Tuesday, January 31, 2012

How many pillars should an economy have?

Tony Abbott made a speech to the National Press Club today and of note was that the northern food bowl got another mention.

"Finally, the coalition’s plan for a more prosperous future will try to ensure that our children and grandchildren look back appreciatively on the big decisions this generation has made.
We have a responsibility to ensure that our land is as productive as possible, that’s why we are looking at new dam sites especially in northern Australia which could become a food bowl to Asia."
Loose Change recently posted on the recent Federal and Qld Guvmint strategic plan for northern agriculture. We now have both sides fighting over our bowl but do we want Bob Katter as judge in this beauty contest?

The paliamentary report from a committee chaired by LNP Senator and farmer Bill Heffernan was not so complimentary on the potential of our food bowl: Report kils northern food bowl dream.

However also of interest is that Abbott refers to a five pillar economy:
"We have a responsibility to keep a diverse five pillar economy: with a capable manufacturing sector, a growing knowledge economy and a sophisticated services sector as well as strong resources and agricultural industries."
Some maybe unaware that there is an imminent state election and Campbell Newman is backing a four pillar economy in Qld: construction, resources, tourism and agriculture. I guess Australia is larger and a different shape so may need an extra pillar?

Actually, I sort of prefer the architecture of Tony's pillars and will come back to that with reference to a perceived gap in the Qld LNP post-school further education and trainng policy, or even IR? There is none that I could see or maybe I missed it? Which sort of conflicts with their employment and inflation objectives I think.

How many pillars should an economy have? Campbell says four. Tony five. Do I hear six, will anyone bid me six?

Disclaimer: KS is still suffering trauma following yesterday's parlyamentary inquiry hearings and apologises for any perceived flippancy in posts!


Udate: As suggested in commenst by drpage Bill Heffernan does see to have disputed the findings of his own committee:

Liberal Senator Bill Heffernan has long argued for mosaic style farming in the north, as the weather and climate changes.
The Senator disputes the findings of a northern agricultural taskforce he sat on, which found the the water supply was not reliable, and dams couldn't be built because of environmental concerns.

In the Navy

The progress report from the Defence Force Posture Review has created news around the potential for expansion of HMAS Cairns. Aside from any defence issues the progress report includes a contribiution fro Delloitte Access Economics on long term economic and demographic projections.

I haven't yet looked at this but there is a summary of key findngs. Loose change has previously commented on the synergies between naval life and tourism.

Monday, January 30, 2012

OMG

I couldn't think of anything better as a title! KS has just spent four (4) hours at the parliamentary inquiry into strata insurance. Volumminous consumption of vino can't even begin to compensate for this experience!

The member for Leichhardt representated us with a couple of obtuse rambling disertations absent any meaning. He didn't ask any questions at all and didn't seem to even understand his role on the committee! George Christansen, first time member for Dawson (Whitsundays) was easily the most effective LNP member on the committee and asked easily the best questions of all. 

Sorry, but KS is now in somewhat of a disturbed mode following this event and may need some days to recover .........

35,800 shortfall of tourism workers?

Federal Tourism minster Martin Ferguson last week announced an extension of 457 visas to include barstaff, chefs and waiters.  This follows a national survey of tourism providers found the equivalent of 35,800 jobs vacant across Australia last year.

Without intervention, the shortage is forecast to jump to 56,000 workers within three years.

Martin Ferguson, the Minister for Tourism, says the resources boom is having unintended consequences for the hospitality and tourism sectors.

MARTIN FERGUSON: "If you're working for example in the industry in Perth at the moment, so you're domestic or you might be knocking out 38 grand or so, you go into the resources sector fly-in fly-out, you can double your wage."

How can the tourism sector in Perth compete with the resources sector - yet at the same time, business tourism in Perth is exceptionally strong - with so many businesspeople coming to Perth and wanting a decent service in the tourism sector.
It's almost hard to believe given the woes of the Queensland tourism sector in recent years.

Sunday, January 29, 2012

Mind the gap?

Gene Tunny at Queensland Economy Watch has given me the privelege of some links and commentary on unemployent and the status of the FNQ economy.  Gene has linked there to a regional unemployment report from OESR with unemployment based on a 12 month moving average.

That's fine, and we know the regional data can be wildly volatile, but more likely to provide a cautious rear view mirror perspective. The positive in the latest data was all in male employment. So the chart below compares ABS estimates of numbers employed for males and females for the Far North. There is a clear divergent gender trend apparent here in the past year, post-Yasi.  



My previous post also linked to Ricardian Ambivalence who suggested that the gender gap is national and may be due to the current retail malaise. Mr Ambivalence also did warn that the purpose of the ABS methodolgy was an unemployment rate rather than employment estimates. There are some uncertainties here particularly in the way ABS does population assumptions which appear to now be running at about 1.4% pa growth for the Far North.

Still don't see how that should materially impact trends unless there are large inaccuracies? I have previously noted that we need to see a trend in employment which hasn't been there of any significance, although apparent in male employment, but not female. Also noted at the weekend was a small snippet in the CM where LNP Treasury spokesman Tim Nichols took a swipe at the Qld Guvmint over female unemployment 


PS: I meant to post on industry policy a few weeks back when the car industry debate began and tourism advocates asked for their share: Tourism asks for similar aid to carmakers, and did note that Gene was also quoted in The Australian for some work on protection for the car industry.


Friday, January 27, 2012

airline flights boost

There has been news in the past week of increased airline flights into Cairns by both Virgin and Jetstar.

Virgin have announced increased connections with Brisbane. That follows an earlier announcement by Jetstar of additional flights from Melbourne. The Melbourne - Cairns link was recently named one of the fastest growing in Australia for the year to Jully 11, although not sure how much of that was related to the introduction of budget Tiger flights which have not yet been reinstated.

Chinese new year celebrations seeed to attract a far higher profie in Cairns this year and hopefully news of direct links to China also wont be too far away.

A recent report from Bill Cummings highlighted the key role of the airport to the Cairns economy.Link to Cairns Airport mejia release is here.






 


Thursday, January 26, 2012

Happy Australia Day

The Australian Flag is the one on the left. No, hang on, maybe it's the other way around?


Wednesday, January 25, 2012

Unemployment falls

The volatile unemployment rate for the Far North has taken a big fall in December down to 6.5%.

The prominent feature this month was that the male unemployment rate fell to 5.1% which is the lowest since October 2008. The estiated number of males employed is also the highest since that month. The trend in the male unemployment rate since last years big wet has been quite positive.

On the other side of the gender divide female employment is languishing with an extremely low participation rate of 59.9% the lowest  recorded for the Far North. Ricardian Ambivalence also commented on similar trends following last weeks national employment data and suggests the retail malaise may be impacting female employment.



Monday, January 23, 2012

State of the States

The latest Comsec State of the States report shows an improved standing for Queensland with a positive outlook.

Australia has a three-speed economy. Western Australia leads the way with the ACT and Victoria in the second group and little separating the other economies in a third group.
And while Western Australia is expected to hold its position in coming quarters, there is likely to be a shuffling of the other rankings. Queensland is moving its way up the rankings, underpinned by strength in resources and rebuilding. Only a soft housing market is holding back the economy.
Macrobusiness has previously expressed some concerns about the housing sector in Victoria.

Sunday, January 22, 2012

The principles of tax reform

Greg Mankiw has a great op-ed column in the Sunday NY Times on four basic principles for tax reform. While this relates to the USA it is universally relevant. 

1) Broaden the base and lower rates
2) Tax consumption rather than income
3) Tax bads rather than goods
4) Keep it simple stupid

Mankiw is a Professor at Harvard and author of some of the most widely used economic textbooks. He is very big on 'pigovian taxes' which is the basis of 'tax bads rather than goods' and this also makes him an advocate of a carbon tax. He was also chief economic adviser to Dubya Bush and generally associated with the Republican Party which always makes him interesting as a debating reference to confuse the ideologically blinkered among the right. Note: see previously posted Einsten quote.

Mankiw also touches on property taxes in context of broadening the tax base:

"Subsidies to homeowners are, in effect, penalties on renters — after all, someone has to pick up the tab. But there is nothing wrong with renting."
Australia also has too many anomalies here and this was also addressed in the Henry tax review. In my view among the most perverse, amoral, and rarely discussed of these has been local councils giving rates preference to owner occupied properties. This is a tax on renters with no justification. To our credit while pervasive elsewhere this is something Cairns has avoided but who knows for how long it can be politically resisted?

This is also a part of our cultural bias in Australia to home ownership. A fews years back when a participant in council submissions on rates increases it was a cry from home owners that strata units were owned by investors who got tax breaks, so they should have their own rates breaks to compensate.

The most vocal hypocrit on this was a man sitting on a $million tax free capital gain on the Kewarra beachfront while requesting his rates be capped and unit owners be slugged by council to compensate for investors ability to claim depreciation!

Einstein's naivety

"This world is a strange madhouse. Currently, every coachman and every waiter is debating whether relativity theory is correct. Belief in this matter depends on political party affiliation."

Compost comments policy failures?

Scepticism of the new Cairns Post comments policy has been previously expressed here. So it was interesting to see comments such as this posted this weekend:

"Investing in services we have the worst Council maintained roads in Queensland. Where is the investment in services there you senile old woman"
As suspected application of the full policy is less than complete or has not been read or understood by their moderators?

4. We do not tolerate personal attacks, racism, sexism, ageism, homophobia or other forms of hate-speech in any form.

Thursday, January 19, 2012

A most malodorous compost?

Investor Club is active again in Cairns! Active enough that Nick Dalton in yesterday's business section of the Compost featured in the MyView  Op-Ed an 'opinion' by Kevin Young of the Investors Club. Kevin was previously known as Kevin Sampy.
Kevin Sampy has an interesting background as a bankrupt and has previously had investment schemes closed down by ASIC (2003). However, as some of us know, the same people seem to adapt to fringes of the law.

He now also has a superannuation scheme. Apparently this took some time for recent ASIC approval last year. This is filtered via something called   " Industry Superannuation Australia Retirement Funds (ISARF). Please note that ISARF is not an industry fund as defined by the Industry Funds Forum and it was not established under an industrial award.". Hmmmm ..... perhaps not what you have have thought to be an 'industry fund' but hey ..... it is disclosed in the detail.

A long running defamation with Neil Jenman has been settled on a confidential basis out of court, subsequently information on this been removed from Jenman's website. However you can find the gist here from The Guardian when he attempted an expansion into the UK on the eve of the GFC.  There remain links to a legal action by a couple who were geared-up into residential property by Investor Club as they neared retirement. There also still references where Kevin suggests you should not consider retirement until LVR is down to 60%? Absolutely Kevin!

Funnily enough, some years ago I lodged a formal complaint with the ABC after Kevin Young appeared with Pat Morrish on local morning ABC promoting his 'club' in a sycophantic interview that would have made John Mackenzie blush (it is a commercial operation flogging developer units via a tupperware party style structure). The complaint was upheld and Morrish was officially warned and had to be reminded of ABC editorial policy. Young (Sampy) was also as a result requested to remove certain ABC material from his website.

Bleg x 2: A bleg being a request rather than a blog!
1) What could possibly be the motivation for the Cairns Post in giving this such a prominent feature?
2) Who was the producer assisting Pat at ABC when she did the sycophantic interview with mathematical savant philanthropist Kevin Young ..... oops I mean Sampy?

Note: A similar question has bee previously asked at Club Troppo.

Insurance woes continue

The run of bad news from insurers is not promsing for any insurance premium relief in Tropical Queensland. QBE Insurance recently delivered a shock profit downgrade because of catastrophe claims and investment markets. Yesterday there was another downgrade from Wesfarmers Insurance which included this comment:
"We continue to make good progress with reducing our exposure to higher hazard geographical areas and industries, in line with our ongoing focus on disciplined underwriting,"
Wesfarmers and QBE are two of those which have withdrawn entirely from strata insurance in Far North Queensland.

Wednesday, January 18, 2012

Tourism commissions rip-off?

News Ltd press are reporting a new inquiry by the Queensland State Guvmint into tour desk commissions with a suggestion of unethical practices in Cairns. Tour desk commissions have been a constant complaint for many years by tour operators. Commissions typically 35% to 45% are indicated in this report which is certainly a large component. There has apparently been a previous inquiry by the ACCC.
The industry has already been through an investigation by the Australian Competition and Consumer Commission, which found market forces were working and warned operators that, if they banded together to demand a set fee, it could contravene the Trade Practices Act.
I would have thought this was a sector where there would be growing competition from online bookings and smartphone apps? If commissions are excessive then why isn't there greater competition as has happened in retail and other travel services such as airline bookings?


PS: There is also a link from that report to another on world tourism numbers from a UN agency.

Update: This did appear front page of today's Cairns Post hardcopy but I somehow missed it online: Price Gouge. Charlie Woodward does refer to the growth of online booking. The Post version includes claims of even higher commissions of as much as 66% although one must be wary of 'journalism mathematics' as this doen't seeem to correlate with the other numbers provided

Tuesday, January 17, 2012

Which unit will pay the highest council rates?



Cairns Aquarius. Long established Cairns icon at 107 The Esplanade and home to many of cairns business elite. Two resort pools, spa, sauna, half court tennis. Security and impressively funrnished foyer entrance. 85 units over 15 levels close to restaurants and city with magnificent ocean views.


Park Regis. 207 Abbott St (small block next to Rydges Esplanade). Limited views from some units. Small pool. 9 units over 3 levels with ground floor parking. Cheapest block with Esplanade frontage city side of hospital. Somewhat tacky. Home to backpackers and other riff raff.


Answer: to be advised but guesses welcome?

Promises! Promises!

As soon as Anna Bligh announces an election date Loose Change can determine the feasibilty of temporarily relocating interstate until this unusual election season blows over. Somewhere else may be a good place to be in the next few months!

Anna Bligh was in town yesterday to promote the Cairns Region Economic Future 2012-2015 plan. Entertainment Precinct funding is the largest component in what is mostly an uninspiring list of projects loosely within strategic sectors. We were assured that this visit and announcement do not constitute campaigning.

This morning Campbell Newman let loose 'the vision thing' with a target of 420,000 jobs 'created' over the next six years with the objective of a 4% unemployment rate. My inner cynic generally deducts points from politicians who pretend some kind of control over somthing of limited influence. State politics is particularly prone to induce this cynicism when promises are made on such as jobs, economy, and the unemployment rate.

The Can-Do job target is for employment growth of about 2.75% p.a. over the next 6 years. The chart below is of annual percentage growth in Queensland employment since 1978. The red line is the 6 year moving average. Yep, looks like Campbell has set pretty close to the average as an aspiration. It would, he said, take hard work to be average and who could deny that?

Whether that and 4% unemployment can be achieved depends on so many factors, so far beyond the influence of a state guvmint, with no apparent consideration to any broader macroeconomic consideration. As they say, past performance is no guarantee!

Talking of whether, does anybody know the weather outlook for Tasmania over the next couple of months? Or the Falkland Islands? 



Monday, January 16, 2012

Agriculture export opportunity?

Officials at Cairo's international airport confiscated 420 pounds of frozen cow brains Friday from three Sudanese travelers who planned to sell them to Egyptian restaurants, authorities said.
An airport official said it was the fourth time this week that customs officers there had foiled an attempt to smuggle cow brains into the country, reflecting the growth of a moneymaking scheme made possible by some realities of international supply and demand: Cow brains are cheap in Sudan, and Egyptians like to eat them.
A pound of raw cow brains bought in Sudan for less than a dollar can be resold in Egypt for six times as much, airport officials said. That means Friday's haul could have earned the men more than $1,500.
Restaurants specializing in liver and brains are popular in Egypt. Both items are deep fried and often eaten in pita bread with spicy red sauce.

Friday, January 13, 2012

Colambaris v Shorten

There has been quite a few media reports on the impact of the Fair Work Act on the restaurant industry, particularly with regards weekend penalty rates.  This follows criticism from celebrity masterchef George Colambaris:
"waiters at his new South Yarra pasta den Mama Baba would have to be paid "$40 an hour on Sundays ... and it's not like they've had to go to uni for 15 years"
The Restaurant and Catering Association has released a list of ten points they want addressed howver the key issue seems to be penalty rates, flexible hours, and the "better off overall" test. Shorten suggests that tthe solution is to improve productivity.
"If George wants to bargain with his workers and improve productivity and be even more competitive, then the tools exist in our present workplace system."
I'm not sure that the potential for productivity improvement in a service sector such as restaurants is quite the equivalent of sectors such as manufacturing, mining and agriculture which have been the productivity leaders over time? At least not without being at the expense of quality. Perhaps he has a buffet in mind?

There has been a suggestion of more prevalent weekend and holiday surcharges. As previously posted at Kitchenslut not many are aware that the ACCC requires a completely different menu with surcharge prices and that simply advising that there is a 10% surcharge is inadequate. This seems to me to be an unnecessary impost.


Further reports in The Australian: fair-work-fails-to-cater-for-us-say-cafes & pressure-builds-for-open-fair-work-review.

Meanwhile Matt Cowgill takes on the claims of Colombaris:
"If Mr Calombaris’ story was accurate and modern awards were strangling his industry, we’d expect to see the profitability of restaurants go down, and employment in food and beverage service go down. This hasn’t happened"


Thursday, January 12, 2012

arrivals and departures

ABS stats for overseas arrivals and departures during November have been posted today.

 SHORT-TERM VISITOR ARRIVAL

  • Trend estimates: Short-term visitor arrivals during November 2011 (505,300 movements) increased 0.5% compared with October 2011 (502,900 movements). This followed monthly increases of 0.9% in September 2011 and 0.7% in October 2011. The current trend estimate for arrivals is 0.8% higher than in November 2010.
  • Seasonally adjusted estimates: During November 2011, short-term visitor arrivals (502,400 movements) recorded a decrease of 0.6% compared with October 2011 (505,200 movements). This followed a monthly decrease of 3.8% in September 2011 and an increase of 4.8% in October 2011.
SHORT-TERM RESIDENT DEPARTURE

  • Trend estimates: Short-term resident departures during November 2011 (653,700 movements) remained unchanged compared with October 2011 (653,700 movements). This followed monthly decreases of 0.3% in September 2011 and 0.4% in October 2011. The current trend estimate for departures is 8.1% higher than in November 2010.
  • Seasonally adjusted estimates: During November 2011, short-term resident departures (649,100 movements) decreased by 0.6% compared with October 2011 (652,900 movements). This followed a monthly increase of 0.1% in September 2011 and a decrease of 1.2% in October 2011.
The flatter trend for resident departures in the second half of 2011 is interesting. Although with the $AUD breaking to new highs against the Euro 2012 may be the year to plan that European junket. It also now makes Australia a very expensive destination from Europe.

Wednesday, January 11, 2012

Strata insurance inquiry


The parliamentary inquiry into residential strata insurance in tropical Queensland rolls into town rolls at the end of the month. Public submissions to this inquiry close next Monday 16 January and should make for some interesting light reading. Public hearings are to be held later this month in Port Douglas, Cairns, Townsville and Mackay:
  • Port Douglas – Monday 30th January, Port Douglas Community Hall, Mowbray St 9am – 12pm
  • Cairns – Monday 30th January, Sebel Hotel, 17 Abbott St 2:30pm – 5:30pm
  • Townsville – Wednesday 1 February 2012, 9am-3pm, Reef HQ, 2 - 68 Flinders St, with videconferencing available to Mackay from 1pm-3pm, Central Queensland University, 6/G.03 Boundary Rd, Planlands. 
Loose Change may be absent on a southern family sojourn so sadly is likely to miss the hearing theatricals. The inquiry is being conducted by the House Standing Commmittee on Social Policy and Legal Affairs which has been supplemented for this inquiry by the inclusion of Warren Entsch.

Recent commentary related to Council rates and strata units has also been noted as local elections draw closer and Loose Change is sure to return to this topic being a subject of keen  personal interest.

Friday, January 6, 2012

changing employment profiles

Courtesy of a tweet by Malcolm Turnbull came a link to a post today at the AFR: Times changing for workers and Labor. The AFR is usually now paywalled however this seems to be open access. There is also a link to this report with graphics.

It is a report by John Black from Australian Development Strategies on employment changes in four key industries. Black was a Queensland ALP Senator between 1985 - 1990 although not sure he remains well regarded within the ALP milieu?

Have no idea on the veracity of the methodology but regardless this does contain some contentiously interesting stuff. While constricted to just four key industries not all most relevant to the Far North, Black claims that growth in employment since 2007 has been massively weighted to health.

The growth in health industry jobs over the past two years has equalled some 2.3 per cent of the entire Australian workforce, or a new labour market bigger than Tasmania’s. Since November 2007, ABS labour force surveys indicate Australian health bureaucrats created 260,000 jobs, including 56,800 in hospitals, 101,600 in medicinal and health-care services, 63,200 in residential care and 48,200 in social assistance. The jobs tally for health is now 1,356,000 and two years ago, it took over from retail as our biggest industry, with more jobs than you’ll find now in Western Australia.
The industries are Health, Finance, Mining, and Manufacturing. An initial attempt to navigate the interactive graph by postcode for changes in these categories with employment changes between November 2007 and 2011 in number of jobs by postcode in Cairns:

Postcode 4878
Mining +104
Manufacturing -22
Finance   -16
Health  + 319

Postcode 4879
Mining +145
Manufacturing -227
Finance +6
Health -133

Postcode 4870
Mining +228
Manufacturing +124
Finance -35
Health +2,129

Postcode 4868
Mining  +80
Manufacturing +77
Finance +143
Health +437

Postcode 4869
Mining -130
Manufacturing +2
Finance +124
Health  +462

Again, I have no idea of the methodology adopted here and the industries do not include key FNQ components such as retail, construction and tourism (note: tourism is usually not a specific industry classification for most statistical purposes as it transcends many industry boundaries).


Thursday, January 5, 2012

Drowning in Debt?

The Cairns Post has reported that we are drowning in $11.6 million of debt and which places us only behind low-rent Logan. 
"The debts and fines range from court orders, and parking and speeding fines, to unpaid electricity and medical bills."
There follows explanations and expressions of concern from various identities and commentators blaming tourism, transient populations and the economy and this is frightening "for a city the size of Cairns". Problem is that the data is based on postcode and Cairns 4870 is one of the largest population postcodes in Queensland at almost double the population of Logan 4114 based on 2006 Census.

The data comes from the State Penalties Enforcement Registry (SPER) within the Department of Justice. The Brisbane Times report includes a link to a pdf file of the data for all postcodes in Queensland. This makes it somewhat unwieldy to trawl and correlate with census population data however a few relevant comparisons may be indicative.

The data also includes number of fines and number of debtors for the outstanding amounts for each postcode. If we compare the number of debtors per capita for each postcode Cairns 4870 comes in at 16.76% with  an average debt/debtor of $1,167. Number of debtors/capita in Logan 4114 comes in at 24.88% with significantly higher debt/debtor.

Brisbane City 4000 scores highly with 28% of its modest population as debtors. Combined with a contribution from GPO 4001 this makes the CBD easily the state 'hotspot'. However, what appears obvious here is that a postcode with a high proportion of business addresses will inflate this percentage relative to population. The data is based on the postcode address attributed to each outstanding debtor. Being a business centre is at least as relevant as population or demographics. Indooroopilly has a modest 7.46% debtors.

This trend is also evident in Townsville where the central 4010 poscode is the leader with 25.17%. Aggregating the next five adjacent Townsville postcodes produces an average 15.6% debtors, broadly in line with Cairns. Townsville has a higher outstanding debt/ debtor.

There is a strong variation between other Cairns postcodes with 4868 to the south having 14.43% debtors and 4879 at the beaches just 8.27%, which is not that different from Indooroopilly. Albeit this is based on 2006 census populations which may be dated but should still be broadly indicative.

The data provides an interesting perspective and it would be good to have a more detailed breakdown, such as based on business and residential adress, and a better format. What is a surprise is not any regional anomally in Cairns, which is not particularly evident on relevant comparisons, or the aggregate of such debt outstanding, but rather the overall number and implied proportions of outstanding debtors. 

Monday, January 2, 2012

A comment on a Compost comments comment

To bring in the new year the Cairns Post has announced that it will enforce disclosure of full name and location as part of its comments policy to prevent anonymous and pseudonymous commmentators. My award for best response in the debate on this among the comments thread at the ComPost:

I am a standup comedian and I frequently scour Cairns.com.au comments for material. I don't know what I'm going to do now.
Posted by: Ethan Addie of Melbourne   12:49pm Saturday
Comment 42 of 72
Perhaps we have not properly appreciated our potential as a source of comic content. If only it could be copyrighted or patented it could be the new industry to diversify the Cairns economy?

It can only be presumed that Post moderators will also now stick to their own comments policy on abuse and factual error among other aspects, regardless of whether anonymous or not.