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Being clear-headed about what the region’s economic possibilities are depends on our ability to learn from the evidence. And, as usual, when you start scratching the surface of things, it becomes clear very quickly that things aren’t always what they seem.
Keeping mining in perspective
For a city-region that expends so much energy talking about mining, you’d be surprised to find that on all key measures, mining sits in the bottom 4 of 19 industries in terms of its contribution to Townsville North Queensland’s economic situation. According to Townsville Enterprise’s own data resource (provided by independent economists IMPLAN), which I accessed mid February:
• Mining employed directly 1,103 people in Townsville North Queensland, ranking it 18th out of 19, with only 60 more employees than Arts & Recreation Services;
• Mining contributed $828.878M to regional output, or 2.87%. On this measure it ranked 14th;
• On Wages and Salaries, mining contributed $115.772M or 1.6% of the total. On per capita terms, it averaged $104,961 – very high in comparison; and
• In terms of value added, mining ranked 16th contributing $309.381M or 2.36%.
None of this is to say that mining is not important. This is a meaningless observation because regional economies are interconnected wholes. Indeed, in employment terms, its contribution a mere five years ago was more than twice it is today; but a few years before that, it was much as it is now.
What it does say, however, is that most other parts of the regional economic fabric make far more significant contributions to material wellbeing than does the mining sector. There is a clear implication here: revitalisation of mining employment in the region on the back of the recent rebound in commodity prices will not be an economic saviour. The amount of effort that is poured into advocating on behalf of the region’s extractive industries is way out of proportion with that sector’s relative contribution.
The point isn’t to get into some simplistic debate about whether mining ‘ought’ or ‘ought not’. It’s to keep things in perspective, and commit proportionate effort when the case merits it.
An unsung hero
For a city-region that claims tourism isn’t its thing, the tourism sector is surely the unsung hero of the Townsville North Queensland economy. That’s not to say that it’s all rosy; it’s not. But, despite a range of indicators pointing to sector fragility, that it continues to punch above its weight surely points to something to work on, rather than treat as something of a “side show”.
The same data crunchers, presented via the Townsville Enterprise website, provide some insight into the relative contribution of the tourism industry to the region’s economy. This is what IMPLAN’s data tells us:
• Tourism employs directly 5,595 people, ranking it 7th out of 21 industries. Its direct contribution to local jobs is 5-times that of the mining sector; As for contribution to regional output, tourism’s is in the order of $1,034.171M or 3.58%. It ranks 9th on this measure; Tourism contributes $283.167M in wages and salaries, ranking it 9th again. However, it is important to note that its average per capita wage is $50,610, less than half the per capita average wage of the mining sector; and
• In terms of value add, tourism contributes $492.251M (12th) or 3.75%.
Townsville North Queensland’s tourism sector has achieved mid-table rankings on key economic measures despite missing out on the boom in tourism visitation that is China. Recent visitation survey data estimates point to a growth in both international and domestic visitations (for holidays, visiting friends and family and for business) since early 2015. If this information is correct, then that is surely to be acknowledged and celebrated.
There are always issues with national sample data being extrapolated into small regional contexts. Chatting to the guys at IMPLAN at the national regional development conference in Canberra last October saw some “data war stories” being exchanged, where if the survey estimates were to be believed, some smaller areas would have had tourism impacts that were substantially greater than the value of the entire economy in that region. So, some caution is warranted.
There are other data sources that can help us get a richer sense of how the tourism sector is going. Here, I am referring to data on accommodation supply and passenger movements at the Townsville airport.
Over the past five years, we have seen a decline in Townsville of the total number of room nights available, a fall in hotel/motel/serviced apartment occupancy rates, and – here’s the killer – decline in Revenues per Available Room (RevPAR). RevPAR is a key industry metric because it goes to the extent to which accommodation providers are making money, or losing money. RevPAR has dropped to levels that see many operators surviving on wafer thin margins, which goes part way to explaining why the number of total room nights available has also fallen. In effect, if operators are losing money, then some will inevitably shut their doors. The growth in Airbnb is also a factor to consider here.
The Townsville Airport provides some statistics on passenger numbers and seats or capacity. The available data presents monthly cumulative totals for this current financial year (2016/17) compared to the situation for the last financial year (2015/16). The data shows that:
• The total number of cumulative seats for July-November 2016 is 2.2% down against the comparable period in the previous financial year; and
• Total passenger numbers for the same period was down 1.3%.
The passenger numbers include international flights, the most obvious addition to the repertoire being Townsville – Denpasar (Bali). Excluding this sector, which by and large takes Townsvilleans to Bali and brings them back, it is conceivable that passenger numbers have taken a dive over the last two years.
Accommodation and airport passenger evidence doesn’t support the rosier picture we get from the visitor survey data. However, that said, there is little reason to doubt that tourism still punches above its weight – and that’s despite having to suffer the ignominy of silly campaigns like last year’s “Alive with Curiosity”, which came on the back of the failed TEL-initiated social media campaign to lure the young Prince Harry.
You can’t win them all, I guess.
So, what have we learned?
None of the above is fake news; nor is it data drawn from some parallel alternative facts universe. The evidence covered above comes from independent sources (e.g. IMPLAN and the ABS) or directly from those organisations that should have accurate information on key parts of their operations (e.g. the Airport).
We’ve learned that tourism’s contribution to the material welfare of the region, measured on four conventional economic dimensions, is more significant than say, that of the mining industry. In employment terms the contribution is 5-times more. In terms of output, tourism’s contribution is 1.24X that of the extractive industries. As for wages and salaries, tourism contributes 2.45X that of mining; and in terms of regional value add, it contributes 60% more than does mining.
That’s just the evidence, folks. No normative conclusions about ‘ought’ or ‘ought not’ need to be drawn directly from any of this.
As an observer, however, it is clear that the extractive industries (and coal in particular) have in recent times become something of an ideological totem. You’re either with them or agin’em. The community is likely to wage out a protracted and divisive battle over the next few years around the question of ‘ought’ and ‘ought not’. Meanwhile, unless we can get our heads around the pressing need for a ‘plan B’, what opportunities there are will be missed.
Expanding the tourism industry has the merit that it is unlikely to be anywhere near as divisive as the future of mining is concerned. It is one where the city-region is actually better at than many in the North would even realise. The evidence shows that there are close to 6,000 people in Townsville North Queensland already directly employed in the sector, which is a strong core of capability and competence.
The worrying sign is that much of the physical infrastructure is poorly utilised. It is run down in some parts, and poorly positioned to meet the needs of the largest growth sector of inbound tourism – the group and independent travellers coming from China.
We need renewed infrastructure to accommodate Chinese travellers. We need more diverse options, in terms of the overall offer, with integrated resorts being top of the list. Such resorts can tap what I’ve previously described as the experiential luxe market, of independent travellers seeking to experience the wonders of Australia’s great outdoors without compromising on the creature comforts of well-funded travel.
We need products that you don’t get on the Gold Coast, Sydney or Melbourne. Replicating a theme park-centric tourism positioning seems pointless, and if you really wanted a Melbourne-style laneway café experience, you’d probably ultimately prefer to do it authentically… in Melbourne.
We need accommodation infrastructure that can house 5,000 to 6,000 visitors from China and Asia generally on any given day across our region. Some of the existing hotel product can go towards this, but much more will be needed. Vertical integration with airlines and tourism operators can also help mitigate risk for investors and deliver a transformation to the region’s economic landscape.
Tourism is an experience-rich industry where ‘high touch’ remains critical to its success. That means that while other sectors rapidly automate, there will in tourism continue to be a significant need for the kinds of services and interactions that only humans can provide.