I am delighted to publish this guest post by Colin Dwyer of DS Economics on the Townsville economy’s improving prospects. The views expressed are Colin’s and should not necessarily be attributed to me. GT
In this essay Founder of ‘Our Fair Share’ Colin Dwyer identifies over 20 private and public sector Townsville projects, (some potential, many confirmed) worth over $9 billion that are helping Townsville forge a new reputation and a stronger more diversified economic future.
Townsville is Northern Australia’s largest city, has 300 days of sunshine each year, and has a reputation as a diversified economy. The North Queensland city once enjoyed 8% GRP growth and 3.5% population increases. The economy is bolstered by the largest regional hospital in Queensland, the largest Army Barracks in Australia and is a major higher education, base metals exporter and transport hub. But in 2016-17, Townsville experienced a deep depression with significant declines in asset values, significant jobs and skills losses and suffered another year of negative net migration. A contributing factor to the length of Townsville’s downturn was minimal public and private investment.
Something has changed in Townsville. Asset prices have stabilised, jobs are being created, there are cranes on the horizon once again and, while the city is not firing on all economic cylinders, in 2019 a NEW Townsville is likely to build on this opportunity and create a new economic reputation. Over 20 major projects are current, starting or planned for Townsville in 2019. Their total cost is similar to Townsville’s current GRP, something that should be envied by other cities.
Although some sectors in Townsville are struggling, 2018 seems to be the start of economic recovery. There’s more potential in Townsville with multiple major projects costing over $9 billion, more jobs and improving economic activity in 2019 and beyond. This is significant for a city with just over $10 billion in GRP. Some of the projects are large with meaningful enduring operational job outcomes. Sun Metals recently confirmed its expansion plans with a 350 jobs construction workforce requirement, and more than 150 above average income earning operational staff needed on completion. In 2019 the federal government will drive the three year $512 million Haughton flood plains Bruce highway upgrade just south of Townsville and Adani will start on its $2 billion Carmichael Coal mine. The $2 billion Singapore defence project recently announced it had acquired enough land to proceed to the next phase of the project. In 2020 Townsville will open its new stadium, in time for the NRL season. These diverse projects will create significant enduring jobs.
Several other organisations have similar reports including QMBA and Townsville Enterprise. DS Economics has identified over 60% of current and future known major projects are private sector ventures. In June 2018, BIS Oxford released their forecast for the next year and North Queensland, including Townsville, is highlighted as a key growth zone for major projects. The report identified an expected 3 to 4 times increase in construction and mining activity over the preceding year. It is worthwhile noting that the Townsville City Council capital investment budget is $430 million for 2018-19, similar to the combined capital expenditure budgets of Rockhampton, Mackay and Cairns (their collective population is approximately double Townsville’s population).
Townsville’s economic future is looking much brighter than in the four years 2013 to 2016. Townsville’s GRP is forecast to grow between 2-3% in 2019, boosted by major construction projects, improving health and social assistance jobs and mining and manufacturing activity. In 2019, Townsville is expected to be one of the fastest growing regions in Queensland (this could also reflect poor growth forecasts for other regions). The challenge for North Australia’s largest city, Townsville, is to build momentum and consolidate sustainable consistent economic net gains and secure a fair share of public and private sector investment.
Major Mining and Construction projects
Townsville is experiencing growth in major construction projects, not seen since 2002. Twenty-three projects amount to over $9.6 billion. Positively, Townsville’s major projects portfolio is varied. They are both private and public projects, across manufacturing, mining, transport, tourism and defence industries. Some projects are unfunded as yet and may not eventuate. Of the 12 projects with confirmed funding commitments, half are private sector projects.
Townsville Major Construction Projects 2019 to 2012
|Townsville Construction Projects||$ million|
|Public Funded Projects||1,322|
|Private Funded Projects||3,519|
|Other Unfunded Projects *||4,760|
Source: DS Economics * includes Singapore defence project
There are multiple transformational projects on Townsville’s economic horizon such as the new JCU STEM education centre, new TAFE education centre, battery factory, nickel/cobalt sulphate refinery, renewable energy producers, retail space, a nickel mine, nickel sulphate refinery and a significant expansion at Sun Metals refinery.
All these projects are positive for Townsville’s economic future. Some may not get funding, but having so many major projects is significantly different to 2016 and prepares a positive platform for Townsville’s recovery.
One key area of recovery is workforce improvements. Townsville job opportunities have improved significantly during 2018, driven by health and social assistance, major construction projects and mining jobs. Officially 5,500 jobs have been created in Townsville region in the year to October 2018 and in the past two months the official monthly unemployment rate has improved to ‘full employment’ levels, although the ABS does note “the estimate is subject to sampling error too high for most practical purposes.” But there’s rarely all positive news, the banking inquiry and local job security concerns have restricted credit, as have interest rate movements in the United States. Slow wages growth and job confidence has restricted local consumer spending. Local and online retail and other business restructuring has reorganised local competitive advantage and influenced investors and consumers. Townsville is emerging from recovery in a complex economic and political environment.
In 2018, Townsville emerged as a solid regional economic growth centre. Population growth is expected to be above 2% in 2018 and 2019. Net migration is likely to be positive for the first time in years. The DS Economics residential vacancy rate for Townsville halved in 2018 to below 3% in September 2018. In early 2019 the vacancy rate is more than likely to tighten below 3% again. Officially, thousands of jobs have been created in the year to October 2018 (their long term tenure and consistent benefit needs scrutiny). Multiple major projects are driving a new reputation, local confidence is positive but fragile, bolstered by multiple private sector projects and thousands of direct, indirect and induced jobs and enduring operational jobs.
One future project, the $2 billion Singapore defence deal (it was recently announced it had acquired sufficient land at Greenvale northwest of Townsville to proceed) offers multiple industry supply chain opportunities to connect with Asia. It also offers a chance for a regional location to not just adapt to new technology but to produce, supply and thrive in a complex globalised and digitised world. Another proposed project, a battery factory, has supply chain support from a new Nickel sulphate refinery. If successful, it could be a catalyst in developing a complex value-added industrial park in the Townsville state development area; creating a unique North Queensland technology cluster with solid supply chain advantages.
In 2016 Townsville was in depression, had minimal public investment, was losing jobs and experienced negative net migration. In 2019, Townsville will build on recovery, set itself new goals and build new population and economic reputations. NEW Townsville has many significant major projects across a variety of industries that are likely to create short term and longer term opportunities. Australia needs its flagship regional cities, like Townsville, to perform independently (with private investment) and consistently, but also to gain its reliable fair share of federal and state public investment.
2016 and 2019 have one key element in common, they are both federal election years. Townsville’s main electorate of Herbert decided the federal election outcome in 2016 and gave the city much negotiating ammunition. Herbert was decided on just 37 votes and at least one major public project was negotiated during the 2016 election. Next year will be different for Townsville. Not all elections are determined by one electorate and the political strategy will need to change if Townsville is to leverage its marginal status at the next federal election.
Colin Dwyer, DS Economics