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‘Bad for tourism’: Business owners say staff shortages will undermine half-price airfares

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Tourism operators say staff shortages will prevent them from meeting the rush of demand triggered by the federal government’s half-price airfares.

About 800,000 discounted airline tickets will be on offer between April and July as part of a scheme designed to cushion the blow when JobKeeper wage subsidies end on March 28. 

But some operators have warned their businesses will be unable to handle the surge in demand, as the pandemic forced many operators to let go of staff and eligible destinations like Airlie Beach in Queensland’s Whitsundays region are traditionally staffed by international backpackers.

Harbour Cove apartments manager Simon Della Santa said it was impossible to attract chefs, kitchen hands, bar staff and cleaners in Airlie Beach and this meant service standards had plummeted.

“Everyone has gone – no one wants to work,” he said.

Mr Della Santa said there were now only two places in town he recommended guests dine at, as the service elsewhere had deteriorated so noticeably. 

“Everyone has had to release staff because it’s very quiet, so you can’t have staff on the books giving minimum casual hours. And then in two weeks’ time the place is going to triple in size and there is no one to meet that service demand,” he said. 

half price air tickets
Mr Morrison has described the scheme as Australia’s “ticket to recovery”.

“So from a broader standpoint, [the scheme’s] just bad for tourism because people are coming and spending money but they’re not getting value.”

His concerns were echoed by Broome hotel owner Michael Leake, who told the ABC that many property owners were already turning away bookings due to a “big staff shortage”.

But Great Barrier Reef tour operator Passions of Paradise founder and managing director Alan Wallish, whose company has been operating for 31 years, struck a more positive note. 

He told The New Daily he was confident he would find the extra staff needed to boost operations from four to seven days a week.

Mr Wallish is confident he can service the rush of domestic tourists.

“I went through plane strikes, September 11, [the] Ansett collapse, GFC (global financial crisis) – you name it, we’ve been through everything – never with a handout,” he said. 

“But COVID is different because literally the tourists just stopped coming and you can’t run a tourism business without tourists.

“We are ready to rock and roll.”

Mr Wallish had 34 staff including casuals before COVID, but now has 18 employees and said he will potentially hire up to 12 more people throughout the year.

“Initially, for a week or two, we’ll be able to carry maximum capacity and that might happen over Easter, but we’re not expecting the numbers to go back to pre-COVID straight away,” he said.

Mr Wallish said in his experience the service standards in Cairns remained high.

“The restaurants and tours that I’m familiar with have all been the same as me – they’ve held on to their key staff so the culture of the companies remains the same, just in a diminished capacity,” he said. 

Since the package was formally announced on Thursday morning, industry leaders have ramped up their public pleas for state premiers to abandon harsh border closures now that vaccines are being rolled out.

Tourism Accommodation Australia chief executive Michael Johnson urged the federal government to reopen the borders so international backpackers could return to work in the tourism sector. 

“There is an opportunity for us to actually bring some of these working holiday makers back into the country,” he told The New Daily.

“Obviously they would need to have a quarantine program that satisfies that as well but … with our COVID numbers being extremely limited to international returns I think we would be a very attractive destination for our working holiday makers to come back.”  

Meanwhile, the federal government’s tourism package has come under fire for excluding the cities, missing out regional areas such as Port Macquarie and Coffs Harbour, offering no direct financial assistance to local tourism operators, and for only including one Victorian destination: Avalon Airport.

Deputy Prime Minister Michael McCormack defended the government’s choice of eligible destinations during an interview on ABC’s Insiders program on Sunday.

Asked whether the list of destinations was determined by “who complains the loudest”, after Hobart, Adelaide and Darwin were added to the original list, Mr McCormack said it had been put together based on advice from Austrade, which he said had identified areas that would normally be “awash with international tourists” at this time of year.

“And we will potentially add more. This is an initial list,” he said.

“This package is going from April through to July, and we will look at it. We will revisit it, as we’ve done all the way through.”

Mr McCormack said that meant the government could end up spending more on the scheme than the $1.2 billion it announced on Thursday.

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Alan Kohler: The whaling industry shows us the future for coal

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In his pre-election speech in September 1946, Ben Chifley talked about The Coal Problem, as he called it – “a social and technical problem of complexity”.

Fair chance Scott Morrison will be talking about the coal problem again in his pre-election speech 75 or 76 years later, or at least he should be, and this time it’s both different and the same.

He got the National Party over the line on net zero by 2050 on Sunday, but only just, and the opposition to it is all about coal.

In 1946, the problem was a dire shortage of the stuff caused by the inefficiency of the mining industry and terrible working conditions leading to scarcity of labour. It was described by one MP as a “chronically sick industry”.

Mr Chifley won that election, beating Robert Menzies’ Liberal Party, and the Labor government fixed the coal problem by establishing the Joint Coal Board with the NSW government and basically taking control of the industry.

Today there’s too much coal, not too little, because many decades of burning it for energy and steel, as well as oil and gas, is turning the planet into a greenhouse.

But like the one in 1946, the Coal Problem of 2021 is socially and technically complex.

Coal exports were $5.5 billion in August, up 13 per cent in a month and almost double the previous August.

A lot of people are engaged in mining and shipping it, directly and indirectly, and the towns they live in rely on coal.

There’s no need to recite all the statistics: Coal is an important industry for Australia, especially New South Wales and Queensland, and our national power grid is geared to it.

It’s also doomed.

ben chifley 1945
Like Scott Morrison, Ben Chifley also faced a problem with coal. Photo: AAP

The International Energy Agency, among other expert and scientific bodies, is clear that there is no place for coal in a world that holds global warming to something less than catastrophic.

There is a clear choice between burning coal and having a liveable planet, and anyone leaving Glasgow next month, possibly even including our Prime Minister, will be in no doubt that the clock is ticking for the industry.

The sooner the coal industry dies, the better off we’ll be.

So the heading on Resources Minister Keith Pitt’s press release dated September 6 – “Coal industry has a strong future in Australia” – was not true.

To assist that “strong future”, the ludicrously titled Environment Minister Sussan Ley has recently approved three new coal mine extensions: at Whitehaven’s Vickery mine, at Glencore’s Mangoola mine, and at Wollongong Coal.

At the same time, Ms Ley knocked back a big renewable energy project in Western Australia.

Little wonder those companies want to dig up more coal as quickly as possible: The thermal coal price has more than quadrupled this year from $US50 ($67) a tonne to more than $US220 ($295) and there is money to be made.

But I can’t help being reminded of the scenes in The Godfather Part 2, of partying in Havana in 1958 before the Cuban revolution.

It is not a question of whether coal assets will be stranded, but when, or as Scott Morrison has put it, without thinking of coal: “For Australia, it is not a question of if for net zero, but how.”

Whaling industry shows us coal’s future

The whaling industry faced a similar fate in the 1860s after oil was commercialised in Pennsylvania in 1859.

Whale oil had lit streets and homes and lubricated machinery for a hundred years, enabling the industrialisation of Europe and the US.

It was a massive industry, supporting many thousands of families and communities, but it ended because it was both horrible and replaceable by kerosine.

Likewise coal.

Meanwhile, Scott Morrison is trying to have it both ways: Talking up the technology that will replace coal while also appearing to support the industry’s continuation.

It’s true that there is a lot of good work being done on technology in Australia, ably led by the former chief scientist Alan Finkel, as well as by entrepreneurs like Andrew ‘Twiggy’ Forrest and Michael Cannon-Brookes.

And the benefits from technology are going to be immense.

A team of mathematicians at Oxford University has just completed a study of the economic windfall to be gained from decarbonisation, based on known technology.

They estimate the net gain at $US26 trillion ($33 trillion). The faster it happens, the bigger the gain.

Faster transition pays for itself

It comes about largely because of pricing differences: “The prices of fossil fuels such as coal, oil and gas are volatile, but after adjusting for inflation, prices now are very similar to what they were 140 years ago, and there is no obvious long-range trend.

“In contrast, for several decades the costs of solar photovoltaics (PV), wind, and batteries have dropped (roughly) exponentially at a rate near 10 per cent per year. The cost of solar PV has decreased by more than three orders of magnitude since its first commercial use in 1958.”

The main insight of these mathematicians is that the “the Fast Transition is likely to be substantially cheaper” (their italics).

Technology is the answer, but Scott Morrison and his colleagues can’t keep playing both sides. They will have to choose.

You can’t credibly foster disruptive technology while also promoting the thing it’s disrupting.

You’ll get credit for neither.

Alan Kohler writes twice a week for The New Daily. He is also editor in chief of Eureka Report and finance presenter on ABC news

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‘Mountain of equity’: Millions of home owners could save thousands

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If you’ve become a home owner in the past five years it might be worth getting an appraisal – you’re probably sitting on a “mountain of equity”.

As we’re all aware, house prices have soared lately. And while that’s bad news for rapidly worsening inequality, it also means those that do own a home could save money on their mortgages, upgrade their properties or even borrow to finance that renovation they’ve been wanting to get done.

Refinancing could save you thousands in interest repayments a year.

You’ll be in a particularly strong position if you’ve also been able to keep up with your mortgage repayments during COVID, because you now own a larger proportion of a house that has rapidly increased in value lately.

It’s a virtuous cycle that’s making the gap between the haves and have-nots much larger in Australia by pushing up property prices even faster.

Owner occupiers have been the keystone of the latest property boom, with most being existing owners upgrading their homes.

Who could blame them? RateCity research published this week finds an owner occupier in Sydney who bought at the median price in 2019 with a 20 per cent deposit has now seen their wealth increase by $402,000.

Apply the same conditions to Melbourne and wealth has risen $192,000.

This assumes property owners kept up with their mortgage repayments, which the majority of home owners have done while working from home and taking part in a $300 billion government cash splash during COVID.

“Millions of homeowners are sitting on a growing mountain of equity, some without even realising it,” RateCity research director Sally Tindall said.

How to benefit

If you’re in this situation, getting the value of your home appraised could be the first step to a better home loan or moving up the property ladder.

“If you’ve owned your own home for at least a couple of years, and have been diligent about paying down your debt, you could refinance to a lower rate,” Ms Tindall said.

“Lots of lenders offer interest rate discounts to new customers with loan-to-value ratios below 70 per cent, including ‘big four’ banks CBA and Westpac.”

What’s a loan-to-value ratio? Put simply, it’s the difference between the size of your home loan and the value of your property.

So, as an example, if your home is worth $1 million and your mortgage is $100,000 you have a loan-to-value ratio (LVR) of 10 per cent.

The lower your LVR the easier it will be to refinance your loan at a lower interest rate or borrow more to purchase a higher-value property.

First home buyers might also be able to remove the guarantor on their loan sooner than they thought because of rapidly increasing prices.

About 58 per cent of the lowest variable interest rates available are open only to those with deposits of 30 per cent or more, RateCity said.

In other words, rising property prices may have moved you into the club of home owners that can achieve lower interest rates on their mortgages.

A median Sydney property purchased on an 80 per cent LVR in 2019 could now be refinanced on an LVR as low as 55 per cent.

If those conditions are applied in Melbourne, LVR falls to 63 per cent.

 

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Here’s why Australians won’t be hit by the soaring gas prices we’re seeing overseas

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Australians have dodged the bullet of skyrocketing gas prices currently hitting consumers in Europe and Asia.

While prices in the major gas hubs of those regions have spiralled up by a factor of five, in Australia a brief spike eased in September.

That means local consumers won’t be facing big jumps in household bills into next year.

Australian gas prices jumped in June and July after outages at coal-fired power plants in Victoria and Queensland boosted demand for gas generation.

That spike was short lived due to warm weather in some states and lockdowns in Victoria and NSW eroding demand, according to research by EnergyQuest.

“You’ve had warmer weather though the major capitals, the effects of the lockdowns and increased renewables, which reduced the demand for gas generation,” EnergyQuest CEO Graeme Bethune said.

Power prices fell

Those factors have also fed into power prices, with electricity costs falling in September in comparison with a year earlier.

What is interesting about the table above is that not only did average power prices drop, but the peak price charged by generators when power is in short supply also dropped.

That was despite the ongoing problems at the Victorian and Queensland power generators.

Part of the explanation is that there is increased output from renewables as rooftop solar grew, and new wind and solar generation came online.

That meant that gas power was called on less often to meet peak demand, which in turn held down power prices.

The inverse was true in Europe, where a 20 per cent fall in wind output over recent months helped run down gas supplies, contributing to the price spike, Mr Bethune said.

The future of power prices in part will depend on renewable output.

“If the wind blows strongly and there is plenty of sunshine across eastern Australia then it will keep pressure off gas prices,” Mr Bethune said.

The influence of renewables across the system in the last year is evident in this chart on power supplies.

Although wind has been stable in terms of its contribution to the power equation, outputs from hydro, solar farms and rooftop solar have risen.

The result is that coal has been pushed down from 65 per cent of power production to a record low of 60 per cent and that should help hold down both gas and electricity costs.

Even if offshore gas prices continue to spike Australian gas producers would not be in a position to push up local prices to match it.

“A lot of the export contracts for LNG [liquified natural gas] out of Queensland are set against the oil price and that has not risen by anywhere near the amount gas had,” Mr Bethune said.

“Then you have the federal government which has made clear to LNG exporters that they need to make enough gas available to the local market.

“They’re doing that regardless of the fact that they could make more money in the export market.”

Domestic users are supplied from long term contracts that cannot be easily changed when gas prices rise, so that would be another brake on prices.

However, while it is comforting to know local gas prices won’t spike to offshore levels, Australian consumers are still not getting as good a deal on prices as they should be, according to Bruce Mountain, Director of Victoria Energy Policy Centre at Victoria University.

“For small customers the gas price is not the big deal. The biggest things are the operation of the retail market and the costs levied by the owners of the gas-distribution pipes,” Professor Mountain said.

“Gas supply has been very profitable for the big gas companies.”

That was in part because consumers don’t bargain-hunt for retailers, and the charges levied to use the pipes and wires of the energy distributors are too high.

Regulators set these charges and could crack down on them but don’t, Professor Mountain said.

Since privatisation margins earned in energy distribution have increased dramatically.

Power distributor AusNet Services, under takeover offers from two groups, “is currently making a margin of 19 per cent – they’re far too profitable,” Professor Mountain said.

When power was distributed by [the state-owned] SECV there was a margin of 3 per cent on sales, Professor Mountain said.

Household power bills could be 15 per cent cheaper if the distribution businesses were less profitable, he said, with the situation similar for the gas sector.

But the move away from gas as a household fuel, necessary to reduce greenhouse emissions, will help deliver cheaper energy.

“Devices that use gas [for household tasks] are much less efficient that those using electricity,” Professor Mountain said.

The post Here’s why Australians won’t be hit by the soaring gas prices we’re seeing overseas appeared first on The New Daily.

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