Thursday, April 14, 2016

Catching up with land valuations

Some info and graphs on the most recent 2016 Cairns land valuations from the Valuer-General have been posted at CairnsEconomy.

Tuesday, April 12, 2016

February Building Approvals

February building approvals data from ABS was out this week. Commentary graphs and links have been posted over here at CairnsEconomy.

A project in progress as much to organise information for myself as others and hopefully will make more sense in a few weeks time .........

Monday, April 4, 2016

4 Corners: British Virgin Islands revisited, again

Following tonight's 4 Corners on tax havens perhaps timely to repost a link from more than two years ago now: The Man from the British Virgin Islands

Sun Hung Kai Properties featured prominently tonight on 4 Corners. Childhood playmates of Tony Fung and the same source of inherited wealth.

There is no insinuation of anything improper from Tony Fung or Aquis in that connection. However perhaps it is about time for the Queensland Government to clarify whether they regard any significant investment or control from any BVI entity as the ultimate beneficial owner in a Queensland casino as acceptable or even a problem?

Friday, April 1, 2016

CairnsWatch Watch

The latest monthly HTW CairnsWatch for March was out yesterday. Through the first half of last year I had some problems with the airport trend analysis: Say what?. I have the same problem again although perhaps not as extreme.
"...passenger numbers at the domestic terminal (which also include international tourists arriving on domestic flights) have increased in trend terms by 8.3%. Overall passenger numbers at Cairns Airport have grown in trend terms by 10.1% over the period from February 2015 to February 2016."
Recent growth has been robust but I can't see how a trend quite that high can be derived. There has been a single month (January) with domestic growth above that in the last year.

Source: Cairns Airport
 

The trend line there is a simple 12 month moving average currently just below 5%. A 3 month average is 7.0%. Similarly the overall trend growth at CairnsWatch just looks a bit high to reconcile on current numbers.

Apart from that the most significant item of interest in this CairnsWatch is probably a move down in rental vacancy rate trends.

Wednesday, March 23, 2016

Right said Fred

Cairns Post: Fitzroy Island tour operator dismisses coral bleaching reports
Raging Thunder owner Fred Ariel, who operates day­trips to the island, said the only bleaching his staff had spotted at the fringing reef was very minor, covering a small car-sized area.
“Reading about it and hearing about it on the news that there’s bleaching on Lizard ­Island, and now Fitzroy Island – it’s bulls**t,’’ Mr Ariel said.

Would that be the same Fred Ariel who enthused a few years ago in 2010 about building a water pipeline from the PNG highlands: Businessman defends PNG water pipeline
An Australian businessman on Friday defended his ambitious plan to build a $US27 billion ($A29.97 billion) pipeline to transport fresh water from Papua New Guinea to the Australian state of Queensland as feasible.
Fred Ariel said his Might and Power company had signed a deal with the PNG government to complete a feasibility study into the construction of a 3000km pipeline to supply farming and drinking water.




Tuesday, March 22, 2016

Monkeys and airport data

Cairns Airport backed up after a strong performance in December with even better numbers in January. Again this wasn't just restricted to Cairns with other airports also reporting big numbers above previous growth trends:


JanuaryDomesticInternational  Total
Cairns8.9%19.1%10.2%
Gold Coast9.1%11.9%9.5%
Sydney6.2%9.5%7.5%
Auckland10.3%9.3%9.7%


However we also need to remember that this is the time of year when the Chinese lunar new year can distort trend analysis. January last year had been a rare negative month for Cairns because of this with a late new year. Year of the monkey still fell in February this year but a few weeks earlier towards January.

Source: Cairns Airport


Cairns Post:  Spike in Chinese travellers at Cairns Airport over New Year celebrations

Thursday, March 17, 2016

Cairns Unhinged: Bob responsible for lower $AUD and growth of China

Cairns Council Election 2016.
 
 
Lies, distortions and exaggerations. Not necessarily in that order.

Perhaps the Unity link headline should really be "Bob claims credit for lower $AUD and growth of China" 

Wednesday, March 16, 2016

Rating the rates benchmarks

I have managed to avoid most of the council election brouhaha until this week but that is always especially difficult for me when it come to council rates. The Cairns Unity team and Mayor are running aggressively on their performance re finances and rates. They have presented this graph as part of their social media campaign: Residential Rates Benchmarking



How to assess and rate this graph? The first thing that stands out is that truncated y-axis which is listed #1 at How to Lie with Data Visualisation. There may be circumstances where a y-axis scale needs to be adjusted for relevance. This is not one of them.

While it does state that what is presented is a median residential rate it doesn't reference any source or more detailed clarification. Trying to compare council rates is time consuming and complex with different rates structures. I know that because I have done it, or tried to do it.

Does the comparison include payment and owner-occupier discounts offered by some councils? Does this represent both houses and strata units where there will be a different mix and rates structure for each council? It appears to represent rates inclusive of utility charges. Comparison of water charges can have its own problems particularly with SEQ where there are different arrangements. A single graph to provide a comprehensive comparison is probably impossible to achieve.

If I was scoring this graph out of 10 for me not providing a source reference is the equivalent of not giving Manu any sauce on #MKR. A huge negative. Similarly the y-scale is the equivalent of undercooked chicken, or in this case they have overcooked the graph. While I have always agreed that Cairns rates are generally competitive and comparatively low, which is not new or just a consequence of the current council, I would score this graph only 3 2 out of 10 as a reliable and valid presentation of that.


So how to score this response from Connect Cairns via Twitter ?




I think my response to that Tweet on Twitter was a succinct and probably adequate expression of my contempt. Connect also lose points for degrading Twitter to the standard of Facebook. I score this a negative. Minus 5 (-5). Take it away, it stinks.



Further links: Local Government Comparative Reports;  Benchmarking council rates

Tuesday, March 15, 2016

Doing the sums for Bob

Cairns Unity via Facebook:
Under Bob Manning’s leadership, the Cairns Regional Council committed $3 million to the Cairns region for the tourism industry in the most recent budget; a 600% increase from the $500K committed by the previous Council.

Comment response:

Sorry for being pedantic but that's actually a 500% increase and not a 600% increase. It really is fundamental numeracy and rated Year 9 level at mathsteacher.com.au. I guess candidates for council don't require that level? Anyway here is a handy online calculator to assist councillors with the next budget: http://www.csgnetwork.com/percentchangecalc.html
 
Politicians for some reason just keep getting this wrong: Doing the sums for Trouty. The same adjustment usually has to be made for any similar numbers from Entsch on insurance premiums.

It also isn't at all clear to me that the numbers used by Unity to derive the incorrect percentage are themselves correct or a relevant comparison? Without trawling through all the available reports and budget documents this link to council minutes from 2011 indicates funding in the last 2011/2012 budget year of the previous council at an annual $480,000 plus an additional $400,000 to support a strategic plan. Which isn't consistent with the Unity numbers.

There is probably a good post also sometime on whether any increase in the tourism budget has been justified by performance? Tourism boom continues…some surprises for TNQ ;

Tuesday, March 8, 2016

Insurance taskforce report response not quite the sound of crickets

After sitting on it since November the Northern Australia Insurance Premiums Taskforce finally dropped their Final Report into the public domain last Friday, a day of the week when all good news is released. I had been thinking the response had been rather muted if anything:
Cairns Post: Mitigation only way to bring down FNQ insurance premiums
AFR: Insurance task force dumps on northern Australia mutual
Insurance News: Entsch unimpressed, but insurers welcome premiums report
Insurance Business: Taskforce reveals Northern Australia recommendations
Insurance Council supports findings of Northern Australia Insurance Premiums Taskforce

But wait? There is outrage from a not unexpected source of the typically variety:
4CA: Where did it all go wrong
4CA: Entsch's response to Insurance Taskforce's recommendations Source

There are the usual number of statements and assertions there from the Member for Leichhardt and his media acolyte which deserve more critical attention and fact checking when time allows a more thorough perusal of the report.

The most interesting reading may actually be in Appendix C: Financial Impact of Proposed Cyclone Schemes

Friday, March 4, 2016

Black hole envelops Douglas

Gavin King on the Cairns Regional Council budget, Cairns Post 2008: black holes and supernovas


People with black holes where their brains should be accuse me of being too tough on Cr Schier and the council.
So, instead of my opinion, let’s deal with the facts.
It is a fact that your total rates bill will rise by at least 15 per cent.
Cr Schier’s claim that rates will rise by just 7 per cent is misleading and yet another example of a public relations department using spin to mask the truth.
Cr Schier is about to buy a house after some years of renting so she may have forgotten that ratepayers fork out money for a total bill, including all of the fees and charges.
That total bill will be a minimum of 15 per cent higher than the last council rates bill we paid.


Gavin King on the Douglas budget and election, Newsport 2016: Douglas Shire’s great rates fiasco

There are some basic fiscal facts in black and white that nobody can deny, not even the staunchest, most optimistic of Leu supporters.

Under the leadership of Leu, Douglas Shire Council last year signed off on rate rises of 5.2% every year for the next four years stretching out to 2020.

They also signed off on a 3.6% rise in council fees and charges over the same period. That means the cost to dump your rubbish is going up and the cost to run your business in the shire is going up. Even the cost to register your dog is going up.

When combined with rate rises, this all adds to the pressure on your household budget and the cost of living in Douglas.

On paper, it’s a combined increase in the cost of living for Douglas ratepayers of nearly 9% every year for at least the next four years.

Let me repeat that. Rates, fees and charges are predicted to rise by nearly 9% every year. For the next four years.


Apart from other similarities can you spot the very basic numerical 'mistake' evident in both? What King had done in 2008 was cumulatively add the percentage increases of the council rate components  and abolition of the early discount to derive a percentage increase a multiple of the actual outcome.  The stated 15% minimum "fact" for all ratepayers was in fact probably unachievable even as a maximum for any single ratepayer with a significant property revaluation. My own rate increase that year was approximately zero.

The Post and King were made aware of this so it all but defies credibility that this is exactly the same mistake of kindergarten innumeracy repeated in King's latest effort at Newsport? The percentages again appear to have been added cumulatively to derive a "combined increase" of 9% (rounded) which would be approximately double the actual annual percentage increase.

King has pointed out that the Douglas rate increases are well in excess of inflation. However perhaps a comparison of rates increases and CPI should also be done on a consistent comparable basis. The ABS provides a breakdown of CPI components.

*enable sarcasm font here*

DECEMBER KEY FIGURES

Sep Qtr 2015 to Dec Qtr 2015
Dec Qtr 2014 to Dec Qtr 2015
Weighted average of eight capital cities
% change
% change

All groups CPI
0.4
1.7
Food and non-alcoholic beverages
0.3
0.4
Alcohol and tobacco
2.7
6.0
Clothing and footwear
1.6
0.5
Housing
0.1
2.2
Furnishings, household equipment and services
0.6
1.9
Health
-0.4
5.3
Transport
-1.4
-1.4
Communication
-2.4
-6.3
Recreation and culture
1.6
1.7
Education
0.0
5.5
Insurance and financial services
0.8
1.8
CPI analytical series
All groups CPI, seasonally adjusted
0.4
1.7
Trimmed mean
0.6
2.1
Weighted median
0.5
1.9


If we apply the cumulative innumeracy method of King we would add up the change in all those components for the year and derive a CPI of 19.3%. Sheesh with rates increases at just 9% no wonder Douglas has a budget problem!

*disable sarcasm font here*

Sadly this only detracts from a real issue of underlying fiscal weakness in Douglas and sustainability of the budget as well as the opacity of the Leu council with regard to that. The commentary referenced from Conus at the Newsport post appears to be valid constructive criticism on this and also consistent with previous comment here at Loose Change: De-amalgamated Douglas Shire


Update: The Newsport post has since been updated and edited to remove the innumerate 'mistake'.

Update: 4CA; Where does this 22% come from? Oh dear!

Wednesday, March 2, 2016

Queensland: still the dump state

Back in 2012 I did a couple of posts on the policy of the newly elected LNP gummint to dump the Qld waste levy which had only been recently introduced: Queensland wasted: doing the sums for Trouty ; Queensland: The Dump State?

The member for Barron River (Donald Trout?) was particularly hyperbolic and blamed the levy for everything from inflation to an alleged collapse of the construction industry. Another rejection from the political right of market based pigovian taxes which should really form part of their core policy approach in a rational world.

It was actually a sound policy and its dumping left Queensland as the only state without some form of pricing policy for waste dumping to landfill. This resulted in reports of interstate arbitrage from NSW where the Liberal gummint had only recently hiked their waste levy:
Drivers heading north on the Pacific Highway will be jostling a rising number of B-double trucks following a decision by the Queensland government earlier this year to remove a levy on waste going to landfill.

Dumping over the border was a bit controversial at the time with calls for measures to prevent this. I hadn't heard anything since so presumed some solution may have been found but apparently not: Queensland could fine NSW businesses for dumping
NSW businesses bringing rubbish across the border to dump it in Queensland could soon be fined.
Queensland Premier Annastacia Palaszczuk said fines were one of the ways the government was looking at to address the problem.
The practice developed after the former Newman government scrapped a $35-a-tonne waste levy, making it cheaper for NSW business to bring their rubbish over the border to dump it in Queensland.
Ms Palaszczuk has ruled out replacing the levy during this term of government, given Labor's election commitment to introduce no new taxes.
"I am concerned about the amount of trucks and rubbish that are coming from NSW into Queensland, so ... maybe we need to look at fines," Ms Palaszczuk said.
"This is a serious matter and I'm prepared to look at that."

One would think taxes (and fines?) targeted against another state may involve constitutional issues? Perhaps a solution is to simply implement a sound pricing policy again but that may take a gummint with a modicum of guts?
  

Tuesday, March 1, 2016

Tropical North Qld heating up

'Tropical North Qld heating up' is the title of a stockbroker analyst research report following the half yearly results from Mantra Group (MTR) last week. However there is no actual mention of TNQ anywhere in the report from Macquarie. Perhaps that was a reference to the weather?

What was highlighted in that report was a strong result from the resorts sector where Mantra does have a significant presence in TNQ which makes up a good chunk of the resorts portfolio outside the capitals.

TNQ was specifically referenced in a previous Macquarie research report in January:

MTR area manager for Tropical North Queensland (TNQ) recently commented in the press that occupancy in the 11 hotels under his supervision is up ~5% on last year, and the first quarter is looking 'really positive’. Demand is strong in both the domestic and international markets and MTR is actively looking to add to the domestic and international markets and MTR is actively looking to add to the number of properties in TNQ (source: Cairns Post 30 and 31 Dec). While we don’t have comparable data for the Gold Coast, we also expect it traded well over the holiday season. Recent airport data are also supportive, with Sydney and Brisbane airports reporting December domestic passenger growth of +5.6%, the strongest growth seen for some years.
 
Yes, this same paragraph of high quality research from Macquarie is not only based on a media report sourced from Nick Dalton at the Cairns Post but repeats the typo error of 5.6% domestic growth posted at BNE for December (now corrected after they were notified). I guess that's why elite research analysts at MacBank get paid the big bucks?

Anyway, the half yearly results presentation direct from Mantra indicates occupancy growth of 4.7% across the resorts portfolio for the period, so it looks like that growth was quite broadly based rather than just specific to TNQ.
Occupancy increased by 4.7% as a result of increased demand for Australian holidays from domestic and international travellers.
Average room rate increased by 9.2% as a result of the increased demand, particularly in Queensland destinations

The combination of those two factors resulted in an increase in RevPAR (revenue per available room) of 14.3% for resorts. In the capital city CBD portfolio results were more mixed: 
RevPAR decreased by 0.6%. This was principally as a result of the reduction in demand in Brisbane, Perth and Darwin which resulted in reduced average room rates. Excluding these regions, occupancy and average room rate increased by 2.0% and 2.9% respectively.

Mantra is a pretty good bellwether for the sector being a pure accommodation play in Australia and New Zealand (plus a couple in Bali) with high tourism exposure along with the transparency and regular reporting of an ASX listing. Mantra brands also include Peppers and Breakfre.

EVT is also an ASX listed entity with exposure to TNQ (Rydges and QT Resorts) but includes substantial cinema operations as well. EVT half year results commentary particularly noted a "difficult trading environment" at Rydges Gladstone and Rydges Townsville.



Note: Intended as general information on the sector and not investment advice. Also Macquarie has a relationship with Mantra including a role in  promoting the 2014 IPO so any positive research from them should consider that context.

Thursday, February 4, 2016

Airports up up and away for summer

Cairns Airport reported strong growth in December with international up 22.9% and domestic up 6.9% on the previous year. While the international recovery has sustained recent momentum it is the domestic number there which is particularly impressive given the relative scale and contribution to trend growth.

 
 
December seems to have been an exceptional month elsewhere as well. Traffic through Sydney was outstanding given its size and scale with domestic up 5.6% and international 8.6% for a total 6.7% growth. All well above trends "driven by strong load factors and seat capacity growth". Domestic was the strongest monthly growth since 2012 with seat capacity also up 4.6% on the previous year.
 
Qantas has previously flagged a shift in capacity from resource related to tourism routes. Gold Coast hasn't yet posted numbers for December but to November has reported total passenger growth of 5.1% for the first five months of FY2016 with double digit growth in international at 12.2%.
 
Over the ditch in the rebellious eastern provinces Auckland Airport (AIA) also continues the growth story. International (ex transits) was up 8.8% in December and domestic (NZ) up 10.8%. AIA also operates Queenstown Airport which completed a big 2015 with international +25.9% and domestic + 10.1% for the year. Monthly domestic was up 20% for December at Queenstown and international 26.8%. AIA is also a stakeholder in NQ Airports (Cairns & Mackay). Mackay was down 11% in December on the previous year in line with the resource sector weakness.
 
Brisbane is more problematic with posted December numbers containing apparent errors. Brisbane reported growth of 5.6% in both domestic and international. However domestic appears actually to be just 2.5% based on the raw numbers posted? There is also a discrepancy of a thousand in adding up the totals for the month. One hopes the person counting heads at Brisbane is not also responsible for air traffic control. 
 
ABS arrivals and departures data for December is scheduled for release at the end of next week.


Thursday, January 28, 2016

Cultural icons and avocados

Michael Pascoe took issue with the Australia Day lamb promotion as a triumph of marketing over history: Vegan-stirring lamb ad pulling the wool over our eyes

How did a Kiwi icon become the Australian national meat? If anything it should be mutton but when was the last time you saw mutton on Masterchef or even in the pet food section at Woolworths? Food traditions evolve rapidly which brings us to avocados and the price thereof.

A relatively recent arrival the avocado has been adopted by Strayans with relish. It has become an icon of our burgeoning café culture. Cartoonist Jon Kudelka has suggested a smashed avocado as replacement for the Union Jack in any new flag design.

However it would appear that demand has recently surpassed supply with skyrocketing prices. A spat has broken out within the avocado community with finger-pointing claims of market manipulation, denials and counter-claims. Apparently we will have to wait for the Queensland Shepherd variety in March to restore reasonable prices.

The truth behind the avocado shortage: growers made 'innocent mistake'

Australian avocado crisis explained

Avocado growers reject market manipulation claims amid national shortage

Australians Aghast At National Avocado Shortage

The national avocado shortage is going to get worse

So spare a thought for our world class café entrepreneurs, culinary cultural warriors who this Australia Day were confronted not just with public holiday penalty rates but usurious costs for their smashed avocados!