Anthony takes us to Cairns this month to look at how the city can climb out of a hard few years.

I remember a skit from way back in the early 1990s by Fast Forward or the Comedy Company or some such program in which they had the actors dressed up as nuns, a la the Sound of Music and were singing "How do we solve a problem like Victoria?" Victoria, the basket case as it was then, with high unemployment, thousands fleeing to Queensland for jobs and government services closing all over the state was rich pickings for comedians and evidently the skit is still stuck in my mind some twenty years later (oh dear, a future newsletter may be how galling it is to me that 1990 is over twenty years ago). Fortunately for the Big V the state has recovered and marching along very nicely. But perhaps it is once again time to don the habits and ask “How do you solve a problem like Cairns? It must be said that Cairns doesn’t fit as nicely into the rhythm of the song as Victoria, but we shall make do.

Cairns certainly has faced a few tough years recently. Highly reliant on the tourism dollar (or yen or yuan or euro), the city has had to endure problems long before the Global Financial Crisis hit, such as a stagnating Japanese economy, bird flu, SARS, terrorist attacks and upheavals in the airline industry. With the onset of the GFC Cairns has had to contend with a slowdown in the world economy, further impacting on several key international tourist market, such as Japan, Europe and North America. The relative strength of the Australian economy has pushed up the value of the Australian dollar, making our tourism destinations more expensive for international visitors. On the domestic front, the tourism industry has experienced low demand as we all tighten our belts in response to a perception of tighter economic conditions and those that are holidaying are taking advantage of our strong dollar and skipping off overseas. The number of flights into Cairns International Airport has been reduced, particularly from Japan, in response to the declining demand.

And then there is the weather. Flooding and cyclones up and down the Queensland coast has severely impacted on access to Cairns or the perception of the city being open and available for a holiday destination. Has a week gone by where the Bruce Highway hasn’t been cut in at least one place due to flooding this summer? Probably, but foremost inthe mind has been the idea that taking a road trip up the coast is a risky idea. The bad weather has impacted on other key regional industries such as fruit and vegetable output and inhibited access to markets and suppliers for all industries.

All of this has meant that the Cairns economy is struggling. As at the September 2010 quarter, the unemployment rate in the city was 9.3%, compared to 5.6% in Queensland. Population growth has slowed and construction activity has plummeted, with dwelling approvals dropping from 2,607 new dwellings in 2007 to 786 new dwellings in 2010.So how do you solve a problem like Cairns? Well the Cairns Regional Council has been on the front foot to try and stimulate the economy through business grants such as its Economic Diversification Fund, which seeks to support innovative, employment generating business opportunities. The Council has also provided Tourism Development Fund grants of up to $50,000 to businesses to try and stimulate the tourism industry specifically.

The construction industry in Cairns needs a fillip and perversely the destruction caused by Cyclone Yasi and the intense flooding this monsoon season will help in that regard by etting tools whirring again. The renewed demand for labour in this industry will be welcomed.

It is good to see Council recognise the imperative to diversify the regional economy. This would help anneal the economy, reducing its exposure to the volatility of the tourism industry. Further opportunities can be exploited from the growth of the Asian economies, such as high-skilled manufacturing, construction or business services such as project consulting. And ensuring that the tourism industry is as skilled at meeting the needs of the growing Chinese market as it has been at meeting the needs of the Japanese market will diversify the tourism industry into growth areas.