Authored by Cr Bob Manning Mayor
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1 Queensland Treasury Corporation Investor Conference Presentation Authored by Cr Bob Manning Mayor Cairns Regional Council 1
2 Two and half years ago, I stood before the Public Hearing for the Joint Select Committee on Northern Australia and told them that the North is under-developed, under-populated and under-valued. Today, that situation remains, but the Federal Government s White Paper on Developing Northern Australia and all that this direction promises, provides some hope that the true potential of the North will be eventually unlocked. Even as it stands, the Cairns region and Far North Queensland as a whole punches well above its weight in terms of contributing to the State s overall economy, with a Gross Regional Product of $14.27 billion last year. We know that this is just the tip of the iceberg in terms of what the North can really produce and the establishment of the $5 billion Northern Australia Infrastructure Facility will only aid in fostering that potential prosperity. I expect that projects to be funded through the NAIF will be subject to robust assessment to ensure only those projects which will deliver ongoing economic benefit are supported. There is already considerable mining investment in Northern Australia and I expect that an increasing focus of funding from the NAIF will be directed to industries other than mining particularly agriculture and tourism. Tropical North Queensland is well placed to capitalise on the growth opportunities in each of these two critical industries. At a local level, there are two projects that are being developed for further consideration the Cairns Airport re-development and the Nullinga Dam. The Cairns Airport is proposing a $1 billion redevelopment of its facility over the next 20 years to ensure airport land holdings continue to evolve as Australia s Asia Pacific Integrated Hub for tourism, aeronautical, commerce and resource sectors, whilst providing core infrastructure vital for regional and state economic development. A new Aviation Enterprise Precinct will provide a world class commercially competitive business environment to capitalise on the ever-changing global market and economic conditions for the aeronautical and aerospace sectors. This will be complemented by a new Commercial Enterprise Precinct to redevelop the airport land holdings into an upmarket retail lifestyle development to attract new unique commercial multi-national and international stakeholders to the region. This initiative ensures that aeronautical and non-aeronautical on-airport development can continue to support future development in this region due to it being the single most critical piece of infrastructure and a key driver in economic prosperity. 1
3 Exports out of both the Airport and the Cairns Sea Port are an important driver of our economy. In the last financial year, activities through the Cairns Port resulted in revenue growth of 40% on the previous year. The value of exports leaving the Port was $208 million, with product including sugar and molasses, going to countries like New Zealand, Korea, Indonesia, and Hong Kong. The value of product being exported through the Airport was estimated at $139 million last financial year, including $60 million of seafood, destined for countries like Hong Kong, Papua New Guinea, Japan, Indonesia and Canada. As stated earlier, the other key project listed as critical by the Northern Australia White Paper is the proposed Nullinga Dam, to be constructed on the Walsh River, west of Mareeba. The dam would not only provide the ability to irrigate vast tracts of dry pastoral land, opening up 15,000 hectares for farming but provides the opportunity for investment in infrastructure associated with primary production. A secure additional water supply will also cater for the forecast urban population growth for Cairns which, if calculated by historical growth of 2.66% per annum over the past 20-year period, would see more than 400,000 residents in the City by Additionally there will be a further 150,000 residents in the regions serviced by Cairns. On these calculations Cairns will be larger than Townsville and will be truly Northern Australia s largest city. Recently, I attended the Queensland Government s Connecting to Asia Forum held in Cairns where I spoke about the importance of our city in capitalising on fast-growing Asian economies, and the enormous opportunities presented by Asia-Pacific markets for tourism development, investment, trade and business. Much of Australia s future growth, and indeed ours, is linked to the accelerating economic growth in East, and South-East Asia. In past years, market friendly economic reform, combined with investment in human and physical capital, has lifted millions of people out of poverty. That will provide millions with the opportunity and the means to travel abroad and we must be ready to benefit from that trend. The Australian tourism industry, is expected to double in the next 20 years, largely due to increased demand from Asia s expanding middle classes, particularly China. There are predictions that overseas trips by the Chinese will more than double to 220 million trips by
4 For Cairns, this presents a major economic opportunity, with tourism currently bringing in some $3.3 billion dollars annually. Overall growth continues to be strong, with a 13.3% increase in international visitors in the 12 months to June 2016, and a similar rise in domestic tourism. Our largest tourist market is now China with 217,000 visitors per annum, having risen by 31% from the previous year. This is followed by the USA, up by 18%, with the third largest being Japan, which is continuing to bounce back with a 17.6% rise over the previous year. Pleasingly, we are experiencing rapid growth in visitors out of India, with a 25.6% increase over the past 12 months. Cairns now hosts 34% of all visitors who come to Queensland, and we expect that upward trend in to continue. Our tourism industry is mature and highly experienced, and has quality infrastructure, but to capitalise on this potential, we need to aggressively encourage investment in regional epi-centres of tourism growth. For example, we know that in peak times, demand for accommodation is rapidly exceeding supply. Latest projections show that we are already facing high levels of utilisation (around 87%) of our existing accommodation stock, and that full utilisation where demand exceeds supply over significant periods of time can be expected from 2018 onwards. Moreover, by 2019/2020 the earliest point in time we can expect additional accommodation capacity coming on-line we can expect demand to exceed supply by approximately 7-21%. The potential for investment is this area is high and with the additional expectations of longer stays, Cairns is ripe for new infrastructure in this sector. Cairns should be Australia s front door to Asia but for tourism and export opportunities to reach their maximum potential, we must also have investment in aviation services. The airport will continue to be our most critical single piece of infrastructure, as we seek to increase the region s penetration into new markets, not just for tourism, but for other services including international education. With two universities now well established, Cairns can look forward to more national and international students. Cairns is already seeing development on the rise for the first time in many years, there are two tower cranes visible on the Cairns skyline, with another expected early next year when Rydges Tradewinds embark on a $20 million expansion of its existing hotel. 3
5 The much-anticipated $550 million Nova City project in Cairns CBD is also poised for a start. There are currently more than 40 sites with development approvals in place for various projects including a 417-room tower motel development, which have not commenced, representing another opportunity for investors seeking to enter the Cairns property scene. In conclusion, Cairns and the Far North Queensland region have a very bright future that relies upon many elements coming together for the right result to be achieved. We have unique natural assets; and our people are resilient and proud. Our future relies upon sound and innovative ideas to tap into the lucrative Asian market; the infrastructure and skilled people to make them a reality; and governments at all levels that are prepared to develop policies aimed at stimulating our economy and investment potential. 4
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