Regional Economic Development

HIA watches building approvals decline after RBA's rate hikes

“A FALL in building approvals at the end of 2022 is the next step in what has been a very well broadcast downturn in the housing market caused by the increase in the cash rate."

That is how Housing Industry Association (HIA) economist Tom Devitt summed up today's release of the Australian Bureau of Statistics (ABS) monthly building approvals data for November for detached houses and multi-units covering all states and territories. 

“Building approvals fell by 9 percent in the month of November, including a 2.4 percent decline in detached approvals and a 19.9 percent decline in multi-units,” Mr Devitt said.

“This puts detached approvals over the three months to November down by 12.1 percent on the same quarter in 2021, and multi-units down by 11.4 percent.

“Within two months of the RBA’s first interest rate hike in May 2022, leading indicators of building activity including new home sales started to decline. Investors, first home buyers and owner-occupiers started retreating from the housing market," Mr Devitt said.

“Today’s data suggests that builders have worked through much of the large pipeline of work that existed in May 2022, when the RBA started increasing the cash rate. This will result in a slowdown in the number of homes under construction in 2023.

“The full impact of the 2022 increases in the cash rate will not be observed until the second half of 2023.

“The depth of this downturn will be determined by the RBA’s cash rate decisions," he said.

“The RBA has already undertaken the steepest hiking cycle in a generation and it needs to hold fire on further hikes to give their actions to date time to play out.

“As more housing market indicators reflect the impact of cash rate increases to date, the RBA will be under increasing pressure to reverse course in the second half of this year,” Mr Devitt said.

In seasonally adjusted terms, total building approvals by state were mostly down in the three months to November compared to the same quarter in 2021, with the declines led by Western Australia (-27.4%), followed by Queensland (-16.8%), New South Wales (-12%), and Victoria (-6.6%), with South Australia seeing the only increase (+6.2%).

In original terms, total building approvals increased in the Northern Territory (+29%) and Tasmania (+7.8%), while declining in the Australian Capital Territory (-34.8%).

www.hia.com.au

 

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Hunter region leads the way with its new productive paradigm

By John Sheridan, Digital Business insights >>

THE HUNTER REGION is the most economically complex and diversified region in Australia outside of the capital cities, with deep experience and resilience generated from reinvention and rebuilding after the closure of the Newcastle steelworks in 1999.

The industries and organisations in the Hunter share similar networks, experiences and needs as other industries and organisations in regions across Australia – in agriculture, manufacturing, defence, energy, mining, climate action, investment and tourism.

So, using a strategy of ‘deliver local–share national’ the Hunter region has developed a most efficient way to target, encourage and build capability across the whole nation. [The Hunter region is now featured on, and utilising, the RED Toolbox to both stimulate and cement its drive for sustainable economic and community development.] 

Deliver locally – share strategically

The [Regional Economic Development] RED Toolbox provides a showcase of 5,000-plus organisations in key productive industries, with export showcases for markets overseas, with groups allowing industry networks, associations, councils and hubs to collaborate and share.

Easy to join. Easy to use. And easy to add new organisations to the platform. 

Organisations manage their own listings. But can connect to others across multiple dimensions. Joined up thinking. Joined up action.

Joined up thinking is an attitude as well as a network function. Our brains do it. It is the interconnection of 86 billion neurons that give us insight and intelligence.

But there is no point connecting billions of devices and networks across Australia unless we also connect the knowledge in the heads of all Australians.

We need more than just information networks, we need knowledge networks, and that means sharing, between silos, between networks, between clusters, between sectors, between regions, connecting the obvious and the less obvious. Holistic.

Knowledge networks mean vision, direction and aggregation of information for purpose – to address the wide range of wicked problems we face.

We need to align our thinking with the possibility of a holistic framework. Recognise what collaboration and sharing ideas might deliver. 

Australia is big country with a small population. Concentrated in the capital cities. We need to collaborate and share across the whole country, all regions and industries.

Ultimately, competition with the world offers a lot more value than competition between ourselves.

RED Toolbox to host national events

From November, the platform will host a national events program – covering innovation, export, cybersecurity, climate action, followed by tourism, future of work, investment and more.

Events will be delivered into the Hunter region in NSW and then shared with all other regions, councils and high schools across Australia.

In a digital age where everybody and every device is or could be connected, we haven’t really leveraged that connected opportunity to its maximum potential. 

We have amazing mineral resources. And we have amazing intellectual resources in the CSIRO, research-based universities and innovative small businesses across the country.

If we could just channel those resources with strategic focus, we could move Australia into a position of leadership and example, and solve many of the wicked problems we face today.

Climate change, biodiversity loss, poverty, obesity, food insecurity, war, corruption, extremism, energy, water, inequality, health and livelihood, and digital disruption to name a few.

It’s time to use the collective potential we have in our resources – mineral and intellectual – in a smart, collaborative manner, leveraging digital technology in a way that supports our regions, councils, industries, students, schools, states and territories in innovation, investment, export, climate action and managing the future of work and jobs.     

It’s time to leverage the benefits of collaboration, connection and networking, and the digital revolution presents the tools to do just that. 

Throughout history, individuals have changed the world … again and again. And individuals working collaboratively have then created permanent and positive changes.

Australia is full of well-motivated people trying to do the best they can in their businesses, their industries, councils, associations, universities, regions and states.

All of us can only do so much on our own. But we can magnify those efforts through collaboration, networking, partnership and support.

Minerals plus brains plus collaboration plus sharing can lead to new connections, solutions, products, services, jobs and opportunities. 

The keys to managing Australia’s future success

Already, there are interesting developments arising from the launch of the new RED Toolbox, with states and regions responding from different perspectives – focused on export, cybersecurity, robotics, security and defence, METS and mining and geotourism.

Guided tours of the platform seem to work best – Zoom, Webex, Teams. 

People then realise that what seems to be a ‘website’ is in fact a platform with a lot more functionality than expected. And RED Toolbox is customised to our regions, sectors and interests, not anybody else’s.

If anyone would like a ‘guided tour’ of the RED Toolbox to see how it could help their region, network, sector or cluster, just let me know. 

www.redtoolbox.org

 

 

About the author

John Sheridan is the CEO at Digital Business insights, the company behind the creation of the Regional Economic Development (RED) Toolbox. The RED Toolbox has been steadily developed over the past 10 years to provide a collaboration platform for Australian economic development, including a range of showcases that promote national and international trade opportunities and connections.

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QRC calls approval of New Acland Stage 3 'a triumph of process over politics'

THE Queensland Resources Council (QRC) has welcomed the approval of New Acland Stage 3 by the State Government, calling it a great day for the Oakey community and Darling Downs region. 

QRC chief executive Ian Macfarlane said the granting of an Associated Water Licence for Stage 3 of New Hope Group’s open-cut coal mine was a long time coming, but a triumph of process over politics. 

“This project is one of the most heavily scrutinised and assessed resources projects in Queensland history and we congratulate New Hope Group on this long overdue news,” Mr Macfarlane said. 

“Today’s announcement will see new jobs, new business opportunities and new life being breathed back into this community.”  

Mr Macfarlane said the world needed Queensland’s high-quality energy commodities now more than ever to provide energy security and stability. 

“Queensland’s coal and LNG exports have a crucial role to play as nations work towards achieving their net zero emissions goals,” he said. 

“Countries all around the world need time to transition and implement new technologies – including renewables and carbon capture and storage – and further develop the potential for hydrogen to be a green energy source. 

““As we’ve seen in the press this week, some of Australia’s most important trading partners, countries like Japan, are becoming increasingly concerned about the lack of investment in new coal projects and the impact this will have on their future energy security. 

“Queensland is well positioned to provide energy security to our trading partners with coal and LNG produced under the strictest environmental and rehabilitation standards in the world," Mr Macfarlane said.

“The Queensland Government needs to ensure the assessment and approval processes covering new energy projects are robust and able to be finalised in a reasonable time.” 

www.qrc.org.au

 

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QRC claims new profits tax 'shutting down a pipeline of investment'

THE Queensland Resources Council (QRC) has accused the Queensland Government of "flying blind about the impact of excessive new coal royalty taxes on Queensland jobs and business opportunities".

QRC chief executive Ian Macfarlane said companies had already paid as much in state royalties in the first six weeks of the new tax regime as the Treasurer said it would cost the industry over the year.

"This gives you an idea of the staggering amount of money companies are now paying to the State Government in extra taxes, which were introduced suddenly and without consultation in the June state budget," Mr Macfarlane said.

"I’m not sure how much more the resources sector can say before someone in the State Government realises the new tax regime is destabilising the Queensland economy and destroying jobs." 

Mr Macfarlane said although coal had been achieving record prices in the past 12 months, "anyone who understood export markets knows prices constantly fluctuate, depending on what’s happening globally".

"Just like the beef and grain industries, resources companies rely on using the extra money earned in the good times, to help ride out the lows when prices fall," he said.

"As anyone who lives in a resources region knows, when our sector is doing well, companies are upgrading their machinery and equipment, expanding operations, employing more people, investing in new technologies and contributing more to their local communities.

"This royalty hike is going to hurt a lot more people than the Government seems to realise," Mr Macfarlane said.

"Mine projects are already being put on hold, and there will be more. The government is shutting down a pipeline of investment opportunities in Queensland for the next 20 to 30 years. It just doesn’t make any sense."

Mr Macfarlane made the remarks yesterday at the Central Highlands Development Corporation Resources and Innovation Forum in Emerald, where he outlined the central role the Queensland resources sector would play in meeting Australia and the world’s emissions reductions targets.

"Achieving emissions reductions goals will depend on our ability to mine Queensland’s diverse commodities safely and sustainably and capitalising on Queensland’s world-leading skills," Mr Macfarlane said.

"A strong resources sector requires investor confidence. The State Government’s huge royalty increase, without consultation, is a red flag to investors in all commodities, with long-term consequences for the Queensland economy."

The QRC also hosted a cross-party group of 10 politicians at a mining industry event in Emerald on Monday night, attended by more than 120 people.

Testerday the group will tour Kestrel Coal’s underground metallurgical coal mine to learn more about the opportunities, benefits, innovation and challenges of modern mining, Mr Macfarlane said.

www.qrc.org.au

 

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Energy Networks Australia calls for urgent ‘transmission reform’

A REPORT commissioned by the Clean Energy Council and Energy Networks Australia has highlighted the critical need to solve transmission challenges “to unlock Australia’s energy transition”.

Energy Networks Australia CEO Andrew Dillon said transmission development was critical to enable the most affordable transition to a net zero energy system. New transmission would ultimately create a modern electricity grid that ensures clean power flows from renewable energy projects to customers.

“Every dollar spent on transmission will return more than twice this in benefits to customers. It will enable cheap, renewable electricity to flow to where it is needed, and more supply will help lower wholesale prices,” Mr Dillon said. 

“Stakeholders saw value in the Federal Government’s Rewiring the Nation fund and highlighted the importance of supporting the twin objectives of least cost to customers and ensuring transmission projects are financeable and able to be built when they’re needed.  

“The stakeholder feedback also reinforced the need for policy reform and support to better address social licence and community benefit issues. The reform process needs to be conducted in collaboration with electricity customers, putting their needs at the heart of investable regulatory frameworks for new transmission.”

Facilitated by KPMG, the report was compiled from interviews with senior representatives from across the energy sector, including policy makers, market bodies, network service providers, developers and private investors.

The findings reflect stakeholder views on barriers to transmission investment, the potential path forward and the role of the Federal Government’s Rewiring the Nation Fund in supporting the financing of major projects.

Clean Energy Council chief executive Kane Thornton said delays in transmission development were hindering the transition to net zero and driving up power prices.

“These delays mean the lowest-cost, clean electricity isn’t reaching customers. Instead, they are paying a premium for unreliable coal,” he said.

“Time is of the essence. To enable a smooth transition, networks need to install more than 10,000 kilometres of new transmission lines to ensure we can connect the renewable generation our system will need. While private sector investors are prepared to underpin much of this investment, government has a clear role in ensuring the investment happens when needed.

“The stakeholder feedback in this report emphasises the crucial role that Rewiring the Nation can play alongside reform to the regulatory regime and policy settings for transmission.”

Full report available here.

 

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Technology extends your new Domain

By Leon Gettler, Talking Business

THE property market has been changed by technology.

John Foong, Domain’s chief revenue officer, said the biggest change has been giving everyone access to data and insights at a much faster pace – and deeper way – than ever before.

“Now everything is at your finger-tips,” Mr Foong told Talking Business. “You can see and do comparables. You can look at valuations from multiple sources. You can read some of that great research from Domain and other providers. It’s a lot more smart.

“I would also say, on the agents’ side, there is a lot more intelligence too. They can draw insights, they can use artificial intelligence, they can aggregate things in data and make more holistic smarter recommendations,” he said.

“Both seeker and agent are a lot smarter than they were before.” 

Mr Foong said this made it challenging for buyers as there were now so many more options. 

“It’s the tyranny of choice,” he said.

“You might be competing with other buyers from out of state, or overseas, so there’s loads of possibilities, more competition and more information.”

TECH ADDS TO AGENT CHALLENGES

Mr Foong said technology had also made it more challenging for agents.

“I think as an agent, a lot of the value you would have historically provided by being an expert with access to industry knowledge has been eroded,” he said.

“So you have to be smarter with publicly available information, which is now freely available, with insights and the way you help people think, and coach them through the process, whether it’s selling or the buyer buying.”

Mr Foong said the great access to information also made it exciting for investors, although it also meant one was competing against “a much broader set of investors”.

“There is still no substitute for an investor going and walking the streets and looking at the house, but there is more information yet to figure out where you should be visiting first, than there would have been a decade ago.”

PANDEMIC CHANGES EVERYTHING

Mr Foong said COVID changed the way people used artificial intelligence because they were spending more time on their computers.

He said mobile apps were now ‘hot’ in the real estate market.

“People expect an awesome mobile app experience,” Mr Foong said.

“They expect to use the 20 seconds they spend at a bus stop or while they’re walking from one place to another to have a meaningful interaction where they find out information by reading content or by browsing a house.

“So it’s got to be easy, it’s got to be quick, it’s got to be accurate, it’s got to be easy to use, it’s got to be shareable, it’s got to be social,” he said.

Mr Foong said he could see the potential for the Internet of Things in commercial real estate.

“We are trying to help the big property managers around the world, the CBREs, the Colliers,” he said. “How do they not just make transactions, like leasing and buying and selling, but how do they develop a lot of value through property management as a service?”

“With the Internet of Things, you would have eyes all over the place. These are things where you can automate value that can be added, and they can charge a premium for that.

“It’s brilliant for commercial. We all want to outsource as much as possible.”

www.domain.com.au

www.leongettler.com  

 

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://play.acast.com/s/talkingbusiness/talking-business21-interview-with-john-foong-from-domain

EY research says abolishing ABCC could cost Australian economy $47b by 2030

THE Australian Labor Party's (ALP) current policy to abolish the Australian Building and Construction Commission (ABCC) could result in a $47.5 billion hit to the economy, according to economic modelling by EY. 

EY’s modelling found that in the context of building Australia’s economic recovery from COVID-19 and acute supply-side pressures currently facing the industry, abolishing the ABCC could lead to significant economic losses.

The EY report identified the most likely losses as:

  • A fall in the output of the construction sector of around $18.4 billion by 2025 and $35.4 billion by 2030.
  • A decline in overall economic activity of $16.3 billion by 2025 and $47.5 billion by 2030.
  •  A fall in manufacturing output of $4.8 billion by 2025 and $13.1 billion by 2030.
  • A decline in services output of $5.9 billion by 2025 and $19.5 billion by 2030.
  • A fall in economic investment of $24.7 billion by 2025 and by $45.6 billion by 2030.

An EY spokesperson said these outcomes would have a detrimental impact not only on the building and construction industry but also the broader economy given the industry’s pivotal role in building productive capacity of the economy.

Analysis in the report highlighted that an efficient and well-functioning construction industry was crucial to the performance of the Australian economy given that $1 spent in public infrastructure -- that is, works that are conventionally within ABCC jurisdiction -- returns $4 into the economy.

The ABCC works to ensure the building and construction industry is lawful, productive and efficient, according to EY. The conclusion was the ABCC was critical in minimising unnecessary costs and project risks that arise from delays and unlawful industrial action.

Recognising such risk factors and the industry’s difficulties in absorbing the costs of industrial disputes, 89 percent of construction businesses surveyed for the report believed that the industry benefitted from an independent specialist regulator.

Nearly 70 percent of businesses surveyed stated that the ABCC had reduced levels of unlawful industrial action, while a similar proportion believed that the ABCC had made industrial action easier to manage.

 About 64 percent of businesses said the ABCC would be a more effective regulator if it had greater powers.

Importantly, according to EY, nearly 40 percent of businesses said the ABCC had helped to improve safety on construction sites.

The report found that the cost of construction for essential public services such as defence, aged care, health and public administration could face an upward pressure if the ABCC was abolished. Based on Australia’s public infrastructure investment pipeline, the cost to taxpayers from abolishing the ABCC could be in the order of $9.5 billion over the next decade.

Master Builders Australia’s CEO Denita Wawn said, “In releasing this report, Master Builders Australia reiterates its call to the Labor to set aside its policy to abolish the ABCC, which would endanger economic recovery and growth, and raise costs for taxpayers.

 “Abolishing the specialist construction regulator would especially imprudent as inflationary headwinds and supply challenges continue to build,” she said. 

 “The release of the report adds $47 billion more reasons why the ALP must reverse its decision to abolish the ABCC. As an agency formed to tackle an ingrained industry culture of lawlessness and ensure taxpayers receive value for money, the work of the ABCC is not yet done.

"This report shines a light on the risk to economic recovery and future growth if the ABCC, a proven and effective regulator, is dismantled,” Ms Wawn said.

Download EY Report: Costs of Labor Abolishing Australian Building & Construction Commission (ABCC) here.

 

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