30 May 2017

Energy prices threaten survival of Glencorp Townsville copper refinery

Glencorp Mount Isa mine and smelter

The boss of Glencorp's Townsville refinery and Mount Isa copper smelter has warned the security of its North Queensland operation is under threat due to the skyrocketing prices of energy across Australia, forcing the closure of its manufacturing business within 12 months.

Unless drastic action is taken by the federal and state governments to reduce energy prices, Glencorp provides no guarantee that the Townsville and Mount Isa operations will be able to continue in a letter written to the Prime Minister by the company.

The stark warning comes off the back of Glencorp's earlier remarks that a coal-fired power station in the north could possibly increase the competition to State energy generators profiteering from the demands for energy in southern states, and who have inadequately planned for enough baseload power generation impacting the entire Australian energy market.

The 2000 jobs supported by Glencorp's operations in Townsville and Mount Isa will add further devastation to a community already hurting from the loss of hundreds of jobs just over 12 months ago at the Clive Palmer Queensland Nickel Refinery north of Townsville, after which the local unemployment rate jumped to 13 percent.

Similar remarks are coming from other refinery and smelter operators across Australia, including big manufacturers such as BASF and Tomago aluminum smelters, who warned there was a limited chance of new investment in Australia and that further job cuts will be likely.

Reporting to the Australian Financial Review (AFR), Tomago chief executive Matt Howell, who runs Australia's largest aluminum smelter in Newcastle, said: "The company was considering cutting production due to ridiculously high wholesale electricity prices which would result in job losses."

Mr. Howell commented to the AFR that "the prices are still way too high. They should be coming down by half or more than that", he said. "We should be an energy superpower with the cheapest and most reliable electricity in the world. We are not seeing that now.", he said.

The desperation of the energy crisis is evident as the Queensland Treasurer Curtis Pitt held a lengthy meeting with Glencorp's executives in Brisbane late on Tuesday to convince the company not to move its copper operations out of the state.
Glencorp Townsville copper refinery

Energy industry expert Paul McArdle, who is the chief executive of energy software company Global-Roam, said "The Palaszczuk government policy of merging state-owned electricity companies, the power demands of the $80 billion liquefied natural gas industry and a shortfall in gas had contributed to a spike in electricity prices in Queensland," he reported to the AFR.

"The merging of CS Energy and Stanwell Corporation in 2012 -3 has led to market power issues at times of tight supply/demand balance since that time.", Mr. McArdle said.

He continued his remarks saying, "It has been escalated by two effects of the LNG industry,  - a significant increase in baseload energy consumption in the state (20% of prior overnight minimums) and the removal of large volumes of competitively priced gas, fired generation burning 'ramped gas' prior to the LNG."

If the Palaszczuk government didn't have enough pressure coming to bear from the green Labor-left under Jackie Trad and the Townsville North Queensland community on the back of the way the government handled the Adani coal mine affair, the threat by Glencorp and other large manufacturers of shutting down their operations in the State will have catastrophic consequences not only for regional Queensland but the latte sippers in the cities.

Adani coal mine saved from brink of green destruction

Image: Chairman of Adani Group, Mr. Gautam Adani and Premier Anastasia Palaszcuk
Photo: The Australian, 2016

The chairman of Adani Group, Mr. Gautam Adani has released a statement expressing his thanks to the Premier Anastasia Palaszczuk, Prime Minister Malcolm Turnbull and members of the State for their support, as the royalties deal with the Queensland government for the Carmichael coal mine was saved from the brink of destruction with an agreement being secured late Tuesday evening.

The head of the Indian mining and energy giant confirmed the project is on track to generate 10,000 jobs for the region, in an overnight tweet to his followers. A statement has been posted also on the Adani Group website.

But if the green groups and the massive war chest they are building from international supporters and the Australian Labor-left have anything to do with it, the coal mine actually turning a single sod of soil from the agreement could be a short-lived prospect.

It was only two days ago that the deal was off the table when the left faction of the Queensland Labor Party lead by Jackie Trad hijacked the Premier's authority and refused to support a royalty holiday for the Adani project.

Amidst the confusion and questions about the Premier's weak leadership, the Treasurer and the member for Mulgrave near Cairns, Curtis Pitt announced that the government would instead consider the Adani royalty deal but as a delayed payment and not a royalty holiday.

Once the royalty deal had been clarified by the Treasurer, and the Premier provided a belated statement to the public that the delay of the royalty payment deal was a better deal for all Queenslanders, the next hurdle was put up by the Trad-lead left faction of Labor Party not wanting to support construction of the railway line.

Image: Adani website announcement of royalty payment

This hurdle hinged on an election commitment of the Palaszczuk government, which held a policy that any financial assistance of the Adani project will not be provided, including its required participation in the constitutional role it has in administering the Northern Australia Investment Fund (NAÏF) loan from the Federal government.  The railway line from the mine site to Abbott Point near Bowen is a dependency project for the actual coal mine to proceed.

The leaking of Cabinet meetings by the Trad left faction sent the News Ltd media into a frenzy and the hearts and hopes of North Queensland with it when the Townsville Bulletin's editor unleashed a barrage of home truths at the Premier and the Trad-backed Greens movement.

The Townsville Bulletin said, "If successful, Cabinet's green left mates would clink their mason jars and toast having put to the sword another ideological enemy in their crusade for a better world."

The editor continued his public rebuttal of the Labor-left saying, "But this Labour government has forgotten the very people who built the working-class brand it now insults with its green, anti-industry rhetoric - proud, ordinary Queenslanders who want to work, raise a family and put food on the table."

The Federal Minister for Northern Australia, Matt Canavan weighed in also and said, "the move will effectively kill Adani's chances of gaining a federal loan for its vital railway line."

The Townsville Bulletins's editor went on and said, "When Queenslanders north of the Tropic of Capricorn are treated with such contempt by our southern leaders it is no wonder that the succession debate comes up so regularly."

The announcement by the chairman of Adani that the royalty deal is done is a relief for many North Queenslanders suffering from an extraordinary economic downturn, mainly driven by carbon-based mining operations forced out due to reductions in global commodity prices and excessive taxation penalties for polluters by the previous Rudd-Gillard federal government.

Unfortunately, the news breaking now is that the influential Tidal Foundation in the United States has contributed financially to the anti-coal movement campaign in Australia backed by a reported $250 million war chest.

Knowing the strength of the Labor-left and green sympathizers in the Palaszczuk government and in Australia's capital cities, the developing story about substantial international funding for the anti-coal campaign means the Townsville North Queensland community still has anxious and uncertain times ahead.

Today is a win for the Townsville North Queensland workers, their families and the business community across the region at large.

29 May 2017

Wide load alert for $193m Port expansion in Townsville

Image: Entrance to Port of Townsville.
Photo: Port of Townsville Annual Report

The first stage of the planned $1.64 billion Townsville Port expansion has been submitted to the State Government for environmental approvals, releasing $193m of economic impact on the City and creating a wide load alert in the Northern Australian port.

Ships the size of three football fields will be able to access the Port when stage one of the expansion project is completed, increasing the existing capacity of ships from 238 metres in length to 300 metres.

The width of the ships will increase also from 32 metres to 40 metres. The channel will be widened from 92 metres at its narrowest point to 180 metres.

The waste from the dredging needed for the expansion will be carried out in accordance with strict environmental requirements. No capital dredge material will be dumped at sea. The material will all be placed in a fully contained area at the Port.

The project is anticipated to cause over 8000 trucks to be taken off the roads and highways cutting carbon emissions and making the roads safer for passenger vehicles.

The project has been in the planning for 10 years. When the business case that has been submitted to the Treasurer Curtis Pitt and Ports Minister Mark Bailey for consideration has been environmentally and operationally approved, the widening project is expected to take 4 1/2 years to complete. This includes one year to set up of the bunded area for the dredge material and 3 1/2 years for the actual dredging. 

Eighty percent of the works will occur at the harbour entrance, adjacent to Platypus channel, and the remaining 20 percent of works will occur in the sea channel. An independent Scientific Oversight Panel will monitor the works with the authority to stop works if the impacts are deemed inaccessible at any time.

Widening the port is essential to bring it up to standard with other capital city ports because ships have gotten bigger over the past 40 years and they cannot fit into Townsville's narrow channel. 

Shipping companies are bypassing Townsville to capital city ports but will gladly steam in and out of Townsville if they can safely navigate their ships through the Port.

If the billion dollar Port expansion had not been considered for the expansion, freight costs for local businesses from capital cities 1300 kilometres away will continue to increase, while passenger cruise ships business opportunities will be missed.

Port of Townsville chief executive officer Ranee Crosby's commented to the Townsville Bulletin where she said "That means over time, less commercial ships and cruise ships will be able to access our port, stifling trade opportunities and potentially putting an end to the boom we are seeing in cruise ship visits to Townsville over the next 10 years".

The project is expected to generate 120 new full-time equivalent jobs in Townsville during construction.

TREN identified that Industry Space in the City is critical to a smart city future and the Port as a heavy industry player in the Townsville property market and its economy is a critical strategic asset to the City.

The expansion of the Port and the increased capacity for trade is a positive announcement by the Port of Townsville.

Cruise ship birth for boarding passenger in Townsville

Townsville's Port Authority and PnO Cruises Australia have announced the Townsville Port will see passengers boarding cruise ships in the City for the first time in its 104 year history, .

PnO's Pacific Eden cruise ship will be the first to complete partial ship turnarounds at the Townsville Port next year.

Port of Townsville Limited CEO Ranee Crosby said; "The announcement was an incredible opportunity for the region."

"A lot of hard work has been done by the Townsville White and Grey Ship-Attraction Committee over the past 18 months to lure more cruise ships to Townsville, and this announcement by PnO is a huge step forward towards achieving the end goal of home porting," said Ms. Crosby.

The partial turnaround decision by PnO from September 2018 is expected to generate jobs and more money flowing through the local economy.

For many of the cruise ship enthusiasts and holiday makers from the North Queensland region had to fly, train or drive to ports to the south or north of the City to experience their lifetime dream of cruising.

This announcement means that people will be able to embark on a cruise from Townsville and not have to travel further afield on connecting journeys.

"We are very appreciative that PnO Cruises Australia has given us this opportunity and I know that Townsville will be up to the task.", Ms. Crosby said.

Tickets are expected to go on sale in the coming months with prices yet to be finalised.

The Port of Townsville is a transport asset of national significance employing hundreds of people and supporting export and import industries handling 30 difference commodities across the Northern Australia regions worth an estimated $11 billion in trade.

The Port of Townsville is expecting 11 cruise ship visits this year, and 18 in 2018.

"Future Cities Office" structure threatens Townsville Enterprise standing

Townsville City Mayor Jenny Hill Image: Evan Morgan
Townsville City Council (TCC) Mayor Jenny Hill's, Chief Executive Officer, Adele Young's headline announcement axing 144 positions in the proposed restructure of Council has set the foundation for the establishment of a Future Cities Office, while exacerbating doubts about the strategic viability of Townsville Enterprise (TEL) as an economic value-add to the ratepayers of the City.

TCC contributes approximately $750,000 to TEL annually. The other major contributor is the State Government's Tourism and Events Queensland to the tune of approximately $650,000.

TREN's breaking story about Townsville's governance organisation structures damaging the investment pipeline of the City characterised the movement of Council and the Federal government's innovation policies, raising questions about the effectiveness of local government resources and strategic alignment capabilities in attracting federal funding in Townsville's new digital future.

The creation of the Digital Futures Office as part of this restructure confirms the impact of the federal government innovation policy implemented as part of the smart "City Deal" with the Prime Minister, Malcolm Turnbull, Premier Anastasia Palaszczuk and Mayor Jenny Hill in 2016.

The Digital Futures Office has been defined as the strategic way forward for council and the interests of ratepayers.

Included in the restructuring, Ms. Young announced the creation of two new roles. A Placemaker, basically to beautify and make the city more people-friendly, and an Economist, which has the capability to analyse enormous amounts of digital data and provide planning input to future economic scenarios.

Both positions will be challenging, to say the least, seeking to bridge the gap between planning and delivery departments, the insatiable appetite of Council executives and department heads demanding briefings, let alone the bone crushing demands of council committees, political and community representatives. The complexities of such roles are a sure sign one man bands would struggle to cope.

In addition to the strategic economic and common sense delivery roles in analytics and communication strategy, the Council has proposed three new sectors that will be established called Digital Cities, Defence, and Aboriginal and Torres Strait Islander Principles.

One of these sectors deals with the enormous defence funding and associated administrative alignments, another deals with the growing cultural interests, influence and sensitivities of indigenous affairs, and the third directly aligns with innovation and the federal government's smart cities initiative.

All of these new roles are directly influenced by the Turnbull federal government organisational priorities such as native title, defence and innovation policies, which directly aim to impact the Townsville districts. And dare it to be said, not the North Queensland regions including the different Council areas of the Burdekin, Herbert, Palm Island and Charters Towers.

Nowhere in the restructure does a mining, manufacturing, commerce, education, and retailing, or real estate services feature as a future strategic alignment sector, but nonetheless most agree the biggest driving force behind future free market jobs creation. Why has the industry elephant been left out of the restructure?

Although the Economist role would have an appreciation of these industry sectors from an analysis and reporting perspective, and of course Council does not meddle in private enterprise, but where is the strategic bridge connecting and aligning the interests of Townsville's development and growth industries and the economy's desperate need to reduce unemployment?

Seemingly the definition of economic development for Townsville is defined in digital alignment with federal funding, indigenous affairs and defence, being managed in the new functional area called Economic Development (function).

Image: TCC website. Management Structure Townsville City Council 2017

Is Townsville City Council's financial future being aligned exclusively to the federal government funding pipeline, and the technological advances and corporate capital that is well known in the corporatocracy model, to enact, enable and embed enterprise with federal governance funding programmes?

All of these questions are relevant and legitimate, but depending on who controls the press release and public relations, neither the leadership of North Queensland or Townsville, state or federal for that matter, are offering direct and honest answers.

However, the Nous Group report identifies logical and common sense projects to improve the leadership, accountability and alignment of its operations with Council policy and priorities. The current Corporate Support department including shared services, the CEOs office, and the advisory teams will transition unchanged except the establishment of the new "advisory/business partners" team, which includes information, communication and technology.

The cameras and sensors of the "big brother" Turnbull regime have been set in stone by contract in the smart "City Deal", unless a possible Coalition cabinet revolt occurs in Canberra and the deal is taken off the table. The federal government is a significant partner organisation to TCC along with Townsville Enterprise, especially based on the current Mayor’s culpability.

The Turnbull smoking gun was detected by TREN and now the Council's management structure is being loaded with the engineering and digital armoury to leverage the money and personal data of Townsville ratepayers, at the expense of $14 million and 144 Council jobs, to launch the City into the information age and an indirect partnership with corporatocracy hedge fund firms such as Bridgewater Associates, BlueCrest Capital Management, Renaissance Technologies, etc.

Is the economist and digital futures office the beginning of the end for Townsville Enterprise?

Clearly, the partnership advisory capacity is being ramped up at TCC and the demand for taxpayer ROI benefit is required from partner organisations like TEL.

In the context of the TCC restructure, TEL's place as a local government partner is under serious threat and its mischievous misalignment of resources outside of the Townsville districts, while conflicted by property developer profiteering, is duplicity to say the least.
Or is this the beginning for TEL forging a new pathway, justifying their North Queensland agenda with a separate North Queensland state of governance and administration despite the priorities of Townsville ratepayers and customers?

As a membership-based organisation with its own Board of Directors supposedly driving business interests, none of which represent Townsville ratepayers. The most influential members, a part of TCC, are dominated by media companies and Government Owner Corporations (GOC's) or regional councils such as Charter Towers, Palm Island and Hinchinbrook. The Mayor is the only ratepayer representative on the TEL Board.

The TEL model is likely to come under further political scrutiny as the Mayor Jenny Hill made it clear that the purpose of the TCC restructure was aiming to achieve financial sustainability and to keep the cost of rates down, hence providing some insight into the conscience and tactical agenda of local labour government desperate for a Turnbullism olive branch.

The restructuring of top heavy, administrative and management departments at TCC has forsaken the legitimate questions about TEL’s role so far, its priorities and digital future as a partner. The very functions of which was the target in the comprehensive set of recommendations from Nous Group and the TCC CEO's decision to cull so many management positions.

Why has the role of TEL and the Mayor Jenny Hill fallen through the proper scrutiny of the media? Why is Patrica O’Callghan not raising concerns about the recall and reinstatement of the economic, marketing and corporate services functions within TCC threatening the viability of TEL’s purpose?

TEL, as a top-down advocacy, marketing and administration partnership business model, has a principal function for the economic development of North Queensland. It is outlined clearly in its strategic plan.

TEL has established parallel functions with TCC and Council, subcontracting, tinkering at the edges of government and embracing the capital of North Queensland tag in its growing regional focus.

Townsville's political priorities towards projects and activities biased towards the common thread of TEL director's interest in property development, including the stadium, while pushing kinship with districts external to Townsville ratepayer interests, has more to say about Ms. Hill’s role. It is a functional agenda outsourced from TCC and Council until the Nous Group exposed the waste, poor decision-making and poor delivery of services.

The duplicated TCC partnership formula with TEL, the misalignment of political policy delivery and support, disastrous unemployment and broader negative economic results, a top heavy risk averse TCC management structure, the reckless appointment of property development moguls influencing an isolated, frustrated, desperate, and incompetent Mayor (also fellow TEL Board director), has created an environment of irresponsible governance, accountability and leadership.

The influence of the TEL’s Board, especially with a membership Mayor evidently with poor TCC support, and desperation for property development revenues, has created a culture of corporate dependency in conflict with the interests of ratepayers and the community.

The Mayor and TEL’s misguided strategic plan focusing on construction and mining, and its fixation on federal and state government welfare has pushed the Townsville community into recession, boasting the highest bankruptcies, and the worst unemployment results in the country.

These are watershed events. Are we seeing the beginning of a new North Queensland state, under quasi-administration by North Queensland Enterprise masquerading as Townsville Enterprise?

Considering the abysmal leadership of its North Queensland advocacy,  marketing and administration functions, and in the context of the damning recommendations by the Nous Group, one could hardly image a successful campaign.

But given the poor funding outcomes for North Queensland from the recent Turnbull-Morission budget, many locals are questioning the effectiveness of not only TEL and TCC, but the innovation and tactical leadership of Council and the State government neglecting jobs, water infrastructure and energy investment as the three most popular interests of Townsville ratepayers.

The political party for a North Queensland state would like to hope so considering the disproportionate distribution of Queensland state revenues to North Queensland compared to its economic outputs. North Queensland is subsidising the South-east. More cash receipts go out of the region than what comes back to the people in the vicinity of $6 trillon per annum.

The key announcements in the Council restructure apart from the unfortunate job losses, is the capabilities created in analysis and communication, and the establishment of sectors, not departments, but functional areas strategically aligned to the financial future of TCC's digital, cultural and defence industries.

The independent report by Nous Group released in September last year identified that the Council had excessive outsourcing and contracting positions, disguising the inflated full-time staff levels in the organisation.

Yet, Townsville Enterprise was not included in the review even though the key recommendations of the Nous report has painted a massive target on the backs of this outsourced, partner organisation advocating and marketing on behalf of the TCC and Council.

Ms. Young said, "Council's new structure better aligns planning, support and delivery roles to break down silos and duplication, cut unsustainable external labour costs and place the focus where it should be on frontline services and outcomes for the community."

But hang on, isn't TEL a silo structure and does it not duplicate the function of the proposed Digital Future Office (defined more broadly as "Economic Development (Function)" with respect to the interest of Townsville districts?

In a statement to the Townsville Bulletin, Ms. Young said; "We are trimming from the top, which is evident in how many management positions we have cut... from 63 to 39," she said. It's the decision to cut these management positions that have created the most significant reduction in costs to the budget moving forward.

Mayor Jenny Hill has a different view of the restructure's purpose. The Mayor identified the purpose of the restructure was to "deliver on a major election commitment and "getting the basics right for Council's financial sustainability and easing pressure on rates," she said. 

The Nous Group was damning of her government's performance and lack of policy delivery, meanwhile racking up enormous debt.

As far as Townsville's history is concerned, the Hill government has presided over a hiatus period of catastrophe for Townsville residents, laden with debt, poor policy delivery and the worst economic decline the City has experienced.

But the strategic alliance with Townsville Enterprise has come under scrutiny in the Nous Group recommendations. The CEO said she will adopt them all in full because they are extensive and comprehensive. They projects relevant to partners include in part;
  • "Assess the current benefits being generated by local partnerships funded by local council and negotiate alignment partner activities with Council priorities." 
  • " TCC should take a leadership role in Townsville's development through strategic alliances with appropriate institutions."
  • "Confirm service level agreement with partners that receive TCC funding and track return on investment (ROI) to assess benefit realisation."
As part of the restructure 144 positions will be slashed saving $14 million. The number of divisions will be cut from five to three. 72 existing temporary roles will transition to permanent full-time positions. There will be 97 new permanent full-time positions created.  187 temporary positions will not be renewed under the new structure. With the focus on planning on frontline delivery, existing administration support capabilities will move into planning and service delivery.

The principal membership role that TCC plays at TEL and the Mayor’s Board influence has come under close scrutiny by TREN, but the local Townsville mainstream media has been uninterested. The conflicts of interests, political incompetence and management failures at TEL and TCC have been exposed by TREN and now the Nous report backs up the legitimate concerns raised by its investigations and many publications over the past few years.

It is the subject of growing debate because, during the days of this Mayor, TCC's reckless leadership, accountability and ineffective strategic partnership alliances have largely gone unnoticed by the people of Townsville.

The legacy of Mayor Jenny Hill’s poor leadership, the ineffective structure of private and public institutions, lack of strategic placement of “value-add” influential community leaders and a dependency for government support has been a disservice to the community of Townsville over the past 10 years.

Over the next 10 years, one is hesitant to forecast, but a real danger exists that the Townsville leadership culture will not heed the text of the TCC restructure and the broader lessons for TEL, Council representatives, the vested academic institutions and media influences in the City.

And it must be called out again, the duplicity surrounding property moguls on the TEL Board on the collective values, capabilities and operational vision contrary to beneficial interests of the people, ratepayers and of the Townsville districts.

Unfortunately, with the smart “city deal” aligning civil and demographic resources to a government even further away than South-east Queensland in Canberra, and the supply chain of information, funding and investment being more closely aligned with a corporatocracy model, the priority interests of ratepayers is likely to appear even more immaterial through the haze of the dust storm of cronyism, conservatism and “fake news” consuming the public discourse.

Property owners and investors contribute nearly 10 percent of the City's economic output and the majority of the wasted rates revenues collected by the City. Investors alone supply nearly 40 percent of the City's accommodation and therefore pays the comparable percentage in Council rates to TCC.

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19 May 2017

Family-owned local building company in liquidation after 30 years servicing North Queensland

Image: Nu-Lite Glass Aluminium logo 

Liquidators have moved on another long-standing Townsville family-owned business that has been manufacturing, supplying and installing building products for 30 years after collapsing with close to $2 million in debts.

Nu-lite Glass and Aluminium has been experiencing significant reductions in business activity and increased competition, causing a dramatic reduction in the company's cash flows over the past few years.

The family had no option but to appoint liquidators BRI Ferrier on 27th April as any hope of trading out of the debt was unfeasible, despite feeding the company with their own resources during these tough economic times.

IN the midst of more unfavourable construction data coming from the banking sector, Townsville's businesses in the building industry are feeling the pain. A Bank West assessment of the industry found that; "Housing construction revenue is anticipated to fall by 6.2 per cent in the year ending June 2017".

"Mining regions will also see reduced housing construction, as the population in these regions falls. Multi-unit apartment revenue is expected to fall by 17.3 per cent over the same period, as new construction over the previous five years has exceeded demand requirements", Bank West Executive General Manager, Sinead Taylor reported.

The family-owned business has been supplying domestic and commercial customers in Townsville and as far out west as Julie Creek, hundreds of kilometers from Townsville, with glass, aluminum doors, windows, shower screens, wardrobes, mirror, security screens ever since the mid-1980s.

The business offered free quotes and was always willing to provide free advice and guidance to hundreds if not thousands of local businesses and residents.

For many years, the company's branding and operations could be seen by locals driving by their prominent warehouse located at 125 Dalrymple Road, Garbutt.

The company employed 16 permanent and casual staff who are expected to receive most of their entitlements under the Federal Fair Entitlement Guarantee scheme, such as wages and annual leave, but with limited assets to receive superannuation disbursements, Mr. Humphreys from BRI Ferrier reported.

Any other unsecured creditors are unlikely to get anything from the collapse.

Widespread failures in the building industry are not occurring according to, the Housing Industry Association report to The Mercury - www.themecury.com.au).

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18 May 2017

Real truth about negative gearing changes in the Morrison federal budget

The federal budget captured the concerns about housing affordability, particularly in the capital city markets, so it was inevitable that the volume of measures that were announced would substantially impact the housing sector.

Essentially, the policy announced can be divided into supply and demand perspectives so Townsville investors and owner occupiers can appreciate the depth and breadth of changes affecting their respective situations.

With respect the negative gearing, which the government and some media outlets had claimed were untouched in the federal budget, will have "a major impact on investors", Mr. Beer, CEO BMT Tax Depreciation said in his media release.

Mr. Beer reported; "This change will have a major impact on investors, essentially reducing the annual deductions they can claim therefore reducing their cash return each year. This could lead to investors being in a tighter financial position and may discourage future investors from purchasing a second-hand residential property."
A summary of the changes include from a demand perspective;
  • First home super saver scheme allowing First Home buyers to salary sacrifice their income directly into their superannuation account limited to $15,000 per annum capped at a maximum of $30,000
  • Capital gains tax concessions have remained untouched
  • Banking industry changes including; change to the Australian Prudential Regulatory Authority (APRA) aimed at minimising investors seeking funds outside the banking sector and in demographic areas of higher risk such as declining regional markets where Loan to Value Ratio (LVRs) are unfavourable
  • The big four major banks plus Macquarie will be levied 0.6 percent on bank funding with likely increase in interest rates passed on to borrowers to recoup costs      

Supply perspective:
  • Seniors over 65 years of age can now sell their principal place of residence they have lived in for a minimum of 10 years and make non-concessional contributions up to $300,000 into their superannuation account outside the existing caps. 
  • The Affordable Housing Agreement with States will be amended to promote better local town planning and to ensure housing targets are achieved from the unchanged funding of $1.3 billion per annum.
  • A Commonwealth Land Registry will be created to identify government owned land for residential development. 127 hectares has been released in Victoria for 6000 new dwellings
  • Infrastructure spending of $70 billion ($50b more than the last budget) between now and 2021. This is an extensive plan but negligible spend is planned for the Townsville or North Queensland region. Queensland's Bruce Highway repairs amount to $844 million mainly in the Southeast corner.
  • Implementation of the Smart "City Deal" aimed to provide better coordination between governments to improve town planning and land management for maximum affordable housing development, currently operating in Townsville, Western Sydney and Launceston
  • A new National Housing Finance and Investment Corporation is being set up to provide low-interest long-term funding to community housing, using bond markets instead of the more expensive bank markets aimed at community housing providers such as local and state governments
  • Investors will not be able to claim travel associated expenses, likely to impact regional investors the most.
  • Claiming depreciation of plant and equipment such as dishwashers, hot water systems, etc.;  Investors can claim deductions only on plant and equipment they purchase directly, rather than plant and equipment purchased by the previous owner. This could impact investment activity in second-hand stock, slowing investment demand but possibly directing investors to upgrade to new stock prompting more unfavourable supply in the market.
  • A new $5,000 levy on foreign owner properties left vacant at least 6 months over 12 month period
  • Foreign owners and temporary residents are exempt from capital gains concessions
  • Developers can no longer sell more than 50% of project stock to foreign investors

Property owners that have purchased assets before the 9th May 2017 will be able to claim depreciation as per normal.

The property owners and investors of Townsville North Queensland have been left with more questions than answers from this federal budget.

With this fresh analysis undertaken by TREN, the property owners and stakeholders of Townsville North Queensland can forge a conclusive understanding of the impact of the federal budget on local real estate investors and owner-occupiers. 

Do you have an opinion about the federal budget or negative gearing? The TREN community wants to hear your story.

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    17 May 2017

    Botched media coverage or Turnbull spin?; negative gearing in federal budget

    Image 1: Sydney Morning Herald website 

    Now that the fine print of the Turnbull-Morrison federal budget has been digested, the real extent of the damage likely to impact property investors can be brought to light for full consideration.

    Even though the Turnbull government must negotiate the Federal Budget Bill through the Senate, the nominal federal budget measures announced on the 9th May addressing housing affordability also captures negative gearing to produce cost savings in the budget,  and likely, the beginning of massive reform of the taxation system.

    The Australian Institute of Company Directors (AICD) said; "negative gearing has lead to ineffective tax outcomes and, in part, distortions in the housing market. The AICD also went on to claim that negative gearing encourages investment in relatively unproductive assets, such as existing residential property. Negative gearing should be reformed so that it applies only to productive assets", (Business Insider, 4th April 2017)

    These measures will hit property investors in ways that will be more detrimental than the anticipated losses of the main housing affordability packages announced, as reported by TREN in Turnbull Federal Budget could wipe out Townsville property owner.

    In addition to the aim of government cost savings, this budget was a typical Turnbull-Morrison smoke and mirrors announcement, just like the federal funding announced for the North Queensland stadium, Townsville sold out by Turnbull smart city deal.

    Instead of coming clean on the reality of the productivity savings for business and government through an innovation program in the detail of the smart "city deal" in Townsville, its purposeful dual announcement focused on the alluring message of more federal money for infrastructure.

    As predictable as ever, the mainstream media headlining the Turnbulll message that "negative gearing is untouched" leading up to the budget, was reported as "fake news".

    The Sydney Morning Herald was embarrassed and discredited and have since completely removed the article from their website, as shown in Image 1 above.

    The Turnbull brand of politics and his business-like ethics to win at all costs brings into perspective the Morrison federal budget that its principal aim is to capture an overwhelming number of voters susceptible to "click bait" marketing, deceiving the public.

    Directing the social media spin towards the naive "bleeding hearts", green and traditional left-wing labor constituency are child's play in the contemporary technology age.

    After all, Turnbull is ambitious and conscious of colonial history. He admires the greatness of that era and is hungry to be remembered by the people and historians as a great Prime Minister, etching his place on the monuments of Westminster square along with Winston Churchill, Gandi and Abraham Lincoln. While Morrison wants the prime ministership handed down to him in traditional succession.

    Holding onto power is what this budget says more about Turnbull's legacy than the dreams and hard work of risk-taking investors and small business owners, who have been the backbone of Australia's economy for multiple decades like the venture pioneers before them.

    On one hand the AICD encourages the abolishment of negative gearing all together because it allegedly supports unproductive housing assets, yet on the other hand, it demands lower company taxes, higher GST and personal tax. Nearly 80% of businesses fail in their first 3 years of start up rendering a substantial burden on the economy, taxation revenues and insurance premiums.

    Either the Turnbull-Morrison government leaked and mislead the media leading up to the budget announcement on May 9th, or the blatant inaccuracies in the mainstream news reporting has shone a bright light on the "fake news" phenomenon of the post-Howard and Bush era of distrust and now the launch of the digital revolution.

    TREN has compiled examples of the mainstream media who reported that negative gearing has not been touched in this budget. This news content is consumed, believed and in many cases decisions made by ordinary Australians based on the twisted reality of profit-oriented media conglomerates, or left-wing social science campaigners such as Crikey, Get Up and the New Daily to name a few.

    No doubt Turnbull is knowledgeable of the fact the majority of people are watching the mainstream media, especially engaged investors, home buyers, and renters. The massive increase in the number of people that get their news from social media has become a cultural characteristic of modern times where the "quick bite" headline is all that matters.

    To start with, the article by the Sydney Morning Herald (SMH) that reported "Negative gearing to remain untouched", prompted an embarrassing retraction in light of the real truth about negative gearing in this budget.

    "Sorry this page could not be found (404 error) displayed in Image 1 above is what is displayed for its readers on their website. However, this article in Image 2 shows the subliminal caption of the negative gearing untouched message. 

    Image 2: Sydney Morning Herald website

    Perhaps one mainstream media outlet getting it wrong is forgivable, and maybe two, but to see multiple mainstream media outlets reporting that negative gearing has not been effected in this federal budget rings alarms bells.

    How could the media get this reporting so wrong?

    The integrity and credibility of journalism and editorial oversight in Australia and across the world is manipulated both by governments and media outlets pushing a social agenda. Unfortunately, the mainstream media has botched the reporting of this federal budget.

    Or does it provide answers more so about the Turnbull brand and how politics and Australian interests have become a social sideshow across the world, congruent with the material influence of United States politics?

    From these examples, the reader can draw their own conclusions about it being about a simple consumer choice, or whether it is a broader conclusion about the health and wellbeing of Australia's liberal democracy, a democracy built on courage, freedom, mateship and hardwork.

    Some liberal commentators argue that courage, freedom, mateship and hard work is not just under threat but these values have been eroded and denigrated to the point that the very institutions that have helped our democracy function during peace time, promoting opportunities and keeping the people safe and secure have lost their integrity and real meaning. 

    The federal government, few educated professionals, and some of the national mainstream media institutions have got it wrong this time.

    Below are examples of the misreporting or "fake news".

    Image 3: ABC News website

    Image 4: The Daily Telegraph website

    Image 5: News Ltd website

    Image 6: The Guardian website

    Image 7: The New Daily website

    Considering the fact these headlines and wrap ups occurred prior to the actual budget announcement, and knowing that politicians seek to control the public message to maintain momentum in the delivery of key policies and election cycles, the likelihood is that the Turnbull government and their "spin doctors" set up the media.

    The following media outlets even reported negative gearing would be untouched on the day of the budget or after the budget papers were released to the media, which suggests poor journalism or a blatant use of "fake news" to push a social agenda.

    Image 8: Crikey website

    The property owners and investors of Townsville North Queensland have been left with more questions than answers from this federal budget.

    With this fresh analysis undertaken by TREN, the property owners and stakeholders of Townsville North Queensland can forge a conclusive understanding of the impact of the federal budget on local real estate investors and owner-occupiers. 

    Do you have an opinion about the federal budget or negative gearing? The TREN community wants to hear your story.

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