Monday, April 21, 2014

Rental vacancies, housing & population

Rental vacancies are back in the news with some recent numbers from REIQ: Rental vacancies tight in Cairns as market tightens up.
Vacancy rates in Cairns dropped from 2.2 per cent to 2 per cent last month
The numbers are quarterly not monthly I think? The Cairns Post also reports from the local REIQ representatives that the region has run out of stock and that renters should buy. Well they would say that wouldn't they?

The REIQ rate is derived from a survey of accredited members. Meanwhile the most recent HTW survey in CairnsWatch indicated a trend vacancy rate of 2.6% in February. I will await the next update from HTW for March however a quick look at some previous comparisons indicates the REIQ number will typically be lower.

SQM Research also provide some free info and graphics on rental data which is worth a look and also currently indicating a vacancy rate around 2.2% for Cairns. I have no idea how SQM aggregate this information however a search on their postcode data graphs also display the number of vacant properties for each postcode and throw up some interesting differences in vacancy rates within Cairns. Some of that difference may correlate to house v units but probably not all when it comes to south v north.

SQM%
Bonds
4868
1.3%
2623
4869
1.1%
2009
4870
2.0%
11458
4878
3.0%
1866
4879
3.7%
2937
Cairns
2.2%
20893


The Residential Tenancies Authority (RTA) also released updated quarterly data recently and the second column there is the aggregate number of bonds lodged at March 31st for each postcode. If I combine the nominal number of vacant properties in March from SQM with the bonds data I actually come up with a vacancy rate of 2.6% for Cairns but no idea on validity of this and it isn't clear what area SQM uses to define their 2.2% rate for the broader Cairns region.

The previously downward CairnsWatch trend vacancy rate recovery actually bottomed back around 2H2012 with the most recent report:
Vacancy rates in the Cairns rental market have been increasing since mid 2013, but are still indicating modest rental shortages relative to supply.
 
The bonds data from the RTA dates back to the March quarter 2011 and may provide some interesting perspective. This is the quarterly change in the number of bonds lodged for Cairns over that period (Postcodes 4868,4869,4870,4878,4879).

 
The aggregate number of bonds lodged actually declined slightly in the March quarter whereas in the two previous corresponding periods growth was quite strong. The trend in vacancy rates since mid 2013 also coincided with weakness in the labour market.

The RTA data for median rents also indicates relatively benign increases over the past year. The two largest cohorts: 2br units 1.8%; 3br houses 2.9%. It was actually the previous year when the vacancy rate was falling that rents for these lifted well above inflation: 2br units 7.8%; 3br houses 6.3%.  Historically low vacancy rates have not been exclusive to Cairns. Most capitals and other regional cities in Qld currently sustain comparable rates.

There have been some estimates recently of housing supply relative to population for Australia and the states. Some very rough back-of-a-drink-coaster calculations for Cairns based on 2% population growth (1.9% FY2013) and 2.5 persons per household (2011 census) would indicate a number still way above current building approvals.
 
 
Update: The SQM methodology:
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties. SQM considers this to be a superior methodology compared to using a potentially incomplete sample of agency surveys or merely relying on raw online listings advertised.

Saturday, April 19, 2014

Good & Bad News Weekend

A very quiet Easter weekend but the Cairns Post has lobbed up a couple of interesting but perhaps dichotomous yarns: Cairns swamped with development applications as activity picks up
CAIRNS is poised to reap the economic rewards of red-tape reduction and rich incentive schemes, with local development applications at a three-year high.
With more than two months left in the financial year, there have already been 386 applications lodged with Cairns Regional Council, outpacing previous years. 
A key indicator of a city’s growth, 60 development applications were lodged with the council in March alone - the highest number received in one month since 2010. The proposals comprise a mix of commercial and residential projects across the city. Building applications are also at a three-year high, while the number of new lots created are on track to be the highest in recent years.
Swamped I tell you! There is even a photograph with the accompanying caption "boom town". While the reported increase is positive and to be welcomed this again needs to be kept in historical perspective of a recovery rather than boom. I'm too lazy to do my own research and there are some nice easy stats and graphs on Cairns available at economy.id.com.au:

 
This is the value rather than number of approvals, both residential and non-residential. I don't think these numbers are adjusted for inflation and certainly don't take into account the substantial increase in Cairns population over this time frame. The numbers themselves at that link also tell a story with Cairns as a % of Queensland at a new low last year and substantially under-representing the proportion of the population and economy.
 
There is something of a dichotomy here for the Post between the boom and the latest employment stats on the same day:  Cairns unemployment figures climb to 10.1 per cent.
Herron Todd White research director Rick Carr said while the region’s unemployment rate typically increased this time of year due to its seasonal workforce, the new figures reflected a weak market.
“Unemployment usually goes up at this time of year. however, in the first three months it has gone up more than usual,” Mr Carr said. “There isn’t a lot of confidence out there. Businesses seem to be more concerned about staying afloat than hiring for the next boom.”
The public sector and mining have taken some attribution there for the weakness in Cairns over the past year. I'm not sure how well this works as an explanation for Cairns?

Thursday, April 17, 2014

Conus: Nothing good in the regional jobs data

That about sums it up from Conus with nothing much more to contribute apart from the customary warning on the regional data: Nothing good in the regional jobs data

Seasonal down time of year maybe but participation rate chart is looking quite dismal.

Tuesday, April 15, 2014

Clean for Gene: Strong Choices or Weak Leadership?

Economic issue du jour in Queensland has obviously been the weekend launch of Strong Choices where you can 'interactively' contribute to solving our 'debt crisis'. Problem is .... not quite so interactive ..... and really an online version of push polling which could actually have some quite negative consequences for genuine political leadership and policy reform.

It is clearly designed to achieve a specific outcome. I started to wander through but then gave up when it was obvious the explanatory information was severely biased on specific options. It is simply not possible for anybody to make an informed opinion on cutting programs or asset sales on the information provided.

Sadly, there was no interactive option which allowed me to play with abolishing stamp duties on insurance and property transactions in return for a broad based land tax. More sadly the responses they are likely to receive on the info provided could well lock out any such reform. The explanatory information provided on land taxes will inevitably skew a more negative response.

John Quiggin has weighed in hard and early with a negative response most of which is predictable but also coherent with valid aguments. Some of the justifications being used for privatisations just don't work and never have particularly in relation to revenue from the government corporations, which also carry a good chunk of the debt.

However Prof Q has also previously to my recollection argued that assets must be considered on an individual basis. When the Bligh privatisations were announced he went through the list: Queensland privatisations: good, bad and ugly.

This is the problem I have with those totally opposed to any and all asset sales. Such a policy would mean the State of Queensland would still run the butcher shops once owned. There is a clear difference in electricity between generation and transmission assets with the latter a natural monopoly. This is sort of rather vaguely referenced in the survey with a different form of private funding not adequately explained. You can argue for and against the privatisation of both these assets but the argument can never be the same for both if it is to remain rational.

Anyway I think Gene Tunny at Queensland Economy Watch has pretty much nailed it on this: Qld Treasury needs to explain logic of asset sales much more clearly
It’s not too late for the Government to win the debate on asset sales, but it needs to present more compelling logic. The Government’s current arguments for asset sales are too simplistic and probably won’t persuade the public. The Government should ask the Treasury to produce a solid report presenting the pros and cons of privatisation – analysing in detail the merits of selling particular assets such as energy businesses and ports, directly addressing the question of whether they would be better run by the private sector. The Government should then present this analysis to the public in speeches and informative publications and websites.
I think Gene also gets this right that debt reduction may be desirable but is not a life-or-death issue as is being portrayed. Gene has also apparently appeared on ABC radio on this although haven't had a chance to listen to check the veracity of the headline: Economist labels "Strong Choices" a joke

Note: "Clean for Gene" was the campaign slogan for Gene McCarthy in the volatile 1968 US presidential campaign.


Update: Gene has posted further on this: Strong Choices poorly received by public; There is also a withering and entertaining response from columnist John Birmingham at the Brisbane Times: Mr Strong Choices thinks you're an idiot. John Quiggin has also now weighed in again: Tim Nicholls makes a little progress in thinking about privatisation

Monday, April 14, 2014

Airport numbers for March

Traffic numbers at Cairns Airport for March show a modest increase of 4.1% on 2013 at the domestic terminal while international continues to be weak with a significant decline on the previous year.


Again we should probably be cautious around the timing of significant events. Last year Easter was the last weekend in March with Easter Sunday on March 31.

 
It was also a relatively small bounce in domestic traffic from the traditional February low. The growing influence of Chinese New Year may be partly responsible for that.
 
 



Sunday, April 13, 2014

Cyclone Ita: Cairns gets lucky again!

After the extreme impacts of both Larry and Yasi previously slipping south, north being the favoured side to be, what could be luckier than a severe cyclone which lands sufficiently north, circles around behind the mountains, then pops out offshore again off Townsville? If this keeps up we may have to stop calling it Brownsville!

Just a day after a lovely evening on the Cairns Esplanade with an almost full moon rising over the inlet .......

 
Note: suggested storm surge possibility didn't make it anywhere close to king tide highs of earlier in the year!

Wednesday, April 9, 2014

The ups and downs of house prices

While I'm on a roll with (mis)statements from the Member for Cairns it was also noted that rising house prices were among his positive economic indicators. When challenged on this and the related issue of rising rentals his FB response included:
According to the latest Census data from the Australian Bureau of Statistics, 57% of homes in Cairns are owner occupied or are people paying off a mortgage, compared to 39% who are renting. So the majority of people in Cairns will benefit from rising house prices.
These are indeed the (rounded) numbers for the Cairns Regional Council area from the 2011 census. I wonder what happens when we look more specifically at the same data for the state electorate of Cairns?
Owners: 47.8%
Renters: 48.1% 
Oops! Looks like most of those 'winners' are more likely to be in Mulgrave or Barron River?

 
I wont delve into debate on the general desirability or otherwise of rising house and more particularly land prices, or how this may relate to circumstances in Cairns. There is currently a parliamentary inquiry into affordable housing with a range of submissions. Contributions from people such as Saul Eslake and Catherine Cashmore should be worth a browse among others. The submission from The Australia Institute makes particular note of the impact of housing prices on inequality. 
 


Sunday, April 6, 2014

Why no circus in Aquis Casino proposal?

The caravan rolls on and perhaps a circus is a missing element from the updated Aquis development plans most recently revealed : Stakes high as mega casino rolls into view:

NOT since the early days of the white-shoe brigade in Queensland — when developers waltzed in and out of the top offices of the Bjelke-Petersen government — has the talk been so big, the stakes so high.
At least The Australian is capable of a balanced approach unlike the advertorial spin from their News Ltd comrades at the Cairns Post. Although am unsure on the description of a current Yorkeys Knob high-rise?
Easily the most expensive non-resources project in Australia, the 340ha complex is proposed to be built on cane fields in the sleepy seaside suburb where a timber shack with a garage underneath is considered to be high-rise. It seems Tony Fung — a Hong Kong businessman who last year burst out of nowhere with his plans for the mega-­casino resort — has got almost everyone on side. Politicians are talking it up, businesses are making plans to expand and families are designing extensions to their homes to rent to the 9000 construction workers and 10,000 permanent staff if the casino gets the go-ahead. It has sparked a frenzy of support in Cairns, where a multitude of ills — severe acute respiratory syndrome, the global financial crisis, cyclones and lack of new investment — has depressed the local economy to the extent that it has the highest youth jobless rate (21.6 per cent) in Australia.

The high-rise description appears incongruous with such as the beachside unit of Warren Entsch, member for Leichhardt, however. The report then includes critical commentary from Professor Jon Nott on the location; Pam Bigelow from the Yorkeys Residents Association is also opposed; and Justin Fung was interviewed from Hong Kong.

I can't recall it being previously reported that the Fung family was actively funding some community groups which support the development? Mind you there is also other news reported from inside the circus tent and disappointment expressed with the Newman Government.

With the resort set back from the beachfront, and sealed off from the neighbouring waterways, Tony Fung had hoped to avoid a drawn-out approval ­process. 
Labelled “the bad boy of the stockmarket’’ by the HK Economic Times, he has had a simple message for the Newman government since announcing his plans last year: approve the resort quickly, or he will go somewhere else. 
One senior official, involved in the assessment of the project, said that pressure to approve the resort quickly was intense, especially as the state government approaches an election, due early next year. 
“It is a frenzy up here — people are desperate to get this thing happening, ‘’ he said. 
“And it is not just Fung either; the locals are pushing hard, and anyone who raises questions or concerns is shouted down or lined-up.’’ 
Mr Fung has repeatedly warned that he will go to Japan, The Philippines or South Korea — where casino licences are soon to go onto the open market — if he is made to wait too long. 
"The window of opportunity that is available to us is limited … there are a lot of people going after a piece of the action and the competition for me is not Mr (James) Packer or Echo (Entertainment) but from other countries,’’ he said last year.

Should he choose Japan then Mr Fung will indeed run into competition from Packer who is reported today to have plans for a $5 billion proposal. Japan is similarly opening up to casino developments via a competitive process and Sheldon Adelson from Las Vegas Sands has also previously said he will spend whatever it takes there.  Unlike the still absent Tony Fung the latest Forbes billionaire reports list Sheldon at US$ 40.8 billion.
The decision last year to call for a competitive process is understood to have enraged Mr Fung, not least of all that it delayed the project’s earliest date that it can begin building by at least a year, to next May. 
He sacked his local lobbyists — including former conservative premier Rob Borbidge — before rehiring him in the new year.

Yet again the Cairns-friendly Fung family on closer analysis don't sound quite so cuddly after all in this report? However the risk of withdrawal from the project is assessed as low:
But he is unlikely to make good with his threat and pull up the surveyor’s pegs on the project anytime soon.

The Aquis Casino FB page has reposted The Australian report in full contradiction of copyright laws with a typical commentary response from the bogantariat:
Tanya Knepper please don't give up by going to Japan, The Philippines or South Korea, there is so much more here that will attract visitors to this picturesque place, where the rainforest meets the reef, at least make them say no to your license first, and if they do, those responsible wont get my vote in upcoming elections.

Tanya actually seems to live in San Francisco and her FB preferences display a keen interest in the paranormal!

Meanwhile good mate Nick Dalton at the Cairns Post has assured everyone that everything will always be OK environmentally and stuff because the consultant says the proponents have enough cash to solve any problem! How would the planning and environmental consultant know that? I think there should be a hefty security lodgement on this one actually similar to what is required of any mining development?

Nick has based his most recent report on recently lodged documents at the Fed Environmental department.

Aquis Resort at The Great Barrier Reef Pty Ltd/Commercial development/Yorkeys Knob Rd, approximately 13kms north of Cairns/QLD/Aquis Resort and Casino at The Great Barrier Reef 

Saturday, April 5, 2014

Cairns population growth estimates by suburb

The ABS released regional population estimates earlier this week which has the Cairns Post lamenting the current rate of growth: Cairns lags behind the rest of Far North Queensland in the population stakes
The Australian Bureau of Statistics has revealed Cairns had a population growth of 1.9 per cent from 2012-13, the slowest of any major city in northern Australia. Townsville, Mackay, Rockhampton and Darwin all recorded bigger growth.
Apart from that headline requiring some geographical editing this should also be kept in perspective. That population growth rate for Cairns is in line with the Queensland average. Perhaps the headline could have been that all the northern tropical cities continue to grow above the Queensland average?

Those numbers are also Local Government Areas (LGA) and in comparing cities perhaps the Significant Urban Area (SUA) may be more appropriate. Cairns SUA grew at a slightly faster 2.0% rate which is the same as Brisbane, Sunshine Coast, and Gold Coast. Rockhampton SUA growth is 0.2% lower when the Capricorn Coast/Livingstone Shire area is removed from the LGA while Cairns growth rate increases 0.1%. Amalgamation & De-amalgamations are not yet incorporated in the LGA estimates.

In line with this it is also noted that in the state electoral division data (SED) that Cairns at 2.1% grew faster than both Barron River and Mulgrave which extend out beyond the city SUA limits. This is the SA2 population growth estimates chart of the range for the Cairns suburbs:

 
Trinity Beach-Smithfield was easily the largest there in terms of total growth in numbers however some of the growth rates here may surprise slightly (Manunda?). These are estimates from ABS based on a number of factors.
 

Thursday, April 3, 2014

Sqwarking parrot overwhelms shark jump as tourism attraction!

So it came to be that the Member for Cairns came to announce positive economic news for Cairns via his Facebook forum of ignorance and sycophancy:
Three bits of great news released on the economic front today:
 * The QLD tourism industry contributed $23 billion to the state economy in 2013 - an increase of $3.5 billion since the 2012 election - and tourism jobs increased 13 per cent over the last two years (source: Australian Bureau of Statistics) 
Well, yes, that is only one bit and issue will be taken subsequently with the Parrot also reviving faith in the property price Ponzi as a source of economic growth. Not sure if he cleared this first with Guvnor Glenn?

However, when it comes to the numbers above it is noted that he has since adjusted the source to the State Tourism Satellite Accounts from Tourism Research Australia. The numbers he has posted are copied from a media release by tourism minister Stuckey. I must say these accounts make fabulous use of input-output multipliers! Which is subject for a future post!

I'm not sure and will check where the $23 billion comes from but presume it relates to tourism consumption rather than GDP or other measures in the accounts? (refer to comment below from pete Faulkner at Conus). The numbers here also relate to financial years with these most recent accounts for FY2013. Consequently any reference to changes "since the 2012 election" are spurious anyway, or what some would call a "lie".

The employment number over two years is particularly interesting also. Again, the numbers here relate to financial years with most recent FY2013. So the 13% increase is since FY 2011 which was the most depressed low for Queensland tourism and the year when Anna Bligh famously declared that Qld was underwater.

Almost all of that increase was actually a recovery in FY2012. When was the election again? The increase in FY2013 was actually a quite low percentage but will check and post a graph on that as there are a few different numbers in these accounts to digest.

Wednesday, April 2, 2014

Still more work to do on building approvals (updated)

The ABS building approvals for February were released today with commentary at the following links. Care must be taken again between seasonally adjusted and trend data when interpreting reports. The seasonally adjusted has been quite volatile in recent months.

Conus: Building Approvals trend still strong. Local data also stronger

Macrobusiness: Dwelling approvals retrace

The Conus Trend series (linked above) is showing annual increases of 30.6% for Cairns and 2.4% in Townsville. This should however be seen in the context that approvals in Cairns so far this FY still remain about half those of Townsville. The HTW Month in Review was also released today. While this is not updated for todays approval numbers it provides an interesting context.

Cairns building approvals have increased in trend terms by 47% between January 2013 and January 2014. While this is welcome news it is hardly boom times for the local construction industry given that the increase has come from such a low base. It really means that housing construction has recovered from 20% of 'normal’ to 30% over the past 12 months. Furthermore all of the increase thus far has been in house construction, apartment construction; is still non-existent.
I presume commentary here is mostly from Rick Carr who also posted his latest CairnsWatch last week. Housing approvals in Cairns remain skewed to the 'north' with over double the approvals in February compared to the 'south' (South also includes most of the central city area in the SA2 data).

 
Update: Pete Faulkner at Conus has taken issue with the HTW numbers with an updated post: More on Cairns building approvals

Although there is no doubt that approvals in Cairns are recovering from a low base, we would take issue with HTW's comment that we are now sitting at only 30% of normal. The most recent peak of approvals (back in late-2009/early 2010) saw trend approvals at a shade under 90 a month. We are presently therefore sitting at just over 50% of those levels.
There can sometimes be some curiosities at times in the HTW trends and I prefer to accept the Conus numbers. It could also come back to what period you are talking about to define "normal" and the chosen period can make a difference!

The pre-GFC construction boom was clearly one of overbuilding in Cairns unrelated to underlying economic activity rather than financially infused madness. Inclusion of that period, and depending on a starting date, will also inevitably skew outcomes.

Numbers relative to population and population growth may be a better guide. Rental trends suggest Cairns has been 'underbuilding' while Townsville and Mackay have been ''overbuilding' and continue to do so despite the underlying data?




Monday, March 31, 2014

Missed it by that much!

The Cairns Post carries a further report today on yet another in the series of backflips that will again see Aquis register interest in one of the two new regional casino licences in addition to the Reef bid: Aquis mega-resort at Yorkeys Knob developers place bid for regional integrated resort

However what caught my attention were the following comments from our favourite business editor:
In documents lodged on the Reef Hotel Casino website, the Fungs reveal a complicated structure of the Aquis Group which is 100 per cent owned by Tony Fung, who also wholly owns Aquis At The Great Barrier Reef Resort company.
He has established an offshore wholly owned holding structure, believed to be in the Marshall Islands, that owns: Aquis Reef Holdings which also owns Aquis Reef Operator Holdings which is buying Casinos Austria International Cairns (operator of the casino); Aquis RE Holdings, which is acquiring Reef Corporate Services (manager of the hotel casino); and Aquis Casino Acquisitions, which is buying the Reef Hotel Trust (owner of the casino and hotel).
Believed to be in the Marshall Islands? I thought we had pretty well documented the corporate links to the British Virgin Islands which are easily verified by an ASIC search for these companies. In fact it could also have been found by Nick in section 4, page 19, of the Aquis bidder's statement.

Never mind, a distance of a mere 13,259 km or 8,239 miles is pretty good by Nick's standards!

A = Marshall Islands; B = British Virgin Islands

The world's most notorious tax haven was not impressed by the leaks and their adverse impact on business. The leaks included some of the information previously posted on Tony Fung's BVI corporate connections. Apparently I could now go to prison for up to 20 years in the BVI for publishing such information, double the sentence for child pornography as reported by The Economist: Going overboard

Meanwhile a story a few years ago in Hong Kong Economic Times - iMoney on elder brother Thomas also offers some perhaps slightly different and less sycophantic perspective to the reports by the Cairns Post on Tony Fung ("the bad boy of stock markets") and also perhaps not entirely consistent with the brief history provided in the bidder's statement?

Sunday, March 30, 2014

Boardwalk democracy demands a free Taiwan

It was a beautiful evening on the Cairns Esplanade today. The highlight was actually a free Taiwan democracy protest of some sort. Take that Chinese tourists!



There were no media cameras noted however I have seen far more poorly attended protest events appear in local evening news broadcasts. Exceptional organisation and co-ordination skills included a march along the boardwalk and more exotic chants to replace the usual "what do we want" etc! Well done although the detail was lost without language translation!!

I must say it was much better entertainment than the fire-twirling busking for which that particular location is renowned!

Saturday, March 29, 2014

Victoria steals our lunch again!

The ABS released updated population estimates and the cosmopolitan café culture in Melbourne continues to steal our lunch eh!

Interstate migration was once the main driver of population growth in Queensland but has continued to lag recently. Gene Tunny at Queensland Economy Watch has a couple of good posts on this:

Interstate migration to Qld remains low, probably reflecting sluggish labour market

Queenslanders moving to Victoria

There is an excellent graph from Gene there on population movements between Victoria and Queensland which is now actually net negative on these most recent numbers. Victoria, along with WA, is now the beneficiary of net interstate migration.

There was an explosion of migration from Victoria in the early 1990's "recession we had to have" when the Victorian economy was hammered and refugees took to the roads in caravans with their scant remaining possessions. Many ended up in FNQ economically insulated by capital inflow from the then Japan bubble.

Anyway, this is my chart of sources of annual Queensland population growth rolling quarterly demonstrating the decline in interstate component:


The significant growth of overseas net migration reflects a national trend rather than anything specific to Queensland. There are also some similar trends here with recent posts on where short term visitors to Australia spend their most time.

The significance of cultural attractions for both tourism and a resident population should not be lost particularly in context of some of the appalling redneck levels of local debate around just that in Cairns in recent years on the value of cultural investment.

However the team at Macrobusiness also continue to raise concerns around the Melbourne economic model as they have done for some time: Melbourne's population Ponzi means it must grow

Thursday, March 27, 2014

Reef bidders and targets statements

The bidders and targets statements for the takeover by Aquis have been posted this week and are available for download at Reef Casino Trust. Most interest is probably in the independent experts report within the target statement which has determined the offer fair and reasonable and I will peruse in due course.

Perhaps the first thing any holders should note however is "when will I be paid?" Effectively this wont be until up to a month after all the conditions have been waived or fulfilled. It has been indicated the process and conditions which includes probity and approval for transfer of the Casino licence may take some months so immediate acceptance wont necessarily bring any cash in a hurry. There may also be aspects around the timing of the next distribution to clarify?

Information in the bidders statement doesn't really provide any greater illumination on the Fungs. There is a detailed list of the family investments in Queensland but only a vague reference to "two major Chinese property development projects".

Fung is described as having been a private investor since the exit in 1996 from Sun Hung Kai which had been founded by his father in 1969. This doesn't appear to be strictly correct from my research with no mention of his subsequent interest in Yu Ming which some media reports have claimed as the source of his billionaireness.

There have also been changes in the corporate structure. The offer for Reef Casino Trust is from Aquis Casino Acquisitions Pty Ltd. At the time the offer was announced this was held wholly owned by Tony Fung in his own name with an address in Hong Kong. This has now been shifted earlier this month to within the holding structure ultimately held in the British Virgin Islands.

 
Sources of Consideration (section 4) also provides further detail on the structure and source of funds:
 


That may comply with the probity standards of the current Queensland administration but doubt it would satisfy my own standards as appropriate for a casino licence. Aquis at the Great Barrier Reef Resort Pty Ltd currently continues to remain outside that structure and held directly by Tony Fung

Disclaimer: I hold 5,000 RCT units through a super fund.

Tuesday, March 25, 2014

Oh dear no!

Gavin King
We've got a local tourism industry really firing & employing 1000s of people - so why aren't more of our local youth in those jobs?
Your thoughts: is it an issue with business owners or is it that young people are reluctant to take on entry level jobs?

 
I wonder why that booming tourism sector creating thousands of jobs doesn't show up in any employment stats? Perhaps the word "firing" has been misinterpreted here?

Monday, March 24, 2014

Brotherhood of St Laurence jumps the shark on youth unemployment

The Brotherhood of St Laurence have in recent months been campaigning on the worthy cause of youth unemployment. The most recent update from the Brotherhood is now being widely reported with some sensational growth forecasts: No jobs or attitude? Why are so many youths unemployed in Cairns?
Youth unemployment in Cairns is now the highest in the country and is reaching a crisis point.
Figures released by the Brotherhood of St Laurence yesterday show an 88 per cent rise in the jobless rate over the past two years and youth unemployment in the city at 21.6 per cent as of last month.
That figure is set to more than double by 2016 to 46 per cent if action is not taken.
The numbers here are derived from the ABS labour force survey. We know how volatile this is for the entire region, or even states, with frequent cautions on the sample size and even more caution is required for smaller subsectors such as youth employment. Conus has posted in recent months on the problems and issues here with the data and also applied a trend analysis, although still cautions on the reliability of this with some unrealistic anomalies apparent in the underlying data:

Cairns Youth Unemployment

Brotherhood of St Laurence and Cairns Youth Unemployment ...again
Youth unemployment in Cairns is clearly a problem but the Brotherhood's reporting, and seeming lack of understanding of some of the statistical difficulties, doesn't appear to be a particularly helpful way of progressing the issue.

I think that is too kind. I would actually call it beyond naïve to the extent of dishonest and appears to have been manufactured with deliberate intent for sensational media coverage.  The particular issue is the way they have taken unreliable regional data to extrapolate sensational "forecasts" of extreme levels of youth unemployment in two years.

The emphasis in the media release from the Brotherhood is on growth percentages and their extrapolated numbers for media consumption:
If it continues to rise at the current rate, the level of youth unemployment will hit 46 per cent in parts of Australia in 2016, the revealing analysis of the new data found.
Somehow we then move subsequently in the media release from this already stretched hypothetical to an analytical "forecast":

At these rates of increase, the new analysis forecasts youth unemployment by 2016 will hit:  46.0 per cent in Cairns.
This methodology is garbage in - garbage out squared! Had they extrapolated like that for a few more years they could have had a youth unemployment rate beyond 100% and really sent Nick Dalton into orbit?

Detail of their "analysis" is actually somewhat limited beyond the media releases so it isn't even clear how they have reached some of these numbers from what they have provided. I wonder if they would like to include underlying assumptions or implications on broader unemployment rates for the period?

I seem to recall a previous post on another worthy charity misrepresenting homeless statistics.


Update: Comments and analysis on youth unemployment from Jeff Borland at Melbourne Uni.

Thursday, March 20, 2014

Employment blues continue to play

The run of weaker employment data for Cairns continued in February with the latest ABS numbers out today. As always the Conus Trend provides the best acoustics to remove statistical and seasonal noise: Poor jobs data throughout North Queensland

If we now look at the far more relevant Conus Trend data the picture becomes clearer, but no more positive. In Cairns the only bright note is that Conus Trend employment, which has been falling every month since Mar 2013, finally registered an unchanged plot. The Conus Trend Participation Rate continued to slide (down to 61.5, the lowest level since we began the Trend series over 6 years ago) and the Conus Trend Unemployment Rate remained stuck at 8.5% (where it has now been since Nov 2013, following upward revisions to previous months). The Conus Trend Employment/Population ratio now sits at a new record low of just 56.5.
I'm still curious about some aspects of the changes made last month to statistical regions after trying to correlate some employment numbers between the new and old areas which didn't seem to make sense. Following last weeks widely reported job surge in the national data I also noted another rant from Ricardian Ambivalence: "Getting right to the point,  my view is that the Feb 2014 jobs report is bunkum"

Mr Ambivalence is always keen to point out that the labour force survey is designed to measure an unemployment rate rather than employment. However I have always thought that the employment numbers and trend must at least have some validity over time with our volatile regional data.

With the new (raw) regional data extending back to 1998 this month I have graphed the unemployment rate for Cairns v Queensland. This displays the percentage point difference between the two with a 12 month moving average:

 
Up until 2004 the unemployment rate in Cairns was on average below the Queensland rate. It may be possible here to conjecture a relationship between the subsequent period of a higher unemployment rate and the shift to a higher $AUD as a factor of significance?

Wednesday, March 19, 2014

Land tax as part of a regional strategy?

Amidst the current debate on debt and asset sales there seems to have been a faint hint this week that taxation measures could be on the agenda. The Queensland tax effort has previously been identified as an issue and the initial draft Costello report did make some suggestions here on the revenue side.

The suggestions included a broader application of land tax. Land taxes have been prominently supported in recent years including the Henry tax review. However one of the few revenue measures by Treasurer Tim was to instead hike insurance stamp duty, a tax which is supported by almost nobody.

I did comment on this at the time last year and how insurance stamp duty disadvantages FNQ relative to SEQ with an equivalent home insurance premium in Cairns roughly double: Insurance 'king hit' for FNQ

So based on the last few years land valuations what would happen if we instead replaced such taxes with a broader land tax?

 
That insurance stamp duty comparison between Cairns and Brisbane would be reversed to advantage FNQ. One would think such a land tax policy would actually be coherent with the stated regional development objectives of both State and Federal Governments?

Tuesday, March 18, 2014

February fade at airport

February is typically the weakest month of the year at Cairns Airport and not even the influence of the Chinese New Year period has been able to change that. Last months February fade continued the trend to dampen the previous months exuberance.

There was still an increase in passenger traffic of 2.7% at the domestic terminal over the previous February although this is well below the current annual growth at 6.4% and the strong growth in January. Again comparison is difficult because the lunar CNY straddled the two months this year more evenly.


 
International traffic continues to be more problematic and was weak in both the most recent months. The airport report numbers show a whopping 11.8% decline in February after meagre 0.7% growth in January. That is despite CNY and the reintroduction of direct flights. International is now down 6.5% financial YTD on the previous year.
 
There remain comparison issues with previous historical data at the International T1 yet to be resolved. I'm also not sure what Jetstar changes to the Cairns - Darwin - Singapore route may have on international and domestic mix.
 
Source: Cairns Airport