Tuesday, October 22, 2013

Great Barrier Reef not unique enough?

The latest Roy Morgan Holiday Tracking Survey is a poor result for Queensland:

The advertisements tell us that Queensland is “where Australia shines”, and with 263 days of sunshine per year this may be true, but more Australians would like to take a holiday in Victoria, the latest Roy Morgan Holiday Tracking Survey shows.

Source: Roy Morgan Single Source (Australia), September 2007 – August 2013, average annual sample n = 19,656.

Yes, those culturally inclined Victorians have stolen top position with the Queensland decline slumping a further 5% in the past year.
Jane Ianniello, International Director of Tourism, Travel & Leisure at Roy Morgan Research, said Queensland suffered because its attraction was no longer unique.
"Key Queensland destinations such as the Gold Coast, Sunshine Coast and Tropical North Queensland are facing stiff price and product competition from a multitude of very affordable overseas beach and island destinations," she said.

The Great Barrier Reef is no longer unique; Without casinos (sorry, integrated resorts) the future is "bleak"? Well, that is the solution from Campbell Newman, although the way casino resorts are proliferating they may be more competitive and less unique than many currently imagine going by this comment in the South China Morning Post: Hong Kong investor takes a gamble on casino in Cairns.
Fung's Aquis is the most ambitious so far. With 3,750 hotel rooms as well as 1,335 villas and apartments according to its plan, it could accommodate more people than Singapore's two integrated resorts put together.
That might be a stretch, said Justin Casey, managing director of Macau-based Asia Pacific Gaming Consultancy.
"Everyone's got a marble floor, chandelier and a Chinese restaurant now," he said. "If you had a pocket full of money and you were looking to establish a new destination in Asia, I don't know Australia would be the first cab off the rank."

Note: Just $950 will get you People who would like to Visit Tropical North Queensland for a Holiday - Profile

Update: View from the Cairns Post: Big projects catch big bucks

Monday, October 21, 2013

Casino taxes: Queensland v The Rest

Queensland Economy Watch has suggested taxation revenue from proposed casino expansion could be maximised with an auction of licences: Qld Government should maximise revenue from casinos

While looking for something else altogether recently in the Queensland budget papers I stumbled upon Casino tax concessions:

The benchmark tax base is assumed to be all casinos operating in Queensland. The benchmark tax rate is assumed to be the highest tax rate that is actually applied in each financial year.
A tax rate of 20% of gross revenue applies for standard transactions in the Brisbane and Gold Coast casinos. A concessional tax rate of 10% applies for gross revenue from standard transactions in the Cairns and Townsville casinos. The tax rate applicable to gaming machines in casinos is 30% of gross revenue in Brisbane and Gold Coast casinos and 20% in the Cairns and Townsville casinos. 
In addition concessional rates of 10% also apply for revenue from high rollers in all casinos. A GST credit is provided to casinos that approximates a reduction in the above tax rates of 9.09%.
I presume the Aquis proposal has bypassed any potential auction by now so it will be interesting to see what tax regime is negotiated and whether the concessional rate for Cairns will be maintained.

The differential tax here for pokies is also interesting and was increased for casinos in 2009. The pokie tax rate at Reef casino had previously been only 10%. The Aquis proposal is actually more heavily weighted to table games relative to pokies than existing Australian casinos in line with Macau gambling trends previously posted: The baccarat boom.

Comparisons with Macau and other international venues are also relevant with expansions also currently proposed or speculated in several jurisdictions: Macau casino operators face tax hike

Macau’s casino concessionaires could face an increased tax burden once their current deals with the special administrative region expire in 2020 and 2022. Hong Kong-based Macquarie Equities Research analyst Gary Pinge says Macau’s government has “a long history of increasing fees and upping taxes after the expiry of each concession contract,” meaning the effective 39% tax rate currently paid by casinos – 35% on gross gaming revenue plus an additional 4% in social contribution tax and license premiums – will likely rise even higher early in the next decade.
Casino taxes constituted 83% of Macau’s total public revenue last year. Nevada’s gaming tax rate is a mere 6.75%, generating around 22% of the state government’s annual revenue. Singapore taxes its two integrated resort casinos at a split rate: 5% for VIP gaming and 15% for the mass market sector (plus 7% GST). The Philippines has adopted a 15% tax on foreigners gambling in Manila’s Entertainment City, while locals pay 27%. Taiwan has proposed a 7% tax rate when it opens its first casino sometime before the end of this decade, rising to 9% after 25 years (plus local taxes not to exceed 7%).
Interesting that tax rates in Macau seem comparatively high. We will have to await further smoke signals on this as the Aquis process proceeds.

Update: A report that Echo (Jupiters) now have the Townsville casino up for sale and asking $75 million.  Would have to check on current market cap for Reef Casino?

Thursday, October 17, 2013

Employment stalled

Winning lotto numbers this month are 9.4, 135.6, 14.1 and 66.1 in the Far North regional employment statistics from the ABS. To parse this result:

  1. The unemployment rate bounced up to 9.4% from 7.7% last month. This is somewhat above the trend of recent months.
  2. Employment estimate was up by 3,200 to 135,600 although the trend remains stalled.
  3. At 14,100 the number of persons estimated unemployed were also up by 3,100.
  4. The participation rate bounced back to a more 'normal' 66.1% from last months record low.
So the participation rate again was a key driver of the volatile monthly unemployment rate and Conus wins the crystal ball award for this comment a month ago:
Any bounce in the Participation Rate in coming months to a more "normal" level would be reflected in a sharp spike in the unemployment rate, barring some very robust employment growth at the same time.
The stalled employment trend remains a concern and particularly the recovery apparent in female employment throughout 2012 appears to have rolled over again on the conservative 12 month moving average:

 Note: Trend line is 12 month moving average
Update: Seasonally adjusted and trend analysis and commentary from Conus: Participation Rate rebound pushes unemployment rate higher in FNQ:
"Our Trend series is showing 7,000 fewer in work than in Jan this year .........."

Saturday, October 12, 2013

An insignificant figurer

The ABS labour force survey statistics came out this week with analysis from Conus and Grog's Gamut:

Conus: Surprise fall in Aus unemployment rate
Grog's Gamut: Australia's Unemployment Rate steady at 5.7%

The headlines belie underlying agreement in their analysis. The difference of course is between a fall in the widely reported seasonally adjusted number and a flat trend number. Both Conus and Grog also refer to the impact of rounding on the seasonally adjusted data as explained at Grog:
And anyway if we get down to the nitty gritty, the seasonally adjusted figure in August was 5.7647% so it only just got rounded up to 5.8%, and September’s number was 5.6479%, so it only just got round down to 5.6%. Thus while it looks like a 0.2 percentage point drop it’s really only a 0.12 percentage point drop.
 It was curious to then see this tweet come through from Queensland Treasurer Tim Nicholls:
Employment growth 0.2% in Qld in Sept and trend participation rates up every month in Sept qtr.
So lets look at the September quarter trend participation rates for Queensland:

June   65.8%
July   65.9%       
Aug   65.9%
Sept   65.9%

Looks pretty flat to me, eh? You see the ABS publish this data to one decimal point however the ABS spreadsheet downloads are to seven decimal points which becomes for the September quarter:

June   65.8364146%
July   65.8605645%       
Aug   65.8971742%
Sept   65.9365453%

So was the participation rate up every month in the quarter or not? Perhaps here we need to consider significant figures and for simplicity I will refer on this to Wikipedia:
The significant figures of a number are those digits that carry meaning contributing to its precision. This includes all digits except:
Spurious digits introduced, for example, by calculations carried out to greater precision than that of the original data, or measurements reported to a greater precision than the equipment supports.
Given the known issues around the ABS labour force survey data it could be suggested that the significance of any number beyond the first decimal published by ABS may be approximately zero? Note that while Conus / Grog have drawn attention to the rounded numbers as cause for caution Treasurer Tim has instead attributed significance to 'precise' numbers where there is none!

Even more curious is that this was one of the key significant (sic) highlights he could find in the Queensland employment data? Since the state election in March 2012 the Queensland trend participation rate has now declined by 0.9pcpts while the national rate has declined by only 0.3pcpts.

Example of an insignificant figurer

Thursday, October 10, 2013

PC joins war on multipliers

An excellent find at Queensland Economy Watch with a post on a note from the Productivity Commission: On input-output tables: uses and abuses
Abuse primarily relates to overstating the economic importance of specific sectoral or regional activities. It is likely that if all such analyses were to be aggregated, they would sum to much more than the total for the Australian economy. Claims that jobs ‘gained’ directly from the cause being promoted will lead to cascading gains in the wider economy often fail to give any consideration to the restrictive nature of the assumptions required for input-output multiplier exercises to be valid. In particular, these applications fail to consider the opportunity cost of both spending measures and alternate uses of resources, and may misinform policy-makers.

This is related to my previous post: War on Multipliers. My fave remains the claim by the current Member for Cairns in his previous incarnation at the Cairns Post that if we all bought local potatoes instead of 'imported' then the flow on multiplier to the local economy would be four times every dollar spent on spuds and we would all be filthy rich. I think a local potato policy would likely be as successful here as it was for the Irish economy?

This also relates to my quest for the Aquis KPMG report. Without the full report including assumptions and methodology there is no way of knowing whether the glib PR claims on employment and the economy are valid or otherwise.

The PC note does also include effective and novel uses of input-output methods.

Tuesday, October 8, 2013

Not the Cairns Post

Travel, family weddings and communications issues have restricted posts this week however an entertaining item on Aquis casino from Michael West at the SMH is worth a look. I will return to this  later for further comment on Aquis when full connectivity is restored ......
The Aquis Great Barrier Reef Resort, with its 750 gaming tables, 1500 pokies, 3750 hotels rooms, 1200 apartments and 130 villas, is far bigger than even Crown's Mecca-on-Yarra itself.
The social benefits of a mega-resort on the Great Barrier Reef are obvious - the fish will love it - but we were keen to evaluate its economic credentials by seeing the Preliminary Economic Impact Assessment for the project prepared by KPMG.
Alas, the office of the Queensland Co-ordinator-General could not help. "The report was commissioned by Aquis. You will have to talk to them about obtaining a copy."
Tracking down Aquis was no mean feat. Following the Crown modus operandi and its streamlined Barangaroo process, the Aquis development had been gloriously splashed across the nearest Murdoch tabloid to kick things off. This time it was The Courier Mail and the Cairns Post as opposed to The Daily Telegraph. But the trail went a tad cold after that, stopping dead with the Queensland Co-ordinator-General and the Aquis Facebook page.