IMPLICATIONS FOR DEVELOPMENT SURVEYING 2018 National Surveying - PowerPoint PPT Presentation

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

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

NATIONAL STATE OF PLAY

GDP GROWTH: INVESTMENT % Change Quarterly % Change Annual 1.8 5 GDP % Change, GDP % Change, 4 quarterly 1.4 annual 3 1.0 2 0.6 1 0.2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -0.2 -1 -0.6 -2 -1.0 -3 Source: HRF Centre; Reserve Bank of Australia; Indexmundi * Seasonally adjusted, June

GLOBAL ECONOMY: STRONGER GDP GROWTH WORLD – YEAR ENDED 8 % Major Trading Partners 6 World 4 2 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 -2 -4 Source: Reserve Bank of Australia 2017

AUSTRALIA: FULL-TIME JOBS GROWTH 8.0 Full-time employment Annual Growth (%) Part-time employment 6.0 4.0 2.0 0.0 DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC DEC 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 -2.0 -4.0 Source: ABS, Labour Force Survey.

WAGES: STILL SLUGGISH Wage Price Index Forecasts Source: Bishop and Cassidy, Reserve Bank Bulletin, March 2017.

RESOURCES CYCLE

MINING AND NON-MINING ACTIVITY Peak Source: RBA, ChartPacks, Mach 2018.

PUBLIC INFRASTRUCTURE BOOM

NSW: RESOURCES CYCLE '000s Tonnes $USD/Tonne 300,000 100 90 250,000 80 70 200,000 60 150,000 50 40 100,000 30 20 50,000 10 0 0 2012-13 2013-14 2014-15 2015-16 2016-17 Hunter coalfield Newcastle coalfield Western coalfield Southern coalfield Gunnedah coalfield Australian thermal coal 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)

OTHER MACRO TRENDS Household sector – International - China – stronger spending subdued growth picks up than expected over longer-term . pace; broad-based growth 20 17. expansion.

HUNTER REGION STORY RIDING THE CYCLE

LABOUR MARKET: CONTRACTION & RECOVERY Recovery period

UNEMPLOYMENT RATE: CONVERGENCE WITH NSW

PULSE SURVEYS 30 0 30 0 Phone Households Businesses surveys

BUSINESS PERFORMANCE: NEW HIGHS SUSTAINED * Figure has been interpolated for June 2015

HOUSING PRICES: LONG-TERM PRICE GROWTH $ 1,400 Cessnock Lake Macquarie 1,200 Maitland Newcastle Port Stephens Greater Sydney 1,000 Inner Ring 800 600 400 200 0 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15 Source: Housing NSW, Rent and Sales Report

HOUSING PRICES: SLOWER GROWTH

LOAN APPROVALS

CONSTRUCTION PIPELINE: BOUYANT $ 3,000 Millions Non-residential 2,500 Residential 2,000 1,500 1,000 500 0 December December December December December December 2016 2012 2013 2014 2015 2017 Source: ABS Building Approvals

BUILDING APPROVALS: RESILIENT

HOUSING AFFORDABILITY: FIRST HOME BUYERS

HOUSING STRESS: WHAT DOES THE CENSUS TELL US? RENTAL STRESS MORTGAGE STRESS % % 2011 2016 16 16 14 2011 2016 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Source: ABS Census of Population and Housing

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’.

BUSINESS CONFIDENCE: HUNTER VS UPPER HUNTER Mining 0.40 CAPEX Hunter Investment 0.35 0.30 0.25 0.20 0.15 Upper Hunter 0.10 0.05 0.00 DEC 01 DEC 05 DEC 09 DEC 13 DEC 17 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). https://media.apnarm.net.au/media/images/2 014/07/10/9-2399757- tcn100714crossing_fct649x487x106x29_ct620 Source: Australian Bureau of Statistics, ASGS 2016 . 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. https://i2.au.reastatic.net/800x600/6faefc04c6ea48f3c6c fa59ea372d8d07e0ce8b14185056fdcfc2fb73cc055c6/mai n.jpg - 12/1/18 Source: Australian Bureau of Statistics, ASGS 2016 .

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 RESIDENTIAL BUILDING APPROVALS (NO’S) 350 Chinchilla Muswellbrook 300 250 200 150 100 50 0 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: University of Queensland’s Boomtown Toolkit; Australian Bureau Statistics, Building Approvals.

HOUSING SUPPLY TIMING vs RESOURCES CYCLE CHINCHILLA MUSWELLBROOK Unemployment No. No. % % Unemployment Rate Rate (RHS) 350 7 (RHS) 250 14 Residential Building Residential Building 300 6 12 Approvals (LHS) Approvals (LHS) 200 250 5 10 150 200 4 8 150 3 6 100 100 2 4 50 50 1 2 0 0 0 0 2004 2006 2008 2020 2012 2014 2016 2004 2006 2008 2020 2012 2014 2016 Source: University of Queensland Boomtown Indicators; Department of Employment, Small Area Employment Estimates; ABS, Building Approvals .

BUST DYNAMICS: HOUSING, CHINCHILLA RENT (3 BEDROOM HOUSES) SALES PRICES 450 500 Chinchilla Chinchilla Series1 Series1 450 400 Queensland QLD Queensland, Rent (3 Bedroom Queensland 400 350 House) 350 300 300 250 250 200 200 % 150 150 Unoccupied 100 private 100 dwellings, 50 50 2016 = 19.3% - 0 2001 2003 2005 2007 2009 2011 2013 2015 2001 2003 2005 2007 2009 2011 2013 2015 Source: University of Queensland Boomtown Indicators.

EXAMPLE: RENT ON A 3-BED HOUSE 5 years Thermal coal price (AUD) https://www.indexmundi.com/commodities/?commodity=coal-australian&months=180 – 25/1/18.

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.”

COMMUNITY SELECTS ‘INDICATORS’ Population? Housing costs? Building approvals? Number of trucks? Unemployment? Crime rates? Families on government payments? https://www.evalueserve.com/wp-content/uploads/2016/07/selecting-data-sources-the-smart-way.png - 19/1/19.

INTERVIEWS TO UNDERSTAND CAUSE & EFFECT Services Employment Mine development Housing

FEEDBACK TO DATE ON ‘INDICATORS’ Community Government agencies Shows positive / negatives Defines problem areas Understandable Town-level data! Consistent, allows comparison Identifies winners / losers Helps grant applications Shows local knowledge / concerns Access to researchers 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