Job vacancies by Qld region

In my last Friday livestream, I mentioned surging job vacancies across Queensland (and in many parts of the rest of Australia, too). Vacancies are at record levels in four out of seven Queensland regions (see the chart below using National Skills Commission data) – Central Queensland, Far North Queensland, and the Outback being the exceptions.

Of course, job vacancies were most likely higher in the early part of last decade for Central Queensland and the Outback due to the resources boom, and FNQ would have benefited back then from an influx of foreign (largely Chinese) tourists. Those facts probably help explain why those regions are not currently at record levels of vacancies. It’s probable that vacancies would be much higher in FNQ if COVID-related border restrictions were removed. As for the Gold Coast, border restrictions are no doubt adversely affecting many local businesses, but thankfully the broadly-based regional economy appears to have proven highly resilient.

Below I present charts of the numbers of vacancies by major occupation groups by region. Professional jobs are dominating across all regions. Note that hospitality workers are included in the Technicians and Trades Worker category, along with construction workers and hairdressers, among other occupations, in the National Skills Commission data.

Brisbane

Central Queensland

Far North Queensland

Outback Queensland

Gold Coast

Sunshine Coast

Toowoomba and South West

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Weekly wrap up – Aussie reopening, Kiwi inflation, oil and petrol prices, and Bitcoin news

My latest Friday livestream covered:

  • accelerating NZ inflation and the implications for interest rates of accelerating inflation in advanced economies more broadly;
  • the great Australian reopening and booming job vacancies (i.e. as noted by the National Skills Commission “Nationally job advertisements are up by 36.2% (or 60,800 job advertisements) compared to levels observed prior to the pandemic”); and
  • the extraordinary Bitcoin narrative which is being reinforced by the introduction of Bitcoin-exposed Exchange Traded Funds.

You can download Michael Knox’s excellent note on the oil price I mentioned in the livestream here:

Biden’s oil and gas lease pause

Also, check out this great note (which I quoted in the livestream and which I’m guessing was written by Pete Wargent) in the BuyersBuyers newsletter from yesterday:

Yields creeping higher

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Qld retail inquiry – industry demands greater consumer choice and removal of inconsistencies

The Queensland Parliament’s Education, Employment and Training Committee is undertaking an inquiry into retail trading hours which could lead to improved consumer choice and reduced inconsistencies, but will probably end up recommending minimal changes, I fear. Hopefully, it will at least support major retailers opening on Sundays in regional centres such as Mount Isa.

I don’t have a lot of hope the Parliamentary Committee will advocate removing all the silly inconsistencies which frustrate consumers and force people to travel further than they otherwise would. Why, for instance, do the closest supermarkets to me, Woolies at Spring Hill and Macarthur Central, close at 6pm on Sunday, but the Coles at Merthyr Rd is open to 9pm and Harris Farm Markets at West End is open to 10pm on a Sunday?  

The Committee is not due to report until late January next year, but public submissions have now been published on its website. Industry bodies such as CCIQ, Commerce North West, and the National Retail Association are rightly supporting further deregulation. CCIQ has identified some major problems with current regulations in its submission. For instance, the side of a road your business is on can have major implications for your trading hours and turnover due to regulation-defined boundaries:

Several chambers consulted discussed irritation in trading hour discrepancies along boundaries of differing areas. This has improved a great deal as the number of areas has shrunk significantly since 2016 however, businesses are still experiencing difficulties. For example, shops on the side of a road may be considered a ‘tourist area’ and able to trade on a Sunday, whilst a shop on the other side may be categorised as ‘all other areas’ and not be able to open. This results in all foot traffic being diverted to areas that can open and creates market opportunities for shops nearby to trade.

Here’s another good point from CCIQ:

Frustrations surrounding retail trading hours in Queensland is common during the Christmas and New Year period. It is necessary that non-exempt stores are able to trade freely to leverage periods of peak economic demand as they see fit. This is also relevant to supporting the economy recovery of business in the present COVID-19 climate where many retailers are facing ongoing disruptions and trading turbulence as a result of forced closures, the end of stimulus support, and ongoing public health restrictions. 

Certainly the state government has made things difficult for many retail businesses since March last year, with lockdowns and border closures, so it should arguably do all it can to reduce the regulatory burden from here on. 

On the frustrations caused by major retailers not opening on Sundays in some regional centres such as Mount Isa, Commerce North West’s submission has some choice quotes from the organisation’s members:

“It’s not just residents who benefit but also our many travellers. So many tourists stay on weekends, lost trade because nothing is opened…”  

“get out of the dark ages and catch up with rest of the world, tourists coming here are astonished that shops are closed Sundays.”  

“Transient Aussie travellers are caught out when traveling through places like Mount Isa when shops are not open.” 

Regular QEW reader Andrew Aschman has also made a great submission to the inquiry. Andrew wrote:

The suitability  of  permitted  hours  that  currently  stand  does  not reflect the need  of  the modern-day  consumer,  nor  to  the expansion  of  the  retail sector.  We  live  in  a 7-day  economy  in  which a progressive  amount  of industry  operates  24  hours  a  day.  Due  these  circumstances  people  that  work in  these  industries  have limited  time  to  buy  essential  goods  at competitive  prices.  Allowing  retail  to trade unrestricted  to  reflect the need  of  the  consumer  market,  can  help  alleviate  this  current  problem.

 As  well  as  providing  better  convenience  and  access  to  bricks  and  mortar stores,  deregulation of retail  can  improve  logistics  in  the online market.  This  can  provide  the  ability  for supermarkets  and other  retail  to  pack  and  deliver  online  orders  for  click  and  collect  at  lockers  and  pick  up  points,  as  well as  for  home delivery  later  into  the evening  7  days  a  week.

Finally, one benefit of deregulating trading hours is that it would reduce, possibly eliminate, a major function of the generously remunerated Queensland Industrial Relations Commission (i.e. its role “setting permitted hours outside the prescribed hours” as the Parliamentary website describes it), hopefully leading to some budgetary savings.

Queensland Parliament House, corner of George and Alice Streets, Brisbane.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Livestream on US inflation, Aussie jobs data, and Qld’s low vax rate

Yesterday afternoon I did my first livestream, covering:

  • the growing concern internationally about accelerating inflation, prompted by the latest US CPI figures;
  • the September ABS Labour Force data revealing big drops in hours worked and workforce participation in the locked-down economies of NSW and Victoria; and
  • Queensland’s relatively low vaccination rate (72% for 1st dose vs 84% nationally) and what it could mean for the state’s reopening and the economy – it’s pretty obvious the Premier should set a date for re-opening ASAP to encourage people to get vaccinated promptly, as suggested by the Queensland AMA.

Here’s the video of the livestream, which was streamed to YouTube and LinkedIn Live:

Regarding inflationary pressures in advanced economies, I quoted leading market economist Stephen Roach from his recent Financial Times op-ed The sequencing trap that risks stagflation 2.0:

As brilliant and lucky as they have been, today’s generation of central bankers is afflicted with the same sense of denial that proved problematic in the 1970s. Due to a lack of experience and institutional memory of that tough period, the risk of another monetary policy blunder cannot be taken lightly.

Certainly, central banks have been running a massive monetary policy experiment with ultra-low interest rates and Quantitative Easing, which have been associated with double-digit growth rates in money stocks. I agree with Roach regarding the potential for a “monetary policy blunder”.

Other links relevant to the livestream include:

Pete Faulkner’s post Labour Force; national data hit by lockdowns while QLD powers ahead

QEW post featuring my The Other Side interview on Australia’s economic suicide

Vaccination numbers and statistics

ABS: New data shows lockdown impacts on business turnover

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Good sign the Great COVID Panic will end in Qld soon

A few weeks ago I observed that it took the NRL Grand Final for the Queensland Government to adopt a more rational approach to the pandemic, and now, thankfully, there are further signs of rationality from the Government, with the Courier-Mail reporting:

Premier Annastacia Palaszczuk, in a strong signal the state’s border with NSW could open within weeks, has also put the impetus on Queenslanders to get the Covid-19 jab saying “we cannot protect you if you won’t protect yourself”.

That’s good news. While some commentators have rationalised border restrictions as acceptable if they mean our politicians don’t impose lockdowns which bring huge economic costs, I think those commentators ignore a) that we probably shouldn’t lockdown even if COVID is spreading and b) the large human costs and the immorality, indeed cruelty, of those border restrictions. Queensland’s economy has no doubt been performing much better than the lockdown-afflicted NSW and Victorian economies, but thousands of Queenslanders have endured immense suffering because of the border restrictions, and interstate-tourism-reliant businesses have been severely financially stressed. For more of my thoughts on the economic impacts of pandemic policies and on the economic outlook, check out my interview with Damian Coory on his The Other Side YouTube/Facebook show:

The Other Side EP68 “Australia’s Economic Suicide” featuring an interview with me on the economic impacts of COVID policies

Finally, if you haven’t read it yet, I can without hesitation recommend you read The Great COVID Panic by Paul Frijters, Gigi Foster, and Michael Baker. The authors make a strong case that the majority of the world succumbed to a great panic over COVID in early 2020 and our governments enacted policies which, on balance, were irrational and harmful.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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COP26 chat with Grattan’s Tony Wood – climate change, renewables, nuclear, and coal

In Economics Explored Episode 108, leading Australian energy and climate change policy expert Tony Wood from the Grattan Institute explains what COP26, the 2021 climate change conference in Glasgow, is all about and why it’s important. Tony discusses what “Net Zero emissions” means exactly, the prospects for nuclear energy, and implications of climate change policy responses for fossil-fuel-dependent economies, such as Queensland’s.

Here’s what Tony had to say about an industry that is very important to Queensland, coal mining, after I asked him how many more decades we’ll be able to mine coal:

We haven’t got very long at all…because, despite what the current resources minister says about, well, Australia will decide what happens to our coal industry, the truth is we won’t. Someone else, our customers will decide what happens to our coal industry. And many of our customers have now signed up themselves to net zero. Whether they’re genuine or not, we will see and that’s the international side of this.

So I think the timing may not be as dramatic as BP would suggest. But you can, I think be very confident that the direction and destination is clear. It’s only a matter of how quickly, and this could accelerate quite quickly.

So what that means is the following. We have about 100,000 people employed in what we’ve described in our work as carbon intensive jobs. Those people, in some cases, at the last election I don’t think voted against action on climate change. They voted against losing their jobs. And the Labor Party, to be fair, did not do a very good job at giving those people a vision of what they would transition to…If you’re a relatively young family, man, most of them are men, often not tertiary educated, and you’re being told your job of $150,000, a year is going to go, and you’ll be paid to work in the tourist industry, you’re not very excited by that.

Right. So that’s the problem. Now, are there some alternatives? Yes, there are. And now’s the time, where we do have the economic benefit of all the coal industry right now in terms of the jobs, in terms of the economic prosperity we enjoy, to use that prosperity to fund the next generation of what’s to come…

It’s not about building more renewable energy farms, wind farms, or solar farms. It’s can we use the comparative advantage of Australia, which is a very big country, with a lot of wind and solar that we don’t need for ourselves, to use that to manufacture materials based upon our mineral resources?

You may recognise that Tony is suggesting what Ross Garnaut has referred to as Australia’s Super Power opportunity, and Tony thinks that’s a real possibility for Australia.

Incidentally, coal prices currently remain at high levels (see the thermal coal one-month and 12-month ahead futures prices in the chart below). There’s still plenty of demand for coal globally. Possibly that will change in future years, although so much depends on whether China, Japan, and other major trading partners follow through on their net zero emissions commitments. (Yes, believe it or not, China has a net zero commitment, but for 2060 rather than 2050.) The Queensland coal industry probably has many good years left, but it would be wise for our state government and local councils to be considering the possibility of what Tony has referred to as coal demand “falling off a cliff almost” in the future.

Thermal coal prices have been at very high levels.

By the way, the coking coal price chart is below. Coking coal, which is used to make steel, is even more important than thermal coal to the Queensland state budget, which is getting a multi-billion dollar boost from these elevated prices.

And so have coking/metallurgical coal prices.

Please check out my conversation with Tony, in which my Adept Economics crew member Ben Scott also appears, and let me know what you think about the issues discussed, including policy responses to climate change and the future of coal.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Hospital funding fight the latest illustration of the big problem with vertical fiscal imbalance in our federation

There is a deep structural problem underlying the current hospital funding fight between the Queensland Premier and the PM, the vertical fiscal imbalance (VFI) between the state’s spending responsibilities and the Commonwealth’s revenue raising powers. The states receive around half of their revenues from the Commonwealth (see the chart below based on Queensland Budget data) and naturally will blame the Commonwealth for their own failings in service delivery and planning. There is a blurring of accountability. Economists have been saying this for decades. 

While he was PM, Malcolm Turnbull tried to revive an idea from the Fraser Government which would have gone some way to resolving the VFI, handing part of the income tax power back to the states, a power which the Commonwealth seized during WWII and never relinquished. Unfortunately, PM Turnbull gave up on this proposal when faced with resistance from the states, a resistance which was led by Queensland Premier Palaszczuk (see Premier’s 2016 Lodge dinner remark to Turnbull highlighted Vertical Fiscal Imbalance problem).

The Queensland Premier should remember her own role in failing to resolve the VFI. She could have reduced the state’s dependence on the Commonwealth, which would have enhanced her flexibility to increase hospital funding if she chose to, but, of course, with more power comes more responsibility. The current VFI allows her to conveniently blame the Commonwealth for any problem which occurs on her watch. In her view, it’s the Commonwealth’s fault for not providing enough funding, rather than her Government’s failure to plan for COVID cases or its failure to redirect funding from other parts of the budget to Queensland Health.   

Other posts of mine on VFI include:

EV taxes, property taxes, and the need to reset federal financial relations in Australia

Qld-Commonwealth argy bargy over dam funding & vertical fiscal imbalance

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Pre and post-COVID population projections

I’ve had some readers query the point made in Capricorn Enterprise’s blurb for the upcoming Major Projects Forum regarding the 600k reduction in Australia’s population (relative to the pre-pandemic trajectory) by 2024 (see my post Upcoming Major Projects Forum in Rockhampton on 28 October 2021). Thanks to Capricorn Enterprise for advising me that figure came from a report by Deloitte in the early days of the pandemic in May 2020. It turns out that the ultimate reduction in population relative to what was expected will be much greater than that, likely over one million people. This was pointed out in the Financial Review following the 2021-22 Budget handed down in May. 

We can illustrate the shortfall by comparing the pre-pandemic population trajectory, based on 2019-20 federal Budget estimates, with the projected trajectory in the 2021-22 Budget (Figure 1). That’s potentially 1.4 million fewer people in Australia at the end of 2024 than we would have expected pre-COVID. Note I extrapolated the 2019-20 Budget projections beyond 2022 based on the 2022 growth rate implied by the Treasury estimates.

The reason Australia’s population is expected to be much lower than previously projected is the big drop in net overseas migration, which was running at 250k per year but turned negative in the pandemic, and was nearly -100k in the twelve months to 31 March. The Treasury is projecting net overseas migration of -77k in 2021-22, 96k in 2022-23, 201k in 2023-24, and 235k in 2024-25 (see Table A.5 in Appendix A: Parameters and further information). That is, net overseas migration isn’t expected to return to pre-pandemic levels until the middle of the decade. 

We can do the same exercise for Queensland. There will potentially be around 170k fewer Queenslanders than we would have previously estimated (Figure 2). I should note the federal Treasury forecasts of state populations in the 2021-22 Budget look like they’re assuming a lower level of net interstate migration to Queensland than we will likely experience based on what we’ve seen to date. For instance, net interstate migration in the twelve months to 31 March was around 31k compared with the 25k assumed in the budget for the 2020-21 financial year. The federal Treasury didn’t appear to anticipate Victoria experiencing negative net interstate migration and a reduction in population.* Queensland will certainly have fewer people than it would have had in the absence of COVID, but the gap may end up being 100-150k rather than 170k.  

*Regarding this population loss for Victoria, see my post Qld population growth and interstate migration gains in perspective).

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Lockdowns reduce retail trade 14-17% in NSW and ACT compared with pre-lockdown levels

Thankfully, and better late than never, the upcoming NRL Grand Final has forced the Queensland Government to recognise the large economic costs associated with lockdowns, and it has decided not to panic this time, and surprisingly it has not yet implemented a snap lockdown in response to the latest COVID numbers. Of course, all that could change in coming days, or even later today, but for now the Government is acting sensibly. The retail trade estimates for the month of August published by the ABS yesterday remind us of the large adverse economic shock from lockdowns (see figure below). Compared with May levels, retail trade was down around 14% in NSW and 17% in ACT in August. Victoria was down nearly 6%, and this figure would have been much higher if Victoria had spent the whole month of August in lock down. Queensland retail trade was down 2.7% in August relative to May, which I expect was largely because SEQ was locked down in the first week of August.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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Upcoming Major Projects Forum in Rockhampton on 28 October 2021

I’m thrilled that I’ve been invited to return to present at Capricorn Enterprise’s Major Projects Forum in Rockhampton on Thursday 28 October. Here’s the blurb:

The Capricorn Enterprise Major Projects Forum is the premier project forum in the region, covering projects investing over $5bn in our region through to 2024/25.

By June 2024, Australia’s population will be 600k less than the pre-COVID projections. However, we expect that the Queensland economy will outpace the national economy over this period due to construction, mining and agriculture development.

Within our region, roads, energy, defence and water projects are expected to sustain elevated levels of project activity, the most significant being the $1bn Rockhampton Ring Road and the Defence Initiatives at Shoalwater Bay.

The forum will also look forward to the next generation of development, including opportunities in emerging industries such as renewable energy and hydrogen.

The potential for a Queensland hydrogen sector is huge. For instance, the Financial Times reported yesterday that Airbus gears up for hydrogen jet as fuel of future edges closer to reality. However, it’s still early days for Queensland hydrogen projects which appear to be still in their demonstration/feasibility testing stages.

I’m really hoping the Forum will go ahead and we won’t be in lockdown in late October. There’s no doubt that the Queensland Government would quickly lock us down again if we get even a few cases up here.

Queensland is fortunate we’ve avoided a COVID-Delta-variant outbreak so far. Obviously it’s good news we’ve avoided people getting infected and, in some cases, dying. Furthermore, the lockdowns in NSW and Victoria have come at a high cost to their state economies (e.g. see the payroll jobs data from the ABS below), and Queensland has avoided that massive adverse direct shock from a prolonged lockdown so far this year.

That said, the way Queensland has avoided an outbreak, i.e. a hard border regime, has imposed immense personal hardships on some people, including Queenslanders who have been shut out of the state, and has imposed large losses of trade on many businesses in tourism and hospitality, particularly those dependent on interstate visitors.

While his forecast is more apocalyptic than mine would be, I think that Peter Gleeson, in today’s Courier-Mail, has well summarised the problem with the Queensland Government’s zero-COVID strategy underpinned by its hard-border policy:

…to succeed, Queensland must effectively close itself off from the rest of the world until coronavirus is no more.

That could be years. We do have an Olympics to host in 2032.

Secondly, it means many, many businesses, reliant upon interstate and international input, will fold.

Hotels, restaurants and tourism operators will not sustain another Christmas without interstate visitors.

Let’s hope we’ve opened up before Christmas. I suspect that, once we’ve reached 80%+ double-vaxxed, the pressure on the state government to open up will be overwhelming.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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