Cairns bets big on Fung familys $8b casino plan- By JESSICA GARDNER of THE AUSTRALIAN FINANICIAL REVIEW 27.09.2014 An audacious project to build an $8 billion casino resort in Cairns would be the best thing for the region, says Derek Ransome, general manager of the north Queensland citys Courthouse Hotel. It gives all businesses and anyone interested in starting a business in Cairns... a little bit of confidence to take that extra step, he says. The flow-on effect is evident already, he argues, gesturing to a whiteboard. Architect plans showing a $3 million upgrade of the pubs beer garden sit alongside a front page article from the local rag, The Cairns Weekend Post. The article, with a bold headline Aquis: a $52 billion bet, says the ambitious dream of Hong Kong billionaire Tony Fung could deliver rich spoils to the region. His planned Aquis Great Barrier Reef Resort could inject $52 billion into the local economy over 15 years, it says. That is to remind me what a fantastic project it is, Ransome says. We didnt purely make our [investment] decision on that, but it helps. Many in Cairns see the project as their ticket out of the economic doldrums. The tropical city may have the Great Barrier Reef and the Daintree Rainforest, but those two world heritage gems have not been enough to protect the one-time tourism mecca from Asian and then global financial crises, not to mention the high dollars. Hotels built in the Japanese investment boom of the 80s sit half empty, with tired decor. Many shops are not tenanted. The unemployment rate is 6.8 per cent, and 20.4 per cent among the youth. Cairns is hurting. For a city that once showed so much promise it is little wonder that Cairns is now betting big on the Fung proposal. But this is not just a story about a tourist town that cant believe its luck. It is also a parable of Australia. Seemingly insatiable demand for our hard commodities has transformed the economy, underpinned 23years of uninterrupted economic growth and provided a buffer against the global financial crisis. But now that demand seems sated. Iron ore and coal prices are plunging, driving down the major miners, the banks and the dollar. All of Australia has a little touch of Cairns about it, the faded resort town thats looking for its next boost Cairns is hoping for a casino and tourism lead recovery - tapping into increasingly wealthy middle class Chinese who are keen to see and play the world. But across Australia there are businesses from retail to technology, education to agriculture – all betting on the rise of the Chinese. Despite not insignificant social and environmental issues, Cairns is going all in with the Fungs, a former banker and his son, even though they have not built or operated a casino resort before. A slick environmental impact statement now being considered by the state government says the first four years of construction, which could begin as early as this year, will require 3750 workers. Stage two from 2020 will create another 3,500 jobs. When the Aquis resort is operating at full capacity it will require 20,000 staff. In The Diamond Gallery on Lake St sales executive Kim Wegner is eagerly waiting construction. What happens is when the building industry booms its nothing for a carpenter, a tiler or an electrician to come in and pay $10,000 to $20,000 for a diamond ring for his girlfriend, she says. Amid the anticipation, theres also a whiff of desperation. Local businesses bombard the local Aquis team, led by Fungs 30-year-old son Justin, with offers of cut-price, or even free service in the hope theyll be the provider of choice should the dream project come to fruition. The Cairns Chamber of Commerce says almost 80 per cent of residents support the project. But the director of a local environment group Angelika Ziehrl says that is because they want to believe and are bamboozled by the project because its so weird and large, but no one is asking the tough questions. Its reflective of a community in need of employment and opportunities for prosperity, she says. I dont believe theres a full understanding of the social, environmental and even economic impacts for the region. Considering the promises being made it is little wonder the project has support Aquis expects 1 million guests a year. The resort, surrounded by an artificial lake, will have 7,500 rooms, convention centres, theatres and two large casino halls. The site will also include an 18-hole golf course, riding trails and an equestrian centre. Plans for the casino megaplex are not winout their detractors. Vocal residents in the neighbouring hamlet of Yorkeys Knob are outraged theyll be living next door to a Macau-style resort - a big change to the sugarcane farm that covers the 343 hectare site now. The project has thrown up social and environmental impacts, from problem gambling to disruptive sound and light and risks to groundwater, but many are putting these on a to-do list for later to ensure the project doesnt fall over. The Fungs must pass environmental and probity applications before their licence is assured, and then comes the big question about whether they will be able to tap debt and equity markets to fund the project. The family may have a private jet but not a spare $8 billion. Aside from these risks, one slightly troubling aspect is how little of the interrogation of the project has centred on whether the Fungs, and crucially Cairns, can really pull this off. Tony Fung, 62, is a financial services veteran. He has dabbled in commercial property development and owns local agricultural properties. He was drawn to the world of casinos after seeing the industry develop in Singapore, but says he has never gambled. Fung junior, who is leading the charge on the ground in Cairns, has worked in communications, as well as in his fathers property company. Their plans come at a time of flux for the global gambling industry. With the rise of Macau, which now has a casino industry seven-times larger than Las Vegas, a swathe of other countries are creating large-scale casino resorts. But as The Philippines, Sri Lanka, Vietnam, Korea and even Japan consider their odds, the fortunes of Macau based companies are faltering. A crackdown on corruption in China is jeopardising the flow of money to the gaming tables. Back in Australia where the casino sector is worth $6 billion - a far cry from Macaus $45 billion - Aquis would compete against James Packers Crown Resorts with casinos in Perth, Melbourne and one on the drawing board in Sydney as well as a resurgent Echo Entertainment Group with casinos in Sydney, Brisbane and the Gold Coast. Fung believes Cairnss natural assets will be a unique drawcard. No one else in this world has two heritage sites in one city. Its very special, he says. But if the reef and the rainforest were what Chinese tourists wanted wouldnt they already be coming in their droves? Not quite, the chief executive of business lobby group Advance Cairns Mark Matthews says. He says Chinese airlines have dropped back to only seasonal flights into Cairns because they couldn’t fill the front end of the plane. At the top end of the market no we dont have the product Matttiews says. Justin Fung agrees. Cairns is a tourist town thats been lacking infrastructure in the past couple of decades, he says. The integrated resort and the Daintree and the Great Barrier Reef, Daintree and the Great Barrier Reef, these are components of what a tourism offering is... But you have to look at the entire package. You would want to see the entire region up its game. Mayor Bob Manning says his locals are ready. The day that theres some sort of word that comes out of the government about probity and casino licenses, I think the next day therell be business people out there on the phone talking to builders and contractors [saying] -when can you start.
Posted on: Sun, 28 Sep 2014 23:51:54 +0000
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