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1
The Far North Queensland Economy
Recent Movements and Short-Term Prospects
Presentation to the Weipa Chamber of Commerce
December 2008
“Getting Things into Perspective”
The FNQ Economy | December 2008 | Cummings Economics2
In retrospect -
The year 2007 / 2008
“Some negatives and uncertainties
around, but continued solid
growth.”
The FNQ Economy | December 2008 | Cummings Economics3
Tourism Growth Phases
CAIRNS AIRPORT PASSENGER MOVEMENTS(Excluding international transits)
No. %
1997/98 2,725,000 0.4% Asian crisis
1998/99 2,770,000 1.7%
1999/00 2,882,000 4.0% +6%
2000/01 2,972,000 3.1%
2001/02 2,878,000 (-3.2%) Ansett collapse
2002/03 3,083,000 7.1%
+ 32%2003/04 3,402,000 10.3%
2004/05 3,689,000 8.4%
2005/06 3,832,000 3.4%
2006/07 3,889,000 1.4% High dollar
2007/08 3,936,000 1.2%
Source : Cummings Economics from Cairns Ports data.
The FNQ Economy | December 2008 | Cummings Economics4
Growth in Room Nights – Hotels/MotelsFar North Queensland Stat. Division
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%19
97/9
8
1998
/99
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
2007
/08
Source : Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics5
Overnight Visitor Expenditure Far North Queensland
Domestic $m International $m Total $m
2003/04 $1,424 $1,020 $2,444
2004/05 $1,319 $1,106 $2,425
2005/06 $1,468 $1,110 $2,578
2006/07 $1,545 $1,041 $2,586
2007/08 $1,546 $1,030 $2,576Source : Cummings Economics from NVS & IVS data.
The FNQ Economy | December 2008 | Cummings Economics6
29
0
28
7 37
6 44
0
46
6
50
5
50
9 59
7
54
0 65
2
60
9
59
4
62
0 67
0
68
2 78
8 87
5
88
8
79
5 89
8 96
3
1,3
37
23
3 34
2
31
1
0
200
400
600
800
1,000
1,200
1,400
1,600
19
82
/83
19
83
/84
19
84
/85
19
85
/86
19
86
/87
19
87
/88
19
88
/89
19
89
/90
19
90
/91
19
91
/92
19
92
/93
19
93
/94
19
94
/95
19
95
/96
19
96
/97
19
97
/98
19
98
/99
19
99
/00
20
00
/01
20
01
/02
20
02
/03
20
03
/04
20
04
/05
20
05
/06
20
06
/07
$m
AgricultureGross Value Agricultural Production
(Long-Term Growth 1982/83 to 2006/07) $m
Source: Cummings Economics from ABS Agstats.
The FNQ Economy | December 2008 | Cummings Economics7
Gross Value of Agricultural Production2006/07
Statistical Div Total (Crops)
Cairns/Far North $1,337 m ($966 m)
Rockhampton/Fitzroy $1,067 m ($312 m)
Mackay/Mackay $937 m ($673 m)
Townsville/North $740 m ($566 m)
North West $419 m ($3 m)
Central West $320 m ($6 m)
Northern Territory $343 m ($99 m)
Tasmania $963 m ($404 m)Source : Cummings Economics from ABS Agstats.
The FNQ Economy | December 2008 | Cummings Economics8
$591.0 m
$362.7 m$349.7 m
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
2004/05 2005/06 2006/07
$m
Value of Mining ProductionFar North Statistical Division
Source: Cummings Economics from Q’ld Dept of Mines & Energy.
The FNQ Economy | December 2008 | Cummings Economics9
WORKING AT MINES 1,600
FLY-IN TO MINES OUTSIDE REGION
1,900
Construction/Maintenance 500
Mines North West Q’ld 970
PNG & NT 460
TOTAL 3,500
Estimated Existing Mining WorkforceFar North Queensland – Mid 2008
The FNQ Economy | December 2008 | Cummings Economics10
AIR SERVICES EX CAIRNS REGION TO MINES, MINING CENTRESAND MAJOR CENTRES NTH QLD, PNG, PAPUA (INDO) & NT
The FNQ Economy | December 2008 | Cummings Economics11
Source: Cummings Economics from ABS data.
TROPICAL AUSTRALIAEST RESIDENT POPULATION 2007 & GROWTH 2001 to 2007
45,27734,270
214,975
253,724
214,295
163,127
204,537
44,733
5,816 1,64517,207
29,558 24,029 25,588 22,790
00
50,000
100,000
150,000
200,000
250,000
300,000
Est Res Pop'n Gwth 2001-2007
No.
Stat Division
Source: ABS Data.
The FNQ Economy | December 2008 | Cummings Economics12
TROPICAL AUSTRALIACounts of AUSTRALIAN BUSINESSES, June 2007
2,283 2,301
16,07414,778
15,840
4,194
23,286
13,734
0
5,000
10,000
15,000
20,000
25,000
No.
Stat Division
Source: Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics13
TROPICAL AUSTRALIA - Business Numbers inFINANCE, INSURANCE, PROPERTY & BUSINESS Services, June 2007
501 417
3,804 3,759
3,312 3,453
510
5,535
0
1,000
2,000
3,000
4,000
5,000
6,000
Pilbara Kimberley Darwin/NT Cairns/FNQ Tvl/NQ Mac/Mackay Rctn/Fitzroy Nth West/CtlWest
No.
Stat Division
Source: Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics14
TROPICAL AUSTRALIAMANUFACTURING BUSINESSES, June 2007
111 117
582
729660 636
135
996
0
200
400
600
800
1,000
1,200
No.
Stat Division
Source: Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics15
Source: Cummings Economics from ABS data.
TROPICAL AUSTRALIAEmployment in MARINE INDUSTRIES
Usual Place of Residence, 2006 Census
646
1,943
550
766
996
0
500
1,000
1,500
2,000
2,500
Darwin/NT Cairns/FNQ Tvl/NQ Mackay/Mackay Rctn/Fitzroy
No.
Sta
Stat Division
The FNQ Economy | December 2008 | Cummings Economics16
Value of Building ApprovalsFar North Qld Statistical Division
0
200
400
600
800
1000
120019
80/8
119
81/8
219
82/8
319
83/8
419
84/8
519
85/8
619
86/8
719
87/8
819
88/8
919
89/9
019
90/9
119
91/9
219
92/9
319
93/9
419
94/9
519
95/9
619
96/9
719
97/9
819
98/9
919
99/0
020
00/0
120
01/0
220
02/0
320
03/0
420
04/0
520
05/0
620
06/0
720
07/0
8
$M
Source : Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics17
Population - GrowthGrowth on Previous Year - Cairns Region
(Estimated Residential)
1.0
%
0.9
%
0.5
%
2.0
%
2.9
%
2.9
%
3.7
% 4.0
%
3.3
%2
.5%
1.7
%
1.4
%
1.5
%
1.2
%
2.0
%
1.8
%
2.4
%
2.2
%
1.7
%
0.8
%
1.3
%
0.9
%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Cairns Cairns Region%
Source : Cummings Economics from ABS data..
The FNQ Economy | December 2008 | Cummings Economics18
POPULATION WEIPAEstimated Residential Population
2001-2007
2,1732,299
2,442
28373,029
3,222
2600
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2001 2002 2003 2004 2005 2006 2007
No.
StaStat Division
Source: Cummings Economics from ABS data.
The FNQ Economy | December 2008 | Cummings Economics19
Problems “Wall St” spread to
“Main St” and rest of the world.
Cairns Region Economy already
impacted – NOT ALL BAD.
The FNQ Economy | December 2008 | Cummings Economics20
FINANCIAL CONFIDENCE
Some evidence stabilised late October.
Harder to borrow money / more scrutiny.
But interest rates down.
The FNQ Economy | December 2008 | Cummings Economics21
COLLAPSE OF WEALTH
Stock Exchange / Property Markets discounting prospects of future earnings.
Some evidence stabilising.
Impacts on spending patterns.
The FNQ Economy | December 2008 | Cummings Economics22
FALLING DEMAND
COMMODITIES (falling prices)
AUSTRALIAN DOLLAR (devaluation)
LABOUR (less overtime, unemployment)
GOVERNMENT ACTION
FINANCIAL CONFIDENCE
PUMP PRIMING
The FNQ Economy | December 2008 | Cummings Economics23
CHANGES IN REAL GDP USA
June Qtr Sept QtrPersonal Consumption +1.2% -3.1%
Durables -2.8% -14.1%Non - Durables +3.9% -6.4%Services +0.7% +0.6%
Private InvestmentNon - Residential +2.5% -1.0%Residential -13.3% -19.1%
Net ExportsExports +12.3% +5.9%Imports -7.3% -1.9%
GovernmentFederal +6.6% +13.8%State/Local +2.5% +1.4%
Total +2.8% -0.3%
The FNQ Economy | December 2008 | Cummings Economics24
LOCAL ECONOMY
OUTSIDE EARNINGS
CONSUMER BEHAVIOR
INVESTMENT
The FNQ Economy | December 2008 | Cummings Economics25
TOURISM POSITIVESFALL IN AUSTRALIAN DOLLAR
FALL IN FUEL PRICES
AIRLINE CAPACITY CONSTRAINTS PASSING
QUESTION ISEXTENT OF DOWNTURN IN PROPENSITY
TO TRAVEL IN SOURCE MARKETS
The FNQ Economy | December 2008 | Cummings Economics26
Domestic Airline Travel - AustraliaTotal Airline Passenger Growth
2001/02 (-6.6%)
2002/03 +8.0%
2003/04 +11.5%
2004/05 +11.4%
2005/06 +6.4%
2006/07 +8.0%
2007/08 +7.8%
(July) (+8.6%)
(August) (+5.7%)
(September) (+3.5%)Source: Cummings Economics from BITRE – Aviation Statistics.
The FNQ Economy | December 2008 | Cummings Economics27
PROPENSITY TO TRAVEL
US Some reduction?
UK Some reduction?
EUROPE Some reduction?
JAPAN Yen very high?
CHINA Continue Growing?
INDIA Continue Growing?
The FNQ Economy | December 2008 | Cummings Economics28
JAPANESE FLIGHT LOSS
INCOME LOSS $130 Million
= 5 to 6% of TOURISM EARNINGS = 1 to 1.5% of GROSS REGIONAL PRODUCT
The FNQ Economy | December 2008 | Cummings Economics29
AGRICULTUREELEMENTS COMPETING ON WORLD MARKETS
PRICES HOLDING UP
DEVALUATION BOOST
DOHA ROUND HOPES
The FNQ Economy | December 2008 | Cummings Economics30
AGRICULTUREFRUIT DOMESTIC MARKET – SHELTERED MARKET
BANANA BIOSECURITY THREAT -BIGGEST
THREAT TO LOCAL ECONOMY
POTENTIAL LOSSES 3 TIMES
LOSS OF JAPANESE FLIGHTS
The FNQ Economy | December 2008 | Cummings Economics31
FISHING INDUSTRY
SAVED BY LOWER DOLLARAND FUEL COSTS
The FNQ Economy | December 2008 | Cummings Economics33
MININGPercent Fall in Metal Prices
July 21 to November 24 in $US and $Aust
Source: US Prices – KITCO Base Metals; Exchange Rates – RBA.
% Decline
$US $Aust
Aluminium -46% -15%
Copper -61% -38%
Lead -47% -16%
Nickel -54% -28%
Zinc -41% -7%
GFMS Index -48% -18%
The FNQ Economy | December 2008 | Cummings Economics34
Estimated Additional Mining Jobs in Pipeline
Queensland Mackay North – Mid 2008
FAR NORTH 1,600
NORTH WEST 2,000
MACKAY/CHARTERS TOWERS
3,100
TOTAL 6,700
The FNQ Economy | December 2008 | Cummings Economics35
OTHER SERVICE OUTSIDE EARNINGS
MARITIME SERVICES
AVIATION SERVICES
INTERNATIONAL EDUCATION
DROP IN AUST $ RESTORES COMPETITIVENESS
The FNQ Economy | December 2008 | Cummings Economics36
CONSUMER SPENDING
CONSUMER DURABLES DOWN
$100 Million PUMP PRIMING EARLY DECEMBER PENSIONERS - FAMILIES
The FNQ Economy | December 2008 | Cummings Economics37
INVESTMENT
VALUE OF BUILDING APPROVALS 1st Quarter 2008/09 = $500 m (cf – Total 2007/08 = $1.2 bn)
GOVT SPENDING NEXT FEW YEARS
UPGRADE GOVT SERVICES, HEALTH & HOSPITAL EXTRA EMPLOYMENT
Lotus Glen $455 m
Hospital $450 m
Dental School $48 m
Office Block $80 m
CLOSE TO $1 billion
The FNQ Economy | December 2008 | Cummings Economics38
NEW HOME OWNERS SCHEME ABOUT $20M IN REGION
HELP HOLD UP DWELLING CONSTRUCTION PROPERTY MARKET
The FNQ Economy | December 2008 | Cummings Economics39
GETTING THINGS INTO PERSPECTIVE
TotalRecent
Annual Growth
REGIONAL POPULATION Res 254.000 6,000
REGIONAL WORKFORCE 130,000 3,000
REGIONAL GRP Approx $10 bn $700 m ($250m REAL)
Loss of 600 jobs = 0.5% of workforce.Japanese Flights = 1% to 1.5% of GRP.
The FNQ Economy | December 2008 | Cummings Economics40
Next 12 months
Slowing in pace of growthBut still positive.
The FNQ Economy | December 2008 | Cummings Economics41
PENINSULA AREA MINERAL PROJECTS
SOME SHORT TERM DELAYS?
FUTURE PROSPECTS EXCELLENT
The FNQ Economy | December 2008 | Cummings Economics43
MARINE INDUSTRIES & TOURISM
EXPANSION IN ASSOCIATIONWITH NPA / TORRES STRAIT
The FNQ Economy | December 2008 | Cummings Economics44
QUEENSLAND REMOTE REGIONAL POPULATION TRENDS
1991 2007 Growth Proj. 2023
Peninsula / Torres 17,492 23,027 +31.6% (30,317)
Gulf 5,763 6,223 +8.0% (6,721)
Mt Isa / North West 33,731 28,308 -16.1% (23,750)
Central West 13,326 11,397 -14.5% (9744)
South West 29,182 26,161 -10.4% (23,440)