Sunday, March 31, 2013

The big dry?

Easter Sunday brings the month to an end so I have updated the rainfall graph for Cairns Airport previously posted back in February.

The graph here shows the variation from the monthly average. The black line is a 6 month moving average and the red an annual 12 month moving average. These are now at their most negative levels since 2007.

The 6 month average reflects the relatively dry wet season and there hasn't been an above average month in that period. The 12 month has fallen sharply as the 907 mm March rainfall in 2012 falls out of the range. It may be more appropriate to use medians perhaps but the pattern would remain.

Monthly averages at Cairns Aero vary from 455mm in February to 27mm in August. The April average is still a respectable 196mm. The Weekly Tropical Climate Note is due to be updated tomorrow but recent crisp sunny mornings don't feel particularly monsoonal.

The drier wet season has been strongly felt by graziers across the north as reported by ABC Rural: The rain that never came
In Queensland's Gulf country, almost every conversation starts and finishes with two topics - the parlous state of the cattle markets and a season shaping up to be the worst in a generation.
Politics of a northern food bowl may have a different context come September?

Friday, March 29, 2013

Easter entertainment from the ABS

The ABS was clearly concerned that people would be bored at Easter so yesterday thoughtfully released Socio-economic indexes for areas (SEIFA).

 Socio-Economic Indexes for Areas (SEIFA) is a product developed by the ABS that ranks areas in Australia according to relative socio-economic advantage and disadvantage.  The indexes are based on information from the five-yearly Census.

Media reports have noted the extremes on the advantage and disadvantage scale. Aboriginal communities are predominant among the disadvantaged with Yarrabah rated the most disadvantaged in Australia on the SEIFA scale with Aurukun also among the bottom 5. Interesting that earlier in the week there had also been a dispute over withdrawal of funding by the Qld Gov't for a welfare reform trial in Cape York communities with Noel Pearson slamming the decision of "cowboys".

Conus Economics Blog has also posted concerns on the Cassowary Coast going backwards and getting poorer based on comparison of the 2011 census results with the previous 2006 census. Similar trends are also noted in Cairns:
Significant declines are also seen when we consider the Cairns Regional Council. In particular the Economic Resources Index for the region has fallen such that their position has dropped from the 63rd percentile in 2006 (weighted average between the old Cairns and Douglas Shires) to just the 36th percentile in 2011!
The ABS has provided comprehensive information and resources including download files for mapping in Google Earth. Below is the SA1 socio-economic advantage & disadvantage data for the more central Cairns area. Red is at the most disadvantaged on the index scale (decile 1) and blue the most advantaged (decile 10).

However the sun has come out, so I will wander off to stroll the boardwalk and ponder the location of my bohemian Esplanade abode in the bottom half of the rankings and empathising with those battlers in Western Sydney struggling away on $250K a year, before returning to play around some more later .......

Update: It has been noted that my bohemian retro Esplanade abode, within an SA1 decile 4 zone with a score of 961 is above the Four Mile Beach front at Port Douglas, within a lowly decile 3 zone with a score of just 926. I can spit with contempt at the Sheraton Mirage!

Monday, March 25, 2013

Meanwhile, down the road .....

The regional employment data has always been at times questionable, but it's all we have! While Cairns and Far North has been navel gazing in recent years, and bemoaning high unemployment, trends down the road in Townsville are if anything more interesting.

While the perception and in Cairns has been that Townsville is a stable diversified economy that has performed more strongly and should be emulated, somehow employment in North - NW has gone significantly backwards in recent years. It is the worst performing region in Queensland in terms of numbers employed going by the ABS estimates since the end of 2010. This is a comparison of employment between Far North and North-NW:
The trend line here is simply a 12 month moving average and shows the contraction in North-NW employment over recent years with employment numbers in the two regions again converging. While both regions cover a large area they are dominated by their respective capitals. 2011 Census data shows a labour force of approximately 85k in Townsville SUA and 68k in Cairns SUA, although the areas surrounding Cairns City are more densely populated than Townsville.

Most of that roller-coaster in North-NW has been in female employment and this is the monthly data for male and female employment since 2007:

So the increase in employment in the North-NW region between the GFC hit and the peak in 2010 was mostly driven by female employment. That female employment reached a level almost matching males is rather unusual, particularly given the regional demographics, with the split in Queensland generally somewhere around 45-55.

This is a direct comparison of female employment between Far North and North-NW:
The trend is again a simple 12 month moving average with the two regions again converging as Far North makes up ground. There are some similar trends here with the decline from 2010 to 2012 now turning around in both regions.
The Townsville Bulletin reported on female employment back in July 2011: Record high for female unemployment rate. There have also been some substantial swings in participation rates over this period with the female rate being as high as 75% and as low as 56%.
Without any local knowledge of what has been going on in Townsville this doesn't really make sense to me, and perhaps raises further questions on the quality of the regional data. Are there really something close to 10,000 less women employed in North-NW than there were around the end of 2010?

Thursday, March 21, 2013

Unemployment February

A catastrophe has befallen the Loose Change IT systems which have now been dispatched to the physician! Consequently a brief post from the City Library facilities on today's regional unemployment data will be absent the usual graph!

The unemployment rate in February blipped back up to 7.9% although the employment estimate remained robust. There were some interesting numbers in other regions with Mackay-Fitzroy in particular posting a jump in the unemployment rate!? Conus Blog is likely to post a more detailed analysis.

Last weeks national data produced a large jump in the estimated number of employed in Australia which drew much commentary including an informative post by Peter Martin explaining the stats.

Tuesday, March 19, 2013

2013 Property Market Movement Report

The Queensland Valuer-General has released the 2013 Property Market Movement Report ahead of the release of land valuations on March 20.   The section on the Far North has been copied below.

Within Cairns Regional Council area the median residential land value fell by 2.1%; multi-unit land -1.4%; commercial -0.7%; Industrial flat at 0.0%; while primary production land was the winner at +6.7%.

The Cairns property market appears to have generally
stabilised, after 5 years of falling values. The key industries
of tourism and construction are still negatively impacted by
the strong Australian dollar. However, increasing tourism
numbers associated with the growing Chinese sector have
raised confidence.
The residential and rural home site market within the
Cairns locality has generally experienced very little
change in value over the last 12 month period. Low rental
vacancy rates have led to greater market turnover and a
stabilisation of the established residential market. The
push from the bottom and softening from the top has led
to a compression of the value range within the housing
Residential land values within Port Douglas locality have
generally stabilised following the declines of previous
years. However, values have fallen in some other areas
where the supply of land is still greater than demand.
Values have been reduced at Wonga Beach and there were
some market corrections north of the Daintree River.
Land values in the Babinda locality have reduced slightly
due a lack of demand.
Distressed sales have been prevalent in the commercial,
industrial and multi-unit market sectors. However,
properties which are well located and have secured
tenancies in place are still holding their levels of value.
Land values in all three sectors have levelled out within
the Cairns region over the last 12 month period. The
Port Douglas locality has also experienced a levelling
in the market for these land use categories. In other
areas however, low visitor numbers and difficult trading
conditions has continued to affect the viability of some
commercial property. Values in the Cape Tribulation area
have been reduced to reflect this.

Monday, March 18, 2013

Liars, Damned Liars & Steve Lewis

Loose Change has about five uncompleted draft posts and an uncompleted project with local policy relevance which may actually have some significance for the lives of real people! However, all these require actual thought unlike the cheap journalism of News Ltd!

So it was that a response to todays report in the Sydney Daily Telegraph that corporate insolvency had escalated because of the carbon tax became inevitable! This report appeared under the co-byline of one Steve Lewis, who is somewhat a controversial character involved in episodes around the Slipper sexual harrassment case where a judge deemed the motive to be political and Lewis appeared to be a player rather than a reporter.

Anyway, lets go to what Steve has said now:
The Australian Securities & Investments Commission reports there were 10,632 company collapses for the 12 months to March 1 - averaging 886 a month - with the number of firms being placed in administration more than 12 per cent higher than during the global financial crisis.
Actually, not.  The 10,632 were the 12 months to December 31, 2012. In terms of how this relates to the alleged carbon tax correlation and validity  ...... lets do a graph:

This is ASIC monthly data for companies entering external administration. Yes, this is a graph of the exact same data used by Steve Lewis shown as a 12 month moving average going all the way back to 1999. It was indeed 10,632 in the year to December 31, and not March as in the Tele. However can one see a further problem with the analysis here in the attempted correlation with the carbon tax?

Yes, you guessed it! Insolvency rates have DECLINED slightly since the carbon tax was introduced at July 1 last year, and doubled in the last 8 years of Howard ?! What does this mean? It means nothing which any professional journalist with half a brain should have known from brief inquiry! Such is News!

A strangely prevelant phenomenon within News Ltd : Liars, Damned Liars, and Gavin King;
Black Holes & Supernovas


Monday, March 11, 2013

Chinese speedbump?

Despite the fanfare for direct flights into Cairns the ABS data for January last week confirms that arrivals into Australia from China have been trending weaker in recent months! This chart is trend seasonally adjusted arrivals over the last ten years and shows the strong growth  since the GFC volatility has arrived at a speedbump it would seem. The lunar new year fell in February this time so next months data on that may be interesting.

The surprise over the last year may be the USA with growth at 8.4% now not far behind China! Perhaps those Paul Hogan ads have finally started working?

Tuesday, March 5, 2013

FNQ too far away for ASIC?

Four Corners last night included a visit to FNQ for a story on the troubled LM Mortgage operations:

JAMIE DURIE, LM INVESTMENT SPOKESMAN: Offering a global pathway to these burgeoning Australian investment opportunities is LM Investment Management Limited...
STEPHEN LONG: With the celebrity gardener Jamie Durie as its chief spruiker, LM is expanding worldwide.
But back home, some of its clients aren't doing so well.
Danny Maher is a financial planner from Cairns.
(Driving with Danny Maher) So you're pretty much involved in a salvage operation on behalf...
He's trying to salvage the lives of people convinced by another advisor to put their money in a fund run by LM Investments.
(to Danny Maher) How much has been lost in these mortgage trusts up here?
DANNY MAHER: Oh look, it's hard to quantify. I know of one trust, the LM First Mortgage Income Fund, that there's about 20 million dollars worth of exposure here in the Cairns and Far North Queensland area.
STEPHEN LONG: Twenty million in this area? That is huge!
DANNY MAHER: Well it's quite a sizeable fund and some of these people... Unfortunately, they are mainly retirees and it is their livelihood. They've lost their life savings.
STEPHEN LONG: We drove north from Cairns to meet one of those people.
He's a retired cane cutter, the son of Italian immigrants, and he's lived for 45 years high up in the hills between Cairns and Mossman.

The fund once held close to $1 billion in assets so it's uncertain to what extent FNQ may have been over-represented among investors.  A decade ago when KS ventured for an episode in financial planning he had cause to have a closer look at LM mortgage funds and had some concerns that it was perhaps riskier than thought by both advisors and investors.

It was however included on the product lists of large planning groups at the time, including Commonwealth Bank. CommBank was also the banker to LM. Michael West at the Sydney Morning Herald covered the LM story last year.

The Far North has had its share of casualties in recnt years including Storm Financial, CEC and Hedley with significant wealth destruction. It is recalled some years ago an ASIC representative before a parliamentary committee commented that they found surveillance more difficult the more distant from the capitals and cited FNQ as an example.

Friday, March 1, 2013

The age of austerity is over?

The Queensland Government has at least released the executive summary of the Costello audit report. Privatisation will be top of media reports and discussions so I will leave that for others!

Queensland Economy Watch supports the privatisation proposals: Govt should embrace privatisation. While Macrobusiness is more cynical: Costello propaganda supports privatisation. Possum Comitatus has been shouting 'foul' on twitter over wages data among other aspects.  No doubt we can expect an imminent contribution from Prof John Quiggin. 

An interesting aspect since the interim report is that discussion of any revenue measures has been disregarded. In fact there is a reference that any revenue measures will have to come from the Feds but should not be expected! Meanwhile, simplicity reigns when it comes to debt analysis:

This reduction in debt cannot be done by adjustments to the State operating
statement. To illustrate, if the Government were to achieve a consistent fiscal
surplus of 1% of revenue year after year, it would take 50 years to reduce debt by
$25 billion (ignoring growth in the base and inflation impacts for simplicity).

The Courier-Mail reported this without reference that growth and inflation over 50 years is ignored! Hang on! Wasn't it the Howard Govt, including Costello, who started a financial literacy education program? Apparently it wasn't effective! Debt /GSP which included these appropriate parameters after 50 years for this calculation would be?

That aint simplicity but rather duplicity! Sadly we have no one of Paul Krugman's standing to offer an alternative perspective: Nobody understands debt.

Meanwhile over in old blighty where the Tories have similar advice and polling links as the LNP and are 10 points behind Labour (at least they know how to spell it) in polls after 2 years of the same agenda, Anatole Kaletsky suggests The age of austerity is ending:

With an election just two budgets away and a radical new governor arriving at the Bank of England amid intense public expectations, a shift of policy away from austerity always seemed likely in the second half of 2013. Until last week, however, a major deterrent to policy U-turns was the fear of losing Britain's triple-A credit rating.
With that totem now demolished, Cameron has less reason than ever to persist with policies that are not only politically suicidal but economically counterproductive - and are coming to be recognised as such in Europe, as well as in America, Japan, China and indeed the world over.
Things may now look that way just yet, but the age of fiscal austerity should soon be over.

Apparently so far some one forgot to tell Australia? Roll on the Great Unhinging!