The document provides an economic outlook and update from November 2009 by Michael Chappell, director of Pracsys Economics. It summarizes that the global economic recovery will be uneven, with Western Australia in a better position than most due to rising commodity prices and demand from Asia. However, the residential property market and retail sector remain weak. The city of Joondalup is advised to pursue strategic infrastructure investments to diversify its economy and attract knowledge-based industries. Key long-term trends discussed include the need for cities to ensure food and water security, transition to renewable energy sources, and plan transportation around dense urban centers.

1. p r a c sy s .
Economic Outlook
November 2009
Update
Michael Chappell
Director
p r a c sy s .

2. Michael Chappell
2
 Economist of 24 years experience
 Founder and Director of Pracsys Economics
 Research program on urban economics
p r a c sy s .

3. Pracsys
3
 Offices in Perth, Sydney, Brisbane
 Policy advisor to government
 Investment advice to commercial resource,
commercial, resource
retail, infrastructure companies
www.innovation4cities.com.au
www.pracsys.com.au
www
p r a c sy s .

4. Outline
4
 What just happened?
 What will happen next?
 The good news
 The bad news
 The Joondalup news
 Megatrends for cities
p r a c sy s .

5. 5
Part 1 – Economic Update Nov 09
p r a c sy s .

6. Ok, so what just happened?
6
p r a c sy s .

7. Private & Public Sector Activity
7
A straight swap?
Saving
Spe d g
Spending
p r a c sy s .

8. Big Government Debt
8
p r a c sy s .

9. World Industrial Production
9
p r a c sy s .

10. Commodities
10
p r a c sy s .

11. 11
Part 2 – WA: the Lucky State
p r a c sy s .

12. Some good things…..
12
Export markets
rebounding….
p r a c sy s .

13. WA Commodity Prices
13
Commodity prices
yp
rising…
p r a c sy s .

14. Inflation
14
Inflation falling…
g
p r a c sy s .

15. Wages
15
Labour costs ok…
…but look
p r a c sy s .

16. and other good things….
16
 Resource exploration increasing
 Non-residential construction booming (federal and
g(
state infrastructure spend)
p r a c sy s .

17. Some bad things….
17
 Residential property market stalled (due more to
finance shortage than land shortage - project LVRs)
 Home mortgages stretched (it ain’t 2007 anymore)
 Financial services flat
 Retail flat (rents down, savings up, unemployment
up, residual pessimism)
id l i i )
 Banks have written off $13 billion bad debts
p r a c sy s .

18. The Joondalup News
18
 Retail/consumer services economy
 Historical growth fuelled by residential construction
g y
 Small export economy
 Underdone for strategic infrastructure
U d d f t t i i f t t
 Little knowledge infrastructure (smart growth?)
 Big daily exodus of workers
p r a c sy s .

19. The Joondalup News
19
 Designated a Primary Centre
 Focal point for future infrastructure investment
p
 Look to Commonwealth funding
 Heaps of basic infrastructure investment (20 year
H fb i i f t t i t t
history & amenity potential)
 Accessible to major employment centres
p r a c sy s .

20. Quick Summary
20
 Recovery will be patchy
 Economic exposure to Asia positive
p p
 Still too much private debt
 Banks
B k gun-shy h
 Retail and residential construction to remain weak
for two-three years
 Joondalup must position for strategic infrastructure
p p g
growth – more export and knowledge industries
p r a c sy s .

21. Newsflash!!
21
 Economists are fully employed
www.innovation4cities.com.au
www.pracsys.com.au
www pracsys com au
p r a c sy s .

22. 22
PART 2 – City Megatrends
p r a c sy s .

23. Megatrends – Abundance to Scarcity
23
 Food
 Water
 Transport
 Energy
gy
 Finance
p r a c sy s .

24. Food
24
 Access t protein will shape cities i f t
A to t i ill h iti in future
 Protein comes from beef, pork, chicken
,p ,
 Most feed for livestock comes from fishmeal
 Fishmeal is nearly gone!
Food Conversion Ratio Critical for cities:
Beef 12:1 secure local food production
Pork 8:1 c ose population us g
close to popu at o using
renewable inputs
Chicken 6:1 (aquaculture, grains..)
Fish 1:1
p r a c sy s . World Food Organisation, 2007

25. Water
25
 Most drinking water goes on lower order uses
 Reuse, recycle, repurpose
 Innovation in decentralised capture storage and
capture,
use of water will reshape cities
Critical for cities: Diversification of water sources improved
sources,
reuse across all user types and zero liquids discharge from
industrial estates
p r a c sy s .

26. Energy
26
 Fossil fuels for power generation in decline
 Decentralised power generation from renewables is
rising – but peak load capacity is weak
 We need better portable storage (eg: nonobatteries vs
NiMeHi) and fixed storage (vanadium flow batteries)
Critical for cities: power storage innovation has lagged (car
companies?) and new efficient technologies are needed
p r a c sy s .

27. Transport
27
 Urban sprawl has separated people from city amenities
and jobs (particularly smart jobs)
 Car use has grown based on cheap fuel
 Public transit systems work best serving dense urban
agglomerations
Critical for cities: private transport based on renewable energy
and public transport serving dense, diverse activity centres
p r a c sy s .