World Economic Cup: Australia Versus the Group of Death

The World Economic Cup
June 2014
It has been a long wait, but the time is almost here for the kick-off of the World Economic Cup. Australia has been drawn in the same group as the Netherlands, Chile and Spain. Urban Economics takes a look at the teams and their prospects.

Australia
World GDP Ranking (2012): 12th

The clear favourite in this group, Australia continues to kick economic goals on the world stage. Since aligning themselves with the Asian economic leagues, the team has dramatically expanded their export volumes, although they tend to be over-reliant on their mining midfield. The foundations of the team remain solid, having stable governance and incremental economic reforms over many years. With the financial sector as safe as a bank at the back and the always underrated education export sector providing variety in attack, Australia should be able to overcome a lack of depth in manufacturing and will be optimistic of finishing on top of this group.

They are not without their concerns though. Questions remain whether their star-studded mining line-up is past their peak and there is the on-going controversy whether some of Australia’s mining players even qualify to represent the nation. Australia’s high currency remains a concern and their new manager, Tony Abbott, has come in for some heavy criticism regarding his new tactics.

Netherlands
World GDP Ranking (2012): 18th

The match-up between the energy sectors of the Netherlands and Australia promises to be one of the highlights of the tournament. The Netherlands has a strong gas sector, both on-shore and from the North Sea and the team is the fifth largest natural gas exporter.
While the Netherlands may be small in size and population, they have a strong track record and punch well above their weight on the world economic stage. They are the sixth largest exporter (by value) in the world, benefitting from being in the EU. The Netherlands is the second largest exporter (by value) of agricultural products behind only the United States by establishing itself as the world’s leader in the high-end cut flower and live plant export markets.
The team is bolstered by very competitive corporate tax rates. Netherlands will field a side including several players that star in the biggest leagues of the world and will be relying on the bankable ING, the fluidity of Heineken and the guidance of TomTom. This team has the work ethic, resilience, economic structure and big names to go far in this tournament.

Spain
World GDP Ranking (2012): 13th

While ranked only one place behind Australia, Spain is a team in turmoil. Repeatedly smashed by Global FC in 2008 and 2009, Spain fell into a deep recession and has yet to substantially recover. Unemployment is rampant, the economy has collapsed and the government’s debt is massive.
Worryingly, this team is notorious for having no energy meaning it must import all its fuel requirements, making it vulnerable to shocks in this sector. Further adding to the nation’s woes, Spain’s youth team has barely gotten onto the economic playing field, with youth unemployment at a staggering 57.7%.
While major troubles continue to plague the team, the sheer volume of their economy, their experience and the backing of the EU mean that this team may well yet be a threat. Spain will be relying on manufacturing and tourism to overcome the resource-based strengths of the other countries in the group. Spain has a large car and car parts manufacturing sector, with major European brands having sizeable plants in Spain. In 2012, Spain was ranked fourth in the world in the number of international visitors, attracting some 57.7 million visitors, almost 10 times that of Australia.

Chile
World GDP Ranking (2012): 37th

Don’t let the GDP ranking fool you, this nation is on the rise and is a South American powerhouse. Another team that is dominated by miners, it produces one third of the world’s copper output. A leader in the South American conference, Chile has the highest standard of living and per capita GDP in Latin America.
Even more reliant on their miners than Australia, Chile has been criticised for being too one dimensional in attack. However, with a growing and increasingly influential middle class and bolstered by agricultural exports, particularly wine and fish products, the Chileans will be confident of causing some upsets in this group. Santiago is a thriving city with a growing reputation for innovation.

Tip

We predict that Australia will finish on top of this group, with the Netherlands just holding out Chile for second. Spain is unlikely to get a point and will finish last. This, unfortunately, is the exact inverse of our tip for how the group will fare in the football World Cup. Prove us wrong Socceroos!!!

Urban Excursions explores New York's Highline

The Highline – New York

With the Federal Budget released this month and the various interest groups still picking their way through the detail *yawn*, Josh takes a detour to New York and guides us down The High Line; an urban reproject that has had economic benefits that nobody budgeted for.

Nowhere in New York is ‘The City That Never Sleeps’ more apparent than the Meatpacking District where fashion, industry, nightlife and culture collide to epitomise New York style. Steeped in history the Meatpacking District as its name suggests was once a hub for trade and included hundreds of slaughterhouses and meatworks which sent and received product via a raised railway now known as ‘The High Line’.

Land on New York’s Manhattan Island is rare and expensive attracting development and investment from the biggest and boldest in the industry. It is of no surprise then, that the area occupied by some 3km of disused and dilapidated railway line dissecting one of its most recognisable areas was under pressure from developers to be torn down, a sentiment shared by former Mayor Rudolph Giuliani over a decade ago. Come my visit in 2013, The Highline was far from being removed and touted by outgoing Mayor Bloomberg as an ‘economic dynamo’.

So what changed?

Following the end of the High Line’s life as a rail track in the 1980’s, community and activist pressure saved a significant proportion of the structure from being demolished and subsequently formed a group, ‘Friends of the High Line’ which initiated planning and design for the raised track to become a public open space in the essence of Paris’s Promenade Plantée (tree-lined walkway). With construction on the third and final stage of the project underway when I arrived at the High Line via the 30th St entrance, it was already possible to recognise the economic activity which had been spurred by the some 4 million visitors per annum that it was attracting.
New apartment buildings were rising alongside historic meatworks and public housing, restaurants and artisans were squeezing into shop-fronts nearest the High Line entrances and mobile vendors patrolled the green course with the typical New York vigour. Some $2 billion worth of new investment has been attributed to the rejuvenation of the High Line, not including the $450 million Whitney Museum of Modern Art.

Residential real estate prices have also jumped (which is no surprise given how close trains used to come to the back of these apartments). On average, home prices in the Chelsea/Meatpacking District are around $1,600 per square foot, or over $1 million for a modest 60m2 apartment.

So, High Lines, Promenade Plantées, coulée vertes and green spines as tools for economic development? Apparently it’s a thing and the High Line has been attributed with inspiring numerous copy cats around the globe. Even Sydney has got in on the act, planning for ‘The Goods Line’ which will link Railway Square through Ultimo to Darling Harbour.

What economic potential could Brisbane’s mooted ‘Green Spine’ deliver? Maybe Brisbane’s BaT Tunnel (overlooked in Budget funding) will one day be more attractive as ‘The Low Line’?

A few World Cup Stats to get you in the mood as the Socceroos hit the road to #Brazil

World Cup-onomics


World Cup Brazil by Numbers:

$35 million - First Prize
$4 billion - FIFA's commercial revenue
$16 billion - Cost to Brazil
200 million - Population of Brazil
$514 million - Estimated value of the 23-man Brazilian squad
$79 million - Amount Christiano Ronaldo will earn this year
$12,000 - Amount an average Brazilian worker will earn in a year
3,140km - Distance between the Arena Amazonia and Estadio Beira-Rio venues
74,698 - Seating capacity of Estadio Do Maracana in Rio de Janeiro
6 million - Tickets available to matches
64 - World Cup Finals matches
$553 - Average resale price for a group match ticket
$180,000 - Approximate melt value of the gold in the World Cup trophy
750/1 - Odds being placed on Australia to be the outright tournament winner

Population versus the Qld Plan

Last week saw the release of the latest population projections from the Office of Economic and Statistical Research (OESR).

Some quick analysis has revealed some drastic changes from the previous release in 2011, the majority of which have anticipated a further increase in the concentration of growth within SEQ. Whilst this is not a totally surprising development, it is at odds with one of the target objectives within 'The Queensland Plan' which states "Half of Queensland's population lives outside South East Queensland". Currently supporting around 67% of QLD's population, SEQ is expected to increase its proportion to around 69% by 2036 to over 4.9 million people. We have long challenged the separation of regional planning from infrastructure planning and economic strategic planning. The population projections will have a significant input to the preparation of the new SEQ Regional Plan, but how do they sit with the Queensland Plan? Does this mean that the Queensland Plan will be simply rhetoric with little substance if regional planning continues to focus economic and population activity within the Sout East and not to reflect the Qld Plan intent to populate and grow economic strength of regional Qld?

The following are the Top 10 changes to population projections by 2031 for statistical areas between the OESR 2011 and 2013 editions, with some rather big "winners" in Coomera and Upper Coomera

Ripley -31,929

Coomera 25,280

Rosewood -19,949

Upper Caboolture 16,885

Greenbank 15,919

Inala - Richlands 15,538

Upper Coomera - Willow Vale 13,175

Helensvale -12,054

Springfield Lakes 11,987

Landsborough 11,604

No doubt this will require some radical new thinking for planning the mix of housing that will be required to accommodate these population changes in the "win" areas as there is quite a vast shift in some areas that will influence infill and greenfield targets for Ipswich, Moreton and Gold Coast. It is interesting to see some expectation of population growth in employment corridors eg. Inala-Richlands, although the majority of the growth "win" areas are greenfield areas detached from employment opportunities. Ripley, which was to provide significant employment for its growth corridorm, now with significant downwards projections on its population potential by 2031 - surely this will have significant implications also for the delivery of employment for the western corridor?

Waiting with interest for the first draft of the SEQ Regional Plan revision.

Oktoberfest-ographics

As we say auf wiedersehen to Oktoberfest for another year, Kerri visits some Australian regions with Germanic roots. Urban Excursions October 2012 brought to you the Oktoberfestonomics, the price of a pint of beer in Australia relative to other countries as we saluted our love of German beer, German sausage and all things Oktoberfest. This year, we explore our Germanic demographic roots, Oktoberfestographics if you like. Well you cannot have a surname like Meulman without laying some claim to Germanic origins and all things Oktoberfest. Whilst my ancestors claim to be Dutch, there is some very small question mark over whether or not there is actually some German descent in my blood, and like many towns across Australia that changed their names at the time of World War I, did my ancestors deny their German heritage? It will remain a mystery, but in any event I am happy to claim some German heritage and this October 2013 edition of Urban Excursions explores Australia’s Germanic roots and ancestry.

Whilst a number of towns with German names or of German origin did indeed change their names around the time of the Great War, others survived or did not change. Hahndorf in the Adelaide Hills is perhaps the first that comes to mind when we think about German settlements and concentrations in Australia. The town of Hahndorf lays claim to being Australia’s oldest surviving German settlement and now has a significant tourist and day tripper function, but it too did not survive the anti-German sentiment at the time of the Great War and was renamed Ambleside, not reverting to its original name until the State’s Centenary celebrations in 1935. The original German Lutheran settlers in the Hahndorf area came to Australia fleeing religious persecution from the King of Prussia at the time. Sound familiar?

Establishing crops, the area became an important fruit and vegetable supplier for Adelaide and South Australia. The town and surrounding Adelaide Hills area retain strong linkages with their German heritage, with 11.5% of the residents of Hahndorf identifying as having German ancestry (compared with only 3.2% for Australia as a whole) and a significant 14.2% identified with the Lutheran religion, compared with only 1.2% Australia wide. Similarly, the Barossa Valley, famed for its wineries and vineyards, was originally settled by German Lutherans, with almost one quarter of residents of the Barossa-Tanunda SA2 identifying German ancestry and a significant 40% of residents were Lutheran at the time of the 2011 Census. Many of the now famous Australian wineries were established in the Barossa during this period; Seppelt, Penfolds, Tolleys, Jacob’s to name a few.

Another of Australia’s prominent fruit and vegetable growing regions, the Lockyer Valley, also claims strong German heritage. Almost 12% of residents of Gatton and 10% of the Lockyer Valley Regional Council area overall, identifying with German ancestry. The wave of German immigrants to Queensland was again effectively forced migration fleeing famine and poor agricultural conditions, in search of employment – again familiar? German migrants were recruited to the Darling Downs to work as shepherds to assist large pastoralists care for their flocks. The Eastern Darling Downs (excluding Toowoomba) including areas such as Oakey and Dalby also represents higher incidences of those of German ancestry (9.5%) Other towns such as Kalbar (formerly Englesburg but changed its name in the lead up to the Great War) and Marburg also represent significant concentrations of those with German ancestry compared with the national average (12.1% and 9.2% compared with 3.2%).

Both Queensland and South Australia have more prominent incidences of those of German ancestry than the other states and the Australian average, established by waves of effectively forced migration and laying claim to much of the development of the renowned food bowl areas of the Adelaide Hills and Barossa, the Lockyer Valley and Darling Downs. It may have been the original British settlers who brought beer to Australia, but as we come to the end of another Oktoberfest, we raise a glass to our German ancestors and shout “Prost!” or Cheers guys, until next month. Now……Ein Bier, bitte!!

Big Data.....Big Deal or Big Opportunity?

·       So what is Big Data?

·       How is it used?

·       What can SME’s do?

·       How can Urban Economics help?

I run a jaded eye over the latest email from Coles Flybuys, and there presented for me are a series of fantastic looking specials at my local Coles Toowong.  Curiously, these items seem somewhat familiar.  I look a little closer, and yes every item on that list of specials was something that I had bought at my last shop in store.  Cottee’s Cordial - son’s favourite drink – Check! Mars Bars and chocolate buttons to make my specialty Mars Bar Slice – Check! All magically on special and emailed directly to me.  Big Data at work.  

A study in the US estimated that retailers applying the information sourced through Big Data analytics would improve operating margins (McKinsey) by some 60% whilst PWC estimated that in Australia, there would be some $1.3billion in savings for business investment when derived through data driven promotion decisions. With headlines like “every company needs a big data strategy to avoid falling behind” and “Big data ‘vital’ to UK economy” reflecting the push for more informed decision making, it is not surprising that the demand for big data analysts is projected to grow exponentially – another 69,000 in the UK by 2017 alone, and that there are a myriad of specialist programs aimed at assisting businesses mine and interpret their data.  

So what is Big Data and is it really a Big Deal?

Big Data is essentially the term applied to the use of technology in extracting insights and information from the wealth of data that businesses have at their disposal in informing business decisions.  This can include internal sources such as client invoices and customer accounts, employee records, website analytics, business traffic counts eg. at a shopping centre etc, as well as external data sources that can be overlaid to sift through critical pieces and insights such as ABS data, social media information, financial markets etc.  

Probably some of the easiest observed outcomes of Big Data at work at this point in time are those inspired emails that are really targeted at individual needs and aspirations, and more importantly their shopping habits and patterns.  And we as consumers are generally ok with companies having this level of access to our purchase patterns, where I shop, what I buy, how often, as long as we feel that we are somehow being rewarded for this or getting some sort of return.  Loyalty programs are central to this access to customer patterns and preferences for retailers, service businesses alike. 

Analysis of internal and external information is vital for all businesses big and small!

 

Big Data analytics might be all well and good for large organisations and government departments with the resources, the extensive customer databases, the deep pockets to invest in the technologies, and such opportunities may seem beyond the possibilities of small to medium businesses.  The reality is that we all, to varying degrees, utilise data to inform decision processes, including both internal and external data sources, and it is the advent of technology with the capacity to drill further into the wealth and breadth of consumer and business data that is changing the face of business decision processes and communication strategies.  Data application itself is not new in influencing competitive strategies and decision processes, rather it is the detailed analysis and application of numerous extensive data sets that is rapidly changing and for which businesses really need to be engaging to maintain competitiveness.  

For small to medium businesses exploring their competitive advantages, I think the key really needs to get back to a focus on information and gathering insights from both your internal and external sources.  Understanding what you already know is critical.  Start a conversation with yourself and explore your own customer data, what trends are evident, who are they, where are they, how have they changed? What do you already know and build on that. Consider a short form survey of your existing client base to fill in some of the gaps, add a splash of ABS data and watch out world!  

Knowledge as they say is power, and with that in mind, I do have a dinner party to prepare for, Mars Bar slice on the menu, I better go shopping and I know just where to go to get a great deal!  

I’d be happy to discuss how to inform and add value to your business decisions through research, insights and analysis.  Let us take the Big Data out of the equation and put information, insights and recommendations back in. 

Kerri Bonwick-Meulman

(07) 3839 1400

Kerrianne@urbaneconomics.com.au

www.urbaneconomics.com.au