UPPER HUNTER ECONOMY DIAMOND IN THE ROUGH? Dr Brent Jenkins, CEO - - PowerPoint PPT Presentation

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UPPER HUNTER ECONOMY DIAMOND IN THE ROUGH? Dr Brent Jenkins, CEO - - PowerPoint PPT Presentation

UPPER HUNTER ECONOMY DIAMOND IN THE ROUGH? Dr Brent Jenkins, CEO DISCL AIME R I n the old times, when it was still of some use to wish for the thing one wanted, there lived a King whose daughters were all handsome, but the youngest was so


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UPPER HUNTER ECONOMY

DIAMOND IN THE ROUGH? Dr Brent Jenkins, CEO

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DISCL AIME R

In the old times, when it was still of some use to wish for the thing one wanted, there lived a King whose daughters were all handsome, but the youngest was so beautiful that the sun himself, who has seen so much, wondered each time he shone over her because of her beauty. Near the royal castle there was a great dark wood, and in the wood under an old linden-tree was a well; and when the day was hot, the King's daughter used to go forth into the wood and sit by the brink of the cool well, and if the time seemed long, she would take out a golden ball, and throw it up and catch it again, and this was her favourite pastime. Now it happened one day that the golden ball, instead of falling back into the maiden's little hand which had sent it aloft, dropped to the ground near the edge of the well and rolled in. The king's daughter followed it with her eyes as it sank, but the well was deep, so deep that the bottom could not be seen. Then she began to weep, and she wept and wept as if she could never be comforted. And in the midst of her weeping she heard a voice saying to her: "What ails thee, king's daughter? Thy tears would melt a heart of stone." And when she looked to see where the voice came from, there was nothing but a frog stretching his thick ugly head out of the water. "Oh, is it you, old waddler?" said she, "I weep because my golden ball has fallen into the well." - "Never mind, do not weep," answered the frog, "I can help you; but what will you give me if I fetch up your ball again?" - "Whatever you like, dear frog," said she, "any of my clothes, my pearls and jewels, or even the golden crown that I wear." - "Thy clothes, thy pearls and jewels, and thy golden crown are not for me," answered the frog, "but if thou wouldst love me, and have me for thy companion and play-fellow, and let me sit by thee at table, and eat from thy plate, and drink from thy cup, and sleep in thy little bed, if thou wouldst promise all this, then would I dive below the water and fetch thee thy golden ball again." - "Oh yes," she answered, "I will promise it all, whatever you want, if you will only get me my ball again." But she thought to herself: What nonsense he talks! As if he could do anything but sit in the water and croak with the other frogs, or could possibly be any one's companion. But the frog, as soon as he heard her promise, drew his head under the water and sank down out of sight, but after a while he came to the surface again with the ball in his mouth, and he threw it on the grass. The King's daughter was overjoyed to see her pretty plaything again, and she caught it up and ran off with it. "Stop, stop!" cried the frog, "take me up too. I cannot run as fast as you!" But it was of no use, for croak, croak after her as he might, she would not listen to him, but made haste home, and very soon forgot all about the poor frog, who had to betake himself to his well again. The next day, when the King's daughter was sitting at table with the King and all the court, and eating from her golden plate, there came something pitter patter up the marble stairs, and then there came a knocking at the door, and a voice crying: "Youngest King's daughter, let me in!" And she got up and ran to see who it could be, but when she opened the door, there was the frog sitting outside. Then she shut the door hastily and went back to her seat, feeling very uneasy. The King noticed how quickly her heart was beating, and said: "My child, what are you afraid of? Is there a giant standing at the door ready to carry you away?" - "Oh no," answered she, "no giant, but a horrid frog." - "And what does the frog want?" asked the King. "O dear father," answered she, "when I was sitting by the well yesterday, and playing with my golden ball, it fell into the water, and while I was crying for the loss of it, the frog came and got it again for me on condition I would let him be my companion, but I never thought that he could leave the water and come after me; but now there he is outside the door, and he wants to come in to me." And then they all heard him knocking the second time and crying:

I am not an e c onomist… … I’m a just ve r y naughty boy !!

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  • Na tiona l E

c onomy:

– T

he Good, the Bad and the Ugly

  • Uppe r Hunte r E

c onomy:

– Br

ight spots and c halle nge s

  • Summa ry

PRE SE NT AT ION OUT L INE

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SLIDE 4

National E c onomic Update

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Australian Dollar

T HE GOOD – L OW AUST RAL IAN DOL L AR

CONT INUING T O MAKE AUST RAL IAN E XPORT S COMPE T IT IVE AND E ASE T HE BL OW OF DE CL INING USD COMMODIT Y PRICE S

50 60 70 80 90 100 110 120 130 140 150 0.50 0.60 0.70 0.80 0.90 1.00 1.10

SOURCE: RBA $A TWI (RHS) $A / $US (LHS)

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T HE GOOD – UNE MPL OYME NT

ST ABIL ISE D, BUT AT A HIGHE R L E VE L

4.5 4.7 4.9 5.1 5.3 5.5 5.7 5.9 6.1 6.3 6.5

Australia NSW

Unemployment Rate %

Source: ABS

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SLIDE 7

T HE GOOD – GDP GROWT H

MAINT AINING GROWT H T HROUGH T HE ST RUCT URAL T RANSIT ION

"We are growing faster than every economy in the G-7, we are growing faster than the United States and United Kingdom, and more than twice the pace of comparable resource-based economies like Canada."

Scott Morrison 2 Mar 2016

Australian GDP Growth Rate %

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SLIDE 8

0.42%* 0.24% 0.12% 0.12% 0.06% 0.00%

  • 0.50%

Contributions to GDP growth December Quarter (seasonally adjusted)

Household Consumption Public Investment Private Dwellings Construction General Government Consumption Machinery and Equipment Net Exports Private Non-Dwelling Construction

Source: ABS

* Percentage Points

T HE GOOD – DRIVE RS OF GROWT H

GROWT H DRIVE N BY HOUSE HOL D CONSUMPT ION, PUBL IC INVE ST ME NT AND DOME ST IC CONST RUCT ION

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Contributions to GDP growth December Quarter (seasonally adjusted)

Public Admin and Safety Mining Info Media and Telco Real Estate etc. Financial Services Health Care Wholesale Trade Electricity Gas etc Retail Trade Other Services Education Agriculture Arts and Recreation Admin and Support Construction Transport, Postal etc Accommodation and Food Professional, Scientific, Technical Manufacturing

  • 3%

T HE BAD – DRIVE RS OF GROWT H

GROWT H DRIVE N BY MINING (ST IL L ) AND SE RVICE S … …

SERVICE SECTOR NON-SERVICE SECTOR

… . MANUF ACT URING IS A BRAKE

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T HE UGL Y – HOUSE HOL D INDE BT E DNE SS

A GOL D ME DAL PE RF ORMANCE

COUNTRY HOUSEHOLD SECTOR Australia 123% Denmark 123% Switzerland 121% Netherlands 112% Canada 95% Norway 91% UK 86% USA 79% South Africa 37% Brazil 25%

Unconsolidated Household Debt to GDP Ratio (2015 Q2)

Australian households have more debt compared to the size of the country’s economy than any other in the world.

  • 1. Housing price inflation
  • 2. Low wage growth
  • 3. Relatively high

personal tax rate

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T HE UGL Y – DISPOSABL E INCOME

T HE NAT IONAL E CONOMY “F E E L S” WE AKE R T HAN T HE HE ADL INE GDP NUMBE RS IMPL Y

Source: ABS

* Real – adjusted for inflation

GLOBAL FINANCIAL CRISIS

Real* Disposable Income per Capita

Sep 1990 Sep 1995 Sep 2000 Sep 2005 Sep 2010 Sep 2015 $16,000 $12,000 $8,000

“RECESSION WE HAD TO HAVE” POST MINING INVESTMENT BOOM

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SUMMARY

Strong high-level indicators – GDP growth and unemployment The low A$ continues Economic growth is increasingly underpinned by domestic consumption on services Individual households not necessarily feeling the love with high levels of debt and a decline in disposable income per capita

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Uppe r Hunte r Re gional E c onomic “Pulse ”

HRF’s unique research

  • n the Upper Hunter

Economy

Note: Upper Hunter Region includes Singleton, Muswellbrook and Upper Hunter LGAs Hunter Balance includes Upper Hunter Region plus Cessnock, Maitland, Port Stephens and Dungog LGAs

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Q: What Hunte r Re gional Indic ator is this ?

AUDIE NCE PART ICIPAT ION

16 14 12 10 8 6 4 2

  • A. Newcastle

Knights – Position in NRL The Hunter needs a Knights led recovery in 2016!!

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BRIGHT SPOT

  • E

MPL OYME NT

GROWT H IN JOBS SUST AINE D

Employment

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BRIGHT SPOT

  • RE
  • BAL

ANCING ACT

SE CT ORAL T RANSIT ION T O SE RVICE S HAS BE GUN

  • 4
  • 2

2 4 6 Wholesale Trade Financial & Insurance Services Mining Information Media & Telecommunications Education & Training Administrative & Support Services Public Administration and Safety Manufacturing Rental, Hiring and Real Estate Services Agriculture, Forestry and Fishing Other Services Electricity, Gas, Water and Waste Services Accommodation & Food Services Transport, Postal & Warehousing Professional, Scientific & Technical Services Retail Trade Construction Arts & Recreation Services Health Care & Social Assistance Thousands

Hunter Annual Change in Employment, Sep 2015

Source: ABS Monthly Labour Force Survey

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BRIGHT SPOT

  • UNE

MPL OYME NT

E NCOURAGING DOWNWARD T RE ND CONT INUE S

Unemployment

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SLIDE 18
  • Gre ate r

supply

  • Rate rise s
  • More

stringe nt le nding c onditions

BRIGHT SPOT

  • HOUSE

PRICE S

SOME RE CE NT RE COVE RY IN UH BUT COOL ING OCCURRING ACROSS NSW

House Prices

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SLIDE 19

CHAL L E NGE S - RE SIDE NT IAL INVE ST ME NT

T HE UPPE R HUNT E R IS SE E ING HIST ORICAL L Y- L OW BUIL DING APPROVAL S

Building approvals (no’s) Annualised

(RHS)

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CHAL L E NGE S- E XPORT

HUNT E R BUSINE SSE S NOT BE NE F IT T ING F ROM L OWE R A$ WHE N IT COME S T O E XPORT S

Exports

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CHAL L E NGE S- INNOVAT ION

INNOVAT ION KE Y T O HUNT E R’S E CONOMIC F UT URE

  • One third of Hunter-

based businesses innovating

  • Increase in the

proportion of firms undertaking innovation in-house

  • r in collaboration
  • Knowledge-based

industries stepping up

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CHAL L E NGE S- INNOVAT ION

NE W ST ART

  • UPs HAVE

AN IMPORT ANT ROL E T O PL AY

  • Start-ups created 1.44 million jobs

in the Australian economy between 2006 – 2011

  • HRF partnered with the Hunter

Founders Forum to investigate the Hunter “ecosystem”

  • New report looking at the

challenges for Hunter entrepreneurs and what can be done to improve outcomes

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E CONOMIC OUT L OOK

BUSINE SS INVE ST ME NT ST RONGE R BUT F ORWARD ORDE RS ST IL L RE L AT IVE L Y WE AK ON BAL ANCE

<0= worsening and >0 = improving

UH Business Investment

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E CONOMIC OUT L OOK

CONSUME R DE MAND NOT RE SPONDING T O NAT IONAL DRIVE RS – L OCAL UNCE RT AINT Y DOMINAT E S

<0= worsening and >0 = improving

UH Consumer Sentiment

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E CONOMIC OUT L OOK

CAN JOBS GROWT H BE MAINT AINE D?

UH Business Conditions

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T HE RE GIONAL OUT L OOK HAS RE COVE RE D A L IT T L E BUT ST IL L RE MAINS SUBDUE D

E CONOMIC OUT L OOK

<0= worsening and >0 = improving

12-Month UH Economic and Financial Outlook

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SLIDE 27
  • Brig ht spots

– Susta ine d e mployme nt g r

  • wth

– L

  • we r

une mployme nt

– Se e ds of se c tor

a l tr a nsition

– Sma ll uptur

n in busine ss e xpe c tations a nd c onsume r fina nc ial c ir c umsta nc e s

  • Cha lle ng e s

– L

a c k of building c onstr uc tion

– De pr

e sse d c onsume r c onfide nc e

– We a k busine ss c onfide nc e

UPPE R HUNT E R SUMMARY

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SLIDE 28

AVAIL ABL E ON YOUR WAY OUT …

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Delivering insights that move the Hunter forward

Thank you