Sugar charities and NAIF infrastructure

There is a good post from Gene Tunny at Queensland Economy Watch on sugar marketing: PC scathing of Qld sugar industry’s “dependency psyche” & “back to the future” re-regulation

One of the low points for the current Queensland Government occurred in late 2015, when it failed to stop the Real Choice in Marketing legislation advanced by Katter’s Australian Party with support from the Opposition and Billy Gordon. This provided cane growers the extraordinary power to force foreign owned milling company Wilmar and other millers to market their sugar through Queensland Sugar Ltd.

The problem I have always had is that this regulation came after growers had profited nicely from selling their own stakes in the mills. Interesting also that QSL is treated as a charity.

Gene has drawn his post from the most recent Trade and Assistance Review by the Productivity Commission. This also contains assessment of the Northern Australia Infrastructure Fund.

There is good commentary in that section on the investment criteria and specific sectors such as irrigation dams and coal, but without doubt the standout quote is:

The lack of transparency to date and the promotion of certain projects by politicians (in the absence of credible supporting investment data) has raised concerns about the viability of future investments under the NAIF.


No pink in excel graphs

ABS regional labour force data continues to be positive for Cairns: Regional jobs data shows Cairns powering ahead

We know how dangerously volatile the regional data can be. Despite issues with the sample I have always liked to look at the male v female comparison:


This is a 12 month average. Female volatility over time is interesting but the standout is the recent improvement in the male rate and a significant break from previous trends. This is probably the most significant aspect in the data and perhaps not surprising given the obvious construction work underway in Cairns.

How does this look in employment:


The trend increase over this time has been more weighted to female employment.

Participation rates:


I always recall the rants of lapsed academic blogger Ricardian Ambivalence that the design of the ABS survey is the unemployment rate. Other data is secondary and reliant on assumed inputs.

Game of Mates

It may have escaped the notice of some that the 60 Minutes program has recently featured a story on the collapse of CEC back in 2011. In typically sensationalist style this paints Roy Lavis as a battler victim of the bank. The story was apparently based on a leaked report.

The Australian Financial Review has responded:

Why 60 Minutes stitched up the Commonwealth Bank

Liberal MP Warren Entsch set up anti-CommBank meeting

And further from AFR:

CommBank takedown a low point for the once-great 60 Minute

As a keen observer of corporate events in Cairns during that period I also posted last year on this: Revisionism at the Cairns Post

However the best response so far is probably a letter in todays Financial Review:

The company involved in the CEC case was large and listed.  It had an experienced and well connected board capable of, and responsible for, making business decisions.  It embarked on substantial investments, with borrowed money, with the aim of making a profit, at what turned out to be a bad time.
This wasn’t a case for the Small Business Ombudsman. Kate Carnell makes this clear when she explains she had to seek expertise from elsewhere to manage it.  It only makes matters worse that the case was a referral from a parliamentary review, which presumably takes us back to the well connected board.
The conclusion of the Ombudsman was populist.  The idea that the board is absolved of its task of making good decisions because the bank encouraged it in any manner is legal nonsense.  The notion that the bank should be pilloried for acting in accordance with the agreed terms of the loan because Ms Carnell is able to review events with the benefit of hindsight is also nonsense.
Ms Carnell has accepted a case neither she nor the Ombudsman were competent to run. She has used it as a vehicle to continue the vandalism of our banking system by career politicians.
She should be removed.
Thomas Miller
Darlinghurst, NSW

Thank you Thomas.

Note: Game of Mates is the title of a recently published book. Co-author Dr Cameron Murray will apparently be speaking at an event in Kuranda this Friday evening.

Back to school for Airport

Cairns Airport posted negative domestic monthly growth (-0.4%) in June. Continuing international growth (10.4%) dragged the total back into positive territory with 0.9% growth over June 2016. This has been attributed to school holidays:

June passenger numbers were slightly lower due to the 2017 school holidays starting one week later than 2016 in Queensland and New South Wales.

Problem is that isn’t correct. NSW and Qld both started in the equivalent week which means they were actually a day earlier in the month than last year. Victoria started a week later than last year to align the term with NSW ending 30 June. Qld term ended 23 June. Anyways:


Update: Sydney Airport has now posted June results with a strong growth driven by international:

“International traffic growth of 9.7% versus the prior corresponding period (pcp) is a fantastic result, and represents our strongest monthly result this year. Domestic traffic also grew strongly at 3.6% above the pcp, contributing to overall traffic growth of 5.8% for the month. International and domestic traffic continues to be driven by higher load factors and larger aircraft.”

June Rental Trends

RTA data for the June quarter continues recent trends with the rental gap between Cairns and Townsville increasing to $90/week for 3 bedroom houses based on new bonds lodged during the quarter.


3 bedroom houses are the largest overlapping category. 4 bedroom houses are not far behind any longer but the trend there is the same with the gap now at $95/week.



Nova City valuations

It is now more than two years since local media speculation that Aspial would start construction of the Nova City project on Spence St before July 1 2015 to qualify for development incentives. The marketing building was constructed in 2015. Two years hence while there have been operational works on the site and reports of pre-sales there has been no final building approval.

Aspial have finally got around to spinning off their non- Singaporean property developments on the higher risk Singapore Exchange second board. The prospectus contains valuation details for Australian properties. The only building in the body of the document related to valuations (p 94) for Australian projects which does not provide a capital value is Cairns. Note 4 provides further details:

There is no Capital Value attributed to the property. The proposed development plans for Nova City were in the midst of being finalised and the sales launch of the residential units in Tower 1 of Nova City (including residential units located in the podium connecting Tower 1 and Tower 2) had not commenced when the independent valuer, Jones Lang LaSalle Advisory Services Pty Limited, commenced its valuation of the aforementioned property. Accordingly, the valuation for Nova City / 81-83 Spence Street and 112-114 Bunda Street, Cairns, Queensland, Australia is based on the market value of the land on an “As Is” basis, and not based on the proposed development plans of Nova City. The market value of the land as appraised by Jones Lang LaSalle Advisory Services Pty Limited, is A$15.0 million, which was lower than the acquisition price of A$18.9 million paid by
our Company.

The explanation doesn’t appear to be consistent with the independent valuation report from Jones Lang Lasalle in Appendix B dated April 2017 which does refer to the relevant pre-sales and marketing which had commenced five months before the valuation.

As at date of inspection preliminary site works were in progress, these are associated with the stormwater drainage easement along the southern boundary. We understand marketing of the apartments for Stage 1 officially commenced in November 2016 and we have been advised by the Developer that 28 contracts of sale (or circa 14% of the total number of apartments) had been issued.

However the only valuation provided in Appendix B is the land value which has been reduced from acquisition value as stated. Capital valuations have been provided for development properties in Brisbane where marketing has not yet commenced.

There are some comments in the Appendix B Jones Lang LaSalle valuation report worth noting:

Based on our analysis we do not consider the proposed development is representative of the highest and best use of the site in the current market. The site it-self (sic) in our opinion is not considered an ‘A-Grade’ location in terms of the Cairns CBD with the prime locations especially from a residential amenity point of view being those situated along the Esplanade or Water (sic) front areas.

There is also this suggestion in the independent valuation:

Strengths: A large development site on the southern fringe of the Cairns CBD which has the potential to be subdivided into smaller parcels, for which we consider there would be a wider market appeal.

Source:  World Class Global


Oh deary me!

Smithfield business owner welcomes bypass. Albeit somewhat conditional apparently:

“Anything that takes traffic away from driving past the shopping centre is not good for the shopping centre, as far as I’m concerned,” he said.

Interesting the way this yarn is framed differently by the Compost in different spaces such as social media but perhaps Bastiat summarised this best with his negative railroad a couple of centuries ago.

I have said that as long as one has regard, as unfortunately happens, only to the interest of the producer, it is impossible to avoid running counter to the general interest, since the producer, as such, demands nothing but the multiplication of obstacles, wants, and efforts.
I find a remarkable illustration of this in a Bordeaux newspaper.
M. Simiot raises the following question:
Should there be a break in the tracks at Bordeaux on the railroad from Paris to Spain?
He answers the question in the affirmative and offers a number of reasons, of which I propose to examine only this:
There should be a break in the railroad from Paris to Bayonne at Bordeaux; for, if goods and passengers are forced to stop at that city, this will be profitable for boatmen, porters, owners of hotels, etc.
Here again we see clearly how the interests of those who perform services are given priority over the interests of the consumers.
But if Bordeaux has a right to profit from a break in the tracks, and if this profit is consistent with the public interest, then Angoulême, Poitiers, Tours, Orléans, and, in fact, all the intermediate points, including Ruffec, Châtellerault, etc., etc., ought also to demand breaks in the tracks, on the ground of the general interest—in the interest, that is, of domestic industry—for the more there are of these breaks in the line, the greater will be the amount paid for storage, porters, and cartage at every point along the way. By this means, we shall end by having a railroad composed of a whole series of breaks in the tracks, i.e., a negative railroad.

*bangs head on desk*

Cairns swings against a trend

With the relationship between housing affordability and avocado toast a topic du jour an increased trend to renting was noted in the census data. Cairns appears to have gone the other way albeit remains relatively high based on the proportion of renters.


This is broader SA4 regional data and while Townsville has moved ahead of Cairns on this measure the Cairns urban area would still remain ahead on proportion of renters after our larger regional population is removed.

This is consistent with RTA bond data where Townsville Council LGA has moved from a few thousand less total rental bonds lodged than Cairns Council LGA to about equal over the period. However I’m too lazy to do this comparison for the available census data as it involves adjustment for the Douglas de-amalgamation. Also not sure what impact defence housing in Townsville has on their rental numbers?

Cairns appears to have moved against a trend though on this. Even the more central high renting 4870 postcode nudged down by 0.4 percentage points of renters over the period.