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  • Gavin King

    TropicNow editor

    Email Gavin King

    What's going on with the Cairns economy these days?

    Tropic Now digs beyond the headlines to analyse the latest data in Rick Carr's Cairns Watch report.


    There is good news and some inevitable bad news about the state of the Cairns economy right now.

    Let's get the bad news out of the way first.

    According to Rick Carr's latest Cairns Watch report, released today, the ongoing success of the buoyant tourism industry isn't translating to jobs.

    And a lack of job creation impacts the property market, with fewer homes selling and prices flat-lining.

    THE BAD NEWS

    The Cairns unemployment trend rate increased to 8.2% in April, a full 2 percentage points higher than the Queensland average of 6.2%.

    Real estate conditions reflect this local jobs trend. The median house price in Cairns has softened in recent months, coming in at $388,500 in March 2016. That's 2.1% lower than it was in March 2015.

    On the other hand, the median unit price trend rose by 2% in the past year coming in at $221,600 in March 2016. 

    As the Cairns Watch report states: "The Cairns economy remains characterised by positive tourism activity indicators feeding through into slowly improved employment.

    "But unemployment remains stubbornly high and property market conditions also remain soft."

    Mr Carr says he doesn't have a definitive answer to this dichotomy between soaring tourism visitation and a flat employment market.

    But he does have a very solid theory.

    Talk to business owners in Cairns and most of them will sing from the same hymn sheet.

    Anecdotally at least, the surging tourism industry isn't filtering through and trickling down to the broader economy the way it used to.

    Mr Carr believes it all comes down to casual workers.

    "I suspect the problem with the unemployment rate and the fact strong tourism figures aren't being felt in the broader economy is due to the high casual workforce in the tourism industry," he said.

    "Tourism operators are working their casuals more, rather than creating new jobs. So the industry is giving extra hours to casuals, not putting on more people in full-time roles.

    "That's across the board, in accommodation, restaurants and tour operators. And because there aren't new full time jobs, the flow-on effects aren't happening as much.

    "The property market of course relies on full-time workers rather than casuals."

    NOW THE GOOD NEWS

    Hidden underneath this matrix of high tourism and flat employment impacting real estate markets is some very good news for Cairns.

    As Mr Carr points out, the high tourist visitation - now sitting at its highest levels in nearly a decade - has been happening in the traditional off-peak period.

    For now at least, the tourism industry is simply increasing the hours of casual workers to meet that demand. But if tourists keep coming in huge numbers, the industry will have to expand its capacity and invest in new jobs and infrastructure. 

    That's when the tide may turn for the broader economy.

    "This tourist boom has been happening in the off-season, and if it continues on through the peak season at some stage we will hit capacity levels," Mr Carr said.

    "That's when we'll start to notice it and that's when business confidence could turn for the better.

    "When you start getting hotel managers saying their places are all booked out, the impact of tourism will start to translate into broader confidence.

    "There hasn't been investment in extra capacity for a long time, but you're starting to see a lot of tourism infrastructure getting upgrades and refurbs.

    "So we are seeing some investment in refurbishments and modernisation, but not yet into capacity. Once that happens, things will start improving on a wider scale."