Tuesday, December 31, 2013

Bipolar property investor?

Sydney property investor Mark Bennett said he would consider decreasing his investment portfolio in Cairns, 15 properties strong, if high insurance was not addressed. - Cairns Post, November 29

Another Sydney property investor, Mark Bennett, who recently bought his 14th property in Cairns, said Bungalow and Cairns North were his favourite investment locations for 2014. - Cairns Post, December 30

Saturday, December 28, 2013

Insurance, mortgages & black boxes

Recently I posted on Cairns mortgage arrears relative to the rest of Queensland. Today, during a leisurely perusal of the Courier-Mail at my local Esplanade RSL, I stumbled upon a report of related data: Queensland sucks up claims on mortgage insurance
QUEENSLAND has an extraordinarily large amount of claims on mortgage insurance.
The insurance pattern became apparent in figures collated by finance industry watchdog, the Australian Prudential Regulation Authority.
Lenders mortgage insurance is protection taken out to protect institutions, such as banks, in case a borrower defaults on a loan. That loan has property as collateral.
Lenders typically require such insurance they lend more than 80 per cent of the property's value. That is because it implies a greater level of risk in the loan.
There has been a bleedingly-high level of claims in Queensland, following some real estate values slumping, and some people losing jobs.
The loss ratio for mortgage classes of insurance business was 93 per cent in fiscal 2013, according to APRA's figures. "This high loss ratio was due to above average claims for loans on properties in some parts of the state," APRA said.

This comes from the APRA statistics which were actually released a month ago (must have been saved up for a slow news period). There has also been an update for the September quarter which is also unfavourable to Queensland.

To put this in perspective in Fiscal 2013 Queensland accounted for 25% of gross written premiums for mortgage insurance in Australia while accounting for 53% of gross incurred claims. I thought maybe there must have been some anomaly or quirk ovrlooked here but can't immediately see what? Although NSW/ACT also accounts somehow for 61% of all travel insurance claims in Australia?

A few weeks ago watching Alan Kohler's Inside Business on OurABC the now veteran fund manager Peter Morgan shook his head when asked for an opinion on the insurance industry as something of a mysterious black box. The nuances of insurance are among the most financially difficult to grasp which is clear to anyone who has painfully watched our politicians attempt to grasp FNQ strata property insurance over the last few years.

So the most interesting recent release also stumbled upon when browsing at APRA was this released the week before Christmas, which should be essential reading for anyone with an interest in FNQ property insurance  Letter to industry: catastrophe risk management
The ultimate responsibility for ensuring prudent and effective management of insurance concentration risk rests with the board of the insurer. APRA expects the board to oversee the insurer’s gross exposure to insurance concentration risk, the effectiveness of the proposed reinsurance arrangements in protecting the insurer against insurance concentrations, and the residual risk retained by the insurer.
Catastrophe concentration risks have been a critical component of our tropical property insurance crisis. Discussion around models, analysis and scenario testing is particularly interesting. There was also on observation on apparent problems with catastrophe risk modelling last year at Queensland Economy Watch: Gov't Actuary finds insurers struggling to understand catastrophe risk.

When we talk about limited supply by insurers into our market we are really talking about supply of capital, which is where APRA comes in. There have been reports as the year has progressed of easier capital conditions in insurance markets. It's disappointing that there hasn't been able to be deeper involvement by APRA into understanding the FNQ insurance issue in recent years.

I recently listened to an interview by our local radio shock jock of Warren Entsch, and assistant treasurer Arthur Sinodinos on those controversial insurance issues in FNQ, coincidentally at almost exactly the same time as the APRA letter. Now while insurance maybe complex to get one's head around it seems to me that Arthur, Warren, and APRA may not have all be singing in perfect harmony here? Perhaps I will have to go back and review my recording of the conversation.

Therein lies much content for future posts related to the currently proposed "plan" to address insurance in the tropics.

Update: Insurers may be at the centre of next big crisis

Wednesday, December 25, 2013

Daltonism of the Year!

There are times when I question whether I am too tough on the Cairns Post, our local monopoly journal of ignorance. Then I slap myself and think better. The term "Compost" was first taught to me by an award winning features writer for the "Compost" itself!

As we approach year end the media professionals (previously known as journalists) at the Compost are falling over themselves in quest to win the inaugural Loose Change 'Daltonism of the Year Award'. This award is for disregard of accuracy and facts which may interfere with the narrative around our great city.

It's a no brainer:
Cairns Chamber of Commerce's sport industry development manager Kevin Maher said Cairns was on the same latitude as Rio de Janeiro and would be perfect for pre-Olympics training.
We may be able to argue about unemployment statistics (?) but surely the geographical relationship twixt Cairns and the 2016 Olympic venue are fixed on the globe by now subject to plate tectonics? Let me quote the latitude and longitude for both venues:

Rio de Janeiro:  22.9083° S, 43.1964° W
Cairns:              16.9256° S, 145.7753° E

Geodetically confused? Well in Queenslander terminology it means the Rio latitude is somewhere just above Rockhampton. I can assist here with a map:

Yes, that's Rockhampton, down there between Bundaberg and Mackay, and smack on the Tropic of Capricorn. It's the place renowned for bulls testicles and which also, unlike Cairns, had the prescience to build its hospital on a hill.

The business editor who lent his name to a verb shares only half the by-line here at this award winning Post article, and I note it is a quote from a manager at the Cairns Chamber of Commerce.  So I am unsure which esteemed body or individual should share more in this prestigious inaugural award?

Santa hat survey

My annual survey of those embarking on Christmas Day reef trips wearing Santa hats confirms >90% Japanese (seasonally adjusted trend rate). Crew don't count as they are paid to wear silly hats.

Disclaimer: I have cheated though and reposted last years photo.

Sunday, December 22, 2013

Gateway to the Greta Barrier Reef

There is yet but scant information at the Aquis website re their $4.2 billion development proposal with the most detail provided possibly the name of the company: Aquis Resort at the Great Barrier Reef Pty Ltd (ABN 95 160 204 384).

An ASIC search throws up some interesting information on the company's short history. It was initially registered in September 2012 as 4JS Developments with the registered office at accountants Moore Stephens in Innisfail. 4JS Pty Ltd has also been the name and company for the Fung cowpasture investments.

Then this year the office shifted and in June there was a name change on the 26th to properly reflect the business: Aquis Resort at the Greta Barrier Reef Pty Ltd.

Some clever person seems to have quickly sussed that this didn't look quite right so subsequently next day there was another change to Aquis Resort at the Great Barrier Reef Pty Ltd.


Coincidentally perhaps, Chinese dishes are listed as a speciality in the bistro at the Greta Workers Club. Though I'd be inclined to stick to the sweet & sour pork.

Note: I knew where to look because many years ago I have actually been to the Greta Workers Club! Coincidentally Greta is also nearby Cessnock the home town of the Member for Cairns. Cessnock is known as "The Gateway to Greta". Mere coincidence?

Saturday, December 21, 2013

Cut & Paste?

The Cairns Post has today published an insight into the family behind the Aquis Casino proposal: Who are the Fungs? Meet the private family behind the Aquis mega-resort and casino proposal at Yorkeys Knob

His substantial fortune was inherited from his father Fung King Hey, known as "the godfather of traders", a billionaire who was at one time the largest shareholder in the world's largest stock brokerage firm, Merrill Lynch.
He also founded Sun Hung Kai Securities.
Fung King Hey made his fortune in tandem with his two business partners, Kwok Tak Seng and Lee Shau Kee.
The partners were the best of friends and were widely known in China and Hong Kong as "the three musketeers".
Their children also became the best of friends.
- Nick Dalton, The Cairns Post,  December 21

Which appears to correlate with a recent post at the idiosyncratic Archie Butterfly blog: Hong Kong Tony’s Greatest Hits: Volume One – Hong Kong Tony, the Kwok Brothers, Noah’s Ark and the Cops
Hong Kong Tony Fung is not a self-made man. His substantial fortune was inherited from his father Fung King Hey, known as ‘the godfather of traders’, a billionaire who was at one time the largest shareholder in Merrill Lynch.
Fung King Hey made his fortune in tandem with his two business partners Kwok Tak Seng and Lee Shau Kee. The partners were the best of friends and were widely known in China and Hong Kong as ‘the three musketeers’. Their children also became the best of friends. 
- Archie Butterfly, December 10

Hey, what's a few paragraph changes here or there ....... or has the true identity of Archie Butterfly been revealed?

Update: The account at The Post of  Tony Fung as both "intensely private" and a "high-profile investor from Hong Kong" is a curious contradiction. There doesn't really seem to be a wealth of public information available beyond his well known family business background, and descriptions as a "billionaire" seem almost entirely related to news reports on Aquis. I can't find him listed anywhere at Forbes as a billionaire or among Hong Kong's 50 richest? Perhaps the complexities of Chinese family nomenclature have me bamboozled?

Friday, December 20, 2013

A haven for dirty money?

Rich smell: The forum for rich countries issues an overdue mea culpa
THE leakage of wealth from poor countries through tax evasion, money laundering and other misdeeds is becoming an ever bigger worry for those who want poor countries to get rich. Global Financial Integrity calculates that such “illicit financial flows” have increased sharply over the past decade and may now be $1 trillion a year or more. Even experts who question the campaigning group’s methodology accept that outflows probably exceed incoming aid and investment combined.
The Economist follows on with a quite critical assessment of the efforts of Australia on money laundering including this comparison:

This should have some implications for Cairns which has been reported as a prominent location for corrupt money from PNG in particular.

Previous posts:
PNG crime links to Cairns
PNG investors roll into Cairns
PNG high rollin'
Foreign invasion called off

Tourism satellite account 2013

Tourism per se doesn't appear as an industry in international statistical standards or the national accounts so the ABS provide a Tourism satellite account which was also released this week.

Despite the wailing and screaming we have heard at times in recent years that Cairns must diversify away from its core tourism strength or die it seems to have performed quite creditably in the most recent financial year, particularly given the elevated currency during that time. Looks like a much better space to be than building cars!

Key Figures

2011-12 to 2012-13 change

Direct tourism gross value added at basic prices ($m)
37 354
38 783
Tourism net taxes on tourism products ($m)
3 384
3 472
Direct tourism Gross Domestic Product (GDP) ($m)
40 738
42 255
Tourism employed persons ('000)
Tourism hours worked annual growth (%)
All industries hours worked annual growth (%)
Gross value added, all industries ($m)
1 392 644
1 423 181
GDP ($m)
1 486 071
1 521 163
Tourism share of gross value added (%)
0.0 pts
Tourism share of GDP (%)
0.1 pts

Key Points

  • Direct tourism GDP increased by 3.7% to $42,255m, compared with GDP growth of 2.4%
  • Tourism share of GDP increased marginally from 2.7% to 2.8%

  • Direct tourism gross value added increased by 3.8% to $38,783m

  • Total internal tourism consumption increased by 4.0% to $109,993m
  • Domestic tourism consumption increased by 3.4% to $83,031m
  • Tourism exports (international tourism consumption in Australia) increased by 5.7% to $26,962m
  • Tourism imports (outbound tourism consumption by Australian residents on outbound trips) decreased slightly by 0.1% to $32,122m

  • Tourism employed persons increased by approximately 11,400 employees to 543,600 employed persons
  • Tourism share of total employment increased from marginally from 4.6% to 4.7%
  • Hours worked in tourism increased by 1.0%, compared with 0.4% overall for the economy

Thursday, December 19, 2013

Reason for optimism but hyperbole watch restored!

The Far North unemployment rate for November has come in at a surprisingly low 4.6%. While this is encouraging the gyrations between 9.4% in September and now 4.6% within two months stretches credibility somewhat. Conus has now shamelessly plagiarised that comment before it was even posted so rather than continue with any attempted analysis will simply defer to their trend series and extensive commentary if I may which includes: Good news continues to roll in for FNQ jobs
Today's headline, unadjusted (and therefore virtually meaningless) unemployment rate for Nov has seen a spectacular drop to 4.6% from 6.2% last month and 9.4% just 2 months ago! Clearly we can place little faith in such wild swings. However, our own Trend series supports the case that there has been a significant drop in the unemployment rate in recent months. The Conus Trend unemployment rate for Nov comes in at 6.5%, down from a downwardly revised 7.1% in Oct.
A flag on sample size was also noted last month and again this month. A quick browse through the regions shows quite a few such flags appearing. The Sunshine Coast unemployment rate fell from 6.2% to just 3.0% this month and also comes with a flag.

An interesting aspect in the state data is an update on a previously posted graph comparing the unemployment rate in Brisbane with the balance of the state. The Bush here is patriotic maroon while Brisbane is evil blue. I have added in a 3 month moving average and note also that these are raw unadjusted numbers:

So a 5.0% unemployment rate for the Bush is now below 5.5% in Brisbane. This is actually quite rare for Brisbane to be higher and has only been repeated less than a handful of previous months since 2007, and never by as much as 0.5%. That could be an interesting comparison to watch!

Reef rolls out returns

Reef Casino Trust (RCT) updated guidance yesterday which appears to indicate a robust result for the latest half and year:

Based on our distribution policy of distributing 100% of distributable profit*, this means that our current estimate of the distributable profit* for the full year 2013 is approximately $14 million. This is above 2012’s distributable profit of $10.8 million due to improved rental contributions from casino operations including main floor table games, electronic gaming machines and also premium gaming.

The 30% lift in distributable profit also results in a substantial increase in distribution for the half to 17.5c per unit. Would have to go back and check to confirm that any payment since the announcement would be in addition to the $4.35 offer proposal from Aquis?

RCT has continued to trade thinly well below the offer price but did lift yesterday on the news to $3.85 albeit still with less than 20,000 units traded. Full results and details will be out in the new year.

Wednesday, December 18, 2013

Are Cairns mortgage arrears really that bad?

The Cairns Post has reported today on the latest mortgage delinquency report from Fitch Ratings: Cairns home loan borrowers lag on loan repayments.

This ranks "Far North and West Queensland ranked number eight for the 10 worst performing regions in Australia by number of mortgages in arrears." I can't think of an obvious rationale but for some reason in this analysis Cairns gets lumped in not just with Far North but all of Western Queensland:
So we should possibly not put too much weight on the relevance of that statistic for our local economy? The numbers from Fitch are presented in two ways. The number of mortgages 30 days or more in arrears as a percentage of the total number and the percentage in arrears on the basis of the value of the mortgages. The percentage on the basis of valuation will typically be higher than that based on number.
The numbers on the above map relate to value of mortgages. The basis of the report by the Post isn't clear but implication would appear to be on the number and not the valuation yet the numbers provided appear to be those higher, based on valuation:

CAIRNS homeowners are falling behind on loan repayments despite record low interest rates and a recovering local economy.
The latest Fitch Ratings mortgage delinquency report revealed 1.69 per cent of mortgage holders in Cairns were more than a month in arrears and 0.75 per cent were behind by 90 days.
Fitch director James Zanesi said the figure at the end of September was worse than the Australian average of 1.25 per cent.
I presume the numbers presented here for Cairns are from further enquiries by the Post or more detailed report because I can't find them on either basis in the PDF and Excel reports emailed to me by Fitch which don't include that level of local detail.

The reports provided do include some details for 76 Queensland postcodes including these from Cairns via a quick cut & paste with value and number as a percentage of total mortgages:

Postcode       Value     Rank    Number    Rank        Ratio
4869 2.65 5 1.85 6 1.43
4879 1.75 29 1.61 14 1.09
4868 1.48 46 1.10 50 1.35
4870 1.42 51 1.02 54 1.39

The postcode information provided is not a complete listing for Queensland so 4878 is missing from our jigsaw puzzle. Postcode 4869 is certainly not pretty ranking at 5 and 6 out of the 76 for highest rates of arrears in Qld. What may surprise is that 4879 at the beaches also stands out with a high rate of arrears. The ratio by which value of arrears exceeds number is also quite low in 4879 but no idea if this is significant.

Yet again, we should not assume either that these numbers for Cairns are way out of line with relevant comparisons. Queensland arrears are also higher than the national average. Within that comparatively low arrears in Brisbane clash with some high rates around areas such as the Gold Coast. Surfers Paradise easily tops the arrears by valuation!

There is also no information related to investor or occupier mortgages. More detail and analysis would be required to draw any insights from this report on a regional basis.

Another recent post: Housing & Mortgages

Tuesday, December 17, 2013

Eclipse stalls airport growth

As posted in previous commentary traffic growth at Cairns Airport would be likely difficult to sustain in the latter months of the year following the eclipse boost the previous year. So it was in November with passengers through the domestic terminal declining by 1.2% compared to the previous year. That is the first such negative month since 2011.


That pulls growth in the 12 month moving average back to about 5.7%. The domestic capacity dogfight remains ongoing so further manoeuvres there will be interesting to observe with issues around Qantas much in the news. Recent changes by Jetstar have boosted flights to Darwin but with cuts to the Singapore link.

Traffic through the international terminal continues to trend nowhere much.

Source: Cairns Airport

Saturday, December 14, 2013

Governor of Queensland?

There have been many reports recently, to the extent that it even seems now almost a consensus, that former Premier Rob Borbidge is to become the next Governor of Queensland.

I must say I find this astounding and there seems to be a complete lack of awareness of the Borbidge post-political record as a company director. Actually his post-political history seems to have been almost entirely airbrushed from Wikipedia?

The Borbidge corporate record was as Chairman at three ASX listed corporations: Asset Loan Co, Early Learning, and our own prominent FNQ collapsed developer CEC Group. Let me defer to Michael West at the Sydney Morning Herald on the Borbidge record with these: Politicians make lousy directors
What is it about politicians and company boards and a jinx? Is it that they are drawn to second-rate companies, or do they simply make second-rate directors?  
Former Queensland premier Rob Borbidge set the bar at a new level this week when a company he chairs, Asset Loan Co, lapsed into the loving embrace of voluntary administrators from Deloitte.  
He must be on a streak. As chairman also of foundering Cairns property group, CEC, Borbidge had presided over a record loss only 10 days before when it unveiled a 300% plunge in profits. Another basket case he chairs, Early Learning Services, has already conceded two profit downgrades since listing on the stock market less than a year ago.

Borbidge was associated at CEC and Early Learning with Cairns accounting identity Greg Kern who was also on the board of the Hedley pub disaster. However it is Asset Loan Co (ASQ) which is the most damning.
But let's get back to Rob Borbidge. Where this former premier of Queensland really  made a difference to the indifferent record of politicians-turned-directors was that he did not just front up to a few board meetings, pocket some fees and partake of the fine claret. 
No, Borbidge went further, actually spruiking Asset Loan's "investment'' products on commercial radio. Asset Loan has always been a two-bit bucketshop, a low-rent version of City Pacific, if you like. 
It advertised to get unsophisticated retail money into its funds, claiming its "bricks and mortar'' investments were good for mum and dad investors - then promptly on-lent that money for speculation in property development. 
Thanks to the odd press report, Borbidge had been reminded about the colourful activities of fellow directors Paul Hare and Russell Percival quite often - both of whom had been up on perjury charges in Queensland.

Given his background and extensive connections on the Gold Coast it is all but inconceivable that Borbidge was na├»ve as to what was in the ASQ cesspool. Yet when questioned the response was such as this: Unfair association with Fincorp
FORMER Queensland Nationals premier Rob Borbidge is the chairman of a high-risk, Gold Coast-based finance company offering huge 11 per cent returns to "mum and dad" investors.
The listed Asset Loan Co on-lends investor funds in the form of short-term loans that carry massive penalty rates, ballooning as high as 1000 per cent per annum.
Despite the high-risk nature of the group and the 11 per cent returns, Mr Borbidge - premier from 1996 to 1998 - said it was not right to equate Asset Loan Co with failed investment groups such as Fincorp, Westpoint and Australian Capital Reserve.
"It's not at all fair to be associating Asset Loan Co with Fincorp. It's a very hands-on company," he said. "(It) has always operated profitably and it is operating at higher profit levels than ever before."

That was in July 2007, a mere 13 months before ASQ collapsed and indeed joined Fincorp et al. The collapse took with it the "mum and dad" investors who had invested on the basis of Borbidge's reputation and advertisements for ASQ.

Borbidge has also recently been a key lobbyist for the Aquis Casino proposal in Cairns. The issue of lobbyist influence has been raised previously as an issue in Queensland politics. A former politician being catapulted from casino lobbyist to the Guvnor's residence should be an issue of question regardless of any opinion on the project itself.

This is simply not an appropriate person as Governor of Queensland in my view and an embarrassment that it is even being contemplated.

Further links:

Asset Loan Co: One underdog not to back

Watchdog eyes ex-premier's Asset Loans

Farewell to a loss leader

Former premier to bale out of investment ads

Borbidge colleague's US scandal

Asset Loan collapse exposes system flaws

ASIC caught waving horses through gate

Class action probe on Asset Loans

A beaming Borbidge


The ASX disclosures of Asset Loans Co (ASQ): 2008; 2007; 2006; 2005; 2004.

Thursday, December 12, 2013

The long march north

The topic of the week has been Holden cars, or rather the imminent demise thereof, and it seems every parrot in the pet shop has an opinion:

Australian disease spreads unchecked

Good riddance to the great Australian icon

Holden: this nauseating job-loss porn fails to ask the hard questions

Holden's production here can't just be for sentiment

Holden demise is not all bad news

Holden's eight hard lessons for Abbott

John Quiggin: The end of GMH

Apparently Tony Abbott has suggested the Olympic Dam expansion can be raised from the dead to be the salvation of South Australia. I actually see this clever diversionary ploy as part of the coalition policy for Northern Australia.

Is the demise of Holden to be the first step in the long march northward for South Australian refugees in the drive to develop the north?

Queensland Economy Watch has also taken a particular interest in the car industry: New government should reject car industry begging

Monday, December 9, 2013

A G20 agenda item

There has been recent noise and threats of action on insurance costs in North Queensland. There was a ten point plan, which looks more like a three and a half point plan on closer analysis, from our local state pollys.  Thence followed a Joint Statement from Campbell Newman and Assistant Fed Treasurer Sinodinos.

Missing from any mention is this recent suggestion at The Conversation: Why disaster insurance should be on the G20 agenda
"Australia has an unprecedented opportunity to resolve issues of escalating insurance prices caused by an uncertain climate. The time has come to curb the trend towards increased economic exposure to natural catastrophes.
The recent change of government, the upcoming Australian G20 in Brisbane in 2014, the establishment of the Bushfire and Natural Hazards Research Centre and international support from APEC finance ministers all point towards support for research and action for disaster risk financing." 
"The Australian Treasury has positioned macroeconomic policy as a key discussion area for the Australian G20. Given the economic and social impact of natural disasters across Australia recently, it would be logical to incorporate disaster risk financing into such discussions."
With this years G20 finance ministers meeting to be held in Cairns this would seem to be a rather appropriate item for inclusion on the agenda. Who knows it may even provide a relevant point of much touted international focus?

Note: I have sent Arthur an email with the suggestion and await his reply.

Saturday, December 7, 2013

A Cape York mystery: "Trouble at mine"

Has there been any longer running soap opera in the Australian mining industry now than bauxite leases on Cape York? One can recall the outraged calls of "sovereign risk" when Peter Beattie moved to remove the leases from the French Pechiney back in 2003.

I am confused as to current status of which bauxite leases are actually which on Cape York but never mind. The leases removed from Pechiney I think went to Chinalco which then pulled out in 2010. Pechiney itself was acquired by Alcan which was then acquired by Rio Tinto which of course operates Weipa.

This week Rio seems to have put the entire South of Embley project near Weipa on hold, as reported in the Courier-Mail: Rio Tinto roller-coaster at Weipa
Driving that was the proposed $1.2 billion South of Embley project, which would potentially ramp up bauxite mining operations for the next four decades and deliver hundreds of jobs to the region. But with the project now shelved indefinitely after Rio's cost-slashing decision last week, the future of the town looks uncertain.
In Weipa last Monday , Rio president and chief executive of bauxite and alumina Pat Fiore gave no indication to the change of plans for SoE, saying it would go ahead "once all the planets had aligned" and a decision on a Land Court objection had been made.
While Rio says it is still proceeding with obtaining all regulatory approvals for the project, the company's shift in focus to iron ore no doubt dealt a disappointing blow to the 3500 residents of Weipa. About 1000 of those residents are employed by Rio, with 25 per cent of the workforce made up of indigenous employees.
Also a recent decision to establish the Steve Irwin Wildfire Reserve seems to have killed the Cape Alumina project at Pisolite Hills which had previously been declared a "significant project". My own contact, a much respected former professional colleague within Cape Alumina simply responded to a general query with:
"Campbell threw us in front of a bus"
This follows the contentious partisan politics which went on around the Wild Rivers policy and mining on Cape York under the previous government. Cape Alumina have not yet ruled out legal action apparently. The average punter could be forgiven for being confused!

One would think such significant events for the regional economy would be big news for the Cairns Post but apparently not so much a priority this week. They seem to have been too busy sending up smoke signals over Yorkeys Knob.

Update: The Cairns Post updates the news! Up to 400 face job loss as Cape Alumina abandons bauxite project near Weipa

A weekend diversion

Funny and always relevant stuff in headlines from a mathematically literate world. Given the frequent rantings here at Loose Change on delusional interpretations of unemployment numbers this contribution was appreciated:

Our World: Unemployment Rate Jumps from 7.6% to 7.8%

Mathematically Literate World: Unemployment Rate Probably a Little Under 8%; Maybe Rising, or Not, Can’t Really Tell

Also highly recommended fun reading is 20 easy steps for trading up from a paper clip to a house.

HT to expatriate economist Justin Wolfers

Friday, December 6, 2013

Trojan horse for land tax?

Michael Pascoe has taken aim at State Treasurers for their efforts at revenue reform: You should all be sacked. This includes a spray at the NSW incumbent after he squibbed on the absolute no-brainer of removing their levy on insurance policies.

This relates to defer a decision to change the emergency services levy from a charge on insurance policies to a land valuation: NSW puts brakes on emergency services levy reform. An equivalent levy in Queensland appears as a flat fee on council rates.

Victoria have already moved to reform their levy with a component based on property valuation: Fire services property levy. This component isn't large being only about $70 for an average residential property on top of a flat $100 component. 

It does however represent a small step perhaps towards land taxes. Land taxes featured in the Henry tax review and also in the draft Costello audit before disappearing from any reference in the final document. Treasurer Tim apparently also squibbed any possibility of revenue reform.

Among the most inefficient taxes are the stamp duties which remain in all states on insurance policies. While insurance costs remain an issue in FNQ reform should really be high on the agenda for our local representatives who continue however to maintain their political spin against the regional interest.

The stamp duty on residential property insurance falls more heavily on FNQ where insurance premiums are higher, and fails to appropriately tax those who choose not to insure. Replacement of the insurance stamp duty with a broad based residential land tax could be much more favourable to North Queensland?

There are many recent posts on land tax at MacroBusiness.

Thursday, December 5, 2013

Comment of the Day

Today's standout comment fits well with the prevailing vision and values here at Loose Change:
"Never let it be said that there is no value in devoting your life to being an irritant" - Ben Pobjie 

Tuesday, December 3, 2013

Rising tide for beaches building

Building approvals data was out yesterday which continued an improving outlook in Cairns with 76 approvals for the council area in October. Commentary at Conus includes their trend series: More strong building approvals data
"Conus Trend series shows approvals in October up to 58 (from a strongly revised 57 in Sept.). This is the highest rate of Trend approvals for the region since mid-2010. The Trend approvals number has now increased from just 33 in Feb this year."
An interesting aspect from the more granular SA2 data is that the higher numbers are mostly out at the beaches with approvals to the north well ahead of the southside in recent times.

The strata unit sector continues to weigh on the local economy with still no approvals since that duplex in Bentley Park in August last year! This can't just be attributed to the insurance factor as there has still been activity in the sector down in Townsville.

Also noted this month was $30 million recorded for value of non-residential building. I presume this could relate to a larger project or two going through during the month?

Meanwhile in the most recent CairnsWatch probably of most interest was the trend in median prices for vacant land which i'm wondering may not be partly attributable to the beaches trend.

Note: In the ABS SA2 areas Cairns North comprises Brinsmead, Redlynch, Stratford and northward to Palm Cove. Cairns South incudes the City, Edge Hill, Whitfield and extending southward from there. Approvals in the north over recent months have been dominated by Smithfield - Trinity Beach.

Update: No weakness in strata elsewhere and remains the 'missing link' in Cairns Apartment boom taking hold in Sydney

Sunday, December 1, 2013

Gavin glosses over Gonski gap

There has been much comment and twittering about what goes on within the mind of Christopher Pyne. The Education Minister has decided to go back to the drawing board and re-write the Gonski reforms. He also reflected with some nostalgia on the Howard funding model which was rather generous to the private school sector.

Peter Martin has posted on that today: Inequality at the heart of Gonski rejection
And it doled out the money on the basis of a con. Funds were allocated in accordance with the ''socioeconomic status'' of the postcode in which each student lived - not on the basis of each student's actual socioeconomic status, but on the basis of the status of those who lived in the same postcode, most of whom would never go near the school and couldn't afford it.
Postcode discrimination? Now where have I heard that recently?  Oh yes, postcode is what the evil insurance companies also use to determine your risk status. Postcode 4870 Cairns is among the largest based on population in Queensland and not really a very useful determinant of socio-economic status. What is evil for insurance may be fine in education perhaps in the minds of some politicians?

We should reflect again on what the Gonski funding reforms would mean for FNQ as previously posted here at Loose Change: Gavin's Gonski Gap

After doing a cut & paste of the Courier-Mail data for Queensland into Excel the average funding increase for a state school in that period to 2019, per student, is 36.8% and the median school 35%.  For the Far North the average school funding increase is way higher at 47.2% and the median 45.2%. 
Part of this is related to indigenous communities with large increases in places like Yarrabah, Pormpuraaw, Western Cape, Torres Strait. However, the larger state high schools in Cairns are also big winners a long way above state averages, or the 19.4% base adopted by Langbroek as being 'worse off':

Trinity Bay High School            63.4%
Cairns State High School           45.2%
Woree State High School           48.8%
Gordonvale State High School   50.8% 
Smithfield State High School     39.6%

That would appear to leave a big potential funding gap missed by the Far North if Queensland rejects Gonski?

The member for 4870 was previously particularly cynical in comments about Gonski as a slogan without substance and supported the refusal of Queensland to sign up to the extra funding for our FNQ schools. However our Gavin is a man prepared to fill any gap and was proud to announce this week that 50 or so of the stray kiddies in the postcode will fill a special school: Education to target troubled youth in Cairns.

Now what socio-economic background would they come from I wonder? That should fix it! No more gaps with Gavin's Gonski Pollyfilla!

We can only hope that as some have suggested Pyne will only attempt a superficial paint job so that he can then claim credit for the shiny new model. Meanwhile we await an anticipated campaign from the Cairns Post to retain FNQ funding? *crickets*

Update: Reporting at The Guardian with strong words from the NSW Liberal Coalition education minister Piccoli who has been a bi-partisan advocate of the Gonski model:
“The war is over and unfortunately this week it’s been reignited. It’s taken 20 years to solve it [but] we’ve had six months of peace.”