Productivity push from Qld Govt needed after living standards growth stalls

Queensland Treasury econocrats should start investigating measures to improve our productivity performance, after ABS State Accounts data released on Friday confirmed a big slowdown in living standards growth over the last decade or so – measured, roughly I admit, by real Gross State Product and Income per capita (see charts below). This is not just due to the mining slowdown, given that mining was still a major contributor to the economic growth that did occur in 2013-14 (see Pete Faulkner’s post Mining & construction led Qld GSP in 2013-14 in which Pete explains why real Gross State Income actually fell in 2013-14). Instead, in my view, much of it probably reflects the slowdown in productivity growth that has occurred (across Australia) due to a slower pace of economic reform than in the eighties and nineties. Hence, a renewed focus on productivity by all levels of Government would be welcome.



Regarding what the Queensland Government should do, it should:

  • continue with its red-tape reduction agenda (e.g deregulate retail trading hours and the taxi industry and push for local governments to relax heritage and other development restrictions), and provide further information to the public on its progress so it can be kept accountable, and
  • continue with its proposed leasing out of State assets, but use the proceeds wisely – i.e. avoid wasting Government money on vote-buying infrastructure investments in regional areas, such as the proposed Townsville Super Stadium.

On the taxi industry, I’ve been very pleased that the Transport Department is turning a blind eye to Uber, because Uber use appears to be growing rapidly and is posing a big threat to the protected positions of Yellow and Black & White Cabs.

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Productivity Commission has scope to consider student visa rorts

One of my loyal readers often says to me that “Australians love a good rort”, and indeed there are several government policies and programs that allow rorting to various degrees. So I’m pleased that the fiercely independent Productivity Commission is reviewing the international education services market in Australia and that, as part of its research program, it will consider the:

Link between student visa policies and the incentives created for education service providers particularly in relation to quality.

In other words, it will look at whether universities, TAFEs and other training providers are rorting the system by enrolling lots of overseas students in dubious courses, knowing that many of the students simply want to get into Australia and don’t really care too much about course quality. Anecdotal evidence on this issue is pretty strong and I recall allegations of dubious practices made against one Queensland university a few years ago (see Foreign students ‘don’t pay to pass’).

This research project by the Commission is timely, given that international student numbers appear to be recovering after the post-financial crisis slump (see chart below I’ve copied and pasted from an Immigration Department report available from the student visa statistics site), and we’d like to consolidate these gains.


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Nice introduction to business opportunities in China and elsewhere

photoThe Australia-China free trade agreement is great news for the Queensland economy, with scheduled reductions in Chinese tariffs on coal and agricultural products from Australia. It will also provide opportunities for people in professional and financial services (see Max Mason’s handy analysis Who wins in Australia-China free trade agreement?)

A nice discussion of how to take advantage of opportunities in China is contained in Airport Economist Tim Harcourt’s latest book Trading Places. It appears Tim was in Adelaide only a few days before I was last week and managed to sign a few copies of his book at Adelaide Airport, one of which I picked up to read on the flight back to Brisbane. My favourite bit of advice in Tim’s book is this:

Try the second-tier cities – Chengdu, Wuhan, Chongqing, etc. Really it’s not a matter of if you’re not in Shanghai, you’re camping out.

That’s very true. I recall that one of the facts Dr Parkinson used to stun us with when he was Executive Director of Treasury’s Macroeconomic Group was that there were over 100 cities in China with more than one million people. There are certainly huge opportunities over there for Australian businesses.

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Update on regional unemployment in Queensland

As I’ve commented on before (Good news for regional Qld if Carmichael mine goes ahead – jobs market weaker than in SEQ), over the last twelve months or so, there has been a large difference in employment growth between SEQ and the rest of Queensland. Mark Beath at Loose Change has produced a good chart based on Pete Faulkner’s trend labour force estimates showing this stark difference, which you can view at his post: Cairns employment disappoints in October. Weaker labour market conditions in the rest of Queensland have been reflected in relatively high unemployment rates in several regional areas, including Townsville, Cairns and Wide Bay (see map below based on Queensland Treasury’s 12 month moving average estimates of the original ABS data).

Unemployment_Oct 14_SA4_Qld

That said, any growth in employment in SEQ appears to be benefiting mostly people living in Brisbane’s Inner City, North and East, with relatively high unemployment rates in some other parts of SEQ, such as Ipswich and Moreton Bay – North (see map below).

Unemployment_Oct 14_SA4_SEQFor more commentary on regional employment trends, see Pete Faulkner’s post:

Cairns jobs worsen while Townsville sees improvement

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Link to ABC radio interview on G20 and Expo 88

I expanded on the points I made in my post from early this morning (G20-Expo comparison is weird) in an interview on 612 ABC Brisbane by Steve Austin later in the morning, which you can listen to at this link:

Why the G20 doesn’t measure up to Expo 88

The important point I made about having to compare hotel occupancy rates during G20 with what they would otherwise have been at this time of year came from one of my loyal readers who commented on my post this morning. Thanks Jim!

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G20-Expo comparison is weird – Expo was a positive economic shock, G20 is a negative one for Brisbane

The Science and Technology Minister’s comparison of G20 to Expo is weird (see the Brisbane Times report G20 will give Brisbane an Expo 88 boost – Minister). I won’t deny there might be some long-term benefits from connections made and deals brokered at G20 side events, or that participating in the G20 is in Australia’s national interest, but it’s pretty obvious to me that the short-term impact of the G20 on Brisbane will be largely negative, while the impact of Expo was hugely positive.

Based on what many of my friends are up to, and on anecdotal reports from holiday destinations on the Gold and Sunshine Coasts and at Byron Bay, there will be an exodus from Brisbane over the G20 long weekend. I expect the negative economic impact of this exodus on Brisbane will more than offset any economic boost from visiting G20 leaders, their entourages and hangers-on. Contrast the expected impact of G20 with Expo 88, which had millions of visitors, and saw huge flows of people into Brisbane from elsewhere in Queensland, Australia and across the world. G20 is an event for a tiny global elite, while Expo was an event for the masses.

Furthermore, Expo has had huge, long-lasting impacts through the transformation of what was formerly a largely industrial area into a vibrant recreational precinct, South Bank.  I doubt the impact of G20 on Brisbane will be as long-lasting.

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Goss Government was strong on economic management, possibly to its political detriment

It was sad news indeed today that Wayne Goss has died at what is now a relatively young age of 63. He certainly made a fine contribution to Queensland during his years as Premier. In addition to the electoral and social reforms that are being widely commented on, his Government made important economic reforms, such as the corporatisation of Queensland Rail. Furthermore, his Government was committed to maintaining Queensland’s AAA credit rating and low tax State status.

But the Goss Government’s strong economic management was unpopular with many in the Queensland community and ultimately cost it votes. Cuts to rail services were very unpopular in regional Queensland. And the Government’s commitment to a AAA rating and low tax status meant unpopular restraint in health and education spending.

Given the current fiscal situation Queensland finds itself in, the economic management of the Goss Government is something that should be remembered fondly. As a later Queensland Government showed, once fiscal discipline is abandoned, and the AAA credit rating is no longer seen as something to value, debt can grow quickly to levels not previously contemplated, as it has in Queensland to $80 billion.

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