Saturday, August 31, 2013

Super Cheap at 48% Interest

Browsing the ASIC website for an entirely different reason this was stumbled upon:

13-228MR ASIC commences legal action against Cairns-based lender and broker
Monday 26 August 2013

ASIC has taken legal action against a Cairns-based lender and broker who offered high-interest credit contracts to consumers in one of Australia’s most disadvantaged local areas.

Proceedings have been filed in the Federal Court of Australia in Brisbane against Channic Pty Ltd (Channic), Cash Brokers Pty Ltd (Cash Brokers) and the sole director of both companies, Mr Colin William Hulbert.

ASIC alleges that Channic and Cash Brokers breached the responsible lending laws that apply to lenders and brokers licensed under the National Consumer Credit Protection Act 2009 (National Credit Act).

ASIC alleges breaches of responsible lending obligations and instances of unconscionable conduct occurred in relation to a series of loans given to consumers for the purchase of motor vehicles from a Cairns-based motor dealer.

Cash Brokers assisted consumers obtain loans from Channic at 48% interest per annum to enable them to purchase vehicles from Ang Hulbert & Associates Pty Ltd, trading as SuperCheap Car Sales (SuperCheap). Mr Hulbert is also the sole director of SuperCheap.

ASIC alleges SuperCheap’s advertising targeted consumers on low incomes or in receipt of Centrelink benefits and those with bad credit histories. Advertising included a flyer noting, ‘Centrelink Income OK, Single Parents OK, Bad Credit OK, Ex Bankrupts OK, Defaults OK.’

ASIC’s claim identifies 10 consumers, who it alleges were given loans that were unaffordable and not suited to their requirements. ASIC has sought civil penalty orders against Cash Brokers, Channic and Mr Hulbert, as well as compensation for the 10 consumers.

‘The responsible lending obligations are some of the most important features of the National Credit Act and are designed to protect consumers from being given loans that they can’t afford’, ASIC Deputy Chairman Peter Kell said.

The proceedings are listed for a directions hearing in the Federal Court in Brisbane on 8 October 2013.

We do still seem to feature quite regularly in ASIC actions, of all types, and there was also action earlier this year on Same Day Lending: 13-045MR ASIC cancels Australian credit licence of a Cairns money lender and bans director for four years.

Note: I understand there may be other businesses in Cairns which include "super cheap" in their business name and there is no indication or inference that these may be associated. It is NOT SuperCheap Auto.

Retail octopi spread tentacles

Competition between the demonic duopoly continues to drive expansion strategies: Coles and Woolies plan to create 2,000 jobs in Queensland.

Woolworths has plans for 9 new supermarkets which presumably includes the Gordonvale store recently approved by the court.  The proposed Central Park development to be anchored by Woolworths in the CBD is reportedly not affected by the recent appointment of administrators and receivers to the businesses of HS Vision.

Coles plans include 5 new supermarkets and refurbishment of 11 existing stores in Queensland this year. While any proposals for Cairns are not specified Coles has been active:
Coles spent $20 million over the last four years to tweak its Cairns offering, where it now employs more than 1000 people across 11 stores.
The Cairns Central store is certainly in need of refurbishment and will need attention if the nearby Central Park development does proceed. An interesting aspect here is the adjoining Bi-Lo store in the centre.  Prior to the Wesfarmers takeover Coles had been in the process of rebranding all Bi-Lo stores as Coles.

There are now just 45 Bi-Lo nationally and 9 in Queensland. With Cairns Central the largest of the lot the strategy from Coles here for this adjoining space will be interesting. I also posted last year on reports of a proposed centre expansion of Cairns Central.

The possibility or retail deregulation may also be a factor in expansion plans with a recent post on this at Queensland Economy Watch: 24 hour retail trading inevitable and desirable

That factor may not be so significant in Cairns where we already enjoy more liberal trading hours as a tourism centre.

Friday, August 30, 2013

No "news" Cairnswatch

The CairnsWatch report for August from Rick Carr at HTW was posted today. Which tells us nothing much that we didn't already know.  That's not meant to appear snide just that the most significant stuff has already been well covered here and elsewhere so while a monthly summary may be useful for at least us wonk junkies this is no longer "news".

The "news" again not expected to be reported is the continuing decline of the Cairns Post job ads into irrelevancy as any kind of indicator. Today the Cairns Post also proudly announced that they had won an award for best daily newspaper with circulation below 25k. No, it is not April fool's day!

Monday, August 26, 2013

Farmers Markets in Queensland

There is much interesting information in Australian food statistics 2010-2011. The fears of Bob Katter that Australia is at risk of becoming a net food importer seem to be as deluded as would be expected and the Far North is a leading agricultural region:

Also included is a report on Social and economic dimensions of farmers markets in Australia (page 50). A curious aspect here is the very low number of such markets recorded in Queensland:

The 2011 data comes from the Australian Farmers Markets Association. There is no Queensland contact listed so I'm not sure if these numbers accurately reflect Queensland. There is also a quite pure definition of a farmers market:

The following Markets are recognised by AFMA because they are committed to the principles of the AFMA Charter and best practice operating standards. Best practice farmers' markets are food markets where the stallholders are the farmers, their families or farm staff. Resellers are not permitted. The emphasis is placed on farm-direct and artisan-made food sales. Plants, seeds, flowers, worm farms, compost, fodder -  and small livestock like poultry are also included, but craft items are typically excluded.

That would certainly exclude a market such as Rusty's. A curious anomaly I may send out a query.

Sunday, August 25, 2013

What value franking credits for the punters?

My thanks to Leigh Dall'Osto for her Facebook post of email comment from barefoot investor Scott Pape on the coalition PPL policy and also congratulatons on the birthday success of Plan B! The issue was on complexity of policy related to imputation credits to fund the rather generous coalition policy is an impost on self funded retirees. 
At risk of stuffing up I will have a go here. The dividend imputation system was introduced by PJ Keating to eliminate ‘double taxation’ of company profits. Where a company has paid tax on profits and an investor receives a dividend from those taxed profits the tax that has already been paid at the current 30% rate is credited to the investor. This creates different circumstances depending on the tax rate of the investor and the ‘franking credits’ created are particularly valued within superannuation where the tax rates are below the company tax rate.
The proposal here is to cut the general company tax rate from 30% to 28.5% but then to impose a 1.5% levy on any taxable company profits Above $5 million. The issue is that as a ‘levy’ and not a ‘tax’ that 1.5% will not flow through to investors as an imputation tax credit. I think that is what Scott Pape hasn’t made clear and also that it has some effect on not just retirees but all investors in Australian equities, but maybe I am equally opaque? 
How significant is that effect? Well if you are an average person in a default balanced super fund such as QSuper you may typically have about 30% in Australian equites. Based on some broad simplistic assumptions of 5% dividend yields fully franked it may reduce the total income yield return to the fund by about 0.03% -0.05% (percentage points)  depending on assumptions re other fund investments. That will be higher for retirees in a pension phase but is not going to be the most critical issue to consider in your retirement funding and you should probably be more worried about management fees.
The most critical aspects of this PPL proposal are equity, productivity as well as cost but the detail of this particular funding aspect is really rather secondary I reckon.

Consideration of this particular aspect belongs in broader tax reform. Nicholas Gruen has previously suggested that the company tax rate can be cut to 20% if imputation is abolished with consequent reductions in the cost of capital and economic benefits. Would that make investors better or worse off? Dividend imputation - $20bn for the taking

Update from Joshua Gans:  Is the Coalition’s Paid Parental Leave Scheme fair?

Thursday, August 22, 2013

Domestic flyers surge in July

Domestic passengers at Cairns Airport surged in July to a new high of 369,700 368,043 (arrivals + departures ex transits). July is typically the seasonal high and that represents an increase of 7.6% on July 2012.

In growth terms there has been a recovery in the last two months from some previous weakness with growth in June and July returning to the 12 month average moving average.

However the strongest growth months in the past year above 10% have been the eclipse related October and November and then Chinese new year in February (Chinese lunar new year started in January the previous 2012 year). As previously suggested those growth numbers may be difficult to sustain in the latter part of the year.

The International terminal remains problematic. As posted last month reporting of numbers re domestic and transit travellers has changed this year so I haven't graphed this: Airport update for June. While the airports own graph shows some rebound in July from previous Jetstar schedule disruptions there as yet remains no indication of any growth trend.

China Eastern direct flights are also due to commence a seasonal hiatus this month until November:

Reef Casino (just?) misses guidance

Reef Casino has reported a 29% rise in first half profit as reported in the Cairns Post: Reef Casino records 30 per cent jump in profits.

 The trust has reported a distributable profit of $5m for the first six months of 2013, up $1.1m on $3.9m in 2012, a 29 per cent rise.

I don't want to be pedantic on minor selective rounding and the reported result was actually a 29% increase to $4.978 million.

As recently posted here at FNQ lifts Mantra Group the guidance from Reef on June 19 was that "Our current estimate of the distributable profit* for the first half year from 1 January 2013 to 30 June 2013 is between $5.0 million and $5.4 million."

So Reef seem to have actually just slightly missed or at least be at the very bottom of their June guidance. Also as previously posted the upper level of the Casino was closed for renovations in the previous corresponding period so relevance of direct comparison is difficult.

There was nothing exceptional in the commentary to note on either performance or strategy and nothing at all on the Aquis Casino proposal. casino commentary included:

Casino visitations: The casino recorded a 12.0% increase in visitations compared to the same period last year. Both our “locals strategy” and “China strategy” contributed successfully to this growth.
Table games: Total revenues were up 15.1% compared to the same period last year with good patron support from local, domestic and especially international tourist (mainly China) markets. Premium play recorded a win rate close to “theoretical”.
Electronic gaming machine turnover was up 4.3% with revenues up 1.7% compared to the same
period last year. Patron support from local and domestic markets remained solid. The “hold” or
“win” rate was however slightly lower than last year reflecting short term variability particularly
in the timing of jackpots.

Reef  Casino Trust had a difficult history in the earlier phase before rebounding from a corporate restructure. RCT recovered from the GFC hit in 2012 but that seems to have stalled in recent months.

 RCT 10 Year

Update: Echo Entertainment also released results today which included commentary on approval for the rival Packer high roller venue at Barangaroo in Sydney. Results for their Queensland Jupiters Casino operations have been reported as weak.

Tuesday, August 20, 2013

More Northern (Wet) Dreams!

Kevin Rudd has joined the Coalition in the northern 'vision thing' with a proposal to turn the NT into a special economic zone: Rudd’s bait for the north – a big cut in company tax

The proposed zone would be confined to the NT for constitutional reasons. WA Premier Colin Barnett has expressed concerns as has the Townsville Mayor: NQ worried about NT plan. There is further opinion on the concept linked there from Gene Tunny but an award for cynicism definitely goes to top ender Ken Parish at Club Troppo: Bogan sheilas and stupid men with beer guts.

Ken relates a previous failed attempt at a trade development zone within the Territory and concludes:
That is not to say that the Territory lacks any opportunities for industrial development at all, but they are niche opportunities that can only generate relatively gradual incremental growth. That is, unless Rudd or Abbott is willing to ignore inevitable mass outrage and do a deal with the Americans to position very large US defence bases here. That would certainly kickstart rapid major growth. Apart from anything else, we could use it as a platform to nurture a brothel-led recovery, which could in turn lead to wider synergies. We could encourage the development of a porno movie industry in Darwin. Of course, the acting talent might be a bit thin on the ground, but we could always target the niche market of people who are kinky about hot sex between Bogan sheilas and stupid men with beer guts.
There could be similar brothel-led growth opportunities for Cairns with the proposal for a large Macau-style casino development at Yorkeys Knob even without such tax concessions: Police Bust More Than 100 Hookers At Las Vegas Sands' Venetian Macau

Previous posts: Insurance: missing word in Coalition policy? ; Ministry for Northern Development

Great moments in statistical analysis (reposted)

Executive pay of Australia’s top 200 companies against total shareholder return 

Graph for The myth of pay for performance
Updated: Aurizon boss Lance Hockridge pockets 34% pay rise
Aurizon (QR National) chief executive Lance Hockridge received a 34 per cent rise in his total pay package last financial year to $6.1 million, making him one of the country’s highest paid executives.
The disclosure today of the senior management team’s pay in the company’s annual report came as Australia’s largest listed rail company posted a 1 per cent rise in annual net profit to $447 million.

Sunday, August 18, 2013

Paying off Queensland's debt $5 at a time?

The Courier-Mail and Cairns Post have run a yarn on opening up national parks to eco-tourism: National park opening will give huge camping access to Great Barrier Reef

TOURISTS will be able to camp on dozens of unspoilt atolls on the Great Barrier Reef under a Newman Government plan to cash in on the state's pristine beaches, rainforests and national parks.
Minister Steve Dickson said a helicopter would fly the tourists to the coral atolls, where they would be able to camp for $5 a night.
Minister is on a mission to pay back debt:

"Unashamedly, I am looking to make money out of this," he said.
"The debt of Queensland is $81 billion and we have to think of innovative ideas out of the box.
Presumably that fee doesn't include the helicopter and at $5 a night we should be debt free in no time!?!

Saturday, August 17, 2013

FNQ lifts Mantra Group

Thanks again to Conus for a post which passed me by last week: Mantra Group results highlight FNQ recovery.

The 2012/13 result represents a 5% increase on profit (YOY) and can largely be attributed to the Group’s Queensland leisure properties with North Queensland region in particular posting a profit uplift of 38%.  The region experienced a significant increase in average daily rate (ADR) of 8.7% and consistent occupancy levels in both non-peak and traditional peak seasons.
Mantra Group CEO, Bob East, said the region’s attractions coupled with a fall in the Australian dollar and growing inbound markets were behind the region’s success.
“Australians were looking for the ease of a domestic holiday in a destination that offered a diverse choice of experiences.  The combination of natural attractions, family friendly accommodation and great food and wine combined with the fall in the Australian dollar benefitted the region,” he said. 
“We are also seeing continued growth with the Chinese market and other emerging markets travelling to the region.”
Mantra Group has three Peppers and eight Mantra resorts located in North Queensland. 
A half yearly result from Reef Casino should also be due in the coming weeks. Reef declared a distribution for the half in June and indicated a distributable profit result between $5.0 and $5.4 million. The 2012 full year profit was $10.8 million which comprised $3.9 million in 1H and $6.9 million in 2H. However the upper level was closed for renovations in 1H and 2H is typically the stronger trading period.

Performance update and commentary from Reef will be interesting particularly given the "only slightly bigger than Crown" Aquis Casino proposal from Tony Fung at Yorkeys Knob.

Friday, August 16, 2013

FNQ employment spin and substance

Regional unemployment numbers were released by ABS yesterday which didn't really provide much change from recent trends but was reported in the Cairns Post:

Jobs on rise as tourism surges
According to the Australian Bureau of Statistics the workforce totalled 138,200, up 5100 on June and 6700 more than this time last year.
The seasonally adjusted and trend series from Conus remains the preferred analysis:

 FNQ Unemp; headline down, trend up and PR confusing everything
The rollercoaster ride for FNQ's jobs data continues but we believe that the Trend data paints a somewhat clearer picture of a gradual slowdown in jobs growth. The working age population in the region is growing at an annual rate around 2.25%. We will need to see trend employment growth beating that (excluding volatility in the Participation Rate) to get a consistent decline in the Trend unemployment rate.

To be fair to Nick Dalton he actually appears to have tried harder with this report and even makes reference to a trend unemployment rate and a somewhat confused attempt at this months participation rate effect in my view. However, he continues to report monthly movements as meaningful rather than statistical noise and most annoyingly continues to confuse the number unemployed with the dole!

There is also a problem with that YoY jobs growth in the Post. I had to check my spreadsheet and sums: July 2012=134,600; July 2013=138,200; 138,200-134,600=3,600? Somewhat less than the 6,700 reported in the Post? Oh? The 6,700 would be a comparison with the previous June, not July! Better luck next month Nick!

The Queensland Government Statistician has again released their regional update which uses a conservative 12 month moving average. I have updated a few graphs and the 'trend' line in these is also a simple 12 month moving average.

Note: With regards unemployment statistics last weeks post on the national data from Grogs Gamut is also recommended: how to put spin on a front page:
As I say, trust nothing you read (including my blog, I am not perfect, and certainly not unbiased), get a second opinion. Verify. But realise that one news organisation has bet all their bickies on a Tony Abbott win. That doesn’t mean we should assume everything they write is a lie – they don’t “lie” and I would never suggest they do. But as we have seen today, they can cherry pick data as good as any politicians can. I suggest you treat their statements with the same level of scepticism. And seek out the full picture.


Thursday, August 15, 2013

Open season for statistical nonsense?

The election has apparently brought an open season on statistical abuse. Conus at Mission Beach hooked a big fish this week from Rupert's flagship and then landed it with assistance from Grogs Gamut:

More deliberate misrepresentation from "The Australian"

Election 2013: Day 10 (or, I’m 70% confident there’s a preference for bias)

Recent reports in the Cairns Post citing various ABS data which could not be easily verified had been noted. This week the Post followed up on the serious topic of affordable housing and homelessness:

Affordable housing shortage now crisis

In no way do I wish to be critical of the work done by Anglicare for the homeless in Cairns or the seriousness of the issue. Indeed I would fully support their comments on the inadequacy of Newstart Allowance which actually entrenches homelessness and long term unemployment.

However some of the methodology and comments are significantly misleading. Anglicare did a survey of online rental vacancies over a weekend. They then compared this with the census data from 2011 and then decided:
"The most startling figure is that on census night 2011 the median rental weekly rent was $240 yet in the survey of nearly 800 rental properties just two years later it is $336," Mr Roberts said.
Comparing two different data sets like this is NOT wise. What Anglicare did was look at online advertised rentals. I did this too and what you come up with is a current median not far distant from Rick Carr's CairnsWatch reports. This quarterly data is derived from the Residential Tenancies Authority.

The RTA data provides a breakdown based on rental bonds for rental properties by number of bedroom and type of property and also number of new rental bonds each period. CairnsWatch then derive a weighted median from this. Note: they are new rental bonds for each period so will lead the trend as will advertised rates. One would have thought this pretty good data and worthwhile further exploration actually!

However what it also shows is that the reported weekly RTA rent for the 2011 census period as indicated by the CairnsWatch weighted median was about $40 or $50 above the census number. There are several good reason why this could/should be so and a quick look shows that the RTA number was typically above the census for any region.

Here are the RTA numbers for the various components in the Cairns region (ex Douglas) over the last two years with nothing like the reported $96 crisis increase in any component:

Jun Qtr 11 Jun Qtr 12 Jun Qtr 13
Rent New Bonds Rent New Bonds Rent New Bonds
1br unit $195 401 $185 436 $200 394
2br unit $250 928 $255 855 $270 819
3br unit $330 181 $330 153 $340 158
2br townhouse $230 128 $235 118 $240 110
3br townhouse $300 28 $290 30 $340 19
2br house $280 39 $290 57 $285 54
3br house $310 443 $320 444 $330 451
4br house $370 399 $390 419 $395 364

 Never mind, the Cairns Post then followed up with an editorial that the median rent had shockingly risen from $240 to $336 in two years based on a comparison of the census with real estate advertising rather than the consistent series in the RTA data.

My respect for Anglicare and its worthy mission with the homeless prohibits more robust language on the veracity of this study.

Note: This was published in the fish'n'chip wrapper edition as a "Nick Dalton exclusive". Perhaps that's why Anglicare failed to respond to a polite request for a copy of the study? There are also some other numbers here not verified in the quoted source? Previous post: Homeless numbers daltoned

Wednesday, August 7, 2013

The baccarat boom?

There are many interesting aspects to the current proposal for the Aquis Casino in Cairns. Not least is that the related gambling boom in Macau is based on a single game, baccarat. Within that the VIP sector deliver almost 70% of all Macau gambling revenue according to the regulatory authority in Macau.

Take out all baccarat and the rest in Macau is only about 10% including pokies!

Well that should all be sustainable then?

Monday, August 5, 2013

A tale of two markets

The latest CairnsWatch report includes special topics on residential land supply and residential apartments. Land supply in the HTW survey has reduced to 657 lots with increasing sales, however as posted previously there is a substantial stock of approved lots outstanding and an anticpated rebuild of supply is noted.

Residential apartments are a different story:
The Cairns new unit market remains in the doldrums, with just 71 sales of new residential units occurring in the past year, mostly of leftover stock from long since completed developments.
Unsold residential new unit stock has fallen to 174 units at the end of June 2013, due to progressive slow absorption and an almost complete lack of new construction.
The Cairns Post has reported on this sluggish market for units with the finger again being pointed at body corporate and insurance fees. The chief advertorial writer has included promotion for a building of 12 units in Buchan St being advertised as "the only brand new units in Cairns" featuring low fees.

I wandered along to the open house on Sunday morning and can't say I found the offering particularly appealing, a box off Mulgrave Rd in Westcourt, despite the relatively low estimated ongoing costs. At  $325,000 to $385,000 for two-bedroom properties in that location I don't think it would be hard to find better long term value at the moment.

The Cairns Post followed up with yet another report on strata insurance although I found this somewhat confusing and not sure equivalent numbers have been used for some comparisons there. It also displays again a naivety on complex insurance issues which has taken the debate down a dead end of impractical solutions never likely to be implemented.

Rick Carr has also provided material from his recent Cairns Chamber Presentation and the HTW Monthly also provides a national roundup including commentary on cairns property markets.

Update: The Cairns Post has followed again today with another yarn on strata insurance. This one seems as much part of the start of the political campaign as anything and the calls for Federal intervention seem to ignore that most of the solutions currently proposed by Entsch relate to State issues. A topic for another post!

Friday, August 2, 2013

Viva Yorkeys Knob!

Obviously the topic of the day and an email through tonight from Cairns Chamber of Commerce finally provided a schematic with enthusiastic supportive commentary. I have resisted any comment because I have mixed feelings and think it actually deserves more considered commentary than it is currently being given particularly regards the comparative scale of the gambling facility in relation to the population! This seems to have actually been specifically avoided in the Chamber communication for some reason? Problem gambling in Macau.

P.S. At the very least that central structure in the lagoon should provide an excellent navigational aid for landings into Cairns Airport?

Thursday, August 1, 2013

North rules!

Building approval stats released this week were regarded as less than spectacular.

Queensland Economy Watch provides the sunshine state perspective: Still waiting for building industry recovery

Conus notes volatility in the national and state data and also includes a trend series for our local regions: Highly volatile units approvals push total down

In our local SA2 area data Cairns-North (234) surpassed Cairns - South (178) in number of approvals for the year led by Trinity Beach-Smithfield (129). No chance of any unit driven volatility in the Cairns data where that duplex in Bentley Park remains the only approval for the year. Someone should give that person an award!

ABS also published some info and stats on home ownership with Cairns LGA the lowest among large Qld metropolitan and regional councils with a 57% ownership rate.

Homeless numbers daltoned?

The State of Australian Cities 2013 report was released yesterday. The focus at the Cairns Post was on the homelessness statistics: Cairns' homeless shame after survey reveals 2300 on the streets

A demographic study has revealed 1.6 per cent of the population, or 2303 people, are living on the streets; the highest proportion of Australia's 18 largest cities. The next highest is Darwin, 1.1 per cent (1359).
However, it could be even worse says the head of the Cairns Homelessness Planning Leadership Group:
Prof Babacan said the statistic neither included the "hidden homeless", those who lived in overcrowded homes and "couch surfers", nor took into account the numbers in areas such as the Douglas shire and Tableland areas.
Which is a bit strange because in the actual report it says:
The estimated numbers of homeless people in each of the major cities are shown in Figure 5-7. These numbers include people living in improvised dwellings, tents or sleeping out, people in supported accommodation for the homeless, people staying temporarily in other households, boarding houses or other temporary lodging and people living in ‘severely’ crowded dwellings. The estimates do not include people in other marginalised housing such as caravan parks.
 Sounds to me like it certainly does include those "hidden homeless" not sleeping on the streets? Does the head of the Cairns Homelessness Planning Leadership Group really misunderstand what the statistics represent or have the reported comments been daltoned?

Much interesting information in the summary Cairns Fact Sheet which may warrant a further post.

Related post on the cities report at QEW: Benefits of higher urban population density – more cycling and walking to work