IMPLICATIONS FOR DEVELOPMENT SURVEYING 2018 National Surveying - - PowerPoint PPT Presentation

SURVEYING 2018 – National Surveying Congress DR ANTHEA BILL, Hunter Research Foundation Centre 23 March 2018

IMPLICATIONS FOR DEVELOPMENT

• National Context
• Resources Cycle
• Hunter Region Story
• Boom and Bust Towns
• Summary and Implications

PRESENTATION OUTLINE

NATIONAL STATE OF PLAY

Source: HRF Centre; Reserve Bank of Australia; Indexmundi * Seasonally adjusted, June

GDP GROWTH: INVESTMENT

• 3
• 2
• 1

1 2 3 4 5

• 1.0
• 0.6
• 0.2

0.2 0.6 1.0 1.4 1.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

% Change Quarterly % Change Annual

GDP % Change, quarterly GDP % Change, annual

GLOBAL ECONOMY: STRONGER

• 4
• 2

2 4 6 8 2001 2003 2005 2007 2009 2011 2013 2015 2017 Major Trading Partners World %

GDP GROWTH WORLD – YEAR ENDED

Source: Reserve Bank of Australia 2017

AUSTRALIA: FULL-TIME JOBS GROWTH

Source: ABS, Labour Force Survey. Annual Growth (%)

• 4.0
• 2.0

0.0 2.0 4.0 6.0 8.0 DEC 03 DEC 04 DEC 05 DEC 06 DEC 07 DEC 08 DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 DEC 14 DEC 15 DEC 16 DEC 17

Full-time employment Part-time employment

Source: Bishop and Cassidy, Reserve Bank Bulletin, March 2017.

WAGES: STILL SLUGGISH

Wage Price Index Forecasts

RESOURCES CYCLE

MINING AND NON-MINING ACTIVITY

Source: RBA, ChartPacks, Mach 2018.

Peak

PUBLIC INFRASTRUCTURE BOOM

NSW: RESOURCES CYCLE

10 20 30 40 50 60 70 80 90 100 50,000 100,000 150,000 200,000 250,000 300,000 2012-13 2013-14 2014-15 2015-16 2016-17 Hunter coalfield Newcastle coalfield Western coalfield Southern coalfield Gunnedah coalfield Australian thermal coal

'000s Tonnes $USD/Tonne

Source: HRF Centre; Coal Services Australia and Index Mundi *Average Australian thermal coal price..

THERMAL COAL: SHORT-TERM TRENDS

Source: Department of Industry, Innovation and Science (2017)

?

International - growth picks up pace; broad-based expansion. Household sector – spending subdued

• ver longer-term .

China – stronger than expected growth 20 17.

OTHER MACRO TRENDS

HUNTER REGION STORY RIDING THE CYCLE

LABOUR MARKET: CONTRACTION & RECOVERY

Recovery period

UNEMPLOYMENT RATE: CONVERGENCE WITH NSW

PULSE SURVEYS

Phone surveys 30 0 Households 30 0 Businesses

BUSINESS PERFORMANCE: NEW HIGHS SUSTAINED

* Figure has been interpolated for June 2015

HOUSING PRICES: LONG-TERM PRICE GROWTH

200 400 600 800 1,000 1,200 1,400 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15 Cessnock Lake Macquarie Maitland Newcastle Port Stephens Greater Sydney Inner Ring $

Source: Housing NSW, Rent and Sales Report

HOUSING PRICES: SLOWER GROWTH

LOAN APPROVALS

CONSTRUCTION PIPELINE: BOUYANT

500 1,000 1,500 2,000 2,500 3,000 December December December December December December

Millions

Non-residential Residential

2012 2015 2016 2013 2014 2017 $

Source: ABS Building Approvals

BUILDING APPROVALS: RESILIENT

HOUSING AFFORDABILITY: FIRST HOME BUYERS

HOUSING STRESS: WHAT DOES THE CENSUS TELL US?

2 4 6 8 10 12 14 16

2011 2016

%

2 4 6 8 10 12 14 16

2011 2016

%

RENTAL STRESS

Source: ABS Census of Population and Housing

MORTGAGE STRESS

RESOURCE BOOM AND BUST TOWNS

TOWN LEVEL BOOM-BUST-RECOVERY CYCLE

• Brown et al., (2005):
• Boom

Demand for skilled labour + rapid in-migration of workers, families,

• services. Supply-chain -> local employment & consumption multipliers;

rising demand for local goods and services.

• Bust

Resource development activity wanes – construction or extraction, labour demand contracts -> outward migration, revenue falls for local businesses, abundant infrastructure remains (Jacquet, 2009).

• Recovery

Long-term – those remaining adapt to ‘the new normal’.

Mining CAPEX Investment

BUSINESS CONFIDENCE: HUNTER VS UPPER HUNTER

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 DEC 01 DEC 05 DEC 09 DEC 13 DEC 17

Hunter Upper Hunter

Source: HRF Centre, Upper Hunter and Hunter Business Pulse Surveys

HOUSING MARKET IMPLICATIONS

• Housing = top asset for Australian households (Kohler et al., 2015).
• Wealth effects -> household consumption & business investment
• Collateral in accessing credit.
• Supply adjustments to housing demand shocks take time (Ellis, 2006)
• Real estate bubbles -> market failure & welfare losses
• Too much or mis-timed construction (Glaeser, 2016)
• Rural gas boomtowns – (Rifkin and Witt, 2016)
• housing tenure shortens (transience)
• absentee landlords (capital leaves)
• increased density of housing (reduced amenity)

BOOMTOWN LOCALITIES: CHINCHILLA

• Rural - a “quiet little town”
• Historical population = 3,000
• Growth rate ~1 per cent per year

(Witt et al, 2016)

• Construction of Coal Seam Gas

(CSG) infrastructure ramped up to peak in 2011-2013 (Witt et al, 2017:ii).

Source: Australian Bureau of Statistics, ASGS 2016. https://media.apnarm.net.au/media/images/2 014/07/10/9-2399757- tcn100714crossing_fct649x487x106x29_ct620 x465.jpg - 12/1/18

BOOMTOWN LOCALITIES: MUSWELLBROOK

• 243 km north of Sydney and

127 km north-west of Newcastle.

• 16,000 residents
• Growth in coal production in

2011 from roll-out $3 billion of planned resource investment

• Industry peaks in 2011-12.

Source: Australian Bureau of Statistics, ASGS 2016. https://i2.au.reastatic.net/800x600/6faefc04c6ea48f3c6c fa59ea372d8d07e0ce8b14185056fdcfc2fb73cc055c6/mai n.jpg - 12/1/18

BOOM, IMPLICATIONS FOR THE LOCAL ECONOMY

• Annual Report on Queensland’s Gasfields Regions (2016):
• Rents climb
• Population movements – out/in

(poor priced out of market, retirees sell up & leave, contractors arrive)

• Big employers – worker camps
• Small employers - rent subsidies
• Increased speculative activity
• Residential mix changes, social cohesion declines
• Delays in building approvals, construction

CONSTRUCTION PIPELINE

50 100 150 200 250 300 350 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Chinchilla Muswellbrook

Source: University of Queensland’s Boomtown Toolkit; Australian Bureau Statistics, Building Approvals. 2010

RESIDENTIAL BUILDING APPROVALS (NO’S)

HOUSING SUPPLY TIMING vs RESOURCES CYCLE

1 2 3 4 5 6 7 50 100 150 200 250 300 350 2004 2006 2008 2020 2012 2014 2016

No. %

2 4 6 8 10 12 14 50 100 150 200 250 2004 2006 2008 2020 2012 2014 2016

No. %

Unemployment Rate (RHS) Residential Building Approvals (LHS) Residential Building Approvals (LHS)

Source: University of Queensland Boomtown Indicators; Department of Employment, Small Area Employment Estimates; ABS, Building Approvals.

Unemployment Rate (RHS)

CHINCHILLA MUSWELLBROOK

BUST DYNAMICS: HOUSING, CHINCHILLA

50 100 150 200 250 300 350 400 450

2001 2003 2005 2007 2009 2011 2013 2015

Series1 Queensland, Rent (3 Bedroom House)

Queensland

• 50

100 150 200 250 300 350 400 450 500

2001 2003 2005 2007 2009 2011 2013 2015

Series1 QLD

Source: University of Queensland Boomtown Indicators.

Chinchilla Chinchilla Queensland

% Unoccupied private dwellings, 2016 = 19.3%

RENT (3 BEDROOM HOUSES) SALES PRICES

EXAMPLE: RENT ON A 3-BED HOUSE

Thermal coal price (AUD)

https://www.indexmundi.com/commodities/?commodity=coal-australian&months=180 – 25/1/18.

5 years

MARKET FAILURE & HOUSING INVESTMENT

Multiple mega projects, each with ‘community engagement’. Too much information & activity – ‘cognitive overload’. Speculators lure investment from distant cities. City offices of banks set guidelines for rural towns. Local expectations based on typical mining ramp up (5 yrs) /ramp down (5 yrs). Local govt – “Not our job to save investors from their stupidity.”

Population? Housing costs? Building approvals? Number of trucks? Unemployment? Crime rates? Families on government payments?

COMMUNITY SELECTS ‘INDICATORS’

https://www.evalueserve.com/wp-content/uploads/2016/07/selecting-data-sources-the-smart-way.png - 19/1/19.

INTERVIEWS TO UNDERSTAND CAUSE & EFFECT

Housing Services

Mine development

Employment

FEEDBACK TO DATE ON ‘INDICATORS’

Community

Shows positive / negatives Understandable Consistent, allows comparison Helps grant applications Access to researchers

Government agencies

Defines problem areas Town-level data! Identifies winners / losers Shows local knowledge / concerns Needed for grant proposals

Industry

Baseline – how were things before … Starts conversations Speaks our language - charts Tells the story

SUMMARY AND IMPLICATIONS

• Mixed indicators national economy
• Business buoyant but households are sluggish
• Resources cycle has shaped Australian

economic trends

• Hunter remains a case study in an economy

in transition

• Town-level indicators important in understanding

community impacts & transition

THANK YOU

SURVEYING 2018

National Surveying Congress