Nick Behrens: Is hosting the 2018 Commonwealth Games really worth it?

In summary, there is no question the Games will showcase the iconic Gold Coast and Queensland’s spectacular destinations to a global audience that will have a return on investment for many years in the area of tourism. But there are questions that must be asked after the Games and answered not with ‘gut instincts’ but with evidence.

Gene Tunny: Qld economy well positioned in 2nd quarter 2018, esp. given Commonwealth Games

The state government is hoping for an ongoing rather than just a temporary economic boost from the Games, via greater tourism as a result of the international exposure, but I’m pretty skeptical about purported long-term economic impacts from sporting events. For example, the 2000 Sydney Olympic Games resulted in a surge in visitation for the period of the Games but no lasting impact (see this Conversation article Hosting the Olympics: Cash Cow or Money Pit? by two of Australia’s leading economic modellers, John Madden and James Giesecke).

John Quiggin: A policy lesson from G20

We won’t be lining up for another international summit any time soon, but the Commonwealth Games will be in the Gold Coast in 2018. I’m confident that an analysis after the fact will reveal very little to show for the $2 billion we are spending on them.

Google Trends: Commonwealth Games

Cairns Airport numbers for February have been welcomed enthusiastically by TTNQ: Chinese New Year success for Tropical North Qld

Our operators’ experiences are backed by Cairns Airport figures for February showing international passengers increased by 21 per cent to 60,910 and domestic passengers increased by 9 per cent to 305,200.

However we need to be a bit cautious as this kind of monthly volatility is typical with the lunar influenced shifts in early months of the year and so far is a blip on the 12 month moving average.

The lunar factor and also last years poor season come into play as these February numbers are off the back of negative monthly results last year for both domestic and international. Commentary on the recovery from last year is noted at Conus: TTNQ claim Chinese New Year as a success for FNQ

The lunar calendar will continue to influence subsequent months with Easter moving from mid April to commence in March and some consequent adjustment in school holidays.

TTNQ also provided positive feedback on accommodation for the Chinese New Year period:

During Chinese New Year, accommodation in the city was close to capacity, especially at the five-star hotels, with a number of apartments and mid-range hotels also reporting strong Chinese figures.
Across the Cairns area there was 86.1 per cent occupancy, up 4.6 per cent from the previous February, while Palm Cove showed the greatest increase with a 19.3 per cent boost to occupancy bringing it to 53.1 per cent, and Port Douglas had 35.1 per cent occupancy, an increase of 4.3 per cent.
Occupancy across Tropical North Queensland was up 5.6 per cent to 68.6 per cent and the revenue per available room also grew across the region, up 17.9 per cent to $106 a night.

This kind of commentary always reminds me of the classic XKCD cartoon:

Also to consider in those accommodation numbers is the removal of Tradewinds for complete renovation by GA Group. I did see reduced capacity in the upper market segment in Cairns mentioned in a recent report I think from Mantra from Reef Casino.

– Reef Casino, FY2017 Results commentary, February 2018

Cairns continues to out outperform / underperform when it comes to pokie win / player loss. I guess this is a matter of perspective. Some interesting graphs in this data though.

February growth in Cairns SA4 at 8.5% was well above Queensland at 5.1%. Townsville lagged badly with just 1.2% growth for the month.

Pokie infiltration became something of an issue in the recent Tasmanian election.

Tinaroo is now at 71% of capacity. Up from 47.7% at the end of February. Still a way to go to full supply.

Weekly Tropical Climate Note:

Coastal parts of tropical Queensland experienced very heavy rainfall during the past week. Widespread totals of more than 500 mm were recorded on the east coast between Mossman and Ingham. Some sites near Innisfail, the wettest region in Australia on average, had more than 900 mm during the week. The highest rainfall total of 926 mm was recorded at Topaz rainfall station. Significant flooding and infrastructure damage was widely reported across the region.

Rolling annual growth % total revenue passengers (domestic + international) on scheduled flights:

Source: BITRE airport statistics

A look at dam levels following recent rainfall events updated to February 28 at the BOM.

Seasonal inflows at Tinaroo have pushed it back up towards 50% while the Burdekin was at 105% on February 28. Data at Sunwater has the Burdekin surging up over 130% in the four days since.

The Burdekin has generally maintained higher levels over recent years while Tinaroo has declined.  Burdekin capacity is over four times larger than Tinaroo but there is a huge difference in catchment. Barron River et tropics catchment for Tinaroo is quite limited at 545 km². The Burdekin catchment is listed as 114,220 km² at Wikipedia albeit in a much drier climate. Rainfall down at Cairns has been only just very slightly below average over the past year to February. Tinaroo catchment seems to have missed out in recent years.

The Nullinga Dam proposal on the southern tableland has also been in the news recently with the business case to be progressed.

January growth numbers for Cairns Airport came in negative with domestic traffic down 1.4%, international up 4%, and combined total down 0.6%.

This wasn’t unexpected as posted last month. If anything given the recent lower growth numbers and the Chinese New Year move to mid February I wouldn’t have been at all surprised by something lower based on previous volatility at this time of year, although the 2017 CNY period was soft .

However, everything on the 12 month moving averages is still moving to lower growth. Domestic is the one to watch. I had intended to look more closely at the forward quarterly forecasts from the Airport last month. Indications appear to be that we could expect lower domestic capacity growth going forward than in recent years. TTNQ has recently indicated something similar in media reports:

“However, visitor growth will be constrained by access, so until more direct (international) flights are secured for Cairns we will not see the extraordinary growth experienced in the past few years.”

Qantas has been in the news for not paying tax. Don’t start me on some of the ignorance around information and partisan opinions on company tax. I suspect that tax situation is mostly related to the previous capacity war between Qantas and Virgin which saw big airline losses when Alan Joyce drew a line in the sand where Qantas would defend market share against a challenge form Virgin regardless .

There was also a tailwind with capacity shift from resource to tourism routes. We will have to see how this plays out with national seat capacity having been flat for a few years now:

Source: BITRE

Qantas vows to keep seat numbers down, fares up as fuel costs rise

United Airlines in the USA recently sent market valuations for the entire sector there into a tailspin when it announced an intention to increase capacity by 5% or so.

Meanwhile:  JPMorgan fund to double down at Cairns Airport

There is actually quite a lot in here for comment: proposed tourism hub; changes in control of significant owner Casinos Austria; local pokie competition and extension of trading hours; charter flights tourism debacle in the first half of 2017 never really resolved with finger pointing all round; and a few more ……

Reef Casino FY2017

Professionally provided by RCT as a scanned document so we can’t just cut & paste the relevant bits. Let me come back to it.

Two employment related posts on the latest Centrelink data:

Job Seeker data shows little change for Cairns

Disproportionate numbers of Newstart/Youth Allowance recipients in Far North Qld, Wide Bay-Burnett & Logan

Meanwhile, over at the somewhat retro website of Cummings Economics there are two posted PDF notes from Bill which take aim at the regional ABS statistics based on census data:

NOTE ON EMPLOYMENT & UNEMPLOYMENT IN THE CAIRNS REGION AND OTHER REGIONAL AREAS OF QUEENSLAND ; NOTE ON YOUTH & INDIGENOUS UNEMPLOYMENT IN THE CAIRNS REGION

The ABS has also just posted some information on characteristics of Aboriginal and Torres Strait Islander Australians: Census reveals jump in young Aboriginal and Torres Strait Islander people working or studying:

Fifty two per cent of Aboriginal and Torres Strait Islander people aged 15 to 24 years are fully participating in either education or work, up from 46 per cent in 2006. Those living in urban areas (55 per cent) are more likely to be fully engaged in work or study than those living in non-urban areas (42 per cent).

I think I would call that a step rather than a jump. Indigenous disadvantage remains the most critical challenge for the Far North.

Aspial, Singaporean developer of the Nova City project in Cairns spun off their Malaysian and Australian interests on The Singapore second board last year as World Class Global.

WCG half year report as at June 30 2017:

WCG quarterly report as at September 30 2017:

Marketing email for Nova City received today from Irene at World Class Global:

I hope that you have had a wonderful break and ready for all the exciting things this new year will bring!

The most exciting thing of course, will be to see Nova City coming out of the ground. Construction is starting with pilings, the beginning of April!
We had a flurry of buying just prior to Christmas which saw some of our best two bedroom apartments sell to some local Cairns buyers so we recommend that if you are looking to purchase one of our apartments, that you beat the rush and secure your preferred apartment now. We only have 5 one bedroom apartments left and limited floors available on the front overlooking the CBD skyline and out to the Coral Sea.

WCG full year report as at December 31 2017:

That’s some flurry. There have been reports of construction tenders with construction to commence soon to qualify for council discounts on headworks charges. The most recent numbers above are from the full year report lodged with Singapore Stock Exchange last week with the only commentary on Nova progress:

In the next twelve months, the Group will continue with the sale of Nova City project and intends to launch Albert Street project in Brisbane, Australia, subject to market conditions in Brisbane then.

While there is commentary on construction progress of the Melbourne properties there is no mention of construction commencement at Nova which seems remiss given marketing and media reports. Nova has yet to appear in the ABS building approvals with most recent data to December.