Economic Outlook Townsville & North West Queensland - Regional Development Australia ...
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ISSUE 3 QUART ERL Y UP D AT E 0 8/20 21
Townsville
& North West
Queensland
Economic
Outlook
1. Outlook August 2021
1.1 MACROECONOMIC Rising inflation driven by recovering with NSW recording in excess of
OUTLOOK economies and supply chain 200 new cases per day at the time
bottlenecks also poses a threat to of publication. Our relatively low
Entering the 2022 financial year the global activity and to stock prices. vaccination rates leave Australia
global economic outlook continues
to be dominated by the COVID-19 vulnerable to significant disruption
Inflation is currently running
pandemic. Outbreaks of the highly and economic pain now that the
at approximately extensive jobkeeper and jobseeker
infectious delta strain have set
the timeframes for recovery back 5% per annum wage subsidies have concluded.
significantly, with control of the virus
in most countries now focused on in the US, Against the increasing COVID risk,
broad vaccination. generally higher commodity prices
the highest since before the Global
have continued to drive economic
Countries with high vaccination Financial Crisis (GFC)
activity in agricultural and mining
rates, including the US and the UK
have continued to recover strongly. It remains to be seen if inflationary resource rich states. Over the 12
However, the risk remains that the impacts are mostly temporary due to months, the RBA commodity price
delta variant will spread more rapidly the pandemic or likely to persist into a index has increased by 40% in
around the world and further disrupt longer-term trend. Australian dollar terms, led by our
global supply chains that have largest export commodity iron ore.
already been heavily strained by Despite the rising inflation risk,
the pandemic. the prolonged impacts of the With navigating the COVID pandemic
pandemic should see emergency increasingly looking more like a
Equity markets remain at very high global monetary policy continue for
marathon than a sprint, a set of
levels thus far, and it remains to some time.
be seen if the spread of the delta longer-term initiatives to support
strain will lead to a significant The domestic economy has been sustainability and growth across the
market correction. hit by a series of COVID lockdowns, country will need to be considered.
A JOINT INITIATIVE BY REGIONAL ECONOMIC ADVISORY
AND REGIONAL DEVELOPMENT AUSTRALIA TOWNSVILLE
A
TONW
D NNS O
V IRL LTEH &WNEOSRTT H
QUWEEESN
T SQLUAENE D
NSLAND ECONOMIC OUTLOOK 1
1.2 REGIONAL OUTLOOK
The return to population growth has been a strong positive for the region.
The Townsville and North West However, whether recent regional migration patterns become a longer-term
Queensland economy has growth trend for the region, remains to be seen.
benefitted from rising commodity
Key to supporting growth will be a resolution to the final form of the Federal
prices and increasing investment
Government’s $10 billion reinsurance pool. The region requires a system which:
interest over the past quarter.
• Supports competitive coverage costs for households and businesses.
The region continues to
experience minimal direct COVID • Improves lending conditions for the development of new dwellings.
cases. However, the constant Specifically, medium and high-density (strata titled) properties which can
threat of border closures and facilitate population growth and rental affordability.
restrictions on businesses
continues to constrain a broader The next few months will be critical for the region as we face the potential for
recovery and a return to longer significant lockdowns and disruption. This time the impacts may need to be
term growth. endured without the extensive subsidy programs which supported activity and
confidence throughout the first phase of the pandemic.
The cancellation of major events
(including the Australian Concerto
and Vocal Competition and the
TOWNSVILLE & NORTH WEST
Julia Creek Dirt n Dust triathlon
QUEENSLAND REGIONS
festival) and the deferral of major
tourism projects such as the
Townville Marine Tourism Precinct Total 2019-20 GRP for Townsville & North West Queensland
and Townsville Airport Terminal -2.1% annual decline
upgrade highlights the strain
Total population growth +0.6%
being felt within some sectors of
the regional economy.
Despite these impacts, the
regional property market has
continued its resurgence. Rental
vacancy rates in some areas are Mornington
Carpentaria
as low as 1%, as regional areas Doomadgee
continue to draw COVID migration
from Australia’s major cities. Burke
Hinchinbrook
Additional attraction of labour Palm Island
Townsville
and skills will be required across Townsville
Townsville and North Queensland,
Burdekin
with many industries reporting Mount Isa
Charters Towers
ongoing skills shortages as Richmond
McKinlay
operations recover. Cloncurry
Flinders
North Queensland
Boulia
Mid-West Queensland
Western Queensland
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 2
2. Key Indicators and Regional Development News
2.1 NORTH QUEENSLAND
Indicator Townsville Hinchinbrook Burdekin Palm Island Charters Towers
Gross Regional Product $10.6 B $420 M $969 M $43 M $ 685 M
1.0% -5.0% -5.1% 8.0% -4.6%
(GRP) (2019-20)
annual annual annual annual annual
Annual Growth Rate growth decline decline decline
growth
6.2% 5.5% 36.5% 6.6%
Unemployment 6.1%
0.1% no 0.1 -1.7% -0.1
(Mar Qtr. 2021) quarterly ppt quarterly ppt quarterly ppt quarterly
increase
change decline decline decline
Median $347,000 $215,000 $187,500 $200,000
House Price 6.0% 2.4% 13.6% N/A 3.9%
annual annual annual annual
(YE March 2021) growth growth growth growth
196,800 10,645 16,953 2,684 11,731
Population 0.9% -0.4% -0.1% 0.5% -0.1%
(June 2020) annual annual annual annual annual
growth decline decline growth decline
Table 2.1: Headline Economic Statistics North Queensland Source: NIEIR (2021), QGSO (2021)
REGIONAL DEVELOPMENTS
OUTLOOK
The Federal Government has committed $40 million
The North Queensland economy showed some towards the Reef HQ Aquarium development in the
signs of slowing over the past three months. The Townsville CBD.
region was significantly impacted by a snap COVID
The funding provided through the Townsville City Deal
lockdown over the key school holiday trading period.
is in addition to the $40.1 million already provided. The
Unemployment edged higher in most areas after
upgrades will provide a range of immersive experiences
several quarters of improvement.
and revitalised exhibits, including educational activities,
However, the property market continued its strong
hands-on experiences, on-site diving programs, scientific
performance. Extremely low rental vacancy rates
demonstrations, and the use of interactive technology.
have been recorded in some areas and construction
The development is expected to be completed by 2023.
activity continues to rebound.
The tourism and hospitality sector remains an area Development of the Australia-Singapore Military
of significant uncertainty, with major projects such as Training Initiative (ASMTI) at Greenvale is set to
the $78 million Townsville Marine Tourism Precinct and commence in mid-2022. A lease agreement has been
$40 million Townsville Airport Terminal redevelopment made through the Queensland Government to secure
shelved. However, other recent proposed land for training of Australian and Singaporean military
developments, including the new Ville and Hilton hotel personnel at Greenvale near Charters Towers alongside
projects in Townsville show underlying confidence in facilities at Shoalwater Bay in Central Queensland.
the long-term outlook. The 302,000-hectare Greenvale site will be developed
Strong sugar prices of around $500/tonne projected into an advanced Military Training Area. Overall, the
for the next 12 months should help to underpin project is estimated to deliver approximately 590 new
confidence across the key agricultural centres of jobs during development and up to 150 permanent jobs
Burdekin and Hinchinbrook. across Queensland when the facilities are operational.
The ASMTI proposes to bring up to 14,000 Singapore
Armed Forces personnel to North and Central
Queensland every year for 25 years, training for 18 weeks
each rotation.
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 3
2.2 MID-WEST QUEENSLAND
Indicator Flinders Richmond McKinlay
$128 M $100 M $523 M
GRP (2019-20) -31.4% -10.3% -2.1%
Annual Growth Rate annual annual annual
decline decline decline
3.9% 4% 4%
Unemployment 0.3 0.3 0.3
(Mar Qtr. 2021) ppt quarterly ppt quarterly ppt quarterly
increase increase increase
Median $140,000 $110,000
House Price 118.8% -12.8% N/A
annual annual
(YE March 2021) growth decline
1,512 813 823
Population 0.6% 0.4% 0.6%
(June 2020) annual annual annual
growth growth growth
OUTLOOK
Table 2.2: Headline Economic Statistics Mid-West Queensland
Economic indicators in Mid-West
Source: NIEIR (2021), QGSO (2021)
Queensland continued to show
mixed results. REGIONAL DEVELOPMENTS • The Federal Government has
Each of the Local Government The development of a significant approved Multicom’s St Elmo
Areas continued to see steadily vanadium mining industry in vanadium project, which has
rising unemployment. However, the Mid-West has continued to the potential to employ 200
local unemployment remains well gather momentum. Major recent people directly during peak
below the Queensland average at milestones include: construction and more than 150
approximately 4% across Flinders, people once operational.
• QEM had advanced feasibility
Richmond, and McKinlay. • Vecco Group’s Debella project
works for its proposed vanadium
Economic activity and housing and oil shale project near is expected to begin production
market indicators remain highly Julia Creek. at the end of this year, with an
volatile, which is typical of rural- expected 50 year mine life.
• Horizon Minerals’ pre-feasibility
remote areas. Recent COVID Vanadium is a key resource in
study for its Julia Creek
lockdowns in Sydney, Melbourne, renewable battery storage which
vanadium Joint Venture
and South East Queensland have has seen exponential growth in
(JV) project with Richmond
impacted visitation during the key recent years.
Vanadium Technology has
winter tourism season.
confirmed a supply of over The iconic Julia Creek Dirt n Dust
However, a return to positive 100 years at a production rate festival has been cancelled for
population growth, a revitalised of 790,000 tpa of vanadium the second straight year due to
mining sector, and strong beef concentrate. To progress uncertainty and disruption created
cattle prices should underpin a the project to production, by the coronavirus pandemic.
solid economic outlook for the the JV partners plan to The three-day event, which usually
Mid-West over the medium term. construct a concentrator, includes a triathlon, bull riding and
power station, railway siding, a range of events has been a major
bores, administration and drawcard in the outback events
accommodation facilities, and calendar for 26 years. The festival
an offshore refining plant. now faces an uncertain future.
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 4
2.3 WESTERN QUEENSLAND
Indicator Cloncurry Mount Isa Boulia Burke Doomadgee Mornington Carpentaria
$938 M $2.1 B $34 M $31 M $34 M $33 M $132 M
GRP (2019-20) -8.9% -8.8% -6.1% -12.6% -26.8% -22.1% -12.7%
Annual Growth Rate annual annual annual annual annual annual annual
decline decline decline decline decline decline decline
6.9% 8.3% 3.4% 27.9% 27.8% 28.8% 27.8%
Unemployment 0.7 0.5 0.4 2.0% 1.9 2.1 2.1
ppt ppt ppt ppt ppt ppt ppt
(Mar Qtr. 2021) quarterly quarterly quarterly quarterly quarterly quarterly quarterly
increase increase increase increase increase increase increase
Median $165,000 $270,000 $250,000
House Price -23.8% 8.2% N/A N/A N/A N/A 38.9%
annual annual annual
(YE March 2021) decline growth growth
3,004 18,578 416 354 1,534 1,231 1,970
Population -1.4% -1.0% -1.7% 0.0% 0.5% 0.1% -0.3%
(June 2020) annual annual annual annual annual annual annual
decline decline decline growth growth growth decline
Table 2.3: Headline Economic Statistics Western Queensland Source: NIEIR (2021), QGSO (2021)
REGIONAL DEVELOPMENTS
OUTLOOK
The recently released Repowering the Townsville & North West Minerals
The outlook for Western
Province Industrial Economy report highlighted the long-term economic
Queensland has continued recent
potential of the North West Minerals Province (NWMP).
trends, with unemployment
The report highlights how prospective the NWMP remains, with an estimated
rising across the region. The
unemployment rate rose as much $680 billion known in-ground resources and the potential to provide a $154
as 2.1 ppt across the remote billion cumulative increase in the gross value of mine production over the
communities of Mornington and next 25 years.
Carpentaria, with Burke and The $1.5 billion CopperString 2.0 project which aims to connect the NWMP
Doomadgee also recording to the National Electricity Grid will be ready to commence construction by
notable increases. October this year.
However, a turnaround in base The remaining steps to realising the project include:
metal prices and renewed • Finalising the remaining items under the Implementation Agreement with
investment interest in the region the Queensland Government.
should see economic indicators
• Finalising environmental approvals and engagement with traditional
improve over the coming months.
owners and landholders.
Copper prices have seen a
strong recent price growth driven • Finalising negotiations with the Northern Australia Infrastructure Facility
by growing global demand for on its financing offer.
electric cars. • Completing the Federal Government-funded study into the potential
The impending development of CopperString 2.0 to support the development of a ‘clean industrial
of the CopperString 2.0 project ecosystem’ across the Townsville to Mount Isa corridor and the NWMP.
has the potential to underpin CopperString 2.0 is scheduled for completion in 2024 with the potential to
confidence and drive a new wave support 750 construction jobs and 3,560 long-term indirect jobs, primarily by
of investment in the region. enabling new resource development.
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 5
3. Business Confidence
Business confidence in QUEENSLAND BUSINESSES
Queensland’s 12-month REPORTED IMPROVEMENTS
outlook continued to ACROSS ALL INDICATORS,
significantly improve in the
WITH THE LARGEST GAINS
March quarter (+12.2 ppt) to
IN THE 12-MONTH OUTLOOK.
a current index of 54.7. These
• General business conditions
results were recorded prior
(+10.3 ppt) and sales and
to the impact of recent delta
revenues (+7.8 ppt) also
stain COVID lockdowns.
recorded strong increases.
Businesses are now
• Labour costs (+7.2 ppt) also
generally positive across
recorded a notable increase,
most indicators (index >50),
with restrictions on international
while profitability levels
labour and intermittent domestic
continue to lag at 45.2.
lockdowns combining to create
Generally, the last 12 months significant labour shortages.
have represented a period The recovery in business confidence
where the significant negative levels has been very positive. However, the
business expectations impact of renewed COVID restrictions and
were not realised, with the recent withdrawal of the jobkeeper and
many sectors performing jobseeker wage subsidies are likely to test
better than expected. confidence levels over the coming months.
Index
Indicator Quarterly Change
Dec 2020
12 Month Outlook Queensland 54.7 +12.2
General Business Conditions 58.3 +10.3
Sales and Revenue 57.4 +7.8
Labour Costs 65.8 +7.2
Profitability 45.2 +4.5
Employment 51.3 +5.0
Capital Expenditure 51.9 +6.0
Table 3.1: Queensland Business Confidence March 2021 Source: CCIQ (2021)
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 6
4. Industry Profile: Manufacturing
Each quarter the Townsville and
North West Queensland Economic
Outlook profiles a key regional
industry sector. This quarter reviews
the Manufacturing industry.
INDUSTRY OVERVIEW
Townsville and North West
Queensland is a significant
manufacturer, with the sector
contributing $1.1 billion (6.6%) to
GRP in 2019-20 and employing
approximately 6,000 people
(ABS, 2017). However, the sector has since returned to modest growth averaging 1.4%
per annum to 2019-20. A recent $455 million expansion of the Sun Metals
The manufacturing sector
Zinc Refinery in Townsville has been a major driver of renewed confidence in
specialises in value adding to the
the sector.
region’s abundant agricultural
The manufacturing sectors across the Mid-West (-2.2% annual decline) and
and mineral resources production.
Western regions (-4.1% annual decline) have continued to experience difficult
Major manufacturers located
trading conditions. The decline highlights the challenges associated with the
within Townsville and North West
often labour and energy intensive operations in geographically remote areas.
Queensland include:
• Mineral resources processing:
Region IVA (2019-20, $M) Average Annual Growth
The Sun Metals Zinc and
Glencore Copper refineries, Northern $958.0 1.4%
Incitec Pivot Fertiliser production. Mid-West $9.2 -2.2%
• Agricultural Value Adding: Six Western $136.4 -4.1%
sugar mills (Invicta, Pioneer, Total Region $1,103.6 0.6%
Kalamia, and Inkerman Mills
in the Burdekin and Victoria Table 4.1: Townsville North West Queensland Source: NIEIR (2021)
and Macknade Mills in the Manufacturing Industry Value Added (IVA)
Hinchinbrook), processing of 900
The broad manufacturing sector across Australia has also experienced highly
head cattle per day at JB Swift
challenging conditions over the past decade, including the closure of the
Meatworks in Townsville.
national car manufacturing industry in 2017.
Over 85% of regional manufacturing
activity occurs in the Northern Increased automation alongside the globalisation and consolidation of
region. The Northern region suffered manufacturing supply chains seeking economics of scale - particularly into
low wage cost countries - has had a profound impact on local production.
a major loss in 2016 with the closure
of the region’s largest manufacturer, Since peaking in the 1970s, Australia has lost approximately half a million
the Queensland Nickel Incorporated manufacturing jobs. However, the sector’s output has continued to grow,
(QNI) Yabulu Refinery, with the loss of as local manufacturing technologies and businesses have become
over 800 direct jobs. progressively more advanced and capital-intensive (Ai Group, 2020).
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 7
4. Industry Profile: Manufacturing continued
OUTLOOK
The regional manufacturing sector is
currently at a crossroads. The recent
renewed interest in local manufacturing
driven by global trends and strong
underlying demand for regional
commodities has brought on several
proposed major projects.
Opportunities are across agricultural
and minerals value adding alongside
Imperium 3’s proposed $3 billion lithium
Despite the challenging history, the past few years have seen a
ion battery plant in Townville.
renewed strategic interest in local production. Global supply chains
have been heavily disrupted by the COVID-19 pandemic, highlighting Increasing interest and advocacy has
a greater need for production self-sufficiency to ensure the security also been generated in developing
of supply. the region’s defence manufacturing
capabilities. The supply chain
New technologies such as the Internet of Things (IoT), 3D printing,
opportunities aim to leverage Townsville
and increased use of Artificial Intelligence (AI) in production have
and North West Queensland’s extensive
also shifted the needs of industry from minimising wage costs
Army and Royal Australian Air Force
towards higher skill levels, political and sovereign stability, and
(RAAF) presence, and the $2.25 billion
access to raw inputs and end markets.
under development Australia Singapore
Each of these key drivers supports production within Australia and Military Training Initiative.
the Townsville and North West Queensland region specifically.
The recent announcement of a Northern
In spite of these significant positive trends, the Australian Australia Infrastructure Facility (NAIF)
manufacturing sector is still projected to shed another 6,000 jobs funding commitment for the Agripower
over the next five years (see Figure 4.1). Australia fertiliser plant near Charters
Towers has also shown the potential
for the development of significant
manufacturing operations in the more
rural and remote parts of the region.
These proposed initiatives present
significant economic development
opportunities. However, the timing and
ultimate commitment for a number
of the region’s major manufacturing
projects remains subject to
significant uncertainty.
Previously proposed large scale
manufacturing projects focused around
agricultural value adding and bio-fuel
Figure 4.1: Australian Manufacturing Source: RBA (2021) Outlook continues over page...
Sector Employment
TOWNSVILLE & NORTH WEST QUEENSLAND ECONOMIC OUTLOOK 8
production - including the Australian Manufacturing significant long-term economic development
Employment and referenced to the ABS (2021) - opportunities for Townsville and North West Queensland.
ultimately were unable to clear the significant economic
Maximising the value adding of the region’s rich resource
and technical hurdles required to reach development
and agricultural production - where the region has a
after several years.
The flexibility investors have in locating new natural competitive and locational advantage - is a
manufacturing plants means that Townsville and North key pillar to driving economic growth and supporting
West Queensland continues to face fierce competition efficient and competitive regional supply chains.
for new investment.
Further leveraging the region’s significant educational
Competition comes from within Australia and
and research presence will also be required if Townsville
internationally from Asia, North and South America,
and Europe among other established and emerging and North West Queensland is to move against the
manufacturing centres. long-term national trend of declining manufacturing
Despite the challenges, manufacturing presents employment and drive significant regional growth.
Project Location (LGA) Status Capex ($M)
Imperium 3 Lithium Ion Feasibility Works
Townsville $3.0 billion
Battery Plant Completed
CNVM Investment
Hughenden Development Deed Signed $100
Hughenden Meatworks
Northern Australia
Agripower Australia
Charters Towers Infrastructure Facility $663
Fertiliser Plant
Funding Committed
Pure Minerals (nickel, cobalt
Townsville Under Consideration $441
and alumina) Refinery
Sun Metals Zinc Refinery
Townsville Completed During 2021 $445
Expansion
Table 4.2: Major Proposed Manufacturing Developments Source: REA
Note: Capital estimates based on publicly available information at the time of writing and may not reflect the most recent project estimates.
For Further Information
The Regional Development Australia Regional Economic Advisory (REA)
Townsville and North West Queensland provides specialised economic
(RDA) Committee is pleased to partner consultancy services to the
with Regional Economic Advisory on this communities of Central, Northern, North
initiative to provide a quarterly update West, and Far North Queensland.
on the region’s Economic Outlook. REA is passionate about unearthing
For more information on investment and new, evidence-based opportunities that
Cr Frank Beveridge growth opportunities within our region, Mr Matthew Kelly help regional centres prosper long into
Chairman please don’t hesitate to contact RDA Principal Economist
the future.
CEO Mr Wayde Chiesa.
Regional Development Australia Regional Economic Advisory
Townsville and North West
07 4767 7234 / 0417 790 016
Queensland Inc.
matthew.kelly@regionaladvisory.com.au
07 4410 3655 regionaladvisory.com.au
ceo@rdanwq.org.au
Level 1, 33 Palmer Street
rdanwq.org.au
South Townsville QLD 4810
Level 1, Enterprise House
6 The Strand, Townsville QLD 4810
All care and diligence has been exercised in the preparation of this report. Forecasts
or projections developed as part of the analysis are based on adopted assumptions
To review previous editions and subscribe and can be affected by unforeseen variables. Consequently, Regional Economic
to future editions, please visit here. Advisory gives no warranty that a particular outcome will result and the authors
accept no responsibility for any loss or damage that may be suffered as a result of
reliance on this information.
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