Cautious Optimism about Geraldton's future
/I'm quite positive with respect to the economic stability of Geraldton long term, and can personally attest to Geraldton being one of the best places in the country to live if you're looking for a great balance of lifestyle, affordability, and beauty.
I'm not bullish because I am sure there are going to me thousands of high paying jobs in 5 years though. I'm positive because Geraldton has a fundamental handful of things that make it great. There's enough jobs if you have the right skill set or are willing to undertake training or education. There's few better places in terms of beaches and a wonderful outdoor lifestyle. And you don't need to be a multi millionaire to live near the beach, like you would in Sydney, Melbourne or Perth.
Yet as a media publication, it's very challenging to publish anything that questions a bullish narrative around Geraldton's economic prospects.
The bulk of our advertisers are both business and property owners, and they, as you expect, have a natural desire to see a positive story about Geraldton's economic future be the constant narrative.
But the last decade plus of unquestioned positivity has lead to lots of members of the public being left holding investments that are now worth far less than they paid. I personally know people who owe far more on their homes than what they could reasonable be expected to sell them for today.
Sure, it's not the first time real estate prices have fallen in Gero, but the fact that many of these purchases were made under an irresponsible narrative painted by those in various levels of Government, and indeed, us in the media, is a problem. Why are there more and more empty shops around Geraldton each month? Why has the population dropped so much in the last 3 years? Why are we still building new shopping centres in the midst of this? Why did the federal government incentivise massive amounts of development and new homes built when landlords struggled to even find tenants for existing properties?
Rewind to 2006. Property prices around WA were booming, in large part due to the insatiable demand for WA's iron ore from China. And of course there was the O word.
Oakajee. Word on the street was that the Oakajee Port, north of Geraldton, was going to go ahead, and when it did, you could expect basically a repeat of what happened in Karratha and Port Hedland, where people were paying over $2000 per week to rent a shack, and they had to hand over the marriage rights to the eldest daughter.
I earnestly jumped into the property market during this heady time, paying ABOVE asking price for a fibro home in Rangeway. It felt great when I discovered my home had increased in value by at least 50 grand within a few months too. I knew it was in part because of economic fundamentals I had no control over, but I couldn't help patting myself on the back for being so smart and buying when I did.
During this same period in 2006, way before I ever decided to launch Everything Geraldton, I realised it was super hard to get any local news online. So I built a small website where I posted any news content about Geraldton I could find. Literally no-one but I used it, but it led me to become quite engrossed in what was happening with respect to Oakajee.
Essentially, a Chinese backed mob thought they had the rights to build the port. They planned on actually doing it too. They had money lined up, but right when they were about to press the big green button, McTiernan and Labor in their infinite wisdom, decided the agreement that the original mob had was too old, and now we should open the process up to tender.
That decision added at least a year of dicking around to the Oakajee process, and in the end, the Japanese backed competitors won the tender.
Except they never built it. During the time of all the fluffing around, the costs of labour (people working, not the political party) went through the roof, and the effects of the US economic disaster was starting to be felt around the world. I remember there was a week there where you literally couldn't get a bank loan, everyone's super was frozen, and all of a sudden it became super unlikely Oakajee was still viable.
But the hype around Oakajee didn't die just yet. In fact, there was an "Iron Ore Alliance" that had formed in the Mid West that had produced a publication that prophesied Geraldton's population was going to hit between 75,000 and 100,000. I scratched my head at how a bunch of pencil pushers came up with these numbers.
I read through everything I could about Oakajee. The entire port was going to ship about 45 million tonnes a year, maaaaybe 60 million in a stretch.
"60 million?" I exclaimed one day. "That's nothing."
Up north, BHP and Rio would ADD a 300 million tonne port before breakfast. And here we are thinking a 60 million tonne port is going to make us all property millionaires?
Not going to happen.
Meanwhile, the City of Geraldton was hiking rates like they were in the rate raising olympics. Property, all of a sudden, didn't seem like such a great investment.
Nationally syndicated writers, economists and property "gurus" boldly kept predicting Geraldton was the next "boom town", and that it was a "gateway" to the North West and to the Mid West.
Oakajee Port was not built.
Fast forward a few years.
I remember attending a rates meeting briefing with the CGG a few years ago, where they presented rates predictions over the next decade. I raised my hand with a question.
"You're predicting in those charts that the Geraldton population is going to hit 75,000. Where are you getting those numbers?"
It seemed to me an important question. Here we are budgeting for the future based on an assumption that Geraldton is going to spike in population within a foreseeable timeline. Based on what I knew about Geraldton's economy, what was coming to town, and the downturn globally in commodities, I couldn't see why 40,000 people were going to decide to move to Gero all of a sudden.
I was told the numbers were from different "official sources".
There was no explanation about how those official sources made their predictions, but if reading Nassim Taleb has taught me anything, I was right to be skeptical.
As you know, the exact opposite happened. Geraldton's population declined in the following few years.
Now, to Alannah McTiernan's credit, she DID try and calm the mindless hype about Geraldton down a little. "Cautious optimism" was what she publicly called for at an economic forum in Geraldton. She was a little drowned out by others predicting untold riches who thought China had a special money printing machine that never turned off.
But perhaps her message was the narrative we should have adopted all along.
"Cautious optimism."
Invest only after doing your own due diligence.
Don't borrow more than you can afford to repay because you don't know if you'll be able to sell this asset later.
Maybe Oakajee Port will get built, maybe it won't. But even if it IS built, it will only employ a couple of hundred people when it's finished.
Maybe the investors who are saying China's economy is grossly overheated are correct, and we're going to see a very, very painful economic collapse from our largest customer.
Cautious optimism.
Now I don't write this brief overview to say "I told you so"... because I didn't tell anyone so. If the banks would have given me more money, I'd own 7 units in Rangeway right now wondering why God hated me so much by allowing me to make such a decision.
At best I was a bit skeptical.
And hey, maybe history could have gone differently. Maybe the US never allows stupid loans to be written to people who couldn't afford them and we don't have the GFC. Maybe Oakajee Port gets built AND the surrounding land gets developed into a thriving industrial precinct.
Maybe that pile of land near the airport sitting dormant the City of Geraldton tried to turn into a technology park gets bought by Amazon and we have a thriving little tech community employing developers and software engineers.
But those things didn't happen. And instead, those "gurus" who made the heady predictions about Geraldton's growth lost no money. They're off doing other things, making money predicting the future somewhere else. They had no skin in the game, but we listened to them because they told us what we wanted to hear.
The people who paid the price are those who didn't possess the ability to dig below the surface, and made investment decisions that they now regret.
I realise that all of us in business want to see positive economic sentiment that will help raise the tide of all our boats.
But lets make sure we don't repeat the mistakes of the last decade. Let's ignore the instinct to only listen to economic predictions that we WANT to be true.
And let's dispense with the hype.
I don't need hype. I need facts.
Update: Correction around who had rights to originally build port.
