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 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 I am not an 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 e c onomist… 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 … I’m a just ve r y 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 naughty boy !! 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:
PRE SE NT AT ION OUT L INE • 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
National E c onomic Update
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 Australian Dollar 1.10 150 $A / $US 140 (LHS) 1.00 130 120 0.90 110 0.80 100 90 0.70 80 70 0.60 $A TWI 60 (RHS) 0.50 50 SOURCE: RBA
T HE GOOD – UNE MPL OYME NT ST ABIL ISE D, BUT AT A HIGHE R L E VE L Unemployment Rate % 6.5 6.3 Australia 6.1 5.9 5.7 5.5 NSW 5.3 5.1 4.9 4.7 4.5 Source: ABS
T HE GOOD – GDP GROWT H MAINT AINING GROWT H T HROUGH T HE ST RUCT URAL T RANSIT ION Australian GDP Growth Rate % "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
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 Contributions to GDP growth December Quarter 0.42%* (seasonally adjusted) Public General Investment Government 0.24% Consumption Private 0.12% 0.12% Net Exports Non-Dwelling 0.06% 0.00% Construction Household Private Machinery Consumption Dwellings and Construction Equipment -0.50% * Percentage Points Source: ABS
T HE BAD – DRIVE RS OF GROWT H GROWT H DRIVE N BY MINING (ST IL L ) AND SE RVICE S … … Contributions to GDP growth December Quarter (seasonally adjusted) Public Admin and Safety Mining Info Media and Telco Real Estate etc. Financial Services Health Care SERVICE SECTOR Wholesale Trade Electricity Gas etc Retail Trade Other Services NON-SERVICE Education SECTOR Agriculture Arts and Recreation Admin and Support Construction Transport, Postal etc Accommodation and Food -3% Professional, Scientific, Technical Manufacturing … . MANUF ACT URING IS A BRAKE
T HE UGL Y – HOUSE HOL D INDE BT E DNE SS A GOL D ME DAL PE RF ORMANCE Australian households Unconsolidated Household Debt to GDP Ratio (2015 Q2) have more debt compared to the size of COUNTRY HOUSEHOLD SECTOR Australia 123% the country’s economy Denmark 123% than any other in the Switzerland 121% world. Netherlands 112% Canada 95% 1. Housing price inflation Norway 91% 2. Low wage growth UK 86% USA 79% 3. Relatively high South Africa 37% personal tax rate Brazil 25%
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 Real* Disposable Income per Capita $16,000 POST MINING INVESTMENT BOOM GLOBAL $12,000 FINANCIAL CRISIS “RECESSION WE HAD TO HAVE” $8,000 Sep 1990 Sep 1995 Sep 2000 Sep 2005 Sep 2010 Sep 2015 * Real – adjusted for inflation Source: ABS
SUMMARY Strong high-level indicators – GDP growth and unemployment The low A$ 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
Uppe r Hunte r Re gional E c onomic “Pulse ” HRF’s unique research on 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
AUDIE NCE PART ICIPAT ION Q: What Hunte r Re gional Indic ator is this ? 0 A. Newcastle 2 4 Knights – 6 Position in 8 NRL 10 12 14 16 The Hunter needs a Knights led recovery in 2016!!
BRIGHT SPOT - E MPL OYME NT GROWT H IN JOBS SUST AINE D Employment
BRIGHT SPOT - RE - BAL ANCING ACT SE CT ORAL T RANSIT ION T O SE RVICE S HAS BE GUN Hunter Annual Change in Employment, Sep 2015 Health Care & Social Assistance Arts & Recreation Services Construction Retail Trade Professional, Scientific & Technical Services Transport, Postal & Warehousing Accommodation & Food Services Electricity, Gas, Water and Waste Services Other Services Agriculture, Forestry and Fishing Rental, Hiring and Real Estate Services Manufacturing Public Administration and Safety Administrative & Support Services Education & Training Information Media & Telecommunications Mining Financial & Insurance Services Thousands Wholesale Trade -4 -2 0 2 4 6 Source: ABS Monthly Labour Force Survey
BRIGHT SPOT - UNE MPL OYME NT E NCOURAGING DOWNWARD T RE ND CONT INUE S Unemployment
BRIGHT SPOT - HOUSE PRICE S SOME RE CE NT RE COVE RY IN UH BUT COOL ING OCCURRING ACROSS NSW House Prices Gre ate r • supply Rate rise s • More • stringe nt le nding c onditions
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