'Keep your kids out...abuse will offend" - Land owner red tape, white papers and green banners put Townsville economy "at risk"

Image: Sign erected in Harvey Range area in Charters Towers 

Lay of the Land

Rural land owners remain uncooperative and the federal government’s innovation policy being deployed as part of the Townsville City Deal is still immature and conservative in its industrial scope, while the Green minority fundamentalist movement is seeking the destruction of capitalism and carbon-based industries in Townsville North Queensland.

Townsville North Queensland is having to battle tooth and nail to realise the ambitious goal of becoming “the place to invest” in Queensland.

As the climate change union and socialist green power converge in coalition to fight the existing establishments of political power, Townsville Mayor Cr. Jenny Hill is saying Townsville is ‘open for business.’

But in Townsville, the “guard dogs and the galahs” are bailing up the postman at the city gates and the farmers in Charter Towers are warning parents with kids “keep out” or “my abuse could offend”.

Nevertheless, the message of hope is getting through; causing business confidence to increase and the predicted property spruikers to bait the hook.

The early adopters are recruiting staff as job advertisements have jumped by 48% on latest reports.

Still, the materials of industry are being challenged at the producers’ gate while the fruit of Northern Australia’s natural resources are again being abandoned in a protracted climate change storm.

But the questions on many property investors lips are directed towards the uncertainties. And the biggest threat to Townsville sustained property growth is this – Is the activist’s actions against industry seasonal or is it the new universal state of doing business in North Queensland?

The minority fundamentalists’ actions could strike a gaping wound however to the faculties of hope, desire and goodwill in the eyes of the Adani Carmichael coal mine, Magnus Resources Battery Gigafactory, and the Singapore Army training area, all of which are depending on billions in capital backing and land supply.

With respect to the largest industrial projects, what could Townsville be risking in economic terms?

These three projects alone are the largest private and non-government investments amongst many investments occurring in North Queensland. Townsville residents are overwhelmingly positive about the impact. But the go-ahead of part or all of the projects is subject to fringe groups individual rights, extreme ideology and the political agenda of disruptive alliances.

Scope of projects

The industries being touted as the next golden age for industry and economics in Townsville are major contributors to the expected drive for population growth over 200,000 in the next few years.

Multiple billions of dollars in defense training, mining and manufacturing contracts make the stakes for the economy, political leadership and industry very high indeed. The collective investment by these companies is over $25 billion with a potential life span of over 50 years.

Adani Carmichael coal mine

The Adani project is expected to bring into the Queensland economy $16.5 billion for the coal mine and $2 billion for the rail line construction to connect the mine from the Galilee Basin to Abbott Point near Bowen, generating an estimated 10,000 jobs over the life of the mine.

Adani says the jobs will be 4000 to build the mine, 3000 to build the rail line while 1400 are expected to work in the mine on an ongoing basis.

The Australian company headquarters has already been announced in the Telstra building in Townsville. The company has already placed advertisements calling for jobs for the Townsville office. The estimated number of jobs Adani proposes to employee in the Townsville office are approximately 500 in total.

Initially, 200 jobs are being created. Jobs have also been advertised in Rockhampton, at the mine site and Abbott Point port at Bowen. Senior investment jobs have been called in Brisbane, Sydney, and Melbourne. The Townsville office will accommodate the remote operations centre as new remote controlled driverless machinery is expected to be used at the mine site.

Adani has already invested $3.3 billion in purchasing the Abbott Point Port. AECOM will employee 70 staff in Townsville to carry out surveying and design of the rail line. The port is located a short distance north of Bowen in the Whitsundays district.

Downer EDI mining has been awarded the largest contract to build and operate the mine in the Galilee Basin. The Melbourne based mining and infrastructure engineering firm is unlikely to impact on the Townsville economy with the $2 billion construction contract as it has an established organisational base in southern capital cities and central Queensland.

Green groups determined to “blockade” the mine site have written directly to the Managing Director of Downer demanding the withdrawal of the Downer relationship with Adani. The Green group warns Downer the “blockade” action will escalate and target shareholders. “Please choose wisely. The world is watching,” the letter concluded.

The fly-in fly-out hub for the mine is yet to be confirmed. Adani has identified Townsville and Rockhampton as the two options so far. With the construction of the mine needing 4000 jobs, it is anticipated that both cities including Mackay will be identified as fly-in fly-out hubs for the sheer volume of people and goods to be transported.

As the mine moves into an operational phase, the fly-in fly-out impact is expected to reduce and one location could be announced as the preferred site. The selection of the operational transport hub will be essential for the ongoing growth of the Townsville economy.

Construction of the mine and employment of the majority workers will be conducted by Downer based in Melbourne. Therefore, the fly-in fly-out headquarters may not be determined by Adani exclusively.

The Indian mining company has placed a loan application for the construction of the rail line with the Northern Australia Infrastructure Fund for $1 billion. The approval of this loan is yet be finalised.

Other critical funding has not been achieved by Adani. The construction of the mine is unlikely to commence for another 5 years, a major projects pipeline report from BIS Oxford Economics has forecast.

Singapore Army Training Initiative

The Singapore Army Training Initiative is expected to generate $2.2 billion of economic impact in Queensland over 25 years.

A KPMG report identified that $36.2 million will go into the Townsville economy per year after the construction is completed. The report also estimated that $143 million will impact the Townsville economy during the first 7 years of construction.

The construction phase is due to begin in 2019 and finish in 2026 at which time the Singapore military will begin training exercises for the next 25 years.

However, the 23 land owners around the existing Australian Army High Range field training area are yet to negotiate a deal with defence. The economic impact to Townsville will reduce and even diminish to negligible benefits altogether if the Singapore Army is forced to move to another region.

Rockhampton is a competitive option as the Singapore military has based its air force for the past 25 years. Also, if the Shoalwater Bay training area is where defence can secure existing Commonwealth land, the Rockhampton region is likely to receive the lions share of the $2.2 billion economic impact.

The Singapore Army is expected to rotate 2000 to 4000 troops through the training facility over an 18-week period each year for 25 years.

Battery Gigafactory

Magnus Resources and its consortium of United States investors and the Townsville City Council is initially investing $2 billion in the 15Gwa battery storage manufacturing factory generating 2000 jobs in manufacturing and supporting a further 5000 indirect through the global supply chain.

The company reports also that the initial project is just the beginning of plans for the 400-hectare industrial site at Woodstock to expand their operations. Construction of the factory could begin within the next 12 months with the consortium already signing off on the pre-feasibility study. Production is expected to begin by 2020.

The gigafactory relies on graphite supply from the Magnus Resources mine in Tanzania. However, the government of Tanzania has created uncertainty around the company’s capital raising capacity due to the Tanzanian government unexpectedly raising taxes on the miner.

Magnus Resources shares have dropped by half and were suspended from trading on the Australian stock exchange. The Magnus chairman, Mr. Poullas said the tax change would have no impact on the Townsville project.

At a nearby site, an independent investor is building a 142-megawatt solar power facility consisting of 450,000 solar panels. It is being constructed at the Ross River Solar Farm on a mango plantation north of Townsville.

Other projects

The Townsville economy is expected to benefit from $1.5 billion in infrastructure projects in the next 12 months. The stimulus coming from the stadium project, roads, water, rail and port investments is an approximate $1.2 billion more than last year, a BIS Oxford Economist shared with an RDA and Infrastructure Association forum last week in Townsville.

Threats to progress

Although the infrastructure projects are positive to the local economy, the stimulus is short term. “At the moment there is a lot of politics. The policy environment can be very toxic,” Mr. Adrian Hart said.

As land owners in the Charters Towers area dig their heels in on the Singapore Army training deal and Green groups disrupt the progress and delivery of the Adani project by threatening more “blockade” protest action on the ground, even more court action and a massive international public relations campaign, the world’s largest coal mine project and the battery gigafactory still have serious supply hurdles to cross.

Red tape, white papers and green banners are literally suffocating the life out large scale industries in Townsville North Queensland.

The impact on public opinion in Australia from protest groups is significant enough for the Indian energy company to undertake a $1.4 million advertising campaign to counter the Green activists across Australia.

Further reading:

Treasurer sparks free market concerns over Domain Central $6 million revamp

Townsville sold out by PM Turnbull Smart City Deal

Turnbull Trio Caught with smoking gun – Townsville Smart City Deal’s Catastrophic Legacy

Townsville Smart City Deal Exposed as National Security Threat

Guide to selling a luxury home

Guide to 22 knockout marketing tips to sell a home

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High profile politician buys Townsville shopping complex

Image: Mr Dutton and wife Kirilly Dutton 

Australia's federal Immigration Minister, the Hon. Peter Dutton has purchased a multi-purpose retail, medical, consulting and office space complex in the Edison Plaza shopping centre at Wulguru, just off the Flinders Highway south-west of Townsville.

The suburb has been earmarked by TREN as one of the hotspot locations in Townsville with its proximity to the army base, university, Cluden Park horse racing, commercial retail including Bunnings, Woolworths and variety stores, heavy industry transportation facilities, the Stuart correctional centre and the proposed 25,000 resident development of Elliott Springs.

Image: Edison Plaza Wulguru

The Edison Plaza complex is adjacent to the Wulguru State School. The commercial property is reportedly netting approximately $104,000 per annum with a current vacancy of approximately 10 percent. Fully tenanted, the complex has a nominal net yield of approximately $140,000 per annum.

The property was marketed and sold by Elders commercial agent, Glenn Adair with a 752m2 floor area on nearly 1 acre of land. The Edison Plaza complex includes eleven tenancies with 52 onsite car parks and drive-through access.

Image: Google Maps, Wulguru, Townsville

This investment brings the couple's property portfolio to five properties across Queensland and the Australian Capital Territory with the most audacious being the property at the Gold Coast's Palm Beach for $2.3 million.

Mr Dutton is an ex-police officer mainly working in the drug squad for Queensland Police. He was elected to federal parliament in 2001 as the member for Dickson, a suburb north of Brisbane. He famously unseated then Australian Democrats Leader turned Labour Party member and MP, Cheryl Kernot.

In his maiden speech to parliament, Mr Dutton said; "As a police officer, I have seen the best and the worst that society has to offer. I have seen the wonderful, kind nature of people willing to offer any assistance to those in their worst hour, and I have seen the sickening behaviour displayed by people who, frankly, barely justify their existence in our sometimes over-tolerant society."

Described by a former flatmate that "not everyone loves him, that's for sure". He is also described as being smart, charming, funny, astute, duplicious and articulate.

The Edison Plaza property was a sale by private treaty for $1.1 million and was on the market for nearly a year and a half. Mr Dutton and his wife Kirilly paid $760,000.

The couple has two sons, Tom and Harry, and daughter, Rebecca. The couple reside in their family home at Camp Mountain, north of Brisbane and are not expected to relocate to Townsville, North Queensland.

Townsville Construction Sector in Caretaker Mode

Townsville's land development and construction sector are in a caretaker mode with residential building approvals tracking steadily from a low base of approximately 60 approvals per month. This is still 40 percent less than the 3rd quarter of 2011 at which time nearly 100 approvals per month were being delivered.

The residential building approval matrix is a pertinent chart in assessing the behaviour of not only the land development and construction sector in Townsville, but the projection of accommodation and capital prices downstream.

The incredible statistic in dwelling construction volumes is shown in this Residential Building Approval chart that shows building approvals continued for 4 years to 2015 while the number of people employed had been dropping since the 1st quarter of 2011.

And despite building approvals decreasing through 2015 to 2017, rental vacancy rates remained high around 5-7 percent and holiday occupancy rates remained low at 60 percent.

Bring this observation to the current day. Despite the North Queensland stadium being approved by all levels of government with negligible medium term economic benefit anticipated, the central city and Ross River precinct improvements are set to attract buyer interest as a catalyst for further unit development in the city.

From 2012 to 2016 unit development increased substantially despite the vacancy rate reaching 8-9 percent which is well above viable yield levels. Yet the construction sector will leverage the negligible economic impact from the nationally profiled stadium to seek further building approvals in the City precinct and meet the council's strategic target of having 30,000 residents in this precinct.

However, unit developments in the city precinct have been much higher in the past 5 years than any time in the history of Townsville. Yet the city precinct is still struggling to stimulate improved visitations to Flinders Street and an economic recovery.

This matrix demonstrates the influence of the land development and construction sectors in the Townsville economy because building approvals continued well above sustainable levels during the 2011 to 2015 years.

This may suggest construction approvals are politically-driven or influenced by the civil administration budget instead of open market supply-demand dynamics, which is the key paradigm for investment decision-making. 

"Capital goes where the cash flows". And with respect to Townsville's economy, the historical flow of government funding as Australia's largest garrison city with a high resident turnover has enabled the real estate and property management sector to become the 2nd largest contributor to GDP.

Management and general administration service sectors are leading. Yet again, this is an indication of the government contribution to the overall economy. These service-based sectors have replaced the heavyweight industrial mining and manufacturing sectors as the most relevant contributors to the Townsville economy just 4 years earlier.

The global financial crisis, reduced commodity prices and the subsequent downfall of infrastructure development businesses such as Clive Palmer's nickel refinery and associated local construction and manufacturing businesses have been frustrating for residential and industrial property construction.

But more precisely, the oversupply of accommodation in a receding economy has impacted the investors that are already vested in the market, which serves approximately 45 percent of the total housing stock in the economy.

Government intervention was a significant contributor to the sustained residential property approvals during the 4 year high of the construction sector.

The National Rental Affordability Scheme (NRAS) and military infrastructure spending contributed significant inflows while the private sector economy was losing confidence and laying off workers.

The reserve bank cash rate continued to fall and government grants stimulated continued borrowings at cheaper mortgage costs, stimulating building approvals and putting significant pressure on incumbent investors to reduce rental prices to maintain cash flows.

The evolving dependence of Townsville's economy on political and government funding, and therefore susceptibility to free market conditions in the absence of a globally relevant industrial sector, presents a significant material risk to Townsville's economic recovery. And therefore as a consequence, the capital and yield opportunities for investors in all sectors of the market.

Townsville's industrial economy is tinkering on the edge of mediocre growth and sustained limited opportunity because it is dependent on high commodity prices, low cash rates (driven by capital city prices) and shallow private capital investment in industry infrastructure. Respectively, the first of which has been falling and the cash rate is anticipated to increase, while industry venture capital is nearly non-existent.

The most significant private capital investment market in Townsville is residential real estate. In the absence of this politically driven market, private capital for the industry is unlikely to be directed to start-ups. Instead, new technologies for existing operators could increase, putting, even more, pressure on employment demand as labour is outsourced.

The announcement of the Elliott Springs development in the past week presents a further case study in explaining the duopoly that exists in the underlying drivers of the Townsville economy and how the land development and construction sector operates.

With the City precinct earmarked for 30,000 more residents (not dwellings) and Elliott Springs earmarked for another 20,000, plus additional northern corridor developments happening over the next 5-15 years, one could be wondering where the ongoing jobs are being created. Technology investment around the Internet of Things (IoT) is projecting up to 40 percent of existing jobs will be made redundant.

Construction is a significant political lever in an economy supporting significant government assets and initiatives, and soon to be influenced even further by the strategic military alliance with the Singapore and United States armies.

Unfortunately, the free market drivers impacting investor risk is exposed to orchestrated initiatives between politicians and construction moguls, resulting in the land development and construction industry profiteering and political capital raising at the behest of incumbent investors.

The effects of the land development industry and construction dynamic is a boom and bust cycle the likes of which is being experienced in Townsville now.

While free employment markets dropped over the 4-5 year cycle, land and construction starts continue to increase because the government funding cycle presents a two-speed economy not dissimilar to the mining industry compared to the rest of the economy across Australia in the last decade.

While the abundance of land development across Townsville continues and politicians can leverage the perceived economic stimulation, existing and incumbent investors will have to settle for subdued price growth in capital and accommodation markets for the foreseeable future.

References:

Herron Todd White Property Market Update November 2016

National Australia Bank Online Retail Sales Index June 2016

Australian Treasury Small Business Key Statistics and Analysis Report 2012

Rapid Realty Australia

Townsville NQ Capital Legitimacy Under Threat from North

Townsville's industrial relevance and Capital of North Queensland status is set to experience testing times over the next decade as the average vacancy rate approaches 30 percent in the City.

In contrast, the Cairns economy continues to see positive growth on the back of growing demand for agricultural products and international tourism experiences.

The City's business sector more broadly is seeing mixed activity with business confidence and job advertisements increasing while employment prospects continue to decrease.

Employment in the industrial sector of mining and construction has been impacted more than any other sector of the market.

The industrial sectors' contribution to Townsville's Gross Domestic Product (GDP) has reduced as a proportion to the total economic contribution of the region.

And therefore it begs the question about the relevance and future prospects for the industrial real estate market in Townsville and the City's claim to the symbolic title of being the capital of North Queensland. 

As the Herron Todd White Property Update for November 2016 reports, the job advertisements and business confidence is showing positive indications. But the all important unemployment rate is still unfavourable at 12 percent.

The actual number of people employed is the most telling economic indicator. On this measure, the trend since early 2011 has continued on negative news of approximately 25,000 workers losing their jobs to November 2016. This has been six years of sustained contraction in labour force wages.

Apart from mining exploration, extraction, processing and the commodity export supply chain, and various light industrial operations, Townsville's industrial and commercial sector has struggled to grow capacity as construction, mining and manufacturing GDP has reduced.

Technology is changing the supply chain's demand for labour and bringing unprecedented transparency on uncompetitive goods and services. This is impacting global industrials like never before. And this too will impact this sector of the Townsville market heavily.

Yet it's the industrial sector and the collaboration with landlords and tenants that will be critical in the next phase of Townsville's industrial relevance because innovation will enable existing products to develop and continue to find profitable markets, while invention will bring increased capacity potential and therefore more capability that will impact employment and GDP overall.

Cairns to the North of Townsville are competing for population and profits growth. Its leaders and commentators makes no bones about that.

Its robust international tourism and goods supply chain readily accessible to Asian markets, solid growth in property values, and a willingness to talk down Townsville's appeal at every opportunity, makes for challenging times for Townsville's property market and legitimacy as the capital of North Queensland.

References:

Herron Todd White Property Market Update November 2016

National Australia Bank Online Retail Sales Index June 2016

Australian Treasury Small Business Key Statistics and Analysis Report 2012

Rapid Realty Australia

Two Airports Call for Townsville; Conflict of National Security for Existing Air Transport Facility

Townsville's real estate industry is an instrument of calibration and diagnostics for the broader economy.

So the current limitations placed on Townsville's most strategic economic asset being controlled by national security interests or constrained by federal budget priorities is a subject worthy of further investigation and reporting in this article because of the impact on property and investment interests in the City.

The real estate industry is one of the most critical arteries that carries the economic life blood of capital and cash flow to the businesses and employees of the City. In fact the real estate, rentals and hiring sector is the highest contributor to the Gross Regional Product (GRP) in the Townsville economy.

As proposed by the Townsville Real Estate Blog (TREB), facilities development will be critical to achieve immediate economic stimulation and sustainable development for the City over the next decade.

The rejection of Townsville's bid for direct international air traffic carrying passengers and goods draws attention to a potential conflict of interest between border protection priorities and Townsville's business and property interests.

Conflicts of interest or fragmented decision making posses a direct threat to the short term creation of jobs and long term growth plans for the City. The security and commercial interests of Townsville's garrison city raises serious questions for town planners and political leaders.

The bid by a fledgling group of local private investors to buy the lease rights to the Port of Townsville under a State government initiative to reduce government debt is an example of the depth of feelings in the community to control such a regionally strategic asset.

As this strategic shipping facility shares parallel commercial and military functions like the Townsville Airport, it too is most likely to have similar uncertainties for investors that are inherent where ring fencing of government and national security interests is a punch line in today's environment of intense governance policies.

For decades the federal government's military and security assets in the garrison City has been attributed to Townsville's reputation for growth, stability and relative certainty. Achieving the status of being the Capital of North Queensland and a legacy of strong population and economic growth over the past 20 years are proud credits for a relatively conservative community in regional Australia.

The findings to the Taskforce on the Development of Northern Australia did no feature Townsville as some people may have expected. The focus of infrastructure and centres of business development instead is directed to a greenfield site in the Northern region of Western Australia.

One of the findings in the Green Paper, Joint Submission to the Northern Australia Taskforce, identified that "Governance arrangements across the various jurisdictions and regions of northern Australia are fragmented and require streamlining and/or collaboration. Land and water use arrangements are crucial examples of these governance challenges which are central to future development opportunities.", the Green Paper considered.

The Green Paper also identified that "Stagnation can only be overcome with new investment targeted at new markets and offering new experiences. Several proposed integrated resorts in the Cairns region (Aquis Resort and Ela Bay Resort) exemplify the type of large-scale investment that may be required to reignite tourist demand.

Townsville Enterprise claimed to be stepping up their lobbying efforts to secure international air services following the Australian Customs and Border Protection Service's decision to reject the proposal by Air Asia to launch direct services from Townsville to Denpasar.

The decision by Customs and Border Protection Services has suggested the rejection of the international carriers proposal was attributed to resourcing of security processing equipment and personnel.

One has to question the viability of strategic national security assets and commercial private sector assets operating in parallel on military controlled land and government controlled transport infrastructure such as the Townsville Airport, and to a less extent, the Port of Townsville.

Tourism has an economic impact less than real estate, rentals and hiring in Townsville. The Australian Customs and Border Protection Service's decision to reject direct services from Townsville to Bali is a massive limitation to the City's ambitions to develop a broad-based economy. Such a decision has heightened sensitivity in a region where unemployment is sitting at record levels, and tourism is a critical pillar in maintaining a comfortable balance for an economy retracting after a recent downturn in the mining industry.

The military priority of the Townsville Airport is a menace to sustainable economic development. For the people of Townsville, leveraging the airport is a passionate interest to facilitate international trade directly into the Capital of North Queensland, especially for the largest City identified in the federally proposed Northern Development zone.

Could the growth of Townsville's air transport economy mean that commercial and military traffic have access to separate dedicated facilities? Does Townsville now plan for an international airport to the west of the City?

During World War II, Townsville accommodated multiple airfields. One of which is still operational today used for amateur aviators near Woodstock only 30 minutes West of the City.

The Australian Defense Force has budgeted for an extension to the Townsville runway to accommodate larger logistic aircraft being added to the Royal Australian Air Force (RAAF) fleet. The extension of the runway could also accommodate larger international aircraft. As the runway extension is driven by RAAF imperatives, consideration for parallel commercial traffic could not be confirmed by local RAAF Command.

Townsville Enterprise confirmed a strong interest by international tourism operators for direct services between Townsville and Bali. Townsville Enterprise Acting CEO said; "This is an issue affecting Townsville North Queensland that will continue to undermine attempts to properly develop the city and achieve the economic potential of Northern Australia. International air services are critical in connecting the north of Australia to a global market which is vital to the growth of the region.

The Acting CEO continued to report that "Townsville residents remain disadvantaged due to the Federal Government’s policy regime that proposes significant additional costs for passengers using Townsville International Airport, which is the 11th busiest airport in the Nation. No such charge is imposed on passengers using any capital city international airport in Australia."

"Townsville Enterprise, Townsville City Council and the Townsville Chamber of Commerce have been leading a united charge on this issue over the past few months. The issue was at the centre of a number of Ministerial meetings in Canberra last month and correspondence is ongoing.", the Acting CEO commented.

In the context of heightened sensitivity for national security, a strengthening global free trade framework with developing countries, and a local economy entrenched with tourism services, could these conflicting elements mean a extended period of frustration and struggle for a clear passage for international traveller markets into the Townsville region?

This potential "Cold War" between federally controlled security assets and local commercial tourism and property investment interests could be the catalyst for broader debate about a second airport with international specifications for the Townsville region.

Townsville's economic ambitions are dependant on the direct link to international trade through increasing air traffic, shipping and ecommerce activity.

A federal government centred over 2000 kilometres from Townsville facilitating a conflict of interest contrary to the interests of the people of Australia's 2nd largest regional economy could again be called to action at the next ballot box should the community find the observations of TREB worthy of further comments and debate.

References:

Townsville Real Estate Blog
Townsville Enterprise website
Townsville Bulletin

Townsville Citizens Under In-Direct Fire from Residential Development Moguls

Townsville property moguls and inept Councillors (including local State representatives) are
pushing Townsville residential property income into decline, while a higher cost base is impacting on the standard of living for local citizens in comparison to the prevailing Gross Regional Product (GRP) in the overall economy.

"Stuck between the devil and the coral sea", governments and high-end property moguls are unleashing a volley of crazy capital stimulation from the sea-side inner-city unit developments to the outer-urban residential developments.

Meanwhile, second-generation incumbent inner-city unit and urban housing owners are feeling the greatest impact with many investors being pushed to the brink with lower than forecast profit margins.

Factor in acquisition capital, high vacancies and reduced cash flows, and probable losses on distressed sales and mortgagee in possession scenarios have increased substantially in the Townsville region in the past 12 months.

Bungled government tax reform, soliciting middle-class income capital for social housing policy, misaligned climate change policy and an over-supply of new construction housing have by and large triggered structural changes in Townsville's tropical and regional economy.

While the real estate and rentals industry are the highest contributors in percentage terms to Townsville's GRP, it is a sector under enormous pressure from which some businesses and investors have been brought to their knees.

The ABC's David Chen reports that "new figures show Townsville continues to have one of the highest rates of personal insolvencies in the country. Data released by the Financial Security Authority shows for the September quarter, there were 76 personal insolvencies in Townsville. Financial counsellor Saskia ten Dam from the Townsville Community Legal Service said the poor local economy, high rents and increased costs of living were putting pressure on residents. "Well I would say a minimum of one a week of people who [are] walking away from mortgages, surrendering their homes," she said.

Local economist Mr Dwyer said; homeowners in some suburbs may be disproportionately affected by the economic downturn. “... I know from Australian Bureau of Statistics data that there are suburbs really battling substantially higher levels of unemployment compared to the rest of the city,” he said. (Townsville Bulletin, 20 Nov 14)

Townsville needs visionary leadership! Leadership with a desirable political influence in Brisbane and Canberra and connections to new funding and capital supply. Links to new capital raising methods such as 'crowd-funding' initiatives, strategic alliances, joint ventures and networking with large corporations, institutions and consortium.

Spawning new and niche products and services, coupled with incentives for corporations to develop and foster skills and jobs in new and emerging technologies, must be high priorities for government and corporate leaders.

In the face of influential leaders that have built their reputation and wealth primarily on the back of Townsville's traditional real estate developments, enabling new leaders that are connected to the global capital, new age technology and infrastructure is seemingly an insurmountable task. But the Townsville economy, its people and its leaders must adapt or fall behind an increasingly competitive and ascending middle class in Australasia.

Still, traditional skills and networks are essential to attracting secured capital, while engineering and construction expertise is needed to drive facilities developments such as a base load power plant, events and people facilities or government-sponsored infrastructure projects.

Decisions by State and Local Governments to release more residential land while seeking inner-city investment stimulation and more residential unit development is a crazy policy. Especially at a time in our economic and political cycles that Townsville is not winning a fair share of government funding based on the ratio of economic contribution the region provides to the State.

An example of crazy planning is the government sector funding of a combined federal military and private sector housing project at the new Blue Wattle community, a massive residential land release development covering 1500 hectares some 20 kilometres from the CBD. Less than 40% of the land will be occupied by defence personnel.

The non-direct investors, those living and working outside the City's trade zone, investing in Townsville is likely to continue with long term benefits, as direct investors have benefited from the growth of Townsville in the past decade.

But the local investor, many of whom are mature citizens, are needing immediate real economic stimulation from construction in sustainable industries and future growth technologies and trade networks. The City is set to continue suffering in the short term otherwise. Revenues and profits must improve to support personal lifestyles and local economic dynamics for small business and large enterprise in order for the standard of living are maintained based on previous generations.

Governments and corporate leaders must rapidly arrest the losses local investors and citizens are experiencing. The devil in the over-supply of residential property will haunt the citizens of Townsville for many months and years to come.

Townsville's productivity has been relatively stable while the citizens, investors and businesses are reaping less personal income from their labour and profits. Businesses and investors are being forced to reduce costs in order to maintain personal and corporate income, impacting substantially on the quality of life for the people of the City.

From an ear to the ground perspective, Townsville Real Estate Blog has actively reported on the general sentiment in the real estate economy and forecast short to medium-term supply and demand activity accurately. These forecasts have served as lead indicators for not only the real estate sector but the broader Townsville economy.

Rising Property Prices Stumble
http://townsvillerealestate.blogspot.com.au/2014/09/rising-property-prices-stumble-snapshot.html

Real Estate and Rental Industry Highest Contributor to GRP
http://townsvillerealestate.blogspot.com.au/2014/09/castle-rocks-real-estate-and-rentals.html

Boom or Bust? Convergence of Factors Impacting Townsville Real Estate market
http://townsvillerealestate.blogspot.com.au/2014/08/boom-or-bust-convergence-of-factors.html

The extent and depth of the cutbacks occurring in the mining supply chain reducing fly in and fly out employment, subsequent reduction in manufacturing outputs, climate risk insurers driving strata unit and housing costs through the roof, while increased energy prices impacted directly on big industry and small businesses...this translated directly to lower living standards for property exposed citizens.

But the most significant risk element for property investors, apart from unemployment moving forward, is the supply of land assets by developer networks connected to large land release projects.

In a climate of conservative government policy, with construction stimulation a pillar of the State government election platform, combined with a local enterprise and political leadership culture prejudiced in the belief that more residential development means robust economic stimulation, the people of Townsville are being shackled with a tendency for misdirected economic stimulation costing its citizens dearly.

"BATTLERS struggling to pay their rates on time have handed Townsville City Council a $490,000 windfall"

Council figures show 7,785 homeowners and businesses failed to pay their rates on time, up from 7,111 at the same time last year. The financial troubles of those homeowners and business are expected to produce a $490,000 windfall for the council, as the 15 per cent discount on rates no longer applies if payment is late. (Townsville Bulletin, 20 Nov 14)

A change of planning focus and strategic direction is needed urgently, especially as the newly agreed Australia and China Free Trade Agreement rolls into operation in 2015.

Anticipating structural changes in the economic mix, entrepreneurship must become the new apprenticeship and trainee initiative promoted by governments.

The Galilee Basin rail corridor, port expansions in Townsville and Abbott Point, new mining ventures including renewable energy farms, and relocation of government administration to the Capital of North Queensland are critical projects for the City and region.

Traditional jobs are estimated to half by 2035. Progressive solutions such as community hubs for emerging e-commerce, home-based small business networking and building technology enterprises around online retail and content curation services and infrastructure is the future. With base load power on our doorstep, heavy industry and manufacturing could better compete with trading partners.

Once construction is completed, the economic stimulation reduces substantially. Meanwhile more residential accommodation is presented as supply to the property market. This is more competition for existing house and apartment assets impacting the ratepayers of the City.

Paradoxically the real victims of the over-supply of land and residential developments are also expected to shoulder the costs of infrastructure development and maintenance for next generation investors.

These investors then fall victim to the paradoxical cycle unless the political, corporate and community leaders drive a different agenda for the benefit of our property investor citizens, ratepayers contributing over 40% of the revenue to Townsville City Council coffers.

Either tone down the residential construction stimulation or ramp up the infrastructure, facilities or investment in entrepreneurs to ensure the demand for residential accommodation is sustainable for the majority of incumbent citizens of Townsville and the developer moguls of the City.

References:

Townsville Real Estate Blog
Core Logic RP Data Reports
Townsville Bulletin
ABC News
Colin Dwyer, Local Economist