VZCZCXRO3273
PP RUEHPT
DE RUEHBY #0366/01 0990651
ZNR UUUUU ZZH
P 090651Z APR 09
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 1353
INFO RUEHWL/AMEMBASSY WELLINGTON 5731
RUEHBN/AMCONSUL MELBOURNE 6245
RUEHPT/AMCONSUL PERTH 4508
RUEHDN/AMCONSUL SYDNEY 4465

UNCLAS SECTION 01 OF 02 CANBERRA 000366 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON SENV AS
SUBJECT: SMALL TOWN CONCERNS IN COOMA 
 
¶1. (SBU) Summary:  Econoff and Econ adviser visited Cooma, 
New South Wales (NSW) on April 7.  Local political and 
business leaders say that the economic downturn has dried up 
financing for small businesses.  Over the longer term, 
leaders are worried about the threat of climate change on 
nearby ski resorts which attract much of the tourism that 
traffics through Cooma.  Despite some successes in luring new 
investment, 62 percent of Cooma's households are living on 
less than A$40,000 (US$28,000) a year.  The Rudd government 
stimulus package is having only minimal impact for Cooma, and 
the poor state of financing in New South Wales is frustrating 
local businesses.  Drought has hurt agribusiness, but the 
town itself is in relatively strong position in terms of 
water holdings.  End summary. 
 
¶2. (SBU) Cooma-Monaro shire is a combination of rural 
villages and a regional center (Cooma) totaling just over 
10,000 located at the base of the Snowy Mountain range in New 
South Wales.  It enjoys an advantageous position on the 
highways linking Sydney, Melbourne, and NSW's South Coast. 
Although it is an agrarian center, it benefits from tourism 
in the Snowys and a number of small and medium enterprises 
that have located in the town.  It is closely linked with the 
Snowy Mountain hydropower scheme (septel) and hosts the 
scheme's headquarters.  The town's population has been 
relatively stable since the mid-1980s - a better performance 
than many rural Australian towns which are losing population. 
 The Shire voted Labor 53-47 in the 2007 elections. 
 
CLIMATE WEIGHS HEAVY ON TOURISM 
------------------------------- 
 
¶3. (SBU) Econoff and econ adviser met with Cooma-Monaro Shire 
Council General Manager John Vucic, ANZ bank Commercial and 
Agribusiness manager David Shelley, and members of the 
Chamber of Commerce and Industry on April 7.  In a frank 
discussion, they shared their views on the economic 
challenges facing rural areas in Australia.  Vucic, who was 
previously the Deputy Transportation Minister for New South 
Wales, said that despite the current economic downturn, his 
biggest concerns were climate change and the superannuation 
system.  The shire is heavily dependent on snow tourists who 
flock to Australia's most important ski centers in the Snowy 
Mountains through Cooma.  Vucic said there was some 
skepticism about climate change in the rural populace, but 
that most accepted the growing range of scientific evidence 
that suggests much lower snowfalls in the region in the 
future.  Without snow tourism, many of the small businesses 
in Cooma itself will find it tough to survive.  Water is a 
constant issue for agribusiness in the ongoing drought, but 
the city itself is fairly well off, according to Shire 
Council Environment Director David Smith.  The city upgraded 
infrastructure in the early 1990s, and therefore had a more 
secure water reserve than many Australian localities.  Cooma 
has not had to institute water restrictions higher than Stage 
2 (Canberra, Sydney, and Melbourne are all at Stage 3 or 
higher, although scales vary) but some outlying communities 
were at Stage 6 and often had to have water trucked in from 
the city during the summer months.  Residential water 
efficiency programs had been pursued in the city, Smith said, 
as "low hanging fruit" and NSW building codes now required 
water and energy efficiency standards for new construction. 
Much of Cooma's housing stock, however, was built in the 
1950s as part of the Snowy hydro scheme and was horribly 
inefficient, Smith said. 
Qinefficient, Smith said. 
 
INCOME UNCERTAINTY STILL AN ISSUE 
--------------------------------- 
 
¶4. (SBU) Vucic said that 62 percent of the households in the 
shire were living on less than A$40,000 ($28,000) a year.  If 
the government passes an emissions trading scheme that raises 
input costs for fuel, commodities, and energy, those families 
would be under even greater stress.  The government's 
stimulus package had put A$900 in everyone's pocket, but 
delivered only A$420,000 for the shire for ten small 
infrastructure projects.  That A$900 would be used, Vucic 
predicted, to save or pay off debt, not to consume, and 
therefore would have little effect on economic trends in the 
shire.  He predicted the next major emergency facing 
residents would be in the mandatory superannuation retirement 
scheme, which he said was a "mess" and would be under 
increasing pressure as share markets continue to stagger. 
¶5. (SBU) Shelley said that small-scale business lending in 
the region has basically dried up as Australians have 
recently saved more and banks have tightened lending 
requirements.  He agreed that the threat to tourism was a 
major concern, but noted that falling foreign tourism trips 
for frugal Australians had bolstered local markets.  2008 had 
 
CANBERRA 00000366  002 OF 002 
 
 
been a relatively good year for tourism, and he noted that 
there were still some new investments being made, most 
notably German super-grocer ALDI, which plans to open a 
regional center in Cooma this year.  Richard Mack, who runs a 
10-person auto parts outlet in Cooma, said he saw uncertainty 
about finance reflected most clearly in the stockyards. 
Where grazers would normally sell 18,000 or so head of stock 
in a single sale day, recent sales days had seen upwards of 
25,000 head sold.  The wool price had been unexpectedly 
resistant to the downturn, Shelley said, and farmers who 
could not get financing to cover feed costs were dumping 
their herds now, with the hope that next year financial 
conditions will have eased and allow them to re-capitalize 
their flocks. 
 
LITTLE HELP FROM NSW 
-------------------- 
 
¶6. (SBU) Vucic, Shelley and Mack all expressed exasperation 
at the New South Wales government.  The state of NSW finances 
was "shocking," Vucic said, and the inability of the labor 
government to enforce any fiscal discipline or achieve key 
policy objectives like the electricity privatization proved 
that they could expect little help from Sydney in the future. 
 Despite federal stimulus spending, transportation 
infrastructure was terrible, Vucic said, but Cooma residents 
still believed that the state should invest in improved 
regional rail networks linking the coast to Canberra, Sydney, 
and Melbourne.  Shelley asked whether U.S. investors would 
still be looking for opportunities in rural Australia, but 
Vucic agreed that the ongoing financial crisis, lack of 
certainty around carbon costs and the state of NSW's 
financial position would all increase risk and drive down 
outside investment in the region for the foreseeable future. 
 
¶7. (SBU) Comment: We expect that any small community in rural 
Australia would express similar concerns in the middle of the 
global financial crisis.  But the potential decline in 
tourism and the continued failure of the NSW government put 
particular pressure on leaders in Cooma.  While it is 
unlikely that the shire faces economic oblivion, its 
longstanding reputation as a place where one can live a 
country lifestyle in comfort (seen in the very stable 
population numbers) may be slipping.  The two greatest 
threats, climate change and the drought, are outside Cooma's 
control.  Despite its beneficial location, Cooma may face the 
same flight to the cities seen elsewhere in rural Australia 
sooner than many would have imagined.  End Comment.