Impact of Chinese flights

Pete has an interesting post at Conus on Chinese visitation with some additional data from the IVS: Details from the IVS show Chinese visitors to TNQ in sharp decline

Some of this relates to the comment in my previous post on a comparison with year to March quarter 2017. This period was a controversial failure around the Chinese New Year and charter flights with much finger pointing of blame. Pete’s numbers still show a decline for the year to this March despite that.

I thought it may be worthwhile to have a look at the direct flight data between Cairns and China. It’s almost impossible to keep up with the constant international route changes but BITRE do provide historical data for scheduled public flights (ex charter) on international routes in a thoughtfully compact 27MB excel file.

Year to March             Passengers
2013                          22,339
2014                          20,390
2015                          17,813
2016                          17,134
2017                            4,976
2018                          23,735

Direct scheduled flights from China have been stop-start and highly seasonal since they started in 2012. I hope I have sorted the BITRE data correctly which indicates there were no scheduled direct China – Cairns flights between May 2016 and December 2017? The sporadic history of direct flights must be a tourism marketers nightmare.

The 2018 scheduled flight data here is only for the 4 month period since direct flights recommenced in December. The direct flight numbers are only a small fraction of Chinese visitation and the significant majority of international visitors to Cairns arrive on domestic routes.

It could though go some way to explaining the anecdotal reports, such as Reef Casino, of a stronger Chinese New Year period in 2018 and how that fits with the IVS data. Something to watch.

Note: This is ex well established Hong Kong route where passenger numbers are much larger and grew by a third in 2016 but have been flat since.

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Double fail on IVS

The delayed International Visitor Survey from Tourism Research Australia was released today. There are two significant issues. The first fail is that TNQ and Queensland didn’t do very well: IVS is horrible for TNQ; falls to record low share of market

The second is that there was a fail with a critical part of the data which is not available:

Please note that the International Visitor Survey (IVS) results for the March quarter 2018 are preliminary and do not include any data relating to purpose of visit. This is because the quality of the main purpose of visit component of the passenger data supplied to TRA by the Department of Home Affairs has been identified as a concern. There are no issues with the survey collection.

To produce a purpose of visit measure for the IVS, Tourism Research Australia (TRA) uses data collected from the incoming passenger cards of international visitors to Australia. Work is currently in progress to resolve these issues and it is likely that a back cast of TRA data will be required. TRA will release revised estimates once a solution has been implemented.

Minister Potato Head’s new super Department of Home Affairs looks to have dropped the ball. We can only hope they are more competent in assessing purpose of visit when it really matters for national security.

The ‘purpose of visit’ data really is essential to any proper understanding of the IVS. This is broken down into categories Holiday, VFR (visiting friends & rellies), Business, Employment, Education, Other in that descending proportional national order. There are difference between states and regions in this mix obviously. The holiday proportion on the now most recent IVS data for year to December 2017 is Queensland 70%, NSW 59%, Victoria 54%.

Consequently, it’s really hard to judge what’s going on if this breakdown of the data is not available. However don’t think that’s going to alter concerns about the total trend decline in market share for both Queensland and TNQ as displayed in the previous link to Conus. This is the best context to look at what we have.

Always have to remember that just like all survey data there are increasing margins of error, or should that be lower confidence intervals, as we work down through the smaller regions. There are two things that stand out to me here in Queensland tropical regions.

  1. March quarter 2018 IVS data is annual for the year. This takes out the previous March quarter 2017 which is generally accepted as a complete flop on Chinese New Year for that period in TNQ. Consequently this negative result seems contrary to perceptions.
  2. Whitsunday was also unimpressive and flat for the year. However Cyclone Debbie did a dead hit right at the end of March 2017. Travelling south through there at the beginning of March this year the local ABC was discussing reopening of key island resorts a year later. Surprised IVS would have held up even that well. However this is where we get seriously into sample size and confidence levels with Whitsunday visitation less than a third of TNQ.

Cairns drops on airport ladder

While awaiting more contemporary monthly numbers from Cairns Airport in the meantime BITRE have updated their top 20 airport stats to April. This pretty much takes us through the period of early calendar months where lunar and climatic events make a mockery of any attempt at seasonal adjustment or trend analysis.

BITRE April 1

Cyclone Debbie continues though to play havoc with some of these numbers. The extraordinary 43.6% monthly growth for Rockhampton is because the airport was underwater for a period last April. The annual growth league table ex Proserpine which is also a Cyclone Debbie outlier.

BITRE April 2

Cairns has dropped two further places down the table since last month at 1.5% annual growth below All Australian Airports at 3.2%.

The table is also compressing from both ends so to speak with Sunshine Coast starting to nudge back while Karratha starts to pull up. Maybe I should go back and check my spreadsheet numbers but this looks like the first monthly growth number for Karratha since 2013 during which time passenger numbers have halved. Caution on that because changes in routes can make big differences for these kind of places as it has with Mt Isa and have no idea how this works over in the west.

Another point particularly to note is that it’s difficult to find anything significant in the Gold Coast Airport numbers around the Commonwealth Games for either March or April. The Games started immediately after Easter and ran from April 4 to 15.

Previous post: Debbie Destroys Data; Commonwealth Games: beyond hyperbole

 

 

 

Queensland regional real estate and lagging indicators.

Queensland regions make up most of the negative regional numbers in the latest CoreLogic report for the year to June 2018.

Corelogic regional

By its exclusion from the table Cairns pretty much by default becomes the top regional performer outside SEQ. However, this could be looking in the rear view mirror and a lagging indicator on an annual basis. If there is a surprise in some more recent data it is how fast some coal mining centres are turning around: Coal fires up.

I prefer Emerald as a Queensland regional coal bellwether perhaps because I spent 7 years there. Some lost, not all. In FNQ the mining activity is weighted to bauxite around Weipa. This hasn’t been on the coal and iron ore rollercoaster but has recently been a positive tailwind included in commentary from the Airport.

Note: This is not financial advice. Personally I wouldn’t touch a mining town. In the 1997 Asia financial crisis I suggested to BHP that they should just give up the entire CQ mining town of Dysart to settle a native title claim. I was wrong but not alone.

Weekend Contemplation

A friend of mine who combines a professional interest in Africa with a hobby of collecting antique maps has written a fascinating paper called “The evolution of European ignorance about Africa.” The paper describes how European maps of the African continent evolved from the 15th to the 19th centuries.
You might have supposed that the process would have been more or less linear: as European knowledge of the continent advanced, the maps would have shown both increasing accuracy and increasing levels of detail. But that’s not what happened. In the 15th century, maps of Africa were, of course, quite inaccurate about distances, coastlines, and so on. They did, however, contain quite a lot of information about the interior, based essentially on second- or third-hand travellers’ reports. Thus the maps showed Timbuktu, the River Niger, and so forth. Admittedly, they also contained quite a lot of untrue information, like regions inhabited by men with their mouths in their stomachs. Still, in the early 15th century Africa on maps was a filled space.
Over time, the art of mapmaking and the quality of information used to make maps got steadily better. The coastline of Africa was first explored, then plotted with growing accuracy, and by the 18th century that coastline was shown in a manner essentially indistinguishable from that of modern maps. Cities and peoples along the coast were also shown with great fidelity.
On the other hand, the interior emptied out. The weird mythical creatures were gone, but so were the real cities and rivers. In a way, Europeans had become more ignorant about Africa than they had been before.
It should be obvious what happened: the improvement in the art of mapmaking raised the standard for what was considered valid data. Second-hand reports of the form “six days south of the end of the desert you encounter a vast river flowing from east to west” were no longer something you would use to draw your map. Only features of the landscape that had been visited by reliable informants equipped with sextants and compasses now qualified. And so the crowded if confused continental interior of the old maps became “darkest Africa”, an empty space.
Of course, by the end of the 19th century darkest Africa had been explored, and mapped accurately. In the end, the rigor of modern cartography led to infinitely better maps. But there was an extended period in which improved technique actually led to some loss in knowledge.

Paul Krugman, The fall and rise of development economics

ATO income data and Cairns City

To follow the previous post and comment that Cairns City SA2 is different here are personal income relativities for the Cairns urban SA2’s:

ATO income data Cairns City SA2

This is different from the 2016 census where Cairns City SA2 median personal income was above the Queensland median. Presumably this represents the difference between the flow of short term income earners through the City such as backpackers etc over the course of the year rather than the census snapshot in August 2016, although there could be other explanations..

Among the most regrettable experiences (but biggest learning experiences) of my life was working the ground follow-up to the 2016 census in Cairns. Never again. It was the most demoralising public service employment experience of my life. This follow up in the area covered targeted exactly this demographic and was completely stuffed up IMHO even in the context of the wider 2016 census failures. I have no confidence whatsoever in the census data around this subset.

Consequently there is no reason for confidence around this in the ABS labour force sample either.

 

 

Personal income down to SA2

Amidst the flurry of relevant regional data in the last week the easiest to miss was this from ABS: Estimates of Personal Income for Small Areas, 2011-2016

It draws off Australian Tax Office data down to the SA2 level. Shane Wright has looked into this data in context of WA: Post-mining boom stats show the wage squeeze is hurting more in WA than anywhere else

Just flagging this for now to come back to but two points which stick out:

  1. The divergence between Cairns and Townsville with income earners in Townsville down @ 2-3% in the year to FY2016.
  2. Cairns City SA2 is different and it is unlikely this is well represented in either the ABS labour force survey or the census.

ATO income data

Note: This is the number of income earners recorded through the course of the financial year. It doesn’t reflect changes in earnings or employment at any specific time.

Cairns Council Budget 2018

 

Yes, it’s council budget day 2018. Not sure what details and media releases are up at the council website but did note this extract from Agenda Item 29: Statement of Estimated Financial Position.

Council Budget 2018 1

No Council. You do not sum the column to derive a variance of (18.70%) on total operating expenses. This is more blindingly obvious because the total operating expenses are otherwise exactly the same as the total operating revenue. Even a Chinese government statistician would be impressed by this level of management control.

We can only trust they otherwise used the correct columns and rows combined with applicable mathematical functions. What to make of a statutory council agenda statement presented with basic mathematical errors?

Anyway. The biggest take away is the rates increase of 1.7% in line with CPI. I don’t know where the current Council EBA negotiation is at but sticking with my comments from last year.

The other is that there was no land revaluation again this year. Cairns will become the only major regional council not to receive a revaluation for three years.

Update: Something to come back to.

The NSW local government cost index last year increased 2.3% IPART Rate Peg

The Queensland LGAQ Cost Index increased 1.89%

 

insurance tragicomedy continues to run

The Financial Services Royal Commission has put out a discussion paper with a request for information: Natural Disaster Insurance. This includes some discussion of insurance in Northern Australia.

While the Royal Commission is certain to provide better theatre it is the ACCC inquiry which remains the most promising. The ACCC has also recently published an update report following public submissions. The list of public submissions received is rather long. Mostly more anecdotal ‘war stories’ with limited substantive contribution.

There are a couple of items of interest on a quick first perusal of the ACCC update:

ACCC preliminary 2ACCC preliminary 1

First. The order in both does actually represent relative cyclone risk despite common misconceptions and media misrepresentations in FNQ. It is North West highest, then Queensland, then NT. Could be better represented on a log scale though.

A question though is trend differences between houses and strata properties? There are some differences between these classes of insurance but they are unrelated to geographic risk.

The big Australian insurers (IAG and Suncorp) report these classes separately in their results. Strata is in commercial distributed through brokers. House and contents is its own division.

I wonder how many unit owners are aware that it is the body corporate managers who take the biggest slice of the 20% commission (typically 15% for large body corporate managers) and not the broker? My experience is almost none.

The relative difference here in premiums between the classes and regions appears to have shifted for strata since the previous report by the Australian Government Actuary. There is also an apparent anomaly between figure 5.6 and figure 5.8 within this report for North Queensland strata?

Comparisons and numbers here should also be another reminder to our elected political representatives that insurance stamp duty is a fiscal transfer from North Queensland to SEQ.

I have tried to aggregate links to the trail of successive inquiries at Insurance.

Not this year, next year

Noted at realestate.com.au: Brisbane apartment slump over with values set to rise

This latest CoreLogic-Moody’s Analytics Australian Home Value Index Forecast is available from CoreLogic at a bargain price of just $1,500. However a cropped snippet of Table 4 has thoughtfully been posted at the above link which includes Cairns.

Corelogic Forecast Index

Not this year Rick, next year: “if it doesn’t happen in 2018, it never will”

Disclaimer: The linked post doesn’t specify whether these are calendar years or financial years.