State of the Nation: Cover Story Australia 2002

The kids are in school; politicians are back politicking; management and staff have returned to their desks . . . all of which means 2002 is officially under way. But what can we expect? What’s going on with the economy? How has business survived September 11? Are there any danger signs ahead? To find some answers Company Director asked leading directors around Australia, as well as SME commentator Peter Switzer and HSBC economist John Edwards to look into the crystal ball of 2002 and provide their views on the state of the nation.

It's a good thing the use of capital letters is going out of fashion. With terms such as recession and recovery accorded a lower case emphasis in much of the financial press, readers can at last feel comforted that things are not as Big or Bad as they could be. The problem, however, is that no one seems able to determine whether we are having a lower case recession or a lower-case recovery because economic data here in Australia and in the financial markets of New York and London can support either position. The only thing everyone agrees on is that Japan is in Trouble. What is also undetermined is whether one of the biggest financial bubbles in corporate history has been deflated or merely pausing before it expels a decade of excess that has culminated in huge levels of household and corporate debt. Once again you can find champions and economic data to defend or promote whatever position you choose. One of the bonuses to emerge from demystifying the R-words is that the Australian economy no longer shudders every time the US economy shakes. Despite our biggest trading partner being on the economic ropes and the tourism industry hit by a fear of flying, the Australian stock market, as ASX boss Dick Humphry said in the December issue of Company Director, managed to outperform the world's major stock markets.

An NAB survey released late last month suggests that small firms are leading Australia's economic recovery and some analysts are predicting that growth could hit 4 percent this year. This prediction was tempered a few days later by the news that the inflation rate had hit 3.1 percent, a level where the Reserve Bank takes a great deal of notice. Of course the Government is quick to claim credit for its management of the economy and, in terms of the grants to first home-buyers, there is some justification. Low interest rates have also spurred consumer confidence and spending but the flip-side is the ever increasing levels of credit card debt. The low Australian dollar has provided a boost to exports but for those companies that have US dollar exposures in what they buy or need to repay in debt, the situation is not quite as rosy. There is little doubt that the bursting of the IT/dot-com bubble had an effect on the equity markets. But unlike the end of the property boom in the late 80s, the IT bubble was equity-funded rather than debt-funded and therefore the trickle-down effect throughout the economy was not as severe.

The issues over the coming year will continue to be the old favourites of further tax reform, a revamp of the superannuation rules, the selling of Telstra, labour market reform and the easing of government bureaucracy and rules as they apply to the owner/directors of businesses. It is also clear that corporate governance is not to be taken for granted and that the roles of the regulators need to be reviewed. But on balance, this small survey of directors around Australia shows that the Australian nation seems to be in a pretty good state.

Victoria

By Don Mercer, deputy vice president AICD

Victoria shows a mixed economic outlook with some signs of health, at least by current national standards, relatively good employment figures (current unemployment 6.6 percent), strong retail sales and a market of continuing housing growth. It is expected that housing construction will maintain a high level of activity for the balance of this financial year. While the effects of September 11 created setbacks for at least two major Melbourne companies, there is still some degree of confidence in the future. Victoria's population has been increasing for the last four years and this is having a pronounced effect on housing prices. There is a construction boom which includes major developments at the Melbourne Cricket Ground, the Spencer Street railway station upgrade and the Commonwealth Games Village. Biotechnology, IT and communications, the professions and tertiary education are also showing marked growth and productivity often without the spectre of potential or actual union interference. Additionally, the coffers inherited by the new Labor Government in 1999 were healthy and there has been a degree of prudent fiscal rectitude practised by the new government, at least during the early part of its term.

However, the future of the resources industry is not looking good. Even BHP Billiton and WMC are looking increasingly like short-term tenants. Shell has already moved its Australian headquarters to Perth and Rio Tinto is effectively based in London. A new survey by the Victorian Employers' Chamber of Commerce and Industry shows a more optimistic growth outlook for Victoria when compared with the previous quarter. Seventeen per cent of those surveyed believe that the state will show stronger growth over the next 12 months against 13 percent in the previous quarter. Thirty six per cent still believed the state's performance would be weaker, but this is an improvement on the previous quarter where 48 per cent believed the economy of Victoria would be weaker. On balance however, the only specific industry where a sizeable proportion of respondents believe that Victoria's economic performance will strengthen over the next 12 months is building and construction (40 percent). In contrast, industries where a sizeable proportion of respondents anticipate a weakening economy include: transport and storage (50 percent); agriculture, forestry and fishing (44 percent); and wholesale and retail trade (40 percent).

Trends in business profitability remained weak during the December quarter 2001, with a net balance of 4 percent of respondents reporting a fall in profitability compared to 20 percent in the September quarter survey. The decline in profitability in the December quarter 2001 is less that the decline in the September quarter, reflecting a slight improvement in general business conditions despite an uncertain global outlook.

NSW

By Rob Chaloner, NSW Division president

The outlook for 2002 among NSW business leaders is sober but positive. A recent business expectation survey by NSW State Chamber of Commerce showed that 42 percent of businesses expect the economy to be stronger this year, compared to 2001. Those that were more pessimistic cited weak global trends as their main concern. Jeff Schubert of Australian Business Ltd says one of the major reasons for the strong performance of the Australian economy has been the low value of the $A. This has made Australia's exports more competitive. However, Schubert warns that the downside to having a low $A is that it can lead to firms becoming complacent about the need to also take other actions to boost productivity and their international competitiveness. Such actions include investment and labour practices. Indeed, the strong performance of the Australian economy might also make governments (both state and federal) too complacent about the need for economic reforms and reduced taxes on business (particularly payroll tax which adds to labour costs). The other significant adverse effect of the undervalued $A is that Australian assets and businesses can too easily become the targets of foreign buyers.

Regional NSW has certainly been affected by a decline in tourism, following the collapse of Ansett. In a recent survey almost one third of businesses reported a decrease in activity following the reduction of airline services to regional locations. Issues facing business in 2002 include the federal tax system and the cost and complexity of compliance. Small business is particularly unhappy and there is a strong call to both State and Federal government to take action. On a more positive note, one area in which the Government is showing some leadership, is improving the governance of statutory corporations. From a state perspective, this is reflected in an increase in participation in educational activities, provided by AICD, from members of government boards. We welcome this trend and look forward to supporting government in this important initiative.

SMEs: The outlook for owner/directors

By Peter Switzer

With the economic swells building up on the global front, what kind of waves will Australian SMEs be riding in the year ahead? Will they be nicely formed curls that give a long ride to the beach? Or will they be powerful breakers that wind up as dumpers, wiping out unsuspecting SME surfers? Sure, it's apparent that I have been over-influenced, possibly over-intoxicated by Christmas holiday activities, but everyone in business needs an economic "surf report" and I reckon surf's up. Of course, that's not to say that all industries will have a great 2002. I bet though that most industries that had a terror-laden second half last year will have slightly broader smiles on their faces this time next year. And I am aware that there is definitely a risk that a rogue dumper could be out there for the second half of this year, but I'm largely a fair-weather economist for 2002. Before doing the objective thing, let's look at some optimism-raising positives. The December 2001 ANZ job ads survey jumped 2.2 percent, the biggest rise since January of the same year. ANZ chief economist Saul Eslake is tentatively upbeat.

"The relatively large increase in the number of newspaper job advertisements in December may indicate that employers are becoming more confident about the outlook for the Australian economy, following a period of considerable uncertainty in the aftermath of the September 11 terrorist attacks on the US and the collapse of Ansett," he said. "Certainly, that would be consistent with evidence from other surveys pointing to a recovery in business confidence." And the latest Dun & Bradstreet survey reinforces this line. The December 2001 snapshot of 1200 executives found that business confidence was at its strongest level for two years. This follows rip-roaring readings on retail sales over Christmas and New Year and strong sentiments for increasingly confident consumers. The Westpac/Melbourne Institute's consumer sentiment readings have had consumer confidence up three months in a row, with rises ranging between 3-5 percent. These are strong results. These confidence spikes are crucial steps in the stairway to recovery this year. Along with other solid indicators, they need to continue for a few months in order to drag business investors out of the no-go zone where they have been as a result of a post-Olympic slump, the uncertainty of the federal election and by the US slide into recession, ahead of the terrorist-encouraged downturn globally.

Little wonder businesses have been holding back on lashing out on new equipment, plant and other capital goods. An investment recovery is a critical issue. In fact, it is the main game for 2002 for anyone who believes the Australian economy will keep on growing strongly. To make this happen, it's important that more solid evidence arrives that the US is back on the economic comeback trail. My optimistic view rests on an American recovery being more believable by say March and "feel-able" by mid-year. And for those looking for omens, one guy I listen to is Rupert Murdoch. He recently gave my "things will be okay" scenario a significant boost when he noted that advertising revenue for his US regional television stations had jumped up by more than he had expected. Mr Murdoch had previously been more negative on the US outlook. Clearly, as Access Economics argues in its December 2001 issue of Economics: "Australia needs more than housing and retail to stitch together a 'miracle' run in 2002." Keep your big picture eye on the US recovery story and pray for big swells of demand to hit the American economy. Bill Evans, the head of Economics at Westpac has gone more negative on the US and believes they won't start to improve noticeably until the fourth quarter. This could mean a slower growing Australia in the latter half of this year. Still, he puts calendar year growth at 3 percent. Last year, Mr Evans estimated that our economic activity went up by about 2.5 percent.

Evans says the Aussie dollar will remain solid but don't expect it to rise much. This will help export-oriented businesses and those competing with imports. Selling Holdens should be easier than foreign-made rivals. He also expects a significant slowdown from the boom in the building sector, despite historically low interest rates, because of the reduction in the First Home Buyers' Grant back to the base $7000 in June. On retail, he thinks the disappointing US story will force unemployment into the 7 percent plus region, and that means consumers will become less courageous in their shopping exploits. Consumers and house buyers have been important to our impressive economic growth, with many global economies wrestling recessions. Business services and IT businesses might experience some improvement in the first half of 2002, driven by local factors. Once again, however, the expected weak showing in the US will hold this sector back in Australia. The current real strugglers – tourism and hospitality – will find 2002 challenging, especially those businesses heavily dependent on overseas travellers. Only 20 percent of the total tourist spend is from abroad, the rest is domestically-driven. So, given a better annual growth rate for production and incomes, next year could be a little brighter for this locally-reliant group. Certainly, the arrival of Ansett MkII should hot up competition and make domestic air travel seductively priced.

Manufacturers should get a slight lift in activity, especially in the first half of this year, with interest rates and the dollar low. Locally, we're ready for an endless summer of "surfing" but it all rests on the economic swells out of the US in coming months.

Tasmania

By George Loughran, president Tasmania Division

Recent statistics show virtually all business indicators rose in Q4 2001. General business conditions up 10.5 percent, total sales revenue up 24 percent, employment up 1.3 percent, investment on plant and equipment up 7 percent. Some directors are anticipating a weakening in the Tasmanian economy over the next 12 months but if the national economy stays on track there is no reason Tasmania should not do the same. The state is entering a period of sustained and exciting development. The major focus at this time is the development of the Bass Strait Gas Pipeline and the completion of the Basslink electricity cable from Victoria. I had the opportunity to discuss the gas development with Carl Fisher, the project manager and a native of North Carolina. The project will at its peak generate around 900 jobs with an ongoing employment of around 200 after linkage into the state. Expenditure will be $400-600 million. Gas is expected to flow in mid-2002. The development is currently the largest pipeline project in Australia. And if you take into account the diameter of the pipe being laid it is one of the largest gas pipe laying projects in the world.

With the Basslink electricity and the development of wind farms in the north of the state, Tasmania will become an effective net exporter of clean, green energy into the national grid. More importantly both these projects will give Tasmania the resources to attract new investments. One of the most exciting prospects of all is the recently completed agreement between Duke Energy and Tas21 that will see fibre optic cable collocated throughout the gas trenches in Tasmania. Within 3-5 years this will provide Tasmania with the most sophisticated fibre optic network in Australia. The broadband availability will create opportunities in IT, e-commerce, delivery of government services, competitive cost and location opportunities for business and for home entertainment. Tasmania has embarked on an Intelligent Island focus. The Government is committing large resources to increasing the availability of computers in our schools, with the longer-term intent of emulating the success that Ireland has experienced. The fibre optic cabling is another step in this process.

Perhaps one of the most encouraging things in all this is that both major political parties, despite their ideological differences, appear committed to the overall scheme of these things. One of the most potent factors in the Irish success was the ability to plan long-term by having a common vision about the outcome while retaining separate party policies. The next 12 months will see the resolution of the choice of the second vessel to service Bass Strait. Whether it is a locally built catamaran or an imported monohull, certainty provided by the new service will increase visitor numbers. It has been reported that 18-20 percent of Australians want to visit Tasmania yet only 3 percent actually make it. A recent survey by the Tourism Council of Tasmania showed there was immediate potential to lift visitor numbers by 50,000 and most likely by 100,000 per year by running two vessels every night between Tasmania and Victoria. The selection of the right vessel this year will see that eventuate quickly. The collapse of Ansett had the potential to be a disaster for the state. However, the subsequent arrival of Virgin and Ansett Mark 2, together with increased services from Qantas has seen a net increase in seats into the state with many of those being at substantially reduced fares.

The recent completion of the Hotel Grand Chancellor Federation Concert Hall, where the AICD held last year's National Conference, together with various accommodation developments in the Sullivans Cove area means that Hobart can now comfortably host conventions of 1000-plus. That market is growing rapidly. Tasmania will continue to have its problems in the short-term but I am optimistic for its future for the next 12 months and beyond and, if the world continues on the way it has over recent times, this place is looking better and better all the time.

Western Australia

By Terry Budge vice president WA Division and managing director BankWest

On the back of strong housing activity, the Australian economy performed very well in 2001. The major issue in 2002 is whether business investment kicks in by the time housing activity slows from around the middle of the year. Business investment remains the key link in an Australian economy that has so far defied the downturn in the global economy that was already under way before September 11. Australia simply cannot expect to stand out from the pack indefinitely unless business investment plays its part. The long-awaited recovery in business investment is already underway in Western Australia, although it is concentrated in two major projects, including the fourth train of the North-West Shelf. An exciting array of projects, including some that will add considerable value to the State's vast mineral and energy resources - not to mention Australia's balance of payments - are poised to get the go-ahead when global economic uncertainty subsides, but the timing of recovery in major economies - the US and Japan in particular, is far from clear. The Western Australian economy can be more exposed to a prolonged and/or deep global recession than others, but also has enjoyed more than its share of the benefits of microeconomic reform since the early to mid 1990s. The loss of appetite by both Labor and the Coalition on further microeconomic and labour market reform therefore is disappointing.

Much of debate in the most recent election campaign centred around the Federal Government's budget position, with both sides claiming the high ground in management of the finances. Recognition of the virtues of budget management should ordinarily be welcomed, but rigid adherence to a surplus-at-all-costs doctrine may be counterproductive if business investment does not recover within a few months. Carefully targeted fiscal stimulation has a legitimate role when an economy is threatening to tip into recession. If not for public capital works spending in 1999 and 2000, the Western Australian economy would have struggled to absorb the sharp downturn in business investment without a steep rise in the unemployment rate. If business investment does not recover by mid-year at the national level, fiscal stimulus aimed at substituting for business investment may be required to offset slowing activity in housing construction and the consumption of household goods that goes with a cyclical upswing in the residential property cycle.

The proliferation of views that the US economy will recover by the middle of 2002 has been given a slight boost by comments from the chairman of the US Federal Reserve in late January. However, history strongly suggests that Australia cannot avoid recession if the US economy remains weak for another six months or more. Equally, however, low and stable inflation and interest rates, along with an exceptionally competitive exchange rate, leave Australia well placed to sustain solid growth as and when the US economy regains its footing.

ACT

By Alan Morrison, ACT Division President

The ACT and region has just reported its 13th consecutive quarter of strong growth according to the ACT and Region Chamber of Commerce's quarterly business expectation surveys. The key factors contributing to the continuing robust nature of the economy stem from a number of sources. Employment continues to be stronger than the national average and is underpinned by a young and highly skilled and educated workforce born out of the world class education and research facilities available in the region. The continued growth of private sector employment has also been the key. The public sector witnessed a marked downsizing beginning with the Keating Government and continuing through the Howard Government period. This has contributed to a shift in employment and economic development patterns. Following this contraction in the public sector (which coincidentally also saw a rise in outsourced private contractor growth), there is now an upswing in public sector growth in line with normal government functional growth.

However, contrary to a widely-held misconception, the private sector in the ACT is now the dominant employer, employing 55 percent of the ACT's workforce. The private sector is made up of mainly SMEs with many larger companies locating "branch offices" in the region. The ACT region has a highly competitive and internationally focussed information and advanced technology industries sector as well as dominant education, tourism, sport and defence related industries. It is and will remain a fact of life that the ACT economy continues to be influenced by its unique role as "the Capital Region". For example, the economy is also strengthened by the presence of several hundred significant national associations and foreign embassies and missions. The positive spin-off of being the "Capital Region" is seen in the growth and development of construction, hospitality and business and government services sectors. The region's economic growth was the highest in Australia - roughly double the national average. Riding on the back of a buoyant 2001, business looks set to build on that success in 2002.

According to a recent survey by Queanbeyan City Council economic development manager Simon Mitchell-Taverner: "We obtained an impression of confidence in the future, and an expectation to be around for the long term. Some of our key findings indicated that 33 percent believe the local economy will grow in the next 12 months while 38 percent believe it will remain at a similar level. Incredibly only 6 percent expect a decrease.

"There was a similar result in profitability expectation with 42 percent believing their net profits will increase over the next 12 months, 40 percent believing their profits will remain at a similar level, while only 12 percent anticipate a downturn." Chamber of Commerce chief executive Chris Peters also emulated this air of confidence. "While the September 11 events and the recent corporate collapses are expected to present all of us with challenges during the year ahead, it's the micro and small business sector that is best able to grow sustainable employment." However, Australian Business Ltd ACT and Region Manager Clinton White cautioned against too much optimism. "National and global economic conditions can and do impact on the economic performance of the Capital Region and business must keep abreast of national and global indicators and prepare for any influencing factors," he said.

White believes that the biggest winners look like being businesses in the home and lifestyle sectors with the effects of the attacks in New York and Washington last year making consumers rethink their priorities. The predictions are that consumers will take a kind of "fortress" approach, so that their priorities will turn to home beautification and security improvements. Homeware and electronic home entertainment retailers, as well as building and landscaping industries could enjoy a business boost as consumers make their homes more comfortable. The security industry also could benefit as the need to protect family and property comes more sharply into focus. These trends will have considerable flow-on benefits as developers and manufacturers pursue product improvements and refinements, with the resultant benefits being new business opportunities and employment growth. With the introduction of the new tax system, business now has to be more diligent with its record keeping. If businesses don't have adequate records they will have problems. There are many forms of record keeping, not just financial. They need to understand what is happening in their business, for example where are their leads coming from? Knowledge is required to react quickly.

The new Defence Headquarters Australian Theatre is scheduled to be built in NSW, 12km from Queanbeyan, 20km from Canberra. The 35,000sqm facility will be the largest development since Parliament House. Construction starts 2003, and the 1000 or so staff are expected to occupy in 2006/2007. The ramifications of this construction, related road and other infrastructure development, and residential development to cope with up to 1000 families arriving from outside the region, will all assist growth expectations.

Queensland

By John Massey, Queensland Division president

Queensland has long been recognised as the Sunshine State - a haven for holiday-makers and a place to get away from the hustle and bustle of the "sophisticated" southern states. However, recent years have seen a significant change in focus for the state. Business and government have pushed to position Queensland as a business-friendly destination for national and international companies. And the push is paying dividends. No longer is the one-time tourist state simply envied for its lifestyle, subtropical climate and low cost of living. It has now arrived as the smart state - a popular business location and a formidable force in the national economy. And the outlook for 2002 is for solid economic growth. The smart state ideal involves attracting innovative and technology-driven companies to Queensland. Biotechnology development is a major thrust, with Queensland aiming to establish itself as a world leader in the sector. Incentives to attract "smart" business include low payroll tax, low stamp duty and low debt servicing costs which, combined with political stability, inexpensive real estate and a highly diverse workforce, have made Queensland the fastest-growing economy in the nation.

Queensland's world-class unique infrastructure is worthy of specific mention. The state has more deepwater ports than anywhere else in Australia, three international airports and Australia's largest rail network. Several of these facilities culminate in Brisbane's Australia Trade Coast precinct which has been integral in attracting large national corporations such as the new Qantas engineering base and Virgin Blue's head office. Regional centres are also strong, with the new head office of Australia Airlines to be located in Cairns. Much of the state's growth hinges on its ability to attract such business and Queensland has also had significant successes with international businesses in recent years. Spurred by the state's close proximity to the Asia-Pacific region, companies such as Boeing, Citibank and Duke Energy have chosen the state as the location for national headquarters. Queensland also clearly benefits from factors which are boosting our national economy compared to many other countries. These include increased construction activity, interest rate cuts and an increase in exports resulting from the low dollar. However, Queensland will not be without challenges in the coming year. Although the downturn in the global economy has been played down, it would be remiss to believe that Australia is immune from global factors. Business confidence has deteriorated worldwide and although Australia is outperforming many other countries, the uncertainty of international economies along with declining consumer confidence, increasing raw material costs, and the weak dollar will impact on business investment. This has been signalled by the volatile share market and the reduction in the number of IPOs in 2001.

From a Queensland perspective, the war against terrorism as well as the collapse of Ansett have seen a decline in tourism which is still a significant earner for the state. Downturns in retail, business services and mining activity are also expected. The challenge for Queensland business leaders and government over the coming year will be to continue to promote the state's business advantages, further expand business opportunities and minimise the impact of any slowdown in the national and international economies. With a changing demographic that brings increasing numbers of professionals and executives to the state, and the ability to nurture and support new and innovative companies, Queensland's future is looking positive. Most believe Smart State's business peak is yet to be realised.

Economics

By John Edwards, chief economist, HSBC Bank Australia and New Zealand

Despite a global downturn, the Australian economy performed remarkably well last year. There are certainly some risks, but we think it will continue to outperform most other economies this year. During 2001 exports were helped by a cheap dollar, by higher commodity prices than are usual when world industrial production is falling, and by new market opportunities for some rural products. A paradoxical advantage for Australia last year was that it does not have a large capacity to make or export information technology and communications manufactures, and was therefore unaffected by the global collapse in demand for those products. Finally, the economy got a welcome boost from low interest rates, and an upswing in new home construction. As a result the Australian economy grew around 4 percent last year, much faster than the US, Europe and many Asian economies, as well as Japan. We expect exports will fall in the first half of 2002 as the global downturn bites, but the impact will be cushioned by the strength of the housing construction boom and continued growth in real incomes, employment and household spending. Overall economic growth should continue around 4 percent through the first half. In the second half the housing boom will fade, but by then the US, Europe and Asia will be growing a little more firmly. Australian exports should pick up again in the second half, and by that time we should also be seeing the first signs of a big upswing in business investment promised by the major government survey of business plans.

There is a risk that the global recovery will be too weak to sustain an export upswing in the second half, in which Australian growth will begin to falter. But if investment is stronger than expected then growth going into 2003 will be quite rapid. The implication of our central forecast of growth of around 3.5 to 4 percent this year is that interest rates have bottomed. Inflation was above the Reserve Bank of Australia's target last year, and output growth this year will be stronger than the Bank expected. As early as June 2002 the RBA will be looking at the first rate rises. All up the rises will be modest, but business executives should be prepared to see short term rates up by as much as 150 – 200 basis points by March of next year. Since they have already increased in response to changing market expectations, long term rates will go up by less. With a prospering economy in a global upswing, the Australian dollar will likely strengthen, but not by much. Unless and until the US dollar decline against most world currencies, the appreciation of the Australian dollar will likely be capped well below US 60 cents.

The NT

By John Carroll, councillor, Northern Territory Division

The Northern Territory business community has reason to be optimistic about the prospects for 2002, although there are undoubtedly some challenges to be faced as the year goes on. Access Economics recently forecast an average growth rate for the NT of 4.6 percent over the five years to 2005/06 - significantly higher than the estimated average national growth of 2.9 percent for the same period. In January, the Australian Financial Review tipped 5 percent growth for the NT in 2001/2002. Consumer and retail spending are generally strong. Present growth is largely underpinned by the Alice Springs to Darwin railway project, which will cost $1.3 billion over its three-year cycle. Although much of the work on the rail itself will be undertaken outside major centres, the flow-on to the local economy of providing services and supplies to the project will be significant. The current workforce is already nearly 560 strong, and local service industries will inevitably benefit from this demand. Another major project now underway is the $87 million second stage of Darwin's new port at East Arm. This will link to the railway to provide high-speed transport between southern and eastern Australia and the markets of South-East Asia.

A range of smaller projects, such as a new convention centre in Alice Springs and major hospital redevelopments in Alice Springs and Darwin, are providing important support for the construction industry which has been through a difficult time recently. Housing construction has been recovering thanks to the present climate of low interest rates and government incentive programs. In contrast, the tourist and hospitality industries face significant challenges in the wake of the September 11 events in the US and, locally, the collapse of Ansett. Work is underway to boost airline capacity into the NT - notably, Virgin Blue has commenced operations into Darwin - but there has undeniably been an impact in this sector. Offshore oil developments such as Laminaria-Corallina and, in future, Bayu-Undan will continue to contribute to the economy by the continuing development of an offshore service and supply industry. However, the NT will not be able to maximise the potential return from oil and gas fields off the NT coastline until gas is brought onshore. This is a key objective of NT Government agencies and will continue to be pursued strongly.

There are significant challenges to be faced by company directors in the coming year. The NT economy is generally strong, but some areas are facing difficulties because of events out of our control. Companies will need to focus closely on core business activities, to ensure they are well placed to withstand any changes in the economic environment and maximise opportunities which may arise.

Disclaimer

The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.