There has been a lot of discussion lately about NSW returning to the Number One position amongst the States. I have personally always ranked NSW Number One – even through the dark years of State of Origin domination by Queensland – but this ranking is a little more scientific. CommSec, the brokerage arm of the Commonwealth Bank, use a range of factors to produce a quarterly ranking for the States and Territories in the nation. I am sure there is a considerable amount of debate on the methodology and weightings but it is difficult to argue with the cold hard data.
What it did do was start to make me wonder if there was a way you could break this concept down even further and produce an economic indicator for a City. I am not necessarily talking about ranking Cities across our State as they are just too disparate (and we know that Dubbo would end up Number One anyway) but I am talking about an economic indicator to see if there is a way to give an update on how well a City is performing.
Many Local Government Areas (LGAs) across the state (including Dubbo) now give a ‘State of the City’ report to the community on an annual basis but some of the data that is required to feed into that report is not updated on an annual basis. For example the Census is only taken every five years although there are estimations available each and every year. The State of the City report takes into account a range of variables that are not just based on economic outputs but are also based on environmental outcomes and community sentiment.
What I want to do is focus briefly on just an economic scorecard in the same way that the CommSec report focuses on the economic prosperity of each State. Think for a moment about the economic indicators that I might choose for a City that give a snapshot of its economic health. For the sake of the discussion, I am going to call the index MONEY – standing for Monthly Opulence ‘n’ Economic Yardstick. For the MONEY I have some specific criteria I need for the data that will feed into my MONEY.
Firstly, I would need updated information on a regular basis. None of this five year Census data for MONEY. The information, as the name suggests, needs to be available monthly – and not estimated data. It needs to be accurate data.
The second criteria for the data is that it needs to be an indication of the health of the economy but not necessarily a driver. It needs to be about the end result. Not about how the result was achieved.
Lastly, it needs to be reliable and repeatable data that, if need be, can have an index applied for seasonal adjustments.
When you start to think about data that can be fed into MONEY, there are many factors that would be nice to have but the data is just not reliable enough and timely enough. Population growth is a great one – but is definitely not reliable enough on a monthly basis. Employment numbers are also important but again not reliable on a month by month basis. Average income is another good indicator that simply isn’t available on a timely basis to figure in MONEY. Likewise with overnight visitors and day visitors. So what does make the grade?
I had to think long and hard – and some you may find a little obscure, but here are my data points to be fed into MONEY.
Firstly, passenger numbers through the local airport. It may seem a little left-field but when you think about it, the only reason an airport increases its numbers is if there is a reason for residents to travel away from the City (for work or pleasure) which means they are spending money – or people travel to the City (increasing tourism or to do business) which means that money is being brought into the City. The data point fed into MONEY may not be an outright number – it may be a percentage change over the previous year so there are automatic seasonal adjustments.
The second indicator is occupancy rates at the local motels. The main reason that motels have high occupancy rates is because people are visiting the City. Every person that visits Dubbo, for example, injects $132 into the economy for every night they stay. This is obviously a great indicator. The problem with occupancy rates is that they have a limit – 100% – so possibly the number of beds occupied would be a better raw indicator or the percentage change in the total number of beds occupied would be better (you can see that I am making up the criteria for MONEY as I go).
The first two indicators relate to temporary movements of people in and out of Dubbo. The third indicator is housing commencements. This is directly related to people living in Dubbo. If building commencements are increasing then our economy is improving. At a Council level we don’t have building commencements as such but we have building applications. Obviously the two are closely linked and the building applications are available on a monthly basis.
The fourth indicator is also related to housing. Median house price. If the median house price in a City is increasing then it stands to reason that the economy is on the increase. Once again this information is available on a monthly basis provided there are enough sales in a City to give statistically valid information.
The fifth indicator that would be nice to include would be retail sales or expenditure in a City. This data is not readily available – the banks (via EFTPOS facilities) would have comprehensive information on expenditure but it is not information that can be easily (and cost-effectively) sourced.
For the moment that leaves four data points for MONEY. Airport; motels; building applications and median house price. There would be extensive debate on how the numbers would feed into MONEY – would they be increases on the same month from last year? Would they be based on percentages or outright numbers? I don’t have the answers for these but I am proposing the MONEY concept more as a thought bubble than a finished product. MONEY could be used to compare different Cities across the State (noting that not every City would have good data on all of these indicators) but, more importantly, could be used to gauge the economic performance of a City in comparison to past performance.
If you look at Dubbo for the month of September, as an example, the MONEY looks pretty good. Passengers in September were 17,579 which is the highest monthly figure ever and an increase of 12.78 per cent over last year. Our motel occupancy rates were 82.99 percent which is an increase of 7.10 per cent over last year and the second highest total ever – with the highest being 83.19 per cent in September 2011. Building applications hit 83 in September this year which is a 22.06 per cent increase over September 2013 and the median house price in Dubbo is currently $309,000 which is up 1.31 per cent since the end of June.
I am always keen to use empirical data to help analyse anecdotal information and make better decisions. Tell me what you think of the idea of MONEY and how it might be utilised at firstname.lastname@example.org.