Saturday, December 31, 2011

Retail regulation archaic

The Post reports that Cairns Central shopping centre is backing the deregulation of shopping hours in Queensland. 
Cairns' largest shopping mall has backed the campaign and said current regulations and trading hours were "out of touch" with southern states.
Cairns Central marketing manager Suzy Pickard said it supported any regulatory change to make shopping more convenient for customers such as extended trading hours.
"The current regulations and hours in place do seem out of touch with other states, and do appear to disadvantage the productivity of Queensland retailers and limit the flexibility of when Queenslanders can shop," Ms Pickard said.
The Australian National Retailers Association, which represents businesses turning over at least $100 million annually, wants deregulated trading hours, as recommended by a Federal Government report.
The Productivity Commission has recommended deregulation of shopping hours and specifically pointed a finger at Queensland. Having shopping hours regulated by the QIRC is somewhat archaic. Political support for retail deregulation prior to the forthcoming election would be a (pleasant) surprise. Queensland Economy Watch has previously posted on the PC report and regulated shopping hours.

We probably don't notice the restrictions as much in Cairns where more liberal trading hours are permited for tourism. However, the situation earlier in 2011 where Easter and public holidays closely coincided was diabolical. The Sheridan St IGA which traded throughout the period in the city was stripped of many products, including fresh produce such as meat, with visitors almost having to fight over the last available packet of mince or resort to pet food..

Queensland still under water?

The Port Phillip Leader has reported that Queensland remains flooded: 

"AFTER swamping floods and battering cyclones during 2011, a great part of Queensland is still under water."
Perhaps they were refering to the local economy? Apart from that it's a very positive review of Palm Cove and the tourist attractions of the Far North.

Tuesday, December 20, 2011

Indonesian Beef

An interesting post at The Conversation by Clive Peters from the Centre for Animal Welfare and Ethics at UQ:  Australia owes Indonesia an apology over live export calamity

However, the affront to Indonesian pride by Australia’s ban on the trade, apparently without consultation with Indonesian authorities (let alone Australian cattle producers), has set back the trust between the two countries a long way. To act in this way with our closest neighbour, one of the world’s major trading nations since the seventh century, was disrespectful. It provided the perfect incentive for Indonesian authorities to reaffirm their intention to become self-sufficient in beef production, an aspiration that they have held for at least 30 years.
Beyond the ethics this also reveals the irrational economics of the Indonesian policy of self-sufficiency in beef production and the costly environmental externalities:
The only way in which this can happen is by cutting down native forest in less populated islands, such as Sumatra, Irian Jaya and Kalimantan in Borneo, thereby providing jobs to the rural poor, stemming the migration to cities and reducing reliance on imports to maintain food security. Indonesian authorities have been settling people from highly populated Java to Sumatra for over four decades, and with United Nations assistance, provided them with cattle from which to make a living. The transition from forest fringe, small-scale agriculture to cattle farming has met many difficulties: disease outbreaks in the cattle, poor productivity, unsuitable ecosystems for livestock farming, soil erosion and lack of forage for the animals.
Well, it would be irational if we were a reliable supplier. The Indonesian policy reminds me of  a tropical version of Allen Sanderson's satirical call for a coffee industry to replace aoutomobiles in Detroit.

Sunday, December 18, 2011

Plains of Promise

The latest proposal to develop agriculture in North Queensland was announced this week. Bob Katter is reported to be delighted but sceptical at the same time.

The Gillard and Bligh Governments will invest $10 million in an historic plan that marks a significant step forward in realising the potential of new irrigated agriculture in the Flinders and Gilbert catchments in north Queensland.
Federal Minister for Regional Australia Simon Crean joined Queensland Premier Anna Bligh and Queensland Minister for Agriculture Tim Mulherin in Richmond to announce the North Queensland Irrigated Agriculture Strategy (NQIAS).
The $10 million investment includes:
  • $6.8 million from the Federal Government, (including $800,000 from CSIRO), for CSIRO to conduct a comprehensive assessment of surface water storage options in the Flinders and Gilbert River catchments, and identify new irrigated agriculture techniques that could be extended right across northern Australia;
  • $3 million from the Queensland Government to undertake on-farm demonstration projects and systems analysis to develop practical farming approaches; and
  • $200,000 in shared funding for a feasibility study to develop a meat processing facility in north Queensland.
Indonesia this week also announced big cuts in live cattle exports from Australia perhaps contributing to the push fopr meat processing. Australian Agricultural are also developing an abbottoir near Darwin as well as a proposal for a boutique abbottoir near Broome.  

Friday, December 16, 2011

casino pays out

Reef Casino has announced its estimate of final distribution for the year and further improvement in trading, albeit with a caution on the financial outlook. Profit for the first half of the year was $4.6 million.  

Rental growth from the Reef Hotel Casino has continued in the second half. Our current estimate of the distributable net profit for the full 2011 year is between $11 million and $12 million or between 43.7% and 56.7% better than 2010. While distributable net profit for 2011 is estimated to be better than 2010, the estimated total distribution for 2011 of 20 cents per unit is maintained at last year’s level due to continuing economic and financial uncertainties arising from financial problems in the Euro zone and the undertaking of
Project L2 at the Reef Hotel Casino. Work on Project L2 is set to start in early 2012 and it will be a complete renovation of Level 2 of the casino at a cost of $2.5 million.

Thursday, December 15, 2011

Unemployment: everything goes up

The latest employment data from ABS does not appear to be encouraging with the unemployment rate for the Far North in November up again to 9.2%. However, the underlying story for this month was that everything went up.

The number employed was up by 4,400 from the previous month, which is above average for the year. The number unemployed was also up by 1,300 as the participation rate rose by 2.6 percentage points. That participation rate is near the top of the range for the last year.

The volatility in this monthly data can be seen in the female unemployment rate which has gone from 10.1% in June, down to 4.7% in September, and now back up to 9.8% in November. These subsets are typically flagged with a warning on sample size.

Loose change has been quietly gazing at the economic storm clouds in Europe while trying to comprehend the narrow teutonic mind and it's belief  in the virtuous contradiction of an expansionary fiscal contraction (separate post required). Unemployment in Spain is above 20% with youth unemployment (under 25 yo) at 46%!

P.S. With all this unemployment about can anybody advise of a good reliable roof plumber who can complete some roof repairs with less than a months wait?

Saturday, December 10, 2011

Percentage Points

xkcd is always fun and this revived recollections of some of the problems that the King Parrot, now the LNP candidate for Cairns, had with basic percentages during his previous career in what now passes for journalism.

Wednesday, December 7, 2011

Tableland tea time

Tea may not be our highest profile local agricultural product so it came as something of a surprise to discover that the Atherton Tableland provides for 15% of Australian domestic tea consumption: 'Rain, sun and love' make Tableland tea a top notch drop.
North Queensland may not be the first place that springs to mind when you think of the great tea-growing regions of the world. But, just like the misty, terraced hills of Sri Lanka, mountains of west China and Assam in the foothills of the Himalayas, the Atherton Tableland has all the essential natural ingredients for producing top quality tea.
The post does make it clear that the Tableland is not in a position to be a bulk commodity exporter of tea and is reliant on a quality branded product into the domestic market. A search of my usual chart source provided nothing on tea, however this link to auction prices in Kenya indicates that tea has been quite a solid performer among agricultural commodities, doubling over 10 years.

Coffee prices have outperformed tea over that period and remain a standout among agricultural commodities coincident with the explosion of the coffee culture. High profile demographer Bernard Salt, a tea drinker, has taken exception to the coffee culture and demanded that Tea drinkers must rise up against the coffee-swilling elite!

Monday, December 5, 2011

Visa Pricing Transformation

An aspect of the MYEFO revenue measures last week which has drawn little comment were changes to Visa charges:
The Government will restructure visa application charges (VACs) bringing them into line with international benchmarks, increasing revenue by $613.3 million over four years. This measure is also intended to encourage online processing, resulting in a more efficient and sustainable visa processing system.
Loose Change is ignorant of the complexities of visas and whether such charges are significant for visitations, although it wouldn't seem to a positive for inbound tourism unless there are benefits in the 'transformational' component of online processing. However, they do seem to think visa charges are significant for student visas:
Base VACs will increase by at least the Consumer Price Index (CPI), with the exception of student visas (where the base VAC will decrease by five per cent) to support the competiveness of Australia's international education sector, in line with the recommendations of the Knight Review.
Loose change has previously posted on student visas and education. Meanwhile there is a report elsewhere of an apparent skills shortage in the tourism sector: Australia’s Tourism in Trouble: In Need of Foreign Workers. Special travel visas are suggested to fill a claimed labour shortage of 35,000 jobs in the tourism sector?

$12 for a toasted sandwich

The Sydney Morning Herald has an interesting feature on the two-speed economy of booming WA:

But the truth is that the so-called patchwork economy is not neatly divided along state borders. It is a region-by-region, suburb-by-suburb proposition that is affecting Western Australia just as dramatically as the non-mining states.
A quick look at the ABS data shows the unemployment rate in the sluggish Lower Western region at 5.1%. Which sounds fine but is still well above the 3.9% average for the state. Back in 2007/8 Lower Western was recording numbers lower than 3% and it has recently been as high as 7% in the typically volatile regional data.

Meanwhile a toasted sandwich is $12 in Karratha and the price of a coffee in Perth is well above Melbourne. I can only wonder how that 114 luxury apartment development in Karratha is going for insurance?

Saturday, December 3, 2011

The economic consequences of the potato

Widely reported this week by our diligent mejia was the existence of a potato glut. Potatoes are dirt cheap, even when scrubbed! The Cairns Post has, of course, framed this in a provincial local context which is not worthwhile even linking. The ABC Far North rural reports:

Charlie McKillop
Potato prices have slumped to new lows in recent weeks amid claims a glut of spuds from Far North Queensland is causing an oversupply.
Potato grower and representative on AUSVEG, David Nix says the current crop is the largest in the history of potato growing on the Atherton Tableland.
He says potato production has spiked right across the country and has affected returns all growers.
The problem started in South Australia where the bulk of potatoes come from, he says.
"They started this slide by putting very, very cheap washed potatoes into Melbourne and then it reached into Sydney, then it came into Brisbane and they were selling them for not much more than the freight it cost to get them there," he says.
"Prices have just tumbled every week 'til it's down to a point where it's no point going any cheaper, you might as well just plough them in. And there are thousands of tons here, we've got a wave of potatoes in front of us that's not going to disappear," he says.
"There'll still be potatoes here and there'll be growers with them in cold rooms, paddock stored potatoes, I can't see this glut disappearing this side of January."
KS Global Economics notes the reference to South Australia in context of current controversy on Murray Darliing water allocations but without a constructive clue as to relevance. Meanwhile, the finger pointing continues elsewhere in ABC reports:
An oversupply of potatoes in the northern states is driving down prices.
Peak industry body AusVeg expects the oversupply could last into the new year, and says it's a great opportunity for consumers to buy potatoes at a low price.
Les Horsfield has been growing and selling potatoes at Thorpdale in Victoria for more than 45 years.
He says there are too many potatoes coming out of Queensland, and that'll drive down demand for Victorian brush potatoes when they begin harvest next month.
"Potato price is exceptionally low. In fact I'd say it's nearly the worst I've ever seen it," he said.
"The potatoes are coming out of North Queensland and the freight price of course is significant - it's just under $200 a tonne from Atherton to Melbourne.
"And the demand is the worst it's ever been, so of course the price is the worst it's ever been."

KS Global Economics simply asks why so many potatoes were planted in the first place? Nobody seems to have asked this question? It is noted that there is in fact a potato levy included in the Federal budget papers.

The potato has much to answer for in history. The Irish potato famine decimated the population of Ireland but also provided a flood of migrants to destinations such as Australia.

What is astounding is the extent of change driven by such as the European expansion into South America. The tomato, potato, and venereal diseases were all transmitted back via the colonisation of South America in the 16th century.

Even what we now regard as traditional, such as the Italian tomato cuisine, is comparatively recent in our culture. A more epicurial aspect on the potato glut has been posted at Kitchenslut.


Thursday, December 1, 2011

Crime in Queensland

The Annual Statistical Review from the Queensland Police Service is worth browsing. Crime always makes a good tabloid headline or shock jock rant but the statistics are not all so bad with crimes against the person continuing a long term downtrend. Crime rates in the Far North for this classification are generally well above the Queensland average although the report does note and comment on regional differences. Crime has a significant social and economic cost. 

Monday, November 28, 2011

The demonic duopoly?

The assault continues on the demonic duopoly of retailers Woolworths and Coles. The proliferation of their own brands, such as discounted milk, seems to be causing much angst and handwringing amongst diverse section of the populace!

Stephen King from Monash (ex- ACCC) had a good post on this over the weekend at Core Economics.
The manufacturers who have most to fear from home brands are those whose products do not survive on quality but on marketing hype. Those manufacturers risk becoming contract suppliers of home brand products. Home brands will reduce the profits of those manufacturers–but consumers will benefit.
Federal Industry Minister Kim-il-Carr has an opinion posted today and seems to have a fixed mind regardless of any ACCC outcome, or any evidence based research. Again the left / right convergence on populist economics is apparent as Carr basically aligns with Katter. George Megalogenis posted on the decline of economic literacy since the keating era in The Oz at the weekend.

Separate from any opinion on the market power of the demonic duopoly my own opinion is that our food manufacturers are just not very good at branding and marketing. The demonic duopoly have been far more innovative and responsive to societal changes than the food manufacturers who are their suppliers.

Witness the Macro Wholefoods brand at Woolies. This is not a downmarket cheap offering as in the past with home brands but a high quality range branded on the basis of consistent quality above competitors. Their rolled oats makes Uncle Toby's almost chook food in comparison. The polenta is exceptional with local Misty Mountains full cream jersey milk.

Woolworths currently have home brand smoked oysters on specialat $1.40 and the quality is more than acceptable. Reject John West!


Saturday, November 26, 2011

Sunbus in real time

Sunbus has a real time bus tracker. A welcome development! We can only hope a smartphone app is not far behind!

As a CBD dweller who has for a period explored the lifestyle of being vehicle free I can only say that this does address one of the bigger problems of public transport in a regional city like Cairns. Public transport also has a status problem. Catching a bus wont get you elevated in social status as I found out!

Thursday, November 24, 2011

TQ wins but does FNQ lose?

The LNP has released a tourism policy. While always reluctant to plunge into partisan politics KS luuncheoned yesterday with a gorgeous local small businesswoman with a strong background in tourism who similarly despaired that 'informal' was the only logical vote. I won't delve into detailed analysis however this stood out:

In making a commitment to enhance and better coordinate tourism development and marketing efforts throughout Queensland, the LNP will establish a new partnership arrangement between Tourism Queensland, RTOs and industry. 

To be known as DestinationQ, this partnership will drive stronger collaboration and more effective development and marketing outcomes, by addressing longstanding diverging views between TQ, RTOs and industry. It will also ensure that TQ is restored to a position of strategic leadership, guiding RTOs and industry in partnership to reclaim Queensland’s title of Australia’s leading tourism destination.

In return for becoming partners in the DestinationQ initiative, the LNP will ensure the expertise and local knowledge of RTOs is properly recognised and utilised in the delivery of destination marketing inititiaves.
Well, here we were thinking the LNP was promoting regionalism whan all this seems to suggest is tighter central control? RTO's = regional authorites like TTNQ. Our local tourism body should not be beyond criticism and reform however I would suggest it may have actually been more successful than TQ?

KS would suggest that the State tourism authorities are themselves self - defeating anachronisms which should in any serious reform be abolished in favour of national and regional marketing. FNQ has nothing to win from DestinationQ, and possibly much to lose?

Starve the poor, destroy the environment, buy local

The quirkily counter-intuitive Freakonomics has posted on the negative economics of the rampant locavore food movement in the USA:
a locavore-like production system would require an additional 60 million acres of cropland, 2.7 million tons more fertilizer, and 50 million pounds more chemicals
KS has always strongly promoted our finest local produce and agricultural potential but always in the context of its appropriate market position and promotion rather than some kind of ideological economic salvation delivered by a mass local food industry. More recently our mejia King Parrot (now LNP candidate) suggested that every dollar transferred to spending on local food would booost our economy by $4! WOW!

Note: WOW is the ASX stock code for Woolworths.

HT Greg Mankiw's Thanksgiving Shopping Advice: And tomorrow, be grateful for the principle of comparative advantage

Friday, November 18, 2011

Behind the Chinese tourism boom

Jack Carlsen from Curtin University has an interesting take on inbound Chinese visitor numbers at The Converation: The real story behind the "boom" in Chinese tourism to Australia.

The Chinese outbound travel market comprises only about 10% of the total population of China, mainly those residing in the major provinces and wealthy enough to travel overseas. Of those 130 million wealthy Chinese, about 40 million travel overseas annually, of which Australia’s share is 400,000, or about 1%. That is on par with Australia’s share of all international travellers, so it appears that we are “holding our own” in terms of global market share.
However, there are inherent difficulties in targeting market share as an indicator of success, as we cannot control for the actions of our competitors, who are also aggressively targeting the Chinese market, mainly the 100 ADS countries.
The United States, for example, has allocated $50 million for tourism marketing in China and countries like Japan, Korea and Singapore are already attracting Chinese visitors. It may be that other ADS countries are better placed to meet the specific needs of Chinese travellers, particularly those that are price competitive, have more favourable exchange rates, better shopping or a more substantial Chinese diaspora population.
Carlsen goes on to comment on market segmentation of Chinese visitors with a younger demographic for educational purposes being prominent. We have previously commented here on issuess related to educational exports and visas.
The main destinations for all segments are the gateway cities of Sydney, Melbourne, Brisbane and Adelaide (where most education centres and our Australian Chinese population are located), with the regions receiving only 7% of Chinese arrivals in 2010.
There is also comment on Chinese tourism and cheaper price sensitive package tours. Some can recall when similar problems and issues were voiced about Japanese tourists.

Meanwhile at BusinessSpectator Gary Livermore of trading group Source Co has some interesting comments on shared aspects of Australian and Chinese culture which gives us an advantage over the USA:

Livermore explains that sharing that sense of humour means that we have an advantage in selling tourism, wine and a whole range of services including legal, accounting and management. There are many more opportunities opening up.

Thursday, November 17, 2011

October unemployment bounces back up

The latest ABS unemployment numbers for October have stalled the recent positive trend. The unemployment rate has jumped from 6.4% to 8.7%. With typical volatility that was pretty much all female unemployment. There isn't much positve to say about the latest monthly number and we can only continue to monitor the trends.  

Monday, November 14, 2011

The Warren's corporate body surreality roadshow

Loose Change has previously posted on the body corporate insurance crisis in FNQ. Today there was a seminar sponsored by the national strata association. I have pondered this since lunchtime when I wandered back from the Cairns RSL in a trance, where I had resorted in need of a quick shot after a surreal political experience!

Warren's roadshow went down well with the audience. Not so well with me! he did his usual thing of arriving late to attract maximum attention. However, Senator McLucas spoke of the role of Guvmint to promote more competition in the market. Wazza threw spleen at private insurers and suggested a return to a guvmint insurance office.

Is this surreal! We have a left faction ALP Senator talking market competition and the Federal LNP member demanding socialist solutions! Peter Costello has recently broken ranks with some criticisms of the LNP on this also: Liberals must protect values of freedom and choice; Party discontent simmers over Abbott's populism.

While Wazza won the forum it was McLucas who made the most poignant point that the laws of unintended consequences can never be neglected when it comes to Guvmint action.There was bipartisan support at the finale to support a parliamentary enquiry.

The National Disaster Insurance Review report was also released today. I will resist further comment for now because I have no idea how to sensibly respond!

Sunday, November 13, 2011

wonkish statistics worth a look

OESR has posted residential land and dwelling activity profiles for local guvmint areas in Queensland. That may sound boring but there is some interesting data in here.I had intended to do more but ended up as a quick post back at the time of the OESR demographic seminar in Cairns earlier in the year.

That seminar covered some of the data in these profiles, and particularly how OESR were tracking property development on a more cohesive basis in Council areas throughout Queensland.OESR is doing good work here in providing valuable aditional data.

At their seminar OESR referred to an overhang of stock in Cairns. Low approvals don't reflect the substantial outstanding stock. Only in the last year has Townsville accumulated a stock above Cairns for the first time since that data commenced in 2003. The OESR data on 'operational works approved' is quite recent but very worthwhile. The ratios here are also relevant with the Gold Coast actually below Cairns on 'operational works approval" as a proportion of (quite low commparatively) approvals stock!

Regardless, there are now large development holdings on the market by the receicers to failed developers! Reports in the Cairns Post of interest in the substantial land bank of CEC. Also reports of the holdings by the murky Capital Globe, associtaed with the previous Cairns Mayor, where the Capital Globe CEO was asasssinated in an Islamabad guest house! However, reports in the Post related to marketing by Quaid Colliers for anything is typically less than useless and shoul be taken as pure spin! 

This is good stuff from OESR and deserving of analytical attention!

Death Star closes in

A few weeks ago now the evil death star Goldman Sachs consortium came back with another recapitalisation offer for Redcape, the ex-Hedley pub fund. Holders receive 2.59c per security under the current offer. When Goldman made its initial proposal three months ago the offer was 8c per security. So, that ongoing tragedy continues to go well for suffering investors eh?!

Hedley floated Redcape (HLG) in 2007 at $3.50 amidst extraordinary hype from local mejia .........

Saturday, November 12, 2011

Financial Sustainability Report

The Financial Stability Review is an assessment of Cairns Regional Council’s capacity to meet its financial commitments by Queensland Treasury Corporation. It's part of the process for the business case for the proposed Entertainment Precinct.

The parrot cage commentariat has gone off in response. The QTC report has done what Treasury reports should do in challenging assumptions and highlighting risks. While there is, I think, still a business case to come it is difficult to see a political way forward for the project in current format.

The report is of interest in itself and worth a look so I will resist any comment on the project, and cultural industries which should be a comparatvive advantage for Cairns, until a later post. The position of CRC is rated as sound, with a strong balance sheet and low debt, but with a negative outlook which is related to broader economic conditions and risks. Most of the noise is around the operating cost of the project and the sustainability of rate increases in a weak economy. In that context it was employee costs which caught my attention in the review.

There is a reference in the opening summary to a risk that "if the next EBA outcome results in greater than
4 per cent growth, a possibility in light of the economic conditions in the region". This struck me as a bit odd? The reference here is to basic wage price growth and not employee numbers. Employee costs are covered in more detail later in the review.

Employee benefit costs are 33% of Council operating expenses. Employee costs have increased by 8.5% p.a. over the past 5 years. This is not attributable to growth in employee numbers but rather a 7.7% p.a. growth rate in FTE (full time equivalent) salaries. Average salary per FTE increased from $63,344 in 2009 to $73,438 in FY 2011. That is clearly not sustainable. The current EBA was struck in 2009 and expires next year:

Under the current EBA, annual wage increases are the greater of 4.0 per cent per
annum or the Australian Bureau of Statistics Wage Price Index (Public Sector)
Catalogue number 6345 which has averaged 3.8 per cent over the last two years.

CRC has advised that factors leading to employee expenses increases greater than 4
per cent include increases in employee overhead costs (i.e workers compensation),
employee classification increments and the payment of overtime.
The 7.7% seems a large increase above the base EBA rate regardless of the explanation. Why the base rate increase should be above the relevant index anyway also deserves query? There has been a trend for some years of public sector wages increasing at a faster rate than private. This graph below of the relevant wage price index from ABS shows how public sector wages have risen past private sector since 1997. 

I would have thought the employment profile of Council quite broad, ranging from professionals to labourers, and not unrepresentative of the broader labour market? Once upon a time there was an expectation of lower public sector wages as a consequence of job security.

The review notes that employees have been granted job security guarantees beyond any amalgamation requirements. The employee costs in the review are based on lower than historical increases in total employee costs of 5.4% but with similar EBA agreement:
Employee wage price increases are forecast at 4.0 per cent for the full forecast period
FY2012 to FY2021, which is in line with the current Enterprise Bargaining
Agreement. This agreement expires in 2012, however negotiations are expected to
result in at least a similar annual increase in light of the high unemployment and poor
economic conditions in the region.
I can't get my head around this rationale that weak economic conditions should equate to relatively high public sector wage outcomes?  It all sounds Greek to me!

Note: The NSW and Vistorian Guvmint policy is to restrict public sector wage rises to 2.5% without explicit productivity tradeoffs. Perhaps QTC should do a scenario of what infrastructure could be afforded with that outcome? The Australian has previously editorialised on this:
Wage costs need to be held to the inflation rate, currently 2.9 per cent, or less if budget deficits are to be reduced and funds freed up for infrastructure

Thursday, November 10, 2011

National Regional Profile

The National Regional Profile from ABS has some interesting data to play with for Cairns and the Far North.

The Cairns Post covers serveral aspects and expresses concern at the numbber of older cars. Queensland economy watch has some comparative data on population density. It was the taxation statistics that caught my attention although data is only available up until the 2009 tax year. The total nummber of taxable and non-taxable individuals declined in 2009 for the Cairns SSD. Aggregate taxable income also fell that year. Updated data for 2010 would be interesting ........

Wednesday, November 9, 2011

Thai's takeaway MSF?

MSF Sugar has come out of an ASX trading halt this morning with an announcement that its 22% Thai shareholder, Mitr Phol, has made a takeover offer to acquire all outstanding shares at $4.45 per share. This is a 30% premium to recently traded prices. The offer is conditional on Mitr Phol reaching a 50.1% stake.  MSF has traded higher earlier in the year before sugar prices have pulled back in recent months.

There is also a current takeover battle for Proserpine Mill, including an offer from Tully Sugar, now Chinese controlled. Mossman Mill maintains its independence. MSF is an ASX listed company with a substantial local shareholding via a previous merger with Mulgrave Mill. MSF recently relocated its HQ to the thriving business centre of Gordonvale.

We can expect a revival of debate on foreign ownership of our agricultural assets, including possibly xenophopic commentary. 

Update: Bizarre headline in the Cairns Post: Far Northern sugar  mills look to offshore lifeline. A lifeline? Hardly, and a complete misrepresentation! The usual suspects in the parrot cage are provoked.

Tuesday, November 8, 2011

Strong dollar not chasing tourists away?

The ABS has released the latest stats for Overseas Arrivals and Departures, Australia, Sep 2011. 
Business commentator Michael Pascoe has responded with a query on the impact of the currency on inbound tourism: Strong dollar not chasing foreigners away.

Everyone knows the Australian tourism industry is dead because the high Australian dollar means we can't compete for foreigners' business – but like many things that "everyone knows", it's not true.
Although I suspect Pascoe overstates his case he does also point to the strong growth in outbound tourism and the changing mix or our inbound tourists. China is growing strongly while the USA and Japan decline.

The latest big spend by Tourism Australia is providing half of  a $10 million marketing budget with Jetstar with the primary focus on boosting Japanese travel to Australia. That's a very nice deal indeed for Jetstar as it launches its Japanese domestic business, but it's also targeting a population that is shrinking and an economy that's going nowhere much either.
Cairns is the classic example of an Australian tourism destination doing it tough. Australians increasingly are getting their tropic hit a little more exotically – our September departures for Thailand were up 38 per cent on last year, 17 per cent more of us took off for Indonesia and 11 per cent for Singapore, but travel to the USA and Italy were up 16 and 17 per cent respectively.
But it's the fall in Japanese tourism that the FNQ locals seem to be focussing on. Stroll the streets of Cairns and there's no shortage of signs in Japanese, but nowhere near as much Chinese. On the current trend, Chinese visitors to Australia will outnumber Japanese by two to one within months.
Australia presently is winning a surge in Chinese travellers almost by default. It's early days with the industry still in learning mode. You can't yet rely on the average hotel offering noodles or congee for breakfast as a matter of course. The Chinese market itself is fundamentally different with the average new tourist more interested in bright lights, big cities and theme parks than beaches and bush. That average tourist must be catered for, while a marketing strategy is necessary to educate and lure the above-average for our particular delights.
Or we can continue to just whinge about the two-speed economy, the strong dollar and pine for the good ol' days.
 Macrobusiness has a different take on the ABS Stats: No joy for tourism

I will try to expand on previous comments on the Qantas dispute in relation to some points from Pascoe, and maybe take a closer look at the ABS data to resolve the differing perspective of Pascoe from Macrobusiness. In relation to Japanese tourism the Yen has been one of the stronger currencies v the $AUD although Australia would still become a more relatively expensive destination for the Japanese. 

Monday, November 7, 2011

Google Trends & Insights

Nicholas Gruen at Club Troppo has posted on some recent research that Google Trends is a more reliable forecast indicator than a couple of the world's leading consumer sentiment indexes:
Forecasting Private Consumption: Survey-Based Indicators vs. Google Trends”, SIMEON VOSEN* AND TORSTEN SCHMIDT, RWI, Essen, Germany

In this study we introduce a new indicator for private consumption based on search query time series provided by Google Trends. The indicator is based on factors extracted from consumption-related search categories of the Google Trends application Insights for Search. The forecasting performance of the new indicator is assessed relative to the two most common survey-based indicators: the University of Michigan Consumer Sentiment Index and the Conference Board Consumer Confidence Index. The results show that in almost all conducted in-sample and out-of-sample forecasting experiments the Google indicator outperforms the survey-based indicators. This suggests that incorporating information from Google Trends may offer significant benefits to forecasters of private consumption.
Journal of Forecasting, 30, 565–578 (2011)
Ricardian Ambivalence has been playing with Google Trends searches on 'unemployment benefits' as a leading indicator for Australian unemployment. He has also employed a Google correlate feature to identify the closest correlation is with body piercings! I'm not sure if my Google skills are adequate but after a short play around it was difficult to get any meaningful specific results for Cairns because of inadequate data. However, these were the search results on a couple of broad terms: 

'Cairns Australia' (all regions): The spikes here are cyclones Yasi and Larry.

Great Barrier Reef (all regions): The letters flag news report links where 'B' is Steve Irwin's encounter with a stingray, and 'D' is the grounding of the Chinese ship.

Both these appear to show quite negative long term trends, or do my Google and interpretative skills need upgrading?

Sunday, November 6, 2011

Cairns Economic Future Plan

With momentum building towards a state election the Queensland Government has released a draft Cairns Economic Future Plan 2011- 2015 for consultation. There is nothing surprising or unexpected in the core strategy:

1.Building on strong industries – Continued industry development for the region’s current strengths in tourism, agriculture and food, aviation services, and marine maintenance.
2.Diversifying the regional economy – Innovation, investment attraction and industry development for new sectors that capitalise on what is special about the Cairns region – tropical expertise, defence, mining services, renewable energy and education. This will also open new job opportunities for skilled workers.
3.Getting the business environment right – Support for regional infrastructure and fundamental economic development, such as support for small to medium enterprises (SMEs).
There is nothing surprising here and while there may be disagreements of priority, emphasis (spin) and implementation there doesn't  really appear to be much variation between parties on core strategic dirction for Cairns. Although I may update that with more nuanced thoughts and observations upon reflection.

Feedback can be provided to before 21 November, 2011.

Saturday, November 5, 2011

What was Australia's biggest corporate collapse?

The Senate this week released the report of its inquiry into The impacts of supermarket price decisions on the dairy industry. Queensland dairy farmers are not happy with the report which basically backs the milk consumer as the winner. A sentiment previously supported here at loose change.

An interesting post on this at Club Troppo caught my attention: The farm lobby, bloodied - but probably unbowed:

It’s amazing that farmers’ complaints on this issue were ever taken seriously. Indeed, the obvious takeaway from the report is that people in the farming business are all too ready to point to economic and regulatory issues that don’t actually exist. Were farm groups embarrassed by any of this? Not a bit. They reacted as they so frequently do, posing at the same time as rugged individualists and pitiable victims of capitalist forces beyond their control.
Troppo also points to a recently published book, Breaking The Sheep's Back, by Charles Massey. Massey has a background in the wool industry and has written a detailed account of the industry's decline. He has estimated that the collapse of the wool reserve price scheme "precipitated what, in today's monetary values, stands as the biggest corporate-business disaster in Australian history" 

Reviews of the book can be found at the SMH: Shrunken industry fleeced by politics and greed, and also by historian Ross Fitzgerald at The Oz: How an industry got fleeced:

Massy's fascinating expose demonstrates with considerable force the unforeseen effects that key ideas about "helping" an iconic industry via staunch protectionism, tariff walls, and other government interventions, have had in the not too recent past.
Fitzgerald's description of Wool Board chairmann William Gunn as "energetic but fundamentally wrong headed" is a description that could equally apply to some more prominently outspoken agrarian socialist politicians today.

Friday, November 4, 2011

Herritage award for cruise terminal

The Australian has a report today on the 2011 Architectural Awards with some glowing references to the refurbished Cairns Cruise Terminal. Sadly, too late for a similar refurbishment of the old Cairns Yacht Club.
ROMANCE isn't a quality much regarded in contemporary architecture but the jury for the 2011 National Awards of the Australian Institute of Architects knew it when they saw it. The refurbished cruise boat terminal in Cairns, which won The Lachlan Macquarie Award for Heritage, is an elegant timber shed, updated with steel and glass inserts, that is redolent with its history as a tropical gateway to the South Pacific.  It would have been easy to substitute it with something as shiny as a cruise ship but it has withstood 100 years of storms and cyclones and it’s not easy to replace that kind of atmosphere.

Thursday, November 3, 2011

Why do we expect others to buy our tropical expertise?

That was the question that should be raised, and came to mind again, with this post today by Stephen King from Melbourne Business School: Jingoism, spin and Holden cars.

Oh no! Not our Aussie Icon, the Commodore. That would be like having a Dane design the Sydney Opera House or having the Sydney Harbour Bridge designed and built by an English firm.
In the Banana Republic of Cairns we seem to think that everything should be done locally. Anything contracted outside the region is regarded as treason and brings media outrage.  At the same time we are arrogant enough to think that our 'tropical expertise' is something and others around the world should buy from us. The hypocrisy is rank but such is the state of political populism and the parochial culture of Cairns.

So to the engineers – on your logic Aussie engineers should not be designing any ‘off shore icons’. Damn – there goes all that work in Asia and suddenly makes a lot of Australian engineers unemployed..

Wednesday, November 2, 2011

Ocean Spirit locals card debacle

As a cardholder Loose Change was quite peeved to receive this letter yesterday as he had only used his reef card once this year. Ocean Spirits has now been sold and the cards will no longer be accepted with 5 months still to expiry.

Ocean Spirits introduced the card last year. While there were problems booking at peak times the cost of $200/single and $350/family provided affordable reef trips for locals. Last years offer was to include Rum Runner out of Cape Trib, however this boat never went back into the water for last years season. I did eventually get value for money last year so decided to renew.

This situation is not uncommon with this kind of offer. Diners who bought into last years Table 52 card offer may have found that Pier Bar would not accept thheir 2-for-1 card after a change of ownership through the year. When Angus & Robertson went into administration earlier this year they controversially changed conditions and dates on gift vouchers, requiring additional cash expenditure equivalent to the value of the voucher redeemed. The  administrator indicated that holders of unused gift vouchers may register to become unsecured creditors.

The Cairns Post has a report on this today: Families angry after unlimited reef trip passes axed 5 months before expiry, which includes some robust commentary. Complaints to Queensland Fair Trading are suggested  by Choice, and some further inquiries here are intended also, and perhaps with ACCC. Clearly there is an issue with consumer protection in this area.

The seller of Ocean Spirits, Macro Corporation Limited, is an ASX listed company, and as that was its only operating business there is a good deal of public information available. The business was sold for $3.8million to Jai Tourism & Leisure, believed to have Indian connections. The proposal documentation provided for shareholder approval in September indicates that purchase price adjustments would include "an amount where the Seller has received prepayments for services to be provided by the Ocean Spirit Business after Completion". Presumably any adjustment didn't include the prepaid reef cards!

The deal did not include the Ocean Spirits IV dinner cruise vessel which is up for sale separately as Macro's only remaining tourism asset. A follow-up post may be required after further investigation of account details, particularly some messing about with boat valuations which drew some attention and qualification from the auditor.

Meanwhile, we reef card holders can console ourselves that while we may not be bound for Michaelmas Cay, the good chaps at Macro intend to retain an ASX listing and divert any remaining funds from the sale, to which we have selflessly contributed, into mining and commodities trading.


transit visas for PNG

After some recent posts on student visas with relevance to foreig students, it was of interest to stumble on this in The Oz: Visa rules driving business abroad.

RESTRICTIVE Australian visa rules are robbing Queensland companies of spillover revenues from the mining boom in neighbouring Papua New Guinea, business groups are claiming. They have urged the Australian government to set up a special processing zone for workers passing through Cairns as they head for the PNG boom.
Cairns businesses have complained to the government that newly wealthy PNG corporations have shifted conferences from Australia, including holding a $100,000 meeting in Singapore, because of the difficulty obtaining visas for their directors and other staff.
Note: Link may require (currently) free registration.

Tuesday, November 1, 2011

The Changing State of Global Poverty

The Changing State of Global Poverty
"We estimate that between 2005 and 2010, the total number of poor people around the world fell by nearly half a billion people to under 900 million in 2010. This means that the prime target of the Millennium Development Goals – to halve the rate of global poverty by 2015 from its 1990 level – was probably achieved around three years ago. Whereas it took 25 years to reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six years between then and now. Poverty reduction of this magnitude is unparalleled in history; never before have so many people been lifted out of poverty over such a brief period of time."

Sunday, October 30, 2011

A win for Qantas would be a win for Cairns

The Qantas grounding has obvious threats to the Cairns economy. At least in the short term. It would be expected and hoped that this phase of the dispute will be short and that services will resume this week. Longer term impacts will be more complex related to the dispute itself and the impacts of any subsequent agreement. So it was interesting today to see the blog response from Harry Clarke, an economics professor at La Trobe University: Qantas to finght trade union reactionaries.

Allan Joyce’s move to ground the entire Qantas fleet  today was an inevitable attempt to break the backs of trade unionist reactionaries. As a Qantas shareholder I am dismayed at the current outcome but, as Qantas has not paid dividends for a couple of years,  I support attempts to force the airline to gain competitiveness and staying power.  Having pilots paid over $500,000 annually is inconsistent with this task and the attempts by maintenance engineers and pilots to trash the Qantas brand suggest that the best outcome for these clowns is to be sacked and then sued. Ungracious, overpaid pilots who lie to me about their employer when I travel on their airline arouse nothing within me but contempt. When a firm is losing $2m per day because of a strike the fact that the CEO is paid $5m per year is irrelevant.  He is worth $20m if he can give these reactionary trade unionists the kick up the backside they so richly deserve.  Qantas sells air services as an internationally traded good and international travellers are voting with their feet to support other airlines which offer cheaper and better quality service.  Domestic air services in Australia remain expensive and the service is anything but great. The Australian travelling public deserve better and Australia needs a viable international carrier not a sheltered workshop.
Already the Labor politicians are shaking in their boots at Joyce’s move because it is hardly a good look for the Labor Government but reading Joyce’s press release I support it.  The Government should keep out of this one. Qantas will fail without decisive action and, even though this might cost me money, I’d prefer to see this fight resolved now – it offers the best prospect for competitiveness reforms.  Pilots, engineers, baggage handlers – accept the need for reform or find yourself new jobs.  As the Qantas AGM showed you have no support among shareholders and the travelling public will see you for the contemptible grasping reactionaries that you are. That you attacked the customer base of Qantas as a negotiating tactic should never be forgotten.
Well, I suspect that rant from Harry will not gain unanimmous support of sentiment, which may be an understatement. However, as previously posted, why I like Harry is that he can never be accused of ideological bias and dishes it out in equal measure accross the spectrum. The very next post on Harry's blog starts "Tony Abbott’s idiot populism..... " and then goes on to berate the "dwarf throwers at Catallaxy" which is our most prominent libertarian economic blog with some high profile right wing economists. Yep, he's my kinda guy!!

Regardless, the pay and security demands from the unions here can never be seen as positive for the Cairns economy. It can only ever contribute to slower regional growth and higher risk. The Asia focus of the Qantas business strategy is to our advantage. The concept of job security in airlines indicates that these unions have never grown past their protected public service mentality. The interests of the employees of Qantas, even local employees, are not the interests of Cairns.

As Warren Buffet famously observed, from the perspective of an investor, the best outcome would have been for someone to have shot down the Wright brothers at Kittyhawk given the investor money that has been trashed  in this industry. Qantas is 90 years old. In metaphorical perspective job security in context for this industry is like a 90yo prostitute demanding job security in a brothel.

Note: this may take a couple of extra posts on the Qantas CEO pay, which has been massively misrepresented, and the wider cultural dilemma of our relationship with Asia, and our attitude of cultural superiority .....

Thursday, October 27, 2011

The world moves closer

Loose Change has previously posted a graphic on global economic activity moving closer to Australia. The Global Economy's Shifting Centre Of Gravity is a recent study on this from the London School of Ecconomics.
The article finds that in 1980 the global economy’s centre of gravity was mid-Atlantic. By 2008, from the continuing rise of China and the rest of East Asia, that centre of gravity had drifted to a location east of Helsinki and Bucharest. Extrapolating growth in almost 700 locations across Earth, this article projects the world’s economic centre of gravity to locate by 2050 literally between India and China.

The black dots here are the locations from 1980 up to now, and the red dots the projections up to 2049. With the assistance of an online calculator the great circle flying distances between these points and Cairns is:
1980: 18,140km; 2010: 12,910km; 2049: 7,770km. So, by 2049 the distance of Cairns from the world economy's centre of gravity (WECG) will be cut to less than half what it was in 1980.

The complexities and problems of projecting a 3D location onto the earths surface are outlined in the paper. However, don't yet try to fly to that 2049 WECG as there is not yet an airport at that location in Tibet, and a look at Google earth doesn't show much prospect of there being one any time soon ......

Oliver Marc Hartwich discusses some of the implications at Business Spectator: Is Australia shy of the Asia boom. The new CEO of Cairns Airport seems to understand the strategic location of proximity to Asia.

Wednesday, October 26, 2011

What? Just Three?

Commsec has released its latest State of the States report. This has been widely reported as proclaiming that the two-speed economy is now a three-speed economy. Whatever! Good PR for Commsec perhaps but not really useful in any understanding of the current situation or an appropriate policy response.

The Commsec methodology is based on analysing eight indicators based not just on current relativities between states, but relative to longer term decade trends for each state : "Each quarter CommSec attempts to find out by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements." The three-speed methodology appears to give all these equal weighting

The key thing to notice is that among their key indicators they have listed the greatest strength and greatest weakness of each state among the eight categories. The strength of Queensland is investment and the weakness housing starts. So what didn't we know already? The surprise in an economic context is that Queensland, the only state that scores investment as its greatest relative strength (2nd behind WA overall) comes in the bottom division? This is the two-speed economy in Queensland! Queensland stands out for the divergence between strongest and weakest sectors.

Key comment in the report: "But while third fastest, Queensland’s population growth is actually the slowest
rate for that state in 11 years." Loose change has previously posted on this with comments from Bernard Salt on the decline in interstate migration (perhaps now paywalled at The Oz?).

Meanwhile Queensland Economy Watch has a relevant post on the latest OESR report. This includes some commentary on the education sector where we have been banging on for some time on the student visa policy refered to, and have previously posted on recent positive policy changes.

Note: QEW has also posted recently on stamp duty also relevant to population growth but to keep the post short we haven't gone into this and how tax reform to abolish stamp duty would be of most benefit to Queensland but will return to it?

Tuesday, October 25, 2011

pork-barrel economics

The actual title of a research paper, published in the journal Economics Letters, is: Can national infrastructure spending reduce local unemployment? Evidence from an Australian roads program.

Abstract: We examine the effect of a federally-funded local infrastructure spending program on local unemployment rates. To address the likely funding endogeneity problem, we exploit variation in spending due to pork-barreling, and find that higher government expenditure on roads substantially reduces local unemployment.

Highlights ► We examine how federally-funded infrastructure spending affects local unemployment. ► We address funding endogeneity using pork-barrel spending in a road funding program. ► More road spending in a district is associated with a fall in local unemployment. ► Federally-funded infrastructure programs can boost local employment.

The research used a pork-barreled Federal roads infrastructure program in 2001 to analyse the different outcomes between comparable regions where some received funding and some didn't. This enabled an estimation of the positive effect of infrastructure spending on a local economy, as reported by Peter Martin.

This is a similar methodology to another recent study based on changes in local infrastructure spending in Italy caused by mafia investigations involving corrupt politicians:
Organised crime is a nightmare in Italy but it is a blessing for economists because it causes significant changes in government expenditures that are completely unrelated to the current economic environment. If a politician is arrested because of his connections to the mafia, all public investments in infrastructure and construction are put on hold immediately until the investigators have checked if the mafia had been able to channel money into their pockets.
Loose Change refrains from any direct comparison between pork-barreled Federal politics and the corrupt politics of Italy!  

Sunday, October 23, 2011

Parrot Droppings Vol XIV

The peculiar politics of the Far North only seem to make national attention for all the wrong reasons. In the 2007 Federal election campaign it was the Nationals candidate, and ex used car salesman Ian Crossland, who made national headlines with his declaration that "Leichhardt is no place for a woman". I was subsequently informed by an ALP left faction organiser that they agreed and that being female was a disadvantage in Leichhardt!

Not much has changed it seems with our misogynist King Parrot now the State LNP candidate for Cairns amidst some ongoing controversial shennanigans. While his former employer at the Cairns Post has been curiously quiet, media elsewhere has been quite responsive to his candidacy:

Courier Mail:  Can the King of Cairns prove to be the Can Do candidate for Campbell?

SMH:    LNP endorsing 'next Pauline Hanson'.

NineMSN: Drunk girls to blame for rape: LNP candidate.

Courier Mail:  Time LNP and Campbell Newman drew line on Cairns candidate Gavin King

The best response has been from Carrie Miller at The Punch: Gavin King: victim blamer and woman shamer, which I think best frames the issues that seem to have bypassed many. The King Parrot's typical response of satire, or being misunnderstood, is really just a poor excuse for his cliched sterotypes and dogwhistles.

In a more economic context Carrie Miller has also opened with a reference to the King Parrot's description of his domestic arrangements:
“Correct me if I’m wrong, but surely it is obvious that we should perform household chores we are best at, in the interests of efficiency and synergy. In other words, the missus irons my shirt because she is able to do it quickly and easily. In exchange, I make breakfast because pouring milk on to cereal is a task simple enough for me to achieve by 7.30am.
Curiously, domestic chores are the only time I am aware of that the King Parrot has ever referenced economic efficiency, which is not given any consideration at all in relation to issues such as moving public servants to Cairns. The principles of comparative advantage and trade can indeed be applied to domestic duties, as they have at Spousonomics.

When it comes to comparative advantage and trade it is Pareto efficiency which matters, where trade is an advantage to both and neither is made worse off. The King Parrot's simple trade model of swapping ironing for pouring milk is unlikely to be Pareto efficient as he has just made himself better off at his wife's expense. However, we will in good time follow up with an illustrative example of how many toilets he will also need to clean .....


income inequality

An interesting chart from Possum Comatatis on historical income variation between Australia and the USA for the top 1% of income earners. The most curious aspect here, in hstorical context, is that huge spike in Australia back in 1950, associated with the wool boom.

A search uncovered this paper with some interesting historical background: Before the storm: the making of Australian anti-inflationary policy, 1945-1965.

The wool boom in 1950/51 tripled wool prices compared to the previous year’s average. With fixed exchange rates, the sudden windfall directly boosted farmers’ money incomes, and though the Commonwealth Bank made special account calls to prevent it from augmenting bank reserves, the increase in expenditure was enough to take consumer price inflation to an annual rate of around 20 per cent.
The policy response also included a 'horror budget' from the Menzies Guvmint. It makes an interesting comparison between periods with the terms of trade now back up at the same lofty levels, abeit on the back of iron ore and coal rather than a sheep. 

Update: This post form Michael Stutchbury at The Oz last year touces some of the history in context of current debate ...... 

Thursday, October 20, 2011

Lowest unemployment rate in three years!

The Far North unemployment rate edged lower again in September to 6.4%.  A further decline is perhaps even a surprise following last months sharp fall but the numbers were quite consistent, with the participation rate increasing.

The current ABS regional series began in November 2007. In fact, these recent ABS numbers indicate the difference between the unemployment rate of the Far North and the rest of Queensland is now LESS than it was in the first year of the series, before the full impact of GFC and collapse of Lehman in September 2008.

However, it does seem the ABS continue to downgrade working age population growth in recent months to an implied 1.1% or so, based on the employment numbers and participation rate. I doubt that is far inconsistent with the trend for most of Queensland either?

Wednesday, October 19, 2011

Banana Republic of Torres Strait?

Queensland Economy Watch has posted on reports for Torres Straight autonomy!

I agree with his concerns! Also relevant are the calls from some sectors to move public servants to Cairns to 'diversify' the economy. As previously posted Cairns and the Far North are already above average on public sector according to census data. Townsville economy already has an anomolous reliance on the public sector. The NT is already propped up by a public sector funded by the Federal Guvmint.

A autonomous Torres Straight? Does anyone else see a problem here?

Has the lunatic got it right?

Excuse me for my political incorrectness, however I can't help but feel that perhaps the lunatic is correct here and the journalists have got it wrong, or at least deserves more consideration? Actually I had intended to post previously on research that in fact the obsessive requirement in Australia for helmets does little for bike safety and just reduces bike transport!

I will need to revert to the reseacrh links but the reality is that the economics are being perveted in media reports! The requirement for helmets has destroyed public bike options in Australia. This has happened recently in failure of a Melbourne hire scheme because, hey, most people just don't carry a helmet with them, despite such schemes being successful in Europe.

As a lover of  counter-intuitive economics, such as freakonomics, the reality is that people who die early from risky behaviour, be it smoking, drinking, or riding a bike without a helmet, may actually do a fiscal service by reducing the ongoing long term entitlement culture of an ageing society. This is not incorporated in the costs you see in the tabloid media. If you anticipate living long then your smoker friend is actually doing you a favour!

If you want to be safe and live long then it is YOU who may be the burden on society and NOT the smoker, drinker, or helmetless bike rider. There is also research in the USA that helmetless Harley riders serve an unrecognised useful social purpose as a source of organ donations!

The lunatic has been badly done by from the Magistrate, anyone who has had anything to do with Stanley knives in an industrial context would know that this item should be as regulated as guns anyway!
The King Parrot had recently posted, prior to departure from the Cairns Post for a political career, that an appearance before a court wearing thongs was disrespectful. Clearly Jenna Hudson from WIN TV deserves rape for showing up at court like this for the lunatic Stanley knife case?

Bike helmet links:
Scone Police: "You're not in Paris now?"
WA bicycle helmets
Australian children the most chaufered in the developed world

Sunday, October 16, 2011

Occupy the Barron River Hotel?

If corporate greed, financial  stress, and Wall St investment bankers is the target of the Occupy Movement then the ongoing saga of Redcape (ex-Hedley pub fund) may provide the most appropriate local target. Bryan Frith has done his usual thorough job of updating the most recent maneuvres as Goldman Sachs, the evil Wall St death star, continues to orbit Redcape.
The consortium's latest tactic was to force hotel and gaming operator National Leisure & Gaming (NLG) into receivership.
NLG is the lessee of Redcape's NSW pubs and its debt has been recently acquired by Goldman. The Hedley receivers also continue to hold a 19.9% stake in NLG. The NLG receivership apparently creates a default event for Redcape with some potentially punishing consequences for the interest rates on its debt. Goldman has also taken a 40% stake in Redcape's senior debt facility, reportedly at 80c in the dollar.

From the latest report by Frith, it looks like the best offer investors may be able to get will be 10c per security. There was substantial local investment in the float back in 2007, including subsequently unemployed Hedley staff via an employee allocation, at $3.50 per security. Some prominent local business identities have also stayed on board for the ride all the way down.

The latest annual report has some interesting moves among the top 20 security holders, including the appearance of 'Thomas Hedley' with 1,057,163 securities (0.65%). I'm guessing that would be Tom Jnr? Greenacres Holdings has increased its stake during the year and now holds 5,633,246 securities (3.47%).A search shows Greenacres is associated with Bruce McDonald, who is understood to be a business partner of Tom Hedley Jnr. Greenacres has previously had a business address at the Hedley Aumuller St office. Hedley's partner Jeannine Cooke has maintained her 3.13% stake.

Ex Hedley CFO Stephen Donnelly has been active in the last year with his super fund disappearing from the top 20 and his Trust selling down. However, NLT (QLD) Pty Ltd now appears in the top 20 with the same address as Donnelly, and the same number of securities as offloaded by the other two entities. Mr David Row also makes an appearance in the top 20 with 820,000 securities (0.5%), who I believe is the former Hedley Group development manager.

David and Jean Barry of Westco Motors have maintained their 0.62% stake. Redcape director and local business identity Greg Kern has maintained his interest, although he has previously dumped this into the Kern Consulting Group super fund, which I am sure has delighted the fund members. Hedley's receivers remain stuck with their 58% stake. Meanwhile, the comparable ALE pub fund recovered from the GFC hit and is travelling soundly, trading profitably, and providing ongoing income distributions to investors.

The most curious new entrant is Lift Capital Nominees with  0.66%? Lift was a margin lender which collapsed around the some time as the Tricom Opes Prime debacle (which also involved Hedley).

Corporate collapses and unemployed staff, unpaid creditors, financial engineering and huge debts, greed, evil Wall St bankers, corporate intrigue, skinned investors, all closely connected to, and spawned in, the Far North. Redcape also maintains a substantial portfolio of pubs and bottle shops in the Far North. It seems to have all the ingredients to be a local focus for the agenda of the Occupy Movement?

Consequently, KS is contemplating occupancy of the front deck at Redcape's Barron River Hotel as his contribution to the protest. A Sunday session perhaps?

Friday, October 14, 2011

Work for Queensland

From the Gladstone Observer:
SKILL shortages are biting hard in the Gladstone region and the Queensland government is encouraging workers from areas of high unemployment, such as Cairns and the Gold Coast, to up-skill and move, as part of their Work for Queensland program.

Thursday, October 13, 2011

Currency Currents

What a difference a week makes. Todays stronger than expected unemployment numbers have sent the $AUD as high as $1.02 again. Were these really the reports only a week ago:

Cairns Post:  "the Australian dollar could fall to as low as US80c in coming weeks"
ABC: "Dollar dive tipped to boost tourism"
Gold Coast Bulletin: "The Australian dollar may stay below parity until about February."

There has been lots of currency controversy this week with the US Senate passing a measure designed to potentially punish China because of a perceived undervaluation of the Yuan. This chart posted today at macrobusiness provides an interesting perspective.

It would be useful to know when this chart was compiled as some aspects don't seem quite accurate to me on current exchange rates. However, China has been allowing a steady appreciation of the Yuan for many years.

tourism minister bashes qantas union

Martin Ferguson has weighed into the Qantas industrial dispute with some strong comments today threatening to intervene in the dispute to protect tourism.

Tourism Minister Martin Ferguson, following his address to an industry conference in Canberra, said the sector's patience was running out with the unions.
"The sooner the parties get in a room and sort it out the better," he told reporters.
The Australian tourism industry depended on a vital and strong aviation sector, he said.
He described as "un-Australian" comments by Australian Licensed Aircraft Engineers association secretary Steve Purvinas urging people to boycott Qantas.
They also were a sad reflection of his leadership.
"You can have a dispute with employers but there is a responsibility on trade union leaders to never set out to damage Australian industry," Mr Ferguson said 
Qantas has today announced it will ground 5 aircraft and cut uto 100 flights a week. The announced cancelled and rescheduled flights today do not seem to directly affect flights to Cairns, although will of course affect connections.

Wednesday, October 12, 2011

FNQ mining potential?

A recent report at the Cairns Post on prospective mining opportunities in the Far North.
Mr Duck said the community did not appreciate the potential of mining in the region, estimated at $900 million a year with a fly-in, fly-out workforce worth $250 million a year.
 Brett Duck was speaking at the Cairns and Mining Conference 2011 held last Friday.

As previously posted it's not so long ago that mining did play a more significant role in the Cairns economy particularly with nearby gold mining operations, although I have no idea on the prospects of any of these exploration projects. Bill Cummings also presented on 'Can Cairns become a major mining services centre again?'

This map seems to show sort of a bit of a hole up at the pointy end although is restricted to advanced projects so presumably doesn't yet include such as a proposed expansion at Weipa?

 HT: Peter Martin

Tuesday, October 11, 2011

seachangers as yet unmoved

As political momentum builds towards a coming Queensland election an interesting post at the Sydney Morning Herald today on regional policy. We can expect lots of policy on regional support which has already been prominent such as sending public servants from Brisbane to Cairns. So this recent policy in NSW is interesting:

Fewer than 50 households have signed up to a state government scheme to encourage relocation from urban to regional areas in its first three months, casting doubt over a forecast take-up of 7000 a year.
The relocation grant scheme was central to the Coalition's pre-election pitch to create a ''decade of decentralisation'' in NSW.
The Premier, Barry O'Farrell, said the scheme was designed to promote ''whole of NSW growth'' and ease pressure on the Sydney metropolitan area. The Finance Minister, Greg Pearce, told Parliament in June it would help ''kick-start'' regional NSW.
Apparently, a grant of $7,000 is available to move from the Sydney metropolis, including Newcastle and Wollongong, to the regions beyond if you sell up your home and buy in the regions. The marketing apparently includes retirement expos. This appeared in the real estate section of SMH so not surprising that the quoted 'industry expert' recommended an extension to first home buyers.

Perversely, this appears in the week after the tax forum where, again, the inefficiency problem of state property stamp duties in restricting geographic mobility was prominent. It's almost like a deliberate strategy to find the most inefficient means to an end!