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Did the Blue Mountains 'cry wolf' about bushfire losses?

By Robert Gibbons - posted Wednesday, 25 February 2015

The bushfires of October 2013 were devastating in the northern and southern ends of the Blue Mountains but did not affect – as it happened – the population and commercial spine along the Great Western Highway and rail line. Nonetheless the State Government gave warnings for visitors to stay away, at least in part to free traffic for essential vehicles, but extended that into a warning that the Upper Mountains' villages might have to be evacuated.

The Blue Mountains City Council's mayor, Clr Mark Greenhill, and others argued that great economic damage had been done to businesses and pushed the Federal and State Governments to make good on promises to give compensation and/or short-term loans to businesses along that spine that had lost customers during the crisis period.

The Mountains' business community argued that their sector had lost a lot of revenue. There was a succession of statements, starting with the views of the chairman of the tourism regional peak body (reduction of 80% in tourism and hospitality income), specific tourism operators and then the Council's economic arm (Blue Mountains Economic Enterprise), on to Federal and State MsP.


The claimed "losses" rose from $3.5 million over 6 weeks for 4 major resorts, to $2 million a day to $100 million and 515 jobs. The "blunder" alarm was going off as $100 million is all of (100% of) "holiday/leisure" visitage for a whole year, or 2.4 months of all regional tourism revenue. 515 jobs is more than 25% of the number of regional jobs in BM tourism accommodation (2,001) which in turn is only 7th in size in the order of employing sectors in the LGA.

On 25 February 2014 BMEE published (Report 3, Economic Impact Report) being modelled projections of losses based on data from BMLOT and national surveys. The series of three analyses progressively increased the loss numbers. Separately, when the chair of BMLOT passed from Randall Walker to Clr Daniel Myles in February 2014, the former was reported as saying the region was on the way to doubling visitage by 2020.

The questions arising relate to (1) whether "modelling" that is presented as evidence bears much relationship to reality; and (2) whether an important region can rely on vested interests to produce "evidence" as opposed to say the professional work of (say) the Hunter Valley Research Foundation to the north of Sydney.

Generally there is no sign that professional economic trend and situational analyses have been published in this important tourism region. BMEE's readers had to work through such text as:

  • Gross Region Product is estimated to decrease by $46.774 million (2.12 %) to $2,162.175 million.

Contributing to this is:

  • Direct decrease in output of $63.254 million
  • 371 fewer jobs
  • $15.455 million less in wages and salaries
  • Reduction in value-added of $29.023 million

Using published official sources, it has been found that comparing 2012-13 with 2013-14:

  • There was a normal seasonal decline in accommodation takings in Katoomba/Leura 3 months before the fires
  • There wasNOdecrease in takings over September to December
  • The post-Christmas trends were normal with stronger recovery than in 2012.

The trend lines show NO FALL or GROWTH in Katoomba/Leura (up to 70% of regional activity) and small growth elsewhere in the BMLOT territory (rural and eco).

To reinforce the points, the average variation in Katoomba/Leura takings in 2012 and 2013 from September to December were almost identical (0.6% and 0.8%). On this limited sample that might be the "normal" pattern which industry is not aware of, and it debunks the fire-impact claims.

Next is expenditures by travellers. Domestic night held up better than domestic day but the trends down started before March 2013. It would be inappropriate to impute a fall due to the fires but a small kick in domestic nights in June might surprise. Myles' statement of 2 December 2014 that the BM economy has "made up" $88 million of the fire "fall" is dubious at the very least. No doubt there were cancellations and the like but were they significant in quantum for any significant time and/or across the Mountains?

Finally, visitage. The trends show that total visitor nights have tended to fall since 2012 according to the moving average. There is no sign of a doubling. A small fall in the overnight trips started before the fires and recovered, belying an impediment. Total visitage did not fall during the fire period.

As an aside, BMLOT referred to falls in employees. ABS recently ceased collecting the number of employees in the main category, resorts, hotels and other licensed premises with 15 or more rooms, but the number in 2012 is about equal to that of 2007 and a repeated subsequent fall would not surprise.

The fire-affected December and March quarters from late 2013 and early 2014 showed some interesting apparent trends. TRA advised the author to do comparisons of each quarter against the corresponding quarter from the previous year, rather than trends between successive quarters. The results will surprise many:

Visitage & Stays - quarterly

Before October 2013, total visitor nights grew strongly. After the October fires, overnight trips and visitor nights went UP. After a pause, they collapsed.

Regional Expenditure – rolling annual

Before the fires in October 2013, domestic day visitage was way down but night expenditure countervailed. After, International was way up, domestic day continued to fall, and domestic night was flat.

Professional analysis is required as these are counter-intuitive trends. These numbers were available early re expenditure and from mid-December for takings. Such analysis leads to question less the reliability of the data and more the quality of industry understanding. They support a case against the claimants of disaster. The major local persons were offered consultation during the course of research but none accepted.

Proportional contributions from different markets factors were taken into account in this analysis. In short, the following points are confirmed:

  • Did visitage cease? – NO.
  • At any time let alone for months? – NO.
  • Were there sackings of a quarter or the like of staff in resorts, hotels and other accommodation providers? – NO.
  • Did 37% of salaries and wages not get paid? – NO.
  • Did the various eminent commentators think to check the claimed loss figures – which were only econometric projections? Apparently not.

The modelling used by the Council's BMEE produced divergent results from market feedback – going from $3.5 million over 6 weeks to $100 million remains astounding. As late as 8 December 2014 Louise Markus (Fed MP) used BMEE economic and employment loss numbers ($100 m and 515 jobs), and announced $255,000 in grants from the Federal Government for website development (rather than a focussed campaign as recommended by Tourism Accommodation Australia). A month later, on 6 January 2015, MsP Markus and Sage, Myles and BMCC made the same announcement as Markus had but embroiled Federal Minister Jamie Briggs in that he repeated Myles' numbers for loss of revenue and jobs.

Further, some negativity of interpretation is appropriate regarding the state of the Mountains' economy. There are clear signs of atrophy in an LGA which has no economic strategy. A professional analytical unit would be expected to provide a better basis for intergovernmental and community understanding in future fire seasons.

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About the Author

Robert Gibbons started urban studies at Sydney University in 1971 and has done major studies of Sydney, Chicago, world cities' performance indicators, regional infrastructure financing, and urban history. He has published major pieces on the failure of trams in Sydney, on the "improvement generation" in Sydney, and has two books in readiness for publication, Thank God for the Plague, Sydney 1900 to 1912 and Sydney's Stumbles. He has been Exec Director Planning in NSW DOT, General Manager of Newcastle City, director of AIUS NSW and advisor to several premiers and senior ministers.

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