News and published articles in 2019 to 2016

  • Hunter needs to prepare for the future

    Tuesday, 9 April, 2019

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    The world must eliminate coal-fired power within about 30 years for any chance to meet agreed climate-change targets. Coal usage is falling in most developed economies. At the same time, developing economies are expanding power generation from coal and renewables to meet the energy needs of their people. With thermal coal exports worth around $25 billion last year, Australia and its coal-exporting regions such as the Hunter Valley need to understand these changes and their consequences.

    Some facts can be valuable. Globally, there are now about 2,400 coal power plants with about 2,000 gigawatts of generation capacity, double what it was in 2000. Coal generates 40 per cent of the world’s electricity. There are about 270 new coal-fired power plants under construction, representing 200-250 gigawatts of capacity.

    The overwhelming share of new capacity is being constructed for developing economies. China’s coal fleet grew five-fold between 2000 and 2017 to almost 1,000 gigawatts, and India’s fleet more than trebled over the same period, to more than 200 gigawatts. Together, these countries added close to 50 gigawatts of new coal capacity in 2017 alone, almost as much as Australia’s total installed generation capacity.

    Yet, these numbers disguise a significant trend. As shown in the chart, as new plants are being built, older plants are being retired. Annual net capacity globally grew by about 80 gigawatts in 2011, but the figure for the yearly increase had fallen to less than 20 gigawatts by 2018. The rate of building coal plants has been slowing even in the developing economies, with concerns about local air pollution adding to their national commitments to emissions reduction. Fossil fuels’ share of capacity growth fell from around 60 per cent in 2012 to 40 per cent in 2017. The world is turning away from coal and the trend is accelerating.

    Despite the declining trend, coal continues to play an important role in power supply, contributing to a 1.2 per cent increase in thermal coal exports from NSW in 2018. These exports grew steadily from about 100 million tonnes in 2008 to about 170 million tonnes in 2015, but they have been flat since then. The strength of these exports underpins the Minerals Council’s confident statements on the future of coal.

    These contrasting developments provide ample material for selective data gatherers to ‘prove’ that coal is still king or that coal is on the way out. But the trend clearly supports the latter, albeit at an unknown pace. The International Energy Agency says the rate at which global governments commit to the spirit of the Paris Agreement will determine whether global coal demand stays flat or falls by nearly two-thirds over the next 20 years.

    Australia needs to make its own decisions on how quickly we respond to this trend. We have little influence over the global trend, but its implications for our export coal revenues are existential. That is the lesson from the numbers.

    The complement to the transition away from coal is the transition toward lower-emissions power generation – basically solar, wind and hydro. This shift presents a range of challenges and opportunities.

    In 2017, the Finkel Review recommended a Clean Energy Target as a policy to meet the Coalition Government’s target of a 26 per cent reduction in electricity sector emissions by 2030. This policy would deliver 42 per cent renewable electricity by 2030 on a pathway to zero emissions by 2070. Current federal Labor policy is for 45 per cent emissions reduction and 50 per cent renewable energy by 2030, with a 2050 target of net zero emissions. At that level, the 2030 difference between Labor and the Coalition is remarkably small, given the vitriolic debate of the past decade.

    During this same time period, existing coal-fired plants will close. The rate of closure will be determined by policy and the economics of solar and wind generation, backed up by storage, natural gas and demand-response, which means adjustments in use by consumers.

    Precise forecasting is a bedeviled task. But, as with demand for coal exports, the domestic trend is clear: coal looks destined to be replaced by solar and wind generation over the next 30 years. The timing is less certain for the export market.

    For the Hunter Region, the first stage of grief is to acknowledge these uncomfortable facts and trends. It then becomes possible to plan for a future less dependent on domestic coal use and on coal exports. The worst outcome is illustrated by the impact on jobs and the local community in Victoria’s Latrobe Valley when the Hazelwood power plant shut in 2017 with only five months’ notice. The good news is that the trends for the Hunter region, for both domestic and international demand, allow plenty of time to adapt with the support of governments. That time should not be wasted.

    Tony Wood, Energy Program Director, Grattan Institute, spoke at the HRF Centre's Upper Hunter Economic Breakfast on 10 April, 2019.

    This opinion piece was published in the Newcastle Herald on 5 April, 2019.

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  • Upper Hunter recovery slows

    Tuesday, 9 April, 2019

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    In December, Upper Hunter business and household expectations for the local economy continued to decline from their 2017 high. That is according to new analysis released at the Upper Hunter economic breakfast at Muswellbrook RSL on Wednesday, 10 April.

    Dr Anthea Bill, lead economist for Hunter Research Foundation (HRF) Centre, says that more Upper Hunter businesses are reporting that their performance is improving than declining. She cautions that a smaller share are reporting improved performance compared to 12 months ago.

    “Business performance, confidence and expectations of the local economy are still positive and above 2014 lows, but there is growing uncertainty. Evidence suggests a slowing labour market, following the rapid about-turn and growth spurt that started in 2015,” she said.

    Dr Bill explained that the Centre’s Pulse surveys show that, to some degree at least, the dampening of expectations for the Hunter economy amongst households and businesses in the Upper Hunter is ‘in synch’ with the Hunter region more broadly. It also aligns with business and consumer sentiment nationwide.

    Unlike the broader region or the state, employment numbers fell from June 2018 to February 2019. There were 3,300 jobs lost (3-month moving average) in the Hunter Balance* over this period, according to the ABS Labour Force survey.

    “On the positive side, the region continues to exhibit low rates of unemployment, a strengthening construction pipeline, and a relatively robust housing market, particularly in Singleton,” she stated.

    The Upper Hunter economic breakfast also featured a presentation on global energy trends and the likely trajectory for Hunter coal exports. Tony Wood, Energy Program Director for the Grattan Institute, tackled demand for coal from Australia’s major trading partners in the context of climate change policies and the rise of renewable energy technology.

    * Hunter Balance includes Upper Hunter Region (Singleton, Muswellbrook, Upper Hunter) plus Cessnock, Maitland, Port Stephens and Dungog Local Government Areas

    DOWNLOAD breakfast presentations | DOWNLOAD Upper Hunter Region Economic Indicators

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  • Creative industries key to unlocking innovation

    Friday, 15 March, 2019

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    Economic and cultural benefits of investing in creative industries were discussed at the Hunter Economic breakfast on 1 March.

    Our guest speaker, the Hon. David Bartlett, talked about ‘the MONA effect’. The opening of the Museum of Old and New Art (MONA) in Hobart in 2011 boosted tourism numbers and spawned a range of other enterprises. Bartlett, Premier of Tasmania from 2008 until 2011, explained how MONA breathed new life into the State’s economy.

    Tasmania received 1.3 million visitors in the 12 months ending September 2018. Around 347,000 (27%) reported visiting MONA during their trip, up from 28,000 in 2010-11.

    Bartlett says that the MONA effect has meant more to Tasmania than just a boost in tourist numbers. The real MONA effect is to give people confidence about what they can do when they try something different.

    The City of Newcastle and Hunter region more generally were recognised as ‘hot spots’ for creative industries in the Smart Specialisation Strategy for the Hunter Region, released in 2016 by Regional Development Australia Hunter. This strategy noted that creative businesses are typically not large, but, in aggregate, the sector can be a substantial employer. It contributes value to other businesses through product design as well as creative content for marketing, product positioning and branding.

    Creative industries are already a key segment within the Hunter according to a recent report from a University of Newcastle project funded by the Australian Research Council. In 2016, creative industries contributed almost $1 billion to the Hunter’s Gross Regional Product.

    Newcastle residents attend more arts events per ticket buyer than the national average, according to TEG Analytics, and they spend less per event. Newcastle also has a substantially greater share of people who attend arts events within the LGA – 41 per cent. The arts and creative industries that benefit from such attendance have the potential to play a central role in ‘place-making’ - improvements in city vibrancy, identity and tourism.

    Tasmania’s experience with MONA is not an isolated instance, according to Andrew Hoyne, place-making and branding expert, who spoke at the breakfast. The concept of creative prosperity is being recognised by cities around the world, Hoyne said.

    Return on investment in creative industries is low, but building the creative sector is actually an investment in entrepreneurship, innovation and new ideas, Hoyne explained.People who use creative ideas to drive new economic activity have a hugely positive effect on the greater community. When creative economies are given the opportunity to flourish, you get better restaurants and bars, better night life and music scenes, and you end up with a more engaged community.

    Hoyne has seen huge investment in creative hubs, rejuvenated city areas and progressive business precincts in cities in the US. Cashed up IT companies are seeing the value, where recruitment and retention are critical issues. They want to be where smart young people are, who in turn want to be where the fun is.They prefer to be surrounded by like-minded people, entertainment and a variety of activities. On this front, creative prosperity is a core pillar.

    These ideas were digested in a workshop, immediately following the breakfast, via facilitated discussion on identity and positioning for Greater Newcastle. The workshop brought together leaders from diverse sectors, including the creative industries. Participants identified the assets of the region and how those assets could be presented to appeal to investors, prospective residents or visitors. This collaborative effort progressed development of a compelling, strategic narrative for Greater Newcastle.

    The HRF Centre will continue to facilitate such engagement with a broad range of stakeholders on questions that are critical to the region’s development. We seek to provide an evidence base of research and exemplars of global best practices to inform the decisions in government, business and the community.

    Contact the Centre to find out more about our 2019 program of engagement and research, or to express interest in participating in future events.

    This opinion piece appeared in the Newcastle Herald on 20 March 2019

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  • Q&A with Andrew Hoyne and David Bartlett

    Wednesday, 13 March, 2019

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    Andrew Hoyne is the Founding Principal of Hoyne - a strategic place consultant and brand agency. They focus on positioning ‘places’ for commercial and social success. Travelling extensively, Andrew has seen the power of how effective place-making can transform communities here and abroad. He is passionate in his belief that we can do more to create meaningful places. He has published a volume - The Place Economy – that looks at best-practice place-making around the globe and its social and economic impacts.

    Now is the time to explore implications for Greater Newcastle. We asked Andrew what we can learn from what has occurred elsewhere.

    What is one thing that Greater Newcastle may overlook in relation to undergoing a major transformation in identity and positioning? What do people often fail to consider?

    It is interesting that we’ve just been hearing all about MONA and Tasmania. One of the most compelling things that cities around the world are starting to do is to understand the concept of creative prosperity. It seems really obvious and simple but the reason why people have not invested in the creative sectors in the past is because on the surface it seems there’s not a sizeable enough financial return on investment. In traditional terms, people with the cheque book assume investing in creative prosperity doesn’t stack up. But the reality is that when you invest in the creative sector anywhere in the world, you actually invest in entrepreneurship, innovation and new ideas – which are the cornerstone of creating new economic opportunities.

    These people who use creative ideas as a driver of new economic activity, have a hugely positive effect on the greater community. When creative economies are given the opportunity to flourish, you get better restaurants and bars, better night life and music scenes, and you get a more engaged community. It is interesting because although we are surrounded by American television, and it is made to look normal when it is clearly not, America is not the progressive country that we are led to believe. It is, in many ways, incredibly backward for a country with its level of resources, funding and market size. When you take these things into account, you will discover that Australia is much more progressive than many other parts of the world.

    What I see in many interesting cities around the USA is huge investment in creative hubs, rejuvenated city areas and progressive business precincts. Companies from the IT industry who have money, are seeing the value. What makes a city great is education which is integrated into the cities fabric. As the number one issue for intelligent businesses is recruitment and retention. Businesses want to be where smart young people are. And where do smart young people want to be? They want to be where the fun is, where they are surrounded by like-minded people, entertainment and activity. This can only be achieved by having creative prosperity as a core pillar.

    Download the transcript to see what they had to say.

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  • The MONA Effect : Can it be replicated in regions?

    Wednesday, 13 March, 2019

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    The Hon. David Bartlett, Premier of Tasmania from 2008 – 2011, spoke at the Hunter economic breakfast on 1 March.

    He discussed the effect created on the Tasmanian economy by the ‘random lightning bolt of weirdness’ that is the Museum of Old and New Art (MONA) in Hobart. MONA’s opening in 2011 boosted tourism numbers and spawned a range of other enterprises. It breathed new life into the State’s economy.

    Bartlett drew nine insights from the success of MONA that can inform upon economies in cities and regions, like Newcastle and the Hunter:

    1. Find your tipping point
      Bartlett talked about The Tipping Point, the magic moment referred to by Malcolm Gladwell in his 2000 book. The tipping point occurs when an idea or trend in social behaviour crosses a threshold. Bartlett says that is what Tasmania has done over the last 20 years. He says there were great ventures happening in Tasmania before MONA came along. He described MONA as the ‘salesman’ that turned the eyes of the world to Tasmania. Other individuals and institutions were then able to recognise the possibilities and seize the moment to capitalise on that potential market.
    2. Back key individuals and projects that can create change
      Identify individuals who can make things happen. For example Brian Ritchie, bass player from punk band Violent Femmes, who moved to Hobart. Bartlett granted him funding to create the MoFo music festival. Ritchie had a ‘little black book with the details of every musical artist in the world’. Bartlett was far-sighted in supporting what was considered by his advisers as a risky project.
    3. Don’t underestimate your audience
      Bartlett related the way that the Hobart community had embraced some of the controversial elements of MONA and MoFo. They saw the opportunities offered as queues formed for arts events. He said that regional leaders, particularly in Government, can be terrified that people might not like something controversial or different. It takes courage to give people permission to do remarkable things and to take risks to do them.
    4. Identify and articulate your ‘Lexus’ and your ‘olive tree’
      Bartlett related to insights gained from Thomas L. Friedman’s book, The Lexus and the Olive Tree. He argues that, for regions to survive and prosper in a globalised world, they must find both their Lexus and their olive tree. The Lexus represents all that is new in a region – innovation-based, technology-based, export-focused and facing the world. In Tasmania, this could be Incat, an advanced manufacturer that has constructed 75 per cent of the world’s ferries. The olive tree is the thing that roots regions in their history, what they believe in and what unifies them as a community. This could be Tasmania’s apple tree. Each region needs to identify these and to get both right.
    5. End (or don’t start) the religious wars
      Bartlett discussed how environmental protesters hijacked the high-profile Sydney launch of Incat’s Spirit of Tasmania III. They dropped a sign over the edge to say Woodchipping the…Spirit of Tasmania. It highlighted environmental issues that had plagued Tasmania for 40 years. A subsequent truce between the forestry industry and environmentalists worked because the forestry industry was no longer economically viable. Bartlett says it had been propped up by successive governments for 30 years, as a religious war. Regions need to identify these ongoing conflicts and ‘get out of the trenches’.
    6. Authenticity is everything.
      Keep it real. People want authentic experiences. The highest consumer-rated tourism experience in the whole of Tasmania is Ian Hall’s all-terrain vehicle (ATV) tour of Henty Dunes, on the west coast of Tasmania. When you do the tour, he tells you the stories of the region where he is from. He is ‘just a bloke’ with four ATVs on some sand dunes. The authenticity is what people want to buy.
    7. Identify and deal with unintended consequences.
      In his address, and the Q&A session following, Bartlett listed a range of consequences that the MONA phenomenon has created in the lives of Tasmanians. One has been a backlash, particularly in Hobart, against the effects of tourism on the city. For example, the Airbnb phenomenon has negatively impacted rental affordability in Hobart.
    8. Constant evolution is necessary.
      Don’t get complacent. Evolution and what is next is really important. There needs to be a constant striving to understand what is next for a regional economy.
    9. Speak with one voice.
      Regions succeed when they speak to Government with one voice. Bartlett gave the example of the Tahune Airwalk, destroyed in Tasmania’s summer bushfires. Within three weeks of the fire, the Huon Valley community unified, together with MONA, the State Government and the Tasmanian Government Tourism Council. They spoke to Federal Government with one voice and were granted $2 million for a collaborative project that would have immediate impact. MONA will build a temporary art and light installation in the forest, to retain tourism and help rescue the regional economy.

    Bartlett said that the real MONA effect is to give Tasmanians confidence.

    “We have had an extraordinary cultural change in Tasmania,” he explained. “There is a cultural confidence and a contagious view of our own assets.

    “Suddenly everything we do is really good because everyone else is telling us it’s really good. That has created an extraordinary culture of experimentation that wasn’t there 10 years ago.”

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  • Regional economy robust at least for the short-term

    Friday, 1 March, 2019

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    Hunter business performance rebounded in December 2018 from the June quarter, according to data released at the Hunter Economic breakfast on 1 March.

    The data came from the Hunter Research Foundation (HRF) Centre’s December 2018 Pulse survey. It also showed a slight improvement in consumer spending, bringing household consumption above the five-year average for December.

    Dr Anthea Bill, HRF Centre’s lead economist, says business confidence rebounded slightly from the sharp drop recorded in June. Levels are now back to where they were 18 months ago.

    “Household and business confidence in the regional economy over the long-term has weakened however,” Dr Bill cautioned. “In the short-term at least business performance appears to be trending above the national picture, where the sector lost some momentum over late 2018.”

    Household spending in the Hunter also looks to be a bit better than the national picture. However, spending is well below pre-GFC averages. The fragile nature of the household sector is a key concern nationally, where low wage growth, high household debt and cooling house prices are likely to be impacting.

    “The Hunter’s economy has a number of protective factors,” Dr Bill stated. “Factors include renewed activity in the region’s mining sector, a relatively strong labour market and, to date, a relatively robust housing market and construction pipeline.”

    Dr Bill delivered her insights into the regional economy to an audience of 290 business, government and academic leaders at the Hunter Economic breakfast. They included analysis of the contribution of the arts and creative industries in regional economies, including Newcastle and the Hunter.

    DOWNLOAD BREAKFAST PRESENTATION | DOWNLOAD LATEST HUNTER ECONOMIC INDICATORS

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