TOWNSVILLE NORTH QUEENSLAND QUARTERLY ECONOMIC SNAPSHOT MAY 2017
TOWNSVILLE NORTH QUEENSLAND QUARTERLY ECONOMIC SNAPSHOT MAY 2017 The Townsville North Queensland Economic Snapshot provides a regional economic outlook and commentary with key quarterly statistics including unemployment, business confidence, property sales and building approvals. The snapshot also provides insight into a major regional development, with a focus on opportunities for regional businesses. This edition provides analysis of the Adani Carmichael Mine, Rail & Port project. % INDUSTRY OUTPUT TOWNSVILLE NORTH QUEENSLAND $27.92B December 2016 Manufacturing 21.1% Construction 11.7% Rental, Hiring & Real Estate Services 9.4% Public Administration & Safety 9.3% Electricity, Gas, Water & Waste Services 5.1% Transport, Postal & Warehousing 5% Health Care & Social Assistance 4.6% Retail Trade 4.0% Professional, Scientific & Technical Services 3.9% Education & Training 3.7% Mining 3.3% Wholesale Trade 3.3% Financial & Insurance Services 3.1% Agriculture, Forestry & Fishing 3.0% Accommodation & Food Services 2.7% Information Media & Telecommunications 2.3% Administrative & Support Services 2.0% Other Services 1.7% Arts & Recreation Services 0.8% SOURCE: REMPLAN, DECEMBER 2016 Major Industry Sector Increases Since January 2011 to December 2016 Major Industry Sector Retractions Since January 2011 to December 2016 Industry Sector % Change* Industry Sector % Change* Electricity, Gas, Water & Waste Services 79.0% Mining -41.7% Administration & Support Services 45.6% Public Administration & Safety -30.3% Health Care & Social Assistance 43.9% Manufacturing -0.4% Rental, Hiring & Real Estate Services 42.9% Transport, Postal & Warehousing 1.2% Education & Training 31.1% Finance & Insurance Services 4.6% Source: REMPLAN December 2016 *Note percentage change can be affected by the timing of capital expenditure. 2
OUTLOOK FOR TOWNSVILLE NORTH QUEENSLAND 1.1 Regional Outlook Townsville North Queensland continued to show signs of economic recovery starting 2017. Business confidence continues to surge off the back of recent positive announcements for the region. Major developments driving the improved outlook include the $250M stage one Integrated Stadium and Entertainment Centre (ISEC) and associated Priority Development Area, $22B Adani Carmichael Mine, Rail & Port project, and the Upper Ross ($255M) and Sun Metals ($155M) solar farms. These developments have the potential to drive significant regional growth over the coming years. Strong agricultural commodity prices including sugar and beef are also underpinning a solid economic outlook across the broader Townsville North Queensland region, including Hinchinbrook, the Burdekin and Charters Towers. While many indicators point to an economic turnaround for Townsville, some still show significant room for improvement. Unemployment continues to rise to over 11% and building approvals remain weak. Residential property approvals sit below the required number to support the region s anticipated population growth and the market remains generally soft with a 4.3% decrease in median detached house prices. In order to capitalise on the increasing confidence for the Townsville North Queensland economy, an efficient commencement of construction works on stage one of the Integrated Stadium and Entertainment Centre (ISEC) and securing a strong share of construction employment from the impending Adani Carmichael Mine, Rail & Port project will be critical. 3
1.2 Key Macroeconomic Trends The flow-on impacts from the election of US President Donald Trump continue to cloud the macroeconomic outlook, with recent moves to curb immigration to the US and the potential for escalating military action in Syria impacting global confidence and stability. The implications of a more protectionist US for Australia s largest trading partner China as it seeks to transition from export-led growth to a focus on consumption and services may have significant short and longer term implications for the Australian economy. Aside from political uncertainty, the macroeconomic outlook for Australia strengthened over the past quarter. Rising commodity prices and higher household spending have likely improved economic performance after negative GDP growth in the September Quarter 2016. Recovering coal prices, in particular, have strong implications for the Townsville North Queensland economy, with the region identified as one of two potential Fly-In/Fly-Out (FIFO) hubs for the largest thermal coal project in Australia s history (Adani s Carmichael Mine, Rail & Port project). 4
KEY QUARTERLY INDICATORS 2.1 Unemployment The Townsville North Queensland labour market remains weak, with unemployment rising to over 11% over September 2016 as the region continues to adjust to the closure of Yabulu Nickel Refinery. The Townsville North Queensland labour force continues to decline and is currently just under 110,000 persons. Regional unemployment has been on an increasing trend since 2013 and is now five percentage points above the Queensland average of 6.1%. While labour force indicators (which lag back to 2016) continue to show weakness, anecdotal evidence suggests some recent improvement in the regional labour market driven by confidence in impending developments including ISEC, the Adani Carmichael Mine, Rail & Port Project, and the Sun Metals and Upper Ross solar farms. Figure 2.1.1: Unemployment and Labour Force Source: QGSO (2017) 140,000 12.0% 120,000 10.0% Labour Force 100,000 80,000 60,000 40,000 8.0% 6.0% 4.0% Unemployment % 20,000 2.0% 0 0.0% Townsville North Queensland Labour Force Townsville North Queensland Unemployment Rate Queensland Unemployment Rate 2.2 Property Property market results were mixed across Townsville North Queensland with a 4.3% decrease in median detached house prices combined with falls across vacant land and unit sales. The market remains generally soft with properties remaining unsold for over 71 days on average and rental yields declining. Building approval activity remains down by around 20-30% from 12 months ago. Residential approval levels are currently well below the 1,700 dwellings per annum required to support the region s projected population growth to 2036. A shortage of new construction will potentially lead to a future housing shortage, should regional growth return to longer term trend levels. 5
Figure 2.2.1: Median Property Prices Sale Source: REIQ QMM Jun 2016 TOWNSVILLE PROPERTY PRICES HOUSES VACANT LAND UNITS $335,000 $155,000 $272,000-4.3% Quarterly change -3.1% Quarterly change -4.3% Quarterly change REGIONAL HOUSE PRICES BURDEKIN $175,000 CHARTERS TOWERS $180,000 HINCHINBROOK $200,000-4.6% 12 month change 1.4% 12 month change -9.1% 12 month change All properties represented above are less than 2,400m 2 Figure 2.2.2: Median Property Prices Rental Source: REIQ QMM Dec 2016 Townsville Burdekin Charters Towers Hinchinbrook 3 Bedroom Houses $290.00/week (-6.5%) $250.00/week (-3.8%) $250.00/week (0.0%) $230.00/week (-8.0%) 2 Bedroom Units $245.00/week (-5.8%) $210.00/week (5.0%) $195.00/week (14.7%) $165.00/week (-17.5%) 6
Table 2.2.3: Building Approvals Source: QGSO (2017) Indicator No. Dwelling Units Residential Building Value ($'m) Non-Residential Building Value ($'m) Townsville North Queensland 12 Months to December 2016 886 $279 $318 Townsville North Queensland 12 Month % Change -27% -22% -32% Queensland 12 Month % Change -6.4% -4% +6% 2.3 Business Confidence Townsville business confidence continues to surge. The PVW confidence index has gained a further 5.7 points over the past three months in a significant sign that the Townsville economy is beginning to turn around over 2017. Recent positive announcements including the potential for Townsville to serve as the FIFO hub for the Adani Carmichael Mine, Rail & Port Project alongside significant local projects are seen as some of the key drivers of improving business confidence. Figure 2.3.1: Business Confidence Change Index Townsville 15 10 5 Confidence Recovery 0-5 -10-15 Business Confidence Change Index Townsville Source: PVW (2017) 7
2.4 Tourism Domestic Visitation Domestic travel represented 90.0% of total visitation to Townsville in the year ending December 2016. The region recorded good growth in domestic visitation, up 7.5% to 1.2 million visitors. Domestic holiday trips were up 19.5% year on year to 362,000 while domestic trips from the Visiting Friends and Relatives (VFR) market were up 24.3% to 368,000. This was driven by the intrastate market, with a 13.3% rise to 927,000. Interstate visitation to Townsville weakened with a 10.5% decrease to 231,000 visitors. The average length of stay (ALoS) for domestic visitors to Townsville is 3.5 nights which is stable compared to a year ago. International Visitation International visitation to Townsville increased by 5.8% in the year ending December 2016 with 129,000 visitors to the region. Holiday travel to the region grew by 14.9% to 104,000 visitors, but all other purposes of travel saw drops in visitor numbers. Visitors from the UK (the region s largest single-country market) increased by 8.7% to 27,000 while visitation from the rest of Europe increased by 13.5% to 60,000. There has been a decline in visitor nights (down 3.4% to 1.6 million) which impacted on overall visitor expenditure ($84.2M) in the Townsville region, with visitors spending 18.5% less. In the year ending December 2016, the average international holiday visitor to the Townsville region stayed 5.1 nights, which is stable year on year. Figure 2.4.1 Key Tourism Indicators Visitors Holiday VFR Business Expenditure ($m) Domestic Overnight 1,158,000 362,000 368,000 302,000 $824.0 Annual % change 7.5% 19.5% 24.3% -5.9% -1.3% Trend % change 6.6% 4.4% -1.5% 17.8% 7.0% International Overnight 129,000 104,000 15,000 n/p $85.2 Annual % change 5.8% 14.9% -27.7% n/p -18.5% Trend % change 8.2% 8.9% 6.2% n/p 0.2% TOTAL 1,287,000 466,000 393,000 n/p $909.2 Annual change 7.3% 18.4% 20.8% n/p -3.2% TIQ Townsville Regional Snapshot (Dec 2016) 8
KEY REGIONAL PROJECTS: ADANI CARMICHAEL MINE, RAIL & PORT PROJECT Table 3.1: Adani Carmichael Project Overview Source: Adani Australia (2017) Factor Specifications Capital Expenditure $22B Status Approved Timing Construction to begin mid-2017 The Adani Carmichael Mine, Rail & Port project includes building Australia s largest thermal coal mine in the North Galilee Basin, approximately 160km north-west of Clermont in Central Queensland. All coal will be transported via a privately owned rail line connecting to the existing QR National rail infrastructure and shipped through coal terminal facilities at the Port of Abbot Point and the Port of Hay Point (Dudgeon Point expansion). The mine at full production will produce 60 Mtpa of thermal coal and have an operating life of approximately 90 years. The combined mine, rail, and port operations are estimated to provide over 10,000 direct and indirect jobs, including (GHD, 2012): A peak direct construction workforce of 580 Full Time Equivalent (FTE) workers for mine and nearly 2,400 FTEs for rail construction. An average direct operational workforce of approximately 2,000-3,000 FTE for mining operations, around 1,150 FTE for rail once the project achieves full production. Given the remote location of the project, a substantial FIFO workforce will be required. Townsville North Queensland is one of two potential locations being considered as the main FIFO hub for the project, alongside Rockhampton. Townsville North Queensland offers a highly desirable location to serve as the FIFO hub for the project, with major strengths including: Size, quality, and availability of the regional workforce, with approximately 11,300 available workers (unemployed and looking for work) in the Townsville North Queensland region and nearly 9,000 based in Townsville: Given the recent closure of Yabulu Nickel Refinery, many of these workers have appropriate skills sets for the Carmichael project and have long and successful work histories. 9
A diverse and highly skilled workforce, including: Bachelor and post-graduate qualifications alongside strong and established trade skills. Strong occupational representation, including management, professionals, trade and support services. Internationally recognised trade and university education institutions, supporting the region s skilled workforce. A strong existing representation across the mining and constructions sectors, including FIFO and Drive In/Drive Out (DIDO) servicing the Bowen Basin coal industry and the North West Minerals Province Well-established regional, national and recently international regular passenger transport (RPT) and charter air links. Strong historical and projected population growth of around 2% p.a. over the next 20 years, further deepening the region s potential to support Adani s workforce requirements and aligning with the long-term nature of the project. Affordable labour costs relative to established coal mining centres. Affordable living costs and a strong lifestyle attraction and amenity, including sporting, recreational, education and entertainment options. Townsville has a long history of supporting families where one partner travels for long periods including FIFO mining (for projects including Century, Ernest Henry, Cannington, Phosphate Hill, Chinova, Eloise and Mt Carlton) and defence force personnel. The Adani Carmichael Mine, Port and Rail project represents a catalytic investment for Queensland, and Townsville North Queensland is one of the best-placed regions to service the project s non-resident workforce needs. Securing a strong share of project employment and flow-on services would provide a substantial stimulus to the regional economy both in the immediate and over the longer term. 10
Figure 3.2: Adani Carmichael Mine, Rail & Port Project 450,000 500,000 550,000 600,000 650,000 700,000. TOWNSVILLE TOWNSVILLE Port Of Abbot Point 7,800,000 7,850,000 Flinders Highway. CHARTERS TOWERS Haughton River. AYR. HOME HILL Port Of Abbot Point Bruce Highway Bogie River MERINDA.. BOWEN Don River MACKAY Port Of Hay Point MORANBAH CLERMONT EMERALD ROCKHAMPTON GLADSTONE MOURA 7,800,000 7,850,000 7,750,000 Gregory Dev Road Bur d ekin River. COLLINSVILLE Proserpine River. AIRLIE BEACH. PROSERPINE 7,750,000 Lake Dalryrmple Bowen River 7,700,000 Cape River Sellheim R ive r. CALEN 7,700,000 7,650,000 7,600,000 Campaspe River Project (Rail) Su ttor Ri ve r Bowen Dev Road Suttor Dev Road Little Bowen River. GLENDEN Isaac River Broken River Pioneer River Port Of MACKAY Hay. Point SARINA. Bruce Highway 7,650,000 7,600,000 7,550,000 7,500,000 Carmicha e Dunda Creek l R iver Moray Carm ichael Road Project (Mine) Gregory Dev Road Kilcummin - Diamond Downs Road Peak Downs Highway. MORANBAH Fitzroy Dev Road. DYSART Isaac River Connors River 7,550,000 7,500,000 7,450,000 Belyando River Clermont - Alpha Road. CLERMONT. CAPELLA. MIDDLEMOUNT Macke nzie River 7,450,000 450,000 LEGEND Major Port Other Rail Network Goonyella System Newlands System Local Road Watercourse 1:2,000,000 (at A4) 0 10 20 30 40 50 Kilometres Map Projection: Universal Transverse Mercator Horizontal Datum: Geocentric Datum of Australia (GDA) Grid: Map Grid of Australia 1994, Zone 55 500,000 Project (Rail) Rail (West) Rail (East) o G:\41\26422\GIS\Maps\MXD\0000_Overview\41_26422_0019_rev_b.mxd 550,000 Mine (Offsite) Project (Mine) 2013. While GHD Pty Ltd has taken care to ensure the accuracy of this product, GHD Pty Ltd, DME, GA, ADANI and DNRM make no representations or warranties about its accuracy, completeness or suitability for any particular purpose. GHD Pty Ltd, DME, GA, ADANI and DNRM cannot accept liability of any kind (whether in contract, tort or otherwise) for any expenses, losses, damages and/or costs (including indirect or consequential damage) which are or may be incurred as a result of the product being inaccurate, incomplete or unsuitable in any way and for any reason. Data Source: Commonwealth of Australia (Geoscience Australia): Town, Railways, Watercourses (2007); DNRM: LGA, (2011), Hillshade (2009); DMR: State Roads (2008); DME: EPC1690 (2010), EPC1080 (2011); Adani: Mine Offsite, Alignment SP1 Opt11 Rev2, SP2 Opt 9 Rev 3 (2013). Created by: MS 600,000 650,000 700,000 Adani Mining Pty Ltd Carmichael Coal Mine and Rail Project SEIS Project Location Based on or contains data provided by the State of QLD (DERM) [2010]. In consideration of the State permitting use of this data you acknowledge and agree that the State gives no warranty in relation to the data (including accuracy, reliability, completeness, currency or suitability) and accepts no liability (including without limitation, liability in negligence) for any loss, damage or costs (including consequential damage) relating to any use of the data. Data must not be used for marketing or be used in breach of the privacy laws. Job Number Revision Date Figure 1 Level 9, 145 Ann St Brisbane QLD 4000 T +61 7 3316 3000 F +61 7 3316 3333 E bnemail@ghd.com W www.ghd.com 41-26422 B 14-10-2013 Source: GHD (2012) 11
Townsville Enterprise Limited Enterprise House 6 The Strand, Townsville Queensland, 4810 Australia Phone: +61 7 4726 2728 Fax: +61 7 4726 2700 Email: tel@tel.com.au Web: www.townsvilleenterprise.com.au The Townsville North Queensland Quarterly Economic Snapshot is a joint initiative of Townsville Enterprise and AEC Group Limited. Disclaimer: Whilst all care and diligence has been exercised in the preparation of this report, AEC Group Pty Ltd does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of AEC Group Pty Ltd or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.