The Economic News Thread

[stumpjumper]

Thanks, phenom. It was a serious question: 'Can you export 'services' like education which are delivered here?' ?For instance, if an SA company took in cars for painting, or watches for repair, did the work and sent the items away out of the state again, I'd say that the service was exported, but I'm not an economist. I was just wondering if they count the education here of students who will return os as an export.

Back to the present: I hear that John Holland was one of the companies on the receiving end of some of the $260 million or so slush fund that Kevin Foley dished out as grants/gifts/concessions/exemptions/bribes to companies here and overseas to get them to do various things, like establish offices here. In most cases, which companies got the money will not be revealed even under FOI, as the information is 'commercial in confidence'. An insecure, desperate for recognition bloke like Foley is just the man you'd send to do business with a room full of smart guys in suits. In addition, giving Foley a $260 million fund to spend, no questions asked, is a good idea too.

The Shoppies union (the SDA, which governs our fair state) never loses. They've finally agreed after much arm twisting to allow the elected government to sanction more shopping hours over the Christmas break. What's the catch? There will now be penalty rates - up to 2 1/2 times hourly rate, for working on Christmas Eve after 5pm for example. Acting Industrial relations Minister Chloe Fox endorsed the new rates. Fox was unaligned until she was elected to Parliament. In her first few weeks as member for suburban Boothby she was taken on a trip around the world by Shoppies parliamentary boss Michael Atkinson, and Chloe returned from the trip a committed 'Shoppies MP'. Ms Fox holds Boothby by a knife-edge and the support of the Shoppies will be crucial to her re-election.

Finally, there is the ability of cabinet to make grants of cash or goods to MPs. It has now been revealed that last July Cabinet gave Mike Rann a package of transport, administration and security services worth in excess of $100,000 in order to get Rann to resign. This happened without the knowledge of Parliament or scrutiny by anyone including the Public Works Committee etc.

I made some enquiries. There is nothing stopping Cabinet from making any grant of any amount to anyone at any time, with no public or parliamentary knowledge of the fact for 30 years. How many other politicians or anyone for that matter have received cash or services via Cabinet grant in return for taking or not taking some action? Answer (from the Department of Premier and Cabinet): 'That information is not available'. 'What stops Cabinet from handing out bribes?' I asked. 'I can't comment on that,' was the answer. I expected no more.

[phenom]

Hi stumpjumper

Yes, the value of educational services provided to students here is most definitely classified as an export. I think (generally speaking) service exports are largely marked, in Australia at least, by local delivery - particular given the prominence of education and travel in our mix of service exports. Your examples of car painting or watch repair would similar classify as a service export although there are complexities in how certain products or components of them are treated - the ABS uses an internationally consistent measure, which is detailed here http://www.imf.org/external/pubs/ft/bop ... chap10.pdf It's a dense read!

[Will]

From the Advertiser:

SA firms surge in final quarter

by: Cameron England From: The Advertiser February 06, 2012 11:00PM


SOUTH Australian-listed companies added 20 per cent to their value in the final quarter of last year.

The Deloitte South Australian Stock Exchange Index, which takes in the 79 listed SA companies, added 20 per cent to its market capitalisation, compared with the ASX200 adding just 1.2 per cent.

The strong performance pushed the index into the black for the calendar year, adding 17.5 per cent, compared with the broader index's 10.6 per cent decline.

Santos made the largest positive contribution to the index in the last quarter of the year, aided by its takeover of Eastern Star Gas and a good share price performance. In all, Santos contributed an extra $1.54 billion to the index.

Flinders Mines shares jumped 124 per cent, adding $282.3 million in value, following the announcement of a 30c per share, $554 million, takeover bid from Russia's Magnitogorsk Iron and Steel Works.

Beach Energy also performed strongly, adding 14.2 per cent in value following a successful takeover bid for Adelaide Energy and increasing success in its shale gas exploration program.

On an absolute share price basis the best performers were Renaissance Uranium, up 133.3 per cent, Flinders Mines and Earth Heat Resources, up 95 per cent.

The worst on a share price basis were Syngas, down 54.5 per cent and Core Exploration, down 53.6 per cent

[dsriggs]

What crisis?

[Ben]

From Indaily:

Tuesday, 27 March 2012
SA entering 100 year super cycle
Kevin Naughton

SOUTH Australia is entering the start of the “most transformative decade in the State’s history”, says Economic Development Board chairman Raymond Spencer.

Aside from the political rhetoric of mining booms, Spencer went a step further yesterday, declaring the State is “not in a boom – we’re in a 100 year super cycle”.

He was speaking at the Technology and Innovation Review forum at the Intercontinental Hotel – a Committee for Economic Development of Australia (CEDA) event.

A director and chairman of several global corporations, Spencer recently returned to live in Adelaide after 35 years living and working in the US, India and Europe.

He said the Olympic Dam expansion project was the starting point for a major shift in the State’s economy.

“Olympic Dam is one of 30 mining projects in development, adding to the 19 that are in production or construction, which has resulted in an extraordinary growth in the State’s mineral and energy sectors – a veritable mining super cycle,” Spencer told 100 delegates at the forum.

“We’re not in a mining boom – what follows a boom? We’re in a 100 year super cycle.

“We are at a turning point and there are opportunities that we can seize.

“The real opportunity is to use the growth in our natural resources sector and the historical strength of our agricultural sector to drive the wider economy forward by adding value-added industries.

“For businesses to find new markets and grow we need to firstly capitalize on the opportunity and use mining as a platform.

“But we also need to take some steps backwards before we take the long steps forwards.

“This decade will be viewed by the future generations as the most transformative decade in the State’s history.”

Aside from the opportunities of the future, Spencer had major concerns about SA’s current levels of productivity.

“There are many measures of productivity growth. But by any of those measures, Australia’s performance in the last decade has been abysmal.”

Productivity in Australia had grown at half the rate of that in the European manufacturing belt.

“Our labour productivity has gone from 92 per cent of the US equivalent in 1998 to just 84 per cent in 2010,” Spencer said.

“Labour costs in the US and Europe have declined by one per cent per annum while in Australia it’s increased by two per cent per annum.”

Another speaker at the forum, mining services Codan Ltd’s CEO Donald McGurk reflected Spencer’s concern with labour costs and manufacturing productivity when he revealed the company designed its products here, but manufactured them overseas.

“It’s a hybrid manufacturing model that involves making our goods in Asia,” McGurk said.

Playford Capital’s CEO Amanda Heyworth had a different view in her remarks, adding that Australia needed to keep making things so we could survive other economic pressures.

[stumpjumper]

While we wait for the benefits to flow from Olympic Dam/Roxby etc, there are some pretty good stories around.

I've been dealing with Revolution Roofing, a new South Australian company which started up from nothing in 2009, and now has 190 employees, is developing new products and is starting to export.

Btw, thanks for the info on exporting services, phenom. As you say, a dense read, but interesting.

[UrbanSG]

Olympic Dam will start economic boom: BIS
ABC News - Updated April 05, 2012 07:52:12

A private report on future engineering construction in Australia says the Olympic Dam mine expansion project holds the key to transforming South Australia's economic landscape.

The BIS Shrapnel report says rail and road infrastructure works will give a vital boost to the construction sector over the next three years.

BIS Shrapnel senior manager Adrian Hart said the bright outlook for SA was dependent on BHP Billiton deciding to proceed with the Olympic Dam expansion.

"If that gets underway later this year or early next year then we will definitely see some exceptionally strong growth in South Australia, pushing activity in the state to record levels," he said.

"It's a long timeframe [for] the project, it's many billions of dollars and you'll see growth over the next three to four years in terms of activity and then just see activity plateau at a very, very high level."

The planned mining expansion will see activity in SA boom from 2012/13, the report forecasts.

Overall activity in SA is forecast to double between the current financial year and 2014/15, to just under $9 billion.

BIS said a SA mining boom would narrow the gap on the two leading mining states, Western Australia and Queensland.

In a note of warning to all states, Mr Hart said the focus on resources for the mining boom was detracting from investment needed on non-mining infrastructure.

[rev]

Does this mean we are going to become the Saudi Arabia of gas exports?

Shale gas to put South Australia on front foot as global energy superpower

Brad Crouch
May 12, 2012 10:00PM


Moomba oil and gas plant in Cooper Basin, South Australia.

THE biggest oil and gas industry conference in the southern hemisphere will today hear how is going to "play a major role in Australia's emergence as a global energy superpower".

While much of the local focus has been on SA's role as an emerging uranium powerhouse, the four-day Australian Petroleum Production and Exploration Association conference will hear how Australia and SA are set to benefit from predictions global energy demand will increase by a third in the next 25 years.

APPEA chief executive David Byers said SA's Cooper Basin remained Australia's leading onshore conventional petroleum province, and SA was a major producer of oil and conventional gas with Adelaide-based Santos and Beach Energy leading the way.

He said US experiences indicated SA's next big growth story may lie in shale gas.

"As recently as 2006, US natural gas production was in decline but drilling technology advances have allowed US companies to commercialise gas found in deep shales, which has caused the country's gas production to rise sharply," he said.

"Natural gas from shale is now the fastest-growing contributor to total primary energy in the US. Only a few years ago, the US was planning to import gas from other countries but now it is building major liquified natural gas terminals to export its oversupply of shale gas.

"The SA shale industry is still in the early stages of development but many people think the state is very well positioned to capitalise upon its shale gas resources on a large scale."

Mr Byers said the scale of the resource remained largely unknown, though a report for the US Energy Department last year estimated there was 396 trillion cubic feet of recoverable gas in the Cooper Basin - enough gas to power Adelaide for 6600 years.

"Clearly, any commercially viable unconventional gas resources in this state will readily find markets," Mr Byers said.

"SA is clearly set to play a major role in Australia's emergence as a global energy superpower."

APPEA will release the preliminary findings of a Deloitte Access Economics report on the economic impact of the Australian oil and gas industry, which now has $170 billion worth of oil and gas projects currently under construction.

Mr Byers said Australia was on track to unseat Qatar as the world's leading supplier of liquefied natural gas by the end of the decade.

"Australia has three operating LNG projects and another seven LNG projects - worth around $170 billion - currently under construction - the industry is booming throughout Australian," Mr Byers said.

"In just the 12 months four LNG projects have been given the go-ahead representing an investment of more than $90 billion. There are also tens of billions of dollars worth of other Australian LNG projects currently awaiting sanction.

"Australia's annual LNG export capacity is set to quadruple to 80 million tonnes by the second half of this decade."

Around 3000 delegates from 35 nations with 150 exhibitors will attend the conference; speakers include Saudi Arabia Minister of Petroleum and Mineral Affairs Ali Al-Naimi, political leaders such as Premier Jay Weatherill and Federal Resources Minister Martin Ferguson and senior executives from major energy companies such as Santos, Woodside, BHP, Total, Chevron, ExxonMobil and Origin Energy.

The Phoenix Society is the conference's chosen charity, receiving a portion of the registration fees.

http://www.adelaidenow.com.au/business/ ... 6353827258

[Wayno]

yep huge potential but a significant challenge - our Cooper Basin shale reserves are 800+ km from labour & supplies. The ramp up cost will be huge compared to many other locations worldwide. For example America's shale gas reserves are adjacent to legacy oil fields - infrastructure abounds with plenty of shale gas equipment. Australia's existing csg reserves (e.g. Bowen & Surat Basins) are close to the coast/ports and again adjacent to other mining projects/infrastructure.

Maybe i'm being overly pessimistic - Definitely worth watching this space...

[AG]

I'm currently in the regional city of Gladstone in Queensland where there are 3 LNG trains supporting the coal seam gas industry all under construction at the moment. Gladstone is a perfect example of the sort of boom that projects like these can provide to the local economy - there's some 18000 jobs being created over the next few years around Gladstone, and between now and 2030 the regional population is predicted to double from 60000 to nearly 120000 people.

There's challenges alright, Gladstone is struggling to get basic infrastructure services up to speed (health, schools and roads). Because of the population boom, rents have doubled in 2 years and 4 of the 10 suburbs with the fastest growing median house price last year in Australia were in Gladstone, which has resulted in people being pushed out to Rockhampton and Bundaberg.

A project like this in SA would be challenging, since the pipelines providing the gas to the export facilities on the coast would extend a long way - it is certainly possible though. To provide the processing and export facilities to a place like Whyalla would do wonders for the local economy, but also potentially create a fair bit of community division.

[rev]

Dramatic rise in oil, gas exploration

Chief Business Reporter Cameron England
May 14, 2012 11:00PM

There are concerns that seismic exploration will adversely affect whales. Picture: Andrew Brooks

THE area in SA waters open to exploration by oil companies has almost tripled, potentially unlocking hundreds of millions of investment dollars.

There are concerns, however, that the new releases could pose a risk to the state's rock lobster fishery near Robe and pose an ongoing risk to whales in the Great Australian Bight.

The Federal Government yesterday released four new areas for competitive tender - three covering 49,527sq km in the Bight and one covering 14,147sq km, just 5.6km off the southern coast near Robe.

The release will increase massively the area that can be explored in SA waters, which previously stood at 33,500sq km.

BP is spending about $600 million doing seismic, or sound-based exploration in the Bight, with a follow-up drilling campaign worth at least a further $800 million to start in late 2014.

The company has a commitment to drill at least four wells, in waters ranging in depth from 1000m to 2500m.

The three new exploration areas in the Bight surround BP's current project.

Another company, Bight Petroleum, is also planning to explore in the area.

Managing director of BP Developments Australia Phil Home said yesterday the exploration results the company had received so far were "very promising".

"The initial look very much confirms the view we have of the basin, so it's very promising in that regard," he said, speaking at the Australia Petroleum Production and Exploration Association conference yesterday.

"We certainly expect to start the environmental approval process later this year (for the drilling program)".

Mr Home said the company would consider bidding on the new areas that had been opened up next to its project.

There are concerns the current exploration, and possible future work, could endanger whales and dolphins in the Bight and threaten the state's rock lobster industry.

SA Rock Lobster Advisory Council executive officer Justin Phillips said adequate research had not been done to assess the possible impact on the $82 million a year industry.

Mr Phillips said his group was not consulted about the new exploration areas.

"From talking to fishermen we do know that some seismic surveying was actually taking place down there around January and February this year," he said.

"I don't think there's any definitive answer on what the effect of that work will be on the southern rock lobster as a species.

"There are some proposals to quantify what the impacts are on a range of species and I hope the rock lobster will be one of those.

"Given the level of uncertainty it's fair to say that we're concerned about it."

Mr Phillips said the lobster fishery extended well past the 5.6km zone where the exploration area starts.

Pew Environment Group deputy director Michelle Grady said the effect of seismic exploration on sea life was not well researched but anecdotal evidence indicated that it led to decreased fish catches.

Ms Grady said her group also had concerns about the effect on whales, which used sound to communicate.

While BP stopped exploration if whales were sighted in the exploration area, work continued at night rendering such strategies useless, Ms Grady said.

"Overall our concern is that there's been no public consultation at all. The people of South Australia have had no say about these areas being opened up," she said.

"While the evidence is still unclear it's increasingly thought that fish are affected. If you talk to fishers, anecdotally when seismic boats are in the area fishing is much worse."

Ms Grady said further stages of exploration, such as drilling, also came with the threat of oil spills, which could be catastrophic.

Mr Home said BP had spotted pods or single whales on 30 occasions, and had shut down its activities four times during its six-month exploration program, as required under its current environmental approval.

Bids on the new areas are due in by November 8.

Resources and Energy Minister Martin Ferguson was approached yesterday afternoon for comment on why the Robe community was not consulted prior to the release, but did not respond before press time.

Earlier in the day, he said the exploration release would help maintain energy security and economic growth in Australia's petroleum sector.

"The available acreage is supported by data and analysis by Geoscience Australia and all exploration and development activities will be subject to comprehensive assessment," he said.

Twenty-seven new offshore petroleum acreages across nine basins were released yesterday.

http://www.adelaidenow.com.au/business/ ... 6355275303

[Wayno]

Did anyone else see the 'hotel occupancy rate' article in The Australian today? it showed average occupancy rates (percentages) for each Australian capital city. Perth was top (95+%), then Sydney & Melbourne (a bit lower) and Adelaide (high 80s if i remember rightly). Canberra was next after Adelaide (low 80s). Can't remember the rest.

The point being that NEW hotels are economically justified when average occupancy sits above 80%. The article did not single out Adelaide's prospects, but reading between the lines things look positive for us - here's hoping the demand is addressed with a development like 64 Currie St.

All numbers are approx based on my dodgy memory.

[Waewick]

most hotels generally make money at anywhere from 60 to 70% occupancy

I know Adelaide is considered to be under catered for hotel rooms, hence people like Quest popping up.

[Will]

From News LTD:

Millionaire numbers surge in Perth


by: Staff Writers
From: PerthNow
September 11, 2012 3:00PM

WA's resources sector has helped to increase the number of multi-millionaires. Source: National Features


THE number of West Aussies worth more than $US30 million has surged, making Perth the second fastest growing city for multi-millionaires.

A new report from London-based wealth consultancy, WealthInsight, shows both Perth and Adelaide outperformed the rest of the nation’s capital cities in terms of multi-millionaire growth.
Over the years from 2007 to 2011, the number of multi-millionaires in Adelaide skyrocketed 75 per cent to 60 individuals, while Perth surged 52 per cent to 330.
A multi-millionaire is defined as a person with net assets of $US30 million or more, excluding their primary residences.
The strong activity in WA’s resources sector helped to drive the multi-millionaire surge, says WealthInsight analyst Andrew Amoils, which was “fuelled by a rise in commodity prices” over the period.
Commodity prices have since come off post GFC highs as the global economy continues to grapple with the volatility.
Nationally, there was an 11 per cent increase in the number of multi-millionaires to 2460 individuals, with Sydney still home to the most at 930.
Melbourne was next at 590, there were 240 in Brisbane and 37 on the Gold Coast.


Read more: http://www.news.com.au/money/millionair ... z26ACoGf1p

[Will]

It seems another company is shifting their HQ to Adelaide.

From AdelaideNow:

Listed property developer Axiom Properties to relocate to Adelaide

Giuseppe Tauriello

September 28, 201210:00PM



LISTED property developer Axiom Properties will relocate its head office to Adelaide after reporting a $6.9 million full-year loss.

Axiom managing director Ben Laurance blamed impairment charges for the result, predominantly to the company's remaining stake in the Gepps Cross Homemaker Centre, which was written down by around $4.5 million, and later sold for $30.7 million.

The company's decision to relocate head office followed the appointment of Adelaide-based Paul Santinon as chief financial officer and company secretary, after the resignation of Perth-based Edita Nuic earlier this month.

"We've had an office in Adelaide for four of five years but until now it has operated as a satellite office," Mr Laurance said.

"Most of our projects are in South Australia so it made sense for us to relocate our office to Adelaide."

Mr Laurance said the company would now focus on its flagship project - the Churchill Centre sub-regional shopping centre, where it has already secured Coles and Kmart as anchor tenants.

He said extensive work had been done on attracting a 50 per cent equity partner in the project, and was hopeful negotiations with an Adelaide-based property syndicate would be finalised within weeks.

Despite a challenging year for the property industry, Mr Laurance remained "cautiously optimistic" about the year ahead.

"I see the market slowly improving," he said.

"I think there's been a marked improvement in the past three months, partly interest rate driven. People are realising that the property market is offering superior returns to cash and other asset classes."

The De Ruvo group, which owns a 50 per cent interest in the southern section of the Gepps Cross centre, retains a first and last right of refusal on Axiom's divestment from the asset, and has until Friday to decide whether it will exercise its right to purchase the property.

Axiom shares closed steady at 3.1c.