Friday, September 27, 2013

Lifestyle property markets hangover clearing?

The RP Data Research blog has a post today on emerging activity in lifestyle property markets: Buyers surging back into beach side housing markets

Most of this positive commentary relates to the Gold Coast and Sunshine Coast with some contextual reference also to FNQ:

In a market like Cairns where tourism is the primary economic pillar, housing market conditions are becoming healthier but the volume of home sales remain just less than half of what was being recorded pre-GFC.  Unit prices have worn the brunt of the downturn, having fallen about 25% over the past five years.


I'm not sure the rationale presented here for regional differences is quite complete but never mind ....

Thursday, September 26, 2013

White shoe coral growth scheme

Pursuit of the KPMG economic impact assessment for the Aquis casino proposal led up a dead end with requests refused. The Aquis Facebook presence is also curious with minimal substantive content and lots of panoramic photography and local promotions.

There is a link for feedback here to Howie the social marketing guy, apparently Howie Thomas. His LinkedIn profile also describes Howie as deputy chair of the Barron River LNP. The Aquis Facebook presence also appears to be a conduit for other pages associated with Howie. Among these is Save The Reef which has this compelling offer:

You can BUY NOW online with packages up to $179 for four corals, but what exactly is the authorisation for this coral planting program on the reef?
I have contacted the Great Barrier Reef Marine Park Authority who said: "Thank you for your enquiry regarding the organisation “Save the Reef Now”.  At present, the Great Barrier Reef Marine Park Authority (the Authority) is not affiliated with any organisation offering to “replant” the Reef." It was advised that any removal or replacement of coral within the park would require approval from the Authority.
Comments in defence of a Facebook query from a sceptic at Save The Reef seem to acknowledge that there is no approval for plantings on the reef? There was a suggestion in Facebook posts of initial research plantings at Fitzroy Island. As far as I am aware Fitzroy is within the GBRMP? Limited impact research is allowed but "only if conducted by an accredited educational or research institution, otherwise a permit is required". The GBRMPA have advised:
Due to the delicate nature of corals, and the various environmental factors that are associated with maintaining healthy and vibrant reefs, I believe that a substantial amount of high level scientific data would be required to ensure beneficial placement, reproduction and general health of any coral being planted.  If this information cannot be provided by the organisation, I would query the sustainability of those actions with the organisation.
There is no such apparent detail provided by Save The Reef of any research organisation. No judgment is made on the veracity of this scheme. At Loose Change we report, you decide?

An unusual reason why Australia prospered?

Andrew Leigh MP has posted a review of Why Australia Prospered: The Shifting Sources of Economic Growth by Ian McLean. This includes an interesting comment on North Queensland given the renewed nationalist drive to "develop the north": 

A third counterfactual is if the northern part of Queensland (Australia’s Texas) had been successful in creating another colony in the 1880s. McLean suggests that such a colony might have consisted of an aristocracy of white planters relying on indentured labour from the nearby Pacific islands. Such an experiment would have looked more like the Caribbean, or the antebellum south, and might well have produced similarly poor long-run growth outcomes. The decision by British colonial authorities to veto such a colony was regarded as a minor one at the time, but turned out to be an important turning point in Australian economic history.

Why Australia Prospered has been well reviewed since publication last year and may be worth looking up at the library!

Updated related link from ABC Far North: Sugar slaves black chapter in agricultural history

Wednesday, September 25, 2013

Up traveler expertise key to tourism success?

My daily Google email for updates on Cairns news today included a link to Cairns’ Amazing Backpackers Offers Holiday Package for Family. I'm not sure on the ethnic background here but suspect some misinterpretation in translation?

Cairns is home to several resorts that have gained international acclaim. One in every of these Cairns hostels is The Jack, is the simplest and affordable resort in the world. This has achieved an ideal score of one hundred out of one hundred. Resorts in Australia are attempting to remain competitive by finance in selling, facility upgrades and growth, and providing a much better expertise for tourists.

According to Deloitte Access Economics' edifice and tourism Outlook, the Australian edifice and resort trade is anticipated to still grow till Gregorian calendar month, 2015, with revenue per offered space rising by four.8 % and national pct increasing steady. However, the progress of the trade depends considerably on the government's temperament to produce the mandatory support, like encouraging investment, increasing the business manpower and up traveler expertise. Though things are wanting up for the Australian edifice and resort trade, there square measure still several things that require to be worn out order for the trade to understand its true potential.


They certainly seem to have been unusually impressed by The Jack as a resort. Obviously Tony Fung has it all wrong!

Tuesday, September 24, 2013

Alcohol and taxes: a wet mess?

The ABS have released data on the Apparent Consumption of Alcohol from 2007 to 2012. Per capita consumption actually declined in 2011/2012 to the lowest level in a decade at 10.05 litres. An interesting aspect is the fall in RTD consumption following the 'alcopops tax' in 2008.

It was widely reported that the 'alcopops tax' had failed to deter binge drinking. This was based on a study of alcohol related admissions to Gold Coast hospitals however it isn't clear to me that this is necessarily a good or complete indicator of positive health benefits.

It was claimed that drinkers would simply switch to spirits and mixers but this doesn't seem to be reflected in the numbers with consumption falling in that entire sector following the tax. The entire sector had grown substantially in the decade before separate reporting of RTD's. Pigovian taxes work!

Following lifestyle trends the growth sector over the last 50 years has been wine. Wine is also the sector least taxed and also the only beverage taxed on price rather than alcohol volume. As previously posted this creates an obscene anomaly in taxation of wine casks which is also the most widely abused: Eclipse of the wine cask long overdue

Despite overwhelming evidence politics continues to trump good policy on alcohol taxation. There is a rather scathing assessment of the impacts of the wine equalisation tax from Adelaide wine identity Philip White: wine equalisation tax unequally wet
Neither should they be forced to compete with ethanol refiners – barely taxed at all - who use enormous amounts of water mining the Mallee for sugar, and wreak environmental, social and economic destruction at both manufacture and consumption ends of this nasty, depressing chain.

Further links: Foundation for Alcohol Research & Education

NAB: Australian wine market

TAI: The liquor industry

Friday, September 20, 2013

Airport August Update

Passenger numbers at Cairns Airport in August appear uncorrelated with this weeks employment data and continued a positive trend with growth of around 10% at the domestic terminal on August 2012. 12 month moving average growth is now at 7.9%.

Sustainability of that growth rate in coming months will be interesting to observe because of seasonal eclipse factors and also abatement of the capacity war between Qantas and Virgin: ACCC concerned by Qantas comments over price war
"On Thursday Qantas boss Alan Joyce told shareholders he was moderating capacity growth this year to between 1.5 per cent and 2.5 per cent in the domestic market, from 8 per cent growth in the past year."

International numbers also continued to improve after a very weak period earlier in the year although still just below August 2012. This is despite China Eastern suspending flights from mid-August until November. International numbers are typically 15% or less of total airport passengers.

Source: Cairns Airport

Thursday, September 19, 2013

Soft employment in Far North

The ABS regional labour force data was released today and while the unemployment rate edged lower to 7.7% from 8.1% last month other indicators were soft. The estimate of number of persons employed at 132,400 was the lowest since June 2012. The improved unemployment rate was the result of a new low for the participation rate at just 63.7%.

Recent months have been soft for both these indicators and the 12 month moving averages here have either flattened or started to roll over. The employment/population ratio has also been trending down since 2H2012.
As always there is a severe weather warning on monthly volatility in the regional data and will await the seasonally adjusted and trend analysis from Conus.

Tuesday, September 17, 2013

No tourism and no Department of Youth either?

With more than half the Abbott cabinet aged over 55 it should not surprise that there is no Department of Youth in the new ministry. With an apparent policy to rationalise ministerial names and responsibilities there is also no specific tourism minister. As reported in the Gold Coast Bulletin tourism responsibility is to be split between domestic and international:
TONY Abbott's decision to axe the role of a dedicated federal tourism minister has raised eyebrows, with a Gold Coast industry leader describing the move as "alarming".

The Prime Minister-elect chose not to name a tourism minister in the cabinet line-up announced yesterday.

Gold Coast Tourism boss Martin Winter said that the absence was alarming.

The portfolio's responsibilities will be split between Trade and Investment Minister Andrew Robb, who will deal with international tourism, and Industry Minister Ian MacFarlane, who will look after domestic tourism.

I'm not sure on the rationale or coherence of this split? Scott Morrison is also in the cabinet with a CV which includes a stint at TA responsible for the disastrous Lara Bingle campaign. In recognition of this skill for restricting visitation to Australia he retains responsibility for the inbound ultra-budget cruise sector.

Abbott also allocated a “very important advocacy role” to Warren Entsch as chair of a special committee for development of northern Australia. What form or role this committee will take in the proposed white paper is unclear. Observing Entsch's performance on the parliamentary strata insurance committee and previously on the board of collapsed CEC leaves me doubtful that he is either competent or appropriate for the role, and fearful of even more populist nonsense on this topic.

The coalition spokesman for northern Australia had been the well credentialed and respected Senator Ian McDonald from Townsville who has clearly been gutted at missing any position evident by an emotional and widely reported facebook post: "What should have been one of the proudest days in my life has turned into one of the worst".

Update: Opinion at Politically homeless from Andrew Elder who describes himself as fully recovered from being an active Liberal:
Why was Warren Entsch dumped as Chief Whip? Along with the dumping of Senator Ian Macdonald from the front bench, you might assume that Abbott has something against far north Queensland. This is going to make it hard for the government to demonstrate that it's big on developing the deep north.

Monday, September 16, 2013

Aquis Query?

This is actually my second attempted query on this with no response to the first ... and  ...... update: apparently the second has met a refusal! Why would the economic impact analysis which they are spruiking so positively not be available? There is a reference to economic and social impacts as part of the EIS so perhaps we will have to wait until then.

Hi Mark,
We appreciate your queries but regret to advise that the KPMG report is unavailable for release and has been submitted to the Coordinator General’s office.
Kind regards,

Sent: Monday, 16 September 2013 6:52 PM
To: Fiona Bawden
Subject: Re: KPMG Report

Hi Fiona,

Thanks for that but, no, it didn't really help answer my question. I'm not really interested in the EIS but rather economic and social assessments.

I refer you to the initial advice statement submitted by Aquis:

"A Preliminary Economic Impact Assessment prepared by KPMG was prepared as part of the proponent’s pre-feasibility studies for the Project. A copy that report has been submitted to the Coordinator General’s office as an appendix to the Proponent’s Prefeasibility Statement. The results of that report are summarised in 6.0 Economic effects."

What I was looking for was the actual KPMG report submitted to the Coordinator General as an appendix in the prefeasibility statement?



On Mon, Sep 16, 2013 at 4:04 PM, Fiona  wrote:

Dear Mark

Thank you for your enquiry, please follow the link below to our Draft Terms of Reference.

I thank you for taking time in writing to us, and I hope this has helped answer your questions.

Kind regards
Aquis Great Barrier Reef Resort

Sent: Monday, 16 September 2013 11:04 AM
Subject: KPMG Report


I note frequent references to an assessment by KPMG and would like to know if a full copy of the KPMG report is available?


Saturday, September 14, 2013

Aggregate hours worked by State

Following that last post I thought I would graph aggregate hours worked by state but have indexed this to July 2007 = 100 for all states. The economic world was almost everywhere beautiful in July 2007, an era when John Howard knew boats?!

So that should represent the proportional change in aggregate hours worked in each state. This will of course also be correlated with employment and population growth by state.


I have tried to match states to colour here although must say was disappointed by the maroon shades offered in Excel! ACT drew last straw and took yellow!

Tasmania is clearly a concern also reflected I suspect by big swings at last weekends election. ACT is actually interesting. What happened to that ever growing army of public servants in Canberra sucking the national economic lifeblood? Bludgers probably all went home early on a Friday afternoon something you would never find in the hard working Cairns private sector!

Unemployment rates debates

Labour force data was released this week with the national unemployment rate nudging up to 5.8%. There is commentary at Conus Blog and a good chart-laden post with a range of indicators on the most recent numbers at MacroBusiness: Australian unemployment in detail.

In the midst of the election campaign there was a rather misleading report by ABC TV 'The Business' on the ABS stats with the title: “Lies, more lies, propaganda and the unemployment rate.”

This was based on a paper from Andrew Baker at the CIS claiming changes to Newstart classifications had somehow manipulated the ABS unemployment rate for political reasons. The ABC report also gave Roy Morgan another soapbox and selectively quoted certain economists with dubious context.

There was an excellent response on this from ACTU economist Matt Cowgill: Has the unemployment rate been manipulated? This pretty much debunks the claim and I think Cowgill has been all too kind re the credibility, professionalism and motivations of Baker and CIS on this!

Cowgill I think does a good job of explaining the unemployment rate as an imperfect indicator and only part of a range of relevant indicators.
The unemployment rate is inadequate, as is any other alternative measure you’d like to propose. I quite like looking at the employment-to-population ratio – this simple measure tells us what proportion of the population is in work. Ah ha, you might ask, but what if all the newly created jobs are part time? Good point – for that reason I also quite like looking at the number of hours worked per adult in the population. But this isn’t perfect either, as when hours fall it doesn’t tell us whether this pain has been shared broadly across the population, or concentrated in a few unlucky people who’ve gone from full-time work to the dole queues. If you want to get a sense of how the labour market is going, you’d want to look at all of the above measures and more.
I also recently posted a not dissimilar comment from US Nobel laureate and NY Times blogger Paul Krugman on this: There is no "true" unemployment rate. Similar claims of manipulation had coincidentally arisen during the last US Presidential election?

Which brings me back to the most recent numbers this week where the consensus is that a weaker labour market is indicated. A positive noted in the MacroBusiness post has been aggregate hours worked and particularly year-on-year growth in Queensland in recent months. Albeit this growth follows a period of sustained weakness and the aggregate has only recently recovered the levels of early 2012 so there could be some catch-up component.

Meanwhile NAB have released a State Economic Update with lots of nice graphs and a mixed outlook for Queensland including a forecast 7.2% unemployment rate in 2014/15! Queensland Economy Watch is more positive: Qld labour market stable, not worsening.

Update: The very bullish report on Queensland in todays Cairns Post reads more like a PR release than journalism! Oh, hang on? Cairns in front for economic comeback

Friday, September 13, 2013

A weekend procrastination


Sugar Sweetens?

No sooner had I posted the recent comment and chart (updated) on sugar prices this week than, yes, the sugar futures price gapped up to its highest in some months. Brazil remains the critical factor: Brazil mills lift cane crush but sugar output lags.
Dry weather allowed Brazilian cane mills to ramp up processing volumes, but output of sugar came in below year-ago levels, despite the improved returns from producing the sweetener rather than ethanol.
An interesting report last month in Rupert's Wall St Journal on US intervention in their protected sugar market by the USDA:
The agency has been attempting to stave off a potential wave of defaults on $320 million in outstanding federal loans to U.S. sugar processors that come due at the end of August and September. The USDA estimates that defaults would occur when domestic sugar prices are below 20.9 cents a pound.
Apparently this involves the USDA buying the sugar to sell to ethanol processors at losses of at least 50%. That sounds like the sort of scheme that would excite Bob Katter! Has anyone heard from Bob this week?

Wednesday, September 11, 2013

Racial divide and class war in Leichhardt?

Two party preferred swings by booth at last weekends election in Leichhardt. Positive swings are towards the sitting member Warren Entsch and negative swings against. Note that despite the swing to Entsch in Aurukun this was still won easily by Billy Gordon for the ALP with 75.77% of the 2PP vote.

Update: The Machans Beach vote may also seem anomalous to some and it is noted that while there was a 5% swing against The Greens their primary vote remained high at 17% which I think(?) is their best Leichhardt booth. It was still a solid 2PP win for ALP at Machans.
Updated commentary and debate on facebook:

Monday, September 9, 2013

Brazilian blues!

While the outlook in tourism has been more promising recently some of our globally traded tropical agricultural products such as sugar and coffee have been sliding all year.

The current sugar price is now above the low in July and may be showing more positive signs. The chart is in $US so a weaker $AUD will provide some relief to growers. A recent note from Macquarie highlighted the importance of the Brazilian economy and currency (BRL) on these commodities.
Brazil is the dominant exporter across many of the softs, and its depreciating currency has had the impact of boosting Brazilian supplies to the rest of the world. Speculators have also been trading the inverse correlation between the dollar-dominated soft commodities and the BRL on the futures markets – exacerbating the soft commodities sell-off.
The BRL has bounced from the most recent sell-off but the Brazilian economy faces some challenges as resource investment recedes. I did see a commentary somewhere that the Brazilian ethanol industry also contributes to this as sugar supplies are transferred from domestic to export as the currency declines?

Coffee is another commodity which has been under pressure (although it hasn't yet shown up in our espresso prices) where it is suggested Brazil is the global marginal producer for Arabica beans and prices have fallen through the cost of production. I'm not sure how that impacts our relatively small boutique local coffee industry but where it could have some economic impact is to our north in PNG where coffee is a significant cash crop. The impact of the resources investment boom in PNG also creates serious two-speed stresses in that still third world economy.

Related links:
Capital flows back to US
Brazil cane industry invests, just not in new ethanol infrastructure
Brazil mills lift cane crush but sugar output lags

Update: meanwhile it seems debate on sugar marketing arrangements continues in Australia: Controversial report calls for sugar reform

Sunday, September 8, 2013

The consequences of Tony Abbott

A new era opened in Australia last night as a grinning Tony Abbott stood at his lectern to declare victory, surrounded strangely by three daughters dressed in white, and announced:

"I can inform you that the government of Australia has changed for just the seventh time in 60yrs".
Ummm, well actually that would be the 6th time Tony?

Never mind, that was 24 hours ago and according to ABS estimates 403.7 Australians have since died. I expect Steve Lewis will byline an exclusive analysis and front page headline in tomorrow's Sydney Tele?

Meanwhile the verified twitter response to the election result from Rupert Murdoch has been widely noted:
Rupert Murdoch @rupertmurdoch 23h
Aust election public sick of public sector workers and phony welfare scroungers sucking life out of economy.Others nations to follow in time