million election promise over the next 4 years. 2012-13: $2.5million; 2013-14: $2.5million; 2014-15: $13.5million; 2015-16: $21.5million.

Perhaps some of that four letter 'D-word' will be considered as funding for a long life infrastructure asset with claimed (but unverifiable) impressive economic credentials?

Cairns Forum has also entered the blogosphere with a post on the cruise ship industry: Is it worth dredging Trinity Inlet?

Friday, September 28, 2012

Tasteless? RIP Jill Meagher

Jill Meagher.

If a woman drinks to excess and is raped or assaulted, is she partly to blame? As uncomfortable and difficult as this question is, the answer surely is yes."- Gavin King, LNP Member for Cairns and  Assistant Tourism Minister.

Some may consider this post  in poor taste. Surely though, how inappropriate, tasteless, thoughtless and deeply offensive the commments were from this member could never be more poignant. As far as I am aware there has never been a truly appropriate apology and retraction?

Lest we forget

Monday, September 24, 2012

Flight manoeuvres

Less than a year ago Fred Ariel from Raging Thunder was calling for direct flights from Singapore as a priority to provide a more effective link for "high yield" European travellers into Cairns. Ariel was less than enthusiastic about Asian tourism:
"That's fine but it's profit-less volume numbers. They are not looking at the dollars," he said.
Reef Casino would probably disagree given that they have already placed their chips on a China strategy.

Last month Jetstar announced they were withdrawing from negotiations for direct flights on the Cairns - Singapore route. Just a week later Qantas announced a codeshare alliance with Emirates. Qantas will no longer fly to London via Singapore and will instead fly from our southern capitals via Dubai linking into the Emirates network to a multitude of European destinations while they continue the Qantas service only to Heathrow.

That doesn't mean Singapore does not remain a critical hub in Asia. British Airways have announced tthat they will continue the 'kangaroo route' service via Singapore when Qantas end that alliance to move to Dubai. It is inevitable that Fred Ariel will get the direct (budget) service from Singapore well before his other famous project of a water pipeline from the PNG highlands to Brisbane.

However a recent report in the SMH refers to Guangzhou  as the "new kangaroo route": Spoilt for choice.
According to its chief executive, Tan Wan'geng, nearly half the passengers on the new CS service from Guangzhou to London are from Australia and New Zealand. Guangzhou is the ideal transit stop for what he calls the new "kangaroo route".
Guangzhou in Canton is the home base for China Southern, the largest international carrier in China, who will also commence a trial service into Cairns later this year. So that  European route into Cairns may be as likely via China as Singapore!

Ben Sandilands writes the  Plane Talking blog at Crikey and has been a commentator on aviation issues for a long time, having previously been at the AFR. A recent post on the Qantas Asian strategy has some relevant comment for Cairns: Where next for qantas.

As the Chinese would say: "May you live in interesting times".


Friday, September 21, 2012

A sugar-hit fade

Sugar prices have retreated over the past year after a period of high and volatile prices, only briefly interrupted by the GFC collapse. With many pundits forecasting an optimistic outlook for agriculture I just thought I would post the 20 year price chart for sugar, the most significant agricultural commodity for the Far North. Although I haven't been able to get my settings to adjust this into $AUD for some reason ......

Structural change and Asia

A conference on Structural change and the rise of Asia was this week hosted by Treasury, the IMF and the RBA.  Presentations to the conference (available via link) may be of interest however most of the media reporting seems to be of the panel discussion (no transcript available) with comments from the IMF’s deputy director for the Asia Pacific region, Takeda Masahiko particularly relevant for the Far north reginal economy:

Making more of Asian century
Meanwhile, the IMF’s deputy director for the Asia Pacific region, Takeda Masahik,o suggested Australia needed to focus on its strengths and Asia’s weaknesses to make the most of the '’Asian century’'.
Australia should take advantages of its natural advantages, including resources, agriculture, tourism and education.
‘‘You need to see how different you are and make use of what’s strong in Australia,’’ he said.
But he said Australia also needed to take note of Asia’s weaknesses and to provide support to ensure emerging economies continued to grow.
He said Asian countries faced challenges in developing infrastructure, boosting productivity and utilising environmentally-friendly technology.
‘‘Unless Asia can overcome these challenges, there is a view that it might end up in what’s called the ’middle-income trap’,’’ he said. ‘‘If you look at the weaknesses of Asia and have found some areas where you can offer support that will help meet the demand on both sides so Australia and Asia can prosper together.’’
Dr Takeda said growth in Asia’s emerging economies were expected to slow in the short term as a result of the global downturn but the IMF still expected China’s economy to achieve a ‘‘soft landing’’.
Comments here are not inconsistent with some previous posts at Loose Change.

Cairns Chamber Letter

There has been some controversy this week around criticism of the new Cairns Regional Council by Anthony Miritsos of the Cairns Chamber of Commerce, as reported in the Cairns Post, and the response from Bob Manning. There would clearly appear to be some tension and politicking happening between Council and the Qld Guvmint. This is the full letter to Chamber members from Mirotsos circulated yesterday:


20 September 2012

Dear Members and Valued Business Colleagues,

I’m sure you will have noticed the commentary surrounding last week’s Cairns Chamber State Budget response, particularly as it relates to our Regional Council.

As your President, I back away from none of it. My role is really very simple – to translate the thoughts and feelings of the Cairns Chamber membership to external audiences. And the overwhelming feeling of our membership at the moment, in relation to the Cairns Regional Council, is one of frustration. The current CRC leadership went to the local elections knowing that there had been a change of government. They went to the election promising to hit the ground running. They talked of a seamless transaction from state to local administration in relation to getting work happening. They did not go to the electorate, let alone the business community, saying ‘give us whatever amount of time’ before we can start creating action outcomes for you.

Let there be no doubt that we believe the new state government is far better positioned than the previous administration to ‘get the economy back on track’. But the simple fact is that while the Newman administration set clear 100 day targets, published and articulated them widely, then hit the vast majority of them, our CRC leadership appears to our members to have listed and achieved very little in the same space of time.

To be fair, the local budget has spared our rate payers an average 8% rate increase, and under Mayor Manning rates are up only 3.7%. We applaud this move, as it’s clear, decisive and positive for business and the wider community. Ten out of Ten.

Cairns Chamber members want the Mayor to make clear pro-business decisions and shout them from the rooftops. But that’s clearly not happening. Members want him to engage more with the business community and to work with us to set and achieve new goals. For example; at the Cairns Chamber lunch this week, Mayor Manning who was in attendance could have stood up and said anything he wanted about his current position – but instead, many members commented on his lack of response, his-folded arm lack of engagement and his apparent despondency. This doesn’t send a positive message to our members.

The State Government started their budget too with the cupboard bare but they were still able to announce some positive initiatives and show us how and why the tough decisions were made. The messages were clearly communicated to us and they were able to articulate where they were being proactive, with limited dollars. The message we are receiving from our local government is much more reactive. We’re not blaming the local government for the lack of dollars – we know times are tough – but what we want them to do is to tell us what they plan to do about it and to take a leadership position and articulate a vision to the business community.

To make our position crystal clear:

•     We support the state budget, and totally agree with the pathway and foundation that it
      provides. Thank goodness we now have a vision from our state government.
•     We believe that the physical dollars in the state budget are not enough to help us dig
      ourselves out of the hole our local economy is in. We never withdrew our support, nor
      did we recant our position.
•     However, the reality is that the first two points remain meaningless without a local
      council that is prepared to lobby hard for us, make some decisions they’ve already
      promised they’d make, and actually convert some of their thinking into doing. It’s vital
      that they be proactive rather than reactive and show some action. We are looking for
      jobs not more reports and studies.

I simply don’t believe, and neither do members, that council can’t actually do anything until they have funding and other commitments come down the pipeline from Brisbane. That’s exactly the story the last council ran, and precisely the story the current administration campaigned against.

I have respect for both the CRC leadership and the Mayor. But it would be remiss of me as your President if I didn’t stand up for what you believe to be the frustrations that many in our business community are having with our local authority in relation to local issues.

The Cairns Chamber has already tried to engage with the Mayor, inviting him as soon as he was elected to meet with the Cairns Chamber Management Committee and begin building a solid working relationship. It took nearly 4 months for him to say yes. We know he is busy, but you’d think he’d be interested in at least engaging with the Cairns Chamber Management Committee. When he did meet with us, we were disappointed with his low level of engagement and frustrated by his lack of vision and limited clarity on what he is doing.

The bottom line is this - We want:

•     More communication from the Mayor’s office directly to the business community.
•     The opportunity to meet regularly with the Mayor and discuss business’ priorities.
•     A Cairns region vision that is very clear and that has an associated action plan for how
      things will be progressed and achieved.
•     Clear, ongoing information to the business community about what decisions are being
      made, and what initiatives are being implemented, how and when.
•     Whatever is being done - we want it shouted from the roof tops so businesses know
      what is actually happening and can plan and manage their operations accordingly.

To play our part, we are prepared to work with CRC in the following ways:

•     We will host a function, at our cost, and give the Mayor an opportunity to present his
      plan of action and to articulate his vision to the business community.
•     The Executive Subcommittee of the Cairns Chamber’s Management Committee is
      prepared to meet with the Mayor monthly, or more regularly if required, to build an open
      line of communication.
•     We will communicate the Mayor’s messages to our database of 4000+ business
      contacts as he articulates his vision, his decisions and his council’s progress.

Yes it has been tough and the Mayor has been dealt a difficult hand, but let’s get some runs on the board. Great leaders, even in tough times, take a strong position and show vision, action and leadership.

In closing, let me thank each and every one of you for your conversations and other communication.

We have been inundated with positive support from members, and where the feedback is negative, we are listening and will reply to these messages as well. It is only by you raising your concerns directly that your Cairns Chamber Management Committee and I as your President, can make sure your voice is heard.

Yours sincerely,

Anthony Mirotsos

Cairns Chamber of Commerce

And on behalf of the entire Cairns Chamber Management Committee.

Tuesday, September 18, 2012

Bond markets give Fitch the finger?

There were good intentions to comment further on the recent Queensland budget but the best opportunity for a timely response has now passed. There was some interesting commentary which also included a scathing report for the ACTU by Bob and Betty Walker on the Costello audit. Selected highlights:

The Walkers: Review of the Costello Report
A curiosity of the Costello Report is its attitude to budgeting for capital works. It adopts the stance that capital works should be funded without borrowing - disregarding the fact that infrastructure assets are long-lived, and benefit not only the current generation of taxpayers but also future generations.
 Prof Quiggin: Profligacy for everyone except the Public Service;
Audit Commission Review

Measures like this are par for the course for state budgets, but not what you’d expect from a government faced with a fiscal crisis, comparable to Greece or Spain.
The government has fiddled at the edges on revenue, but is doing nothing (or even adding to the distortionary concessions) on payroll tax and land tax.
In essence, the government is relying almost entirely on cuts to the public service, focused on the health sector. This is a high-risk strategy to put it mildly. It may well be that the health bureaucracy is bloated and inefficient, but that doesn’t mean that creating a new layer of regional management is going to improve things, especially when their first task is to implement arbitary cuts in the number of nurses and other employees. Campbell Newman says his promise that “frontline jobs are safe” now means “frontline services won’t be affected by job cuts” but this is just wishful thinking. There hasn’t been any analysis of how to improve efficiency, just an edict that numbers need to be cut.
Gene Tunny: LNG the hero of the budget 
With a third LNG processing plant coming on-line after the end of the budget forward estimates in 2015-16, the Government potentially will have several billion dollars in LNG royalties from 2016-17 to the end of the decade that it can use to fund its commitments at the next election. Hence I expect the fiscal austerity will only be temporary.
 Ben Eltham: Welcome to Austerity
The LNP's determination to cut spending while holding revenue flat is an ideological decision.
Peter Costello
"As I said in my report, you'd have to do something on the expense side, and you'd have to do something on the revenue side. Did they take my advice ? They took some of it. But they're the government, they're entitled to do that."

Despite the budget austerity last week Fitch Research came out and further downgraded Queensland's credit rating from AA+ to AA which seem to be based on concerns about revenue forecasts. This provoked a political blame game including some facebooked "quotes" from the Fitch statement by the member for Cairns which demonstrated his previous journalism skills at News Ltd of not even being able to accurately cut & paste a simple quote!

Queensland Economy Watch has suggested that next time they come visiting Treasury officials should starve the Fitch people of the cream biscuits! This pretty much seems to be the approach already of QTC which, despite the political attention, doesn't even bother to refer to Fitch in any publication.

This weeks update from QTC makes no mention at all of the downgrade from Fitch during the week? Movements in bond yields during the week reported by QTC:

QTC Bonds:   3 year 3.43%  +2 bps
QTC Bonds:  10year 4.34%   -6 bps
Aust Govt bonds:  3 year  2.71%  +15 bps
Aust Govt bonds: 10 year 3.28%  +8 bps

So, Fitch downgraded, and the spread with the AAA rated bonds narrowed rather than the reverse! Not that this is now unusual as reported yesterday at Bloomberg: French S&P Downgrade Was Upgrade in Investor Repudiation:
"The nation’s 1.07 trillion euros ($1.4 trillion) of debt maturing in a year or more rallied 7.4 percent since it was downgraded to AA+ on Jan. 13, more than double the gains for the rest of the global government bond market, and beating AAA rated Germany, the U.K. and Australia ........"
"France’s performance shows investors have determined the analysis done by ratings firms on the world’s biggest nations to be irrelevant. U.S. borrowing costs tumbled after the biggest economy was stripped of its AAA credit grade 13 months ago. About half the time, government bond yields move in the opposite direction suggested by new ratings, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back to 1974."
Which makes it all the more curious to discover this op-ed today at the Brisbane Times:  Newman forced to make tough choices because others balked:
"There are many measures that you can use to quantify a state’s performance. To avoid an overly academic debate, in Queensland’s case the most relevant is the opinion of the credit rating agencies."
What planet has this person inhabited for the last 4 years? I haven't heard anybody make a statement giving any such credence to the rating agencies at least since Lehmen collapsed?! Actually, this person recently worked on the LNP campaign for Brisbane City Council. What is the BCC debt again??

Ole' Queensland Bonds?

We must exterminate the Japanese?

Islamic protests in Sydney may have dominated our media in recent days, however perhaps with the much extolled imminent arrival of direct flights, racial tensions in China this week should be of greater concern for Cairns?

The photo of an Audi dealership in China is quite amazing. There are reports of Japanese targets in China being attacked. The US Defence Secretary has also expressed concern at the rising tensions.  It is quite clear that protests in China are state sponsored .

Japan remains a significant and welcome inbound tourism market and census numbers show the Japanese community among the largest ethnic resident populations in Cairns.

Apparent employees outside an Audi dealership with a banner that reads in rhyming verse: 'Even if China becomes nothing but tombstones, we must exterminate the Japanese; even if we have to destroy our own country, we must take back the Diaoyu Islands."

Thursday, September 13, 2012

Participation drives up unemployment

The regional employment data from the ABS has returned to volatile form for August with the headline unemployment rate back up to 10.3%. However, this was entirely driven by the participation rate which also jumped 66.8% to 70.3%. The biggest contribution came from male unemployment which spiked up to 12.2% which is the highest since the early months of 2011.

The estimates for number of people employed was actually positive and increased by 4,400 to the highest level since June last year. It is to be hoped increased participation and employment finally reflects anecdotal observations of stronger tourism in recent months, with a strong recovery in female employment noted. However it would be wise to be circumspect given this volatility, and unreliability of monthly regional data.

Update: Conus Consulting analysis is also sceptical of the monthly numbers. As usual the ABS data also includes a sample warning on female data for Far North. Reporting in the Cairns Post may be interesting.