612 ABC Brisbane radio interview on Qld having nation’s highest unemployment rate

Yesterday I had an enjoyable chat with Steve Austin on his 612 ABC Brisbane Drive program about the latest ABS Labour Force estimates, which, as I reported in yesterday’s post, revealed Queensland is the only state with an unemployment rate of 6% or more.  You can hear our discussion, in which I comment on various regulatory and policy settings, as well as the loss in the 2000s of Queensland’s previous status as the low tax state, from 2:02:55:

Drive Thursday 15 November 2018

While Queensland’s unemployment rate is typically higher than the national rate (see chart below), the current 1.1 percentage point difference between the rates is currently above the 40-year average of 0.4 percentage points. If the current difference were due solely to a surge in workforce participation related to strong jobs growth I wouldn’t be concerned. Alas, it isn’t. Queensland’s rate of jobs growth is less than half the national average. The Queensland economy continues to under-perform.


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Qld only state/territory with 6%+ unemployment rate

The Queensland economy continues to under-perform based on the latest ABS Labour Force estimates released this morning. The state unemployment rate is stuck at 6.2% (in trend terms) while the national rate fell to 5.1% in October from 5.2% in September (see facet plot below). Queensland has the highest unemployment rate among states and territories. Jobs growth is non-existent and both the trend and seasonally adjusted employment measures declined marginally in October. As I’ve said many times before, our state government urgently needs to review all the regulatory and policy settings that could be holding back Queensland businesses from reaching their full potential.



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Upcoming Townsville seminar on regional economies in a digitised & globalised world

The Economic Society of Australia (Qld), of which I’m a Vice President, is hosting an upcoming seminar in Townsville on how regional economies can adapt and thrive in a digitised, globalised world (see flyer below). Local ESA member Matthew Cook has lined up well-known Townsville economists Colin Dwyer and Riccardo Welters to speak on this topic. I understand that, in addition to stimulating discussion of appropriate policy settings to promote regional development, some light refreshments will be provided.

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Should governments actively direct people and investment to regional centres with a view to easing congestion in major cities (e.g. via tax concessions or government grants)? Should they invest in super stadiums and new convention centres to stimulate growth, or would it be better to invest those dollars in local schools and hospitals, for example?  Should regional councils push for a decentralisation of state public administration and a relocation of public service jobs to their regions?

This is just a sample of the interesting questions that I expect will be considered in this seminar. I very much suspect the perennial issue of whether there should be a separate state of North Queensland will arise during this seminar (see My comments on NQ exit in ABC online story). Colin Dwyer in particular has written extensively on this issue in the past and his analysis was featured in the Our Fair Share campaign.

If you’ll be in Townsville on Thursday 22 November, please consider attending this important seminar.

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612 ABC Focus discussion on negative gearing – also featuring shadow treasurer Chris Bowen & Master Builders’ Paul Bidwell

Well done to Emma Griffiths for tackling the challenging topic of negative gearing on her 612 ABC Brisbane Focus program yesterday morning. I participated in an interesting discussion which also featured the deputy head of Master Builders Queensland Paul Bidwell and federal shadow treasurer Chris Bowen, who gave a pre-recorded interview:

Focus: Will your kids ever be able to buy their own home?

Earlier this year I wrote in the CIS’s journal Policy about why I think the federal opposition’s proposed changes to negative gearing and the taxation of capital gains are illogical and ill-considered.

Untangling the debate over negative gearing

The proposed changes should be reconsidered following the opposition’s almost inevitable election win next year.

My CIS Policy article was partly based on a report I prepared (with assistance from Patrick Windle) for Walshs Financial Planning in 2016 on the opposition’s proposed policy changes. Here’s a write up of it by Simon Benson in the Daily Telegraph at the time:

Election 2016: Family investors to lose $20k under Labor property plan

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TAFE in trouble – reliant on $170M Qld gov’t annual subsidy for survival

Today, the NCVER published its January to June 2018 data for government-funded vocational education and training (VET) students, and it reminded me that I should further investigate the troubled TAFE Queensland. The data show Queensland TAFE remains last in Australia in terms of market share of government-funded students (see the plot below of the market share in each state for each provider type). In Queensland, only 32% of government-funded VET students are enrolled in TAFE courses, compared with 72% in NSW, and 50% in Victoria, for example.


As a firm believer in contestability, I don’t necessarily have a problem with this, but it does pose an ongoing problem for TAFE Queensland and the state government which continues to heavily subsidise it, including via the $174 million State Contribution Grant in 2017-18. TAFE Queensland’s latest Annual Report notes the State Contribution Grant:

…is aimed at supporting quality training and skills delivery by subsidising public providers in areas of competitive disadvantage in comparison to private providers.

There may be some justification for a community service obligation (CSO) payment of some kind, as TAFE can argue it is the only provider in many rural and remote Queensland localities. But consider the State Contribution Grant of $174 million is additional to the $141 million TAFE receives from the state government to deliver government subsidised training, funds which it is competing with private providers for (see p. 35 of the Annual Report).

Is it plausible that TAFE’s community service obligations mean that it can’t deliver its training for less than 2.2 times the cost private providers are expected to deliver it at? This seems highly unlikely and suggests TAFE remains hugely inefficient, and that without the overly generous State Contribution Grant it would run at a huge operating loss. Consider that, in 2017-18, TAFE Queensland only recorded an operating profit of $1.4 million (p. 27 of Annual Report). That’s a very low rate of return (0.4%) on a $400 million asset base.

Of course, given Queensland taxpayers are paying for the $174 million State Contribution Grant, my sense is that TAFE Queensland effectively represents an annual loss to taxpayers of (at least) tens of millions of dollars and possibly over $100 million, depending on what value can genuinely be placed on TAFE Queensland’s community service obligations.

The TAFE Queensland board and management at least appear to recognise their predicament and aren’t living in denial, with the Annual Report noting:

This year continued to be a challenging year for TAFE Queensland, especially given the tightening of the VET Student Loans legislation and increased competition for funds. (p. 1)

The longer-term trend has been against TAFE. As training has become more contestable, TAFE market share has declined across Australia, and TAFE Queensland has been most affected (see plot below).


Similar to TAFE systems in other states, Queensland’s TAFE system is training far fewer people today than it did a decade ago (see plot below). TAFE Queensland is on state government life support and, no doubt, will continue to be for the foreseeable future.


Note: you can find the historical time series data I’ve plotted in the charts above if you scroll down on the page where the latest NCVER report is found (see link earlier in this post). I’ve created all the plots using the ggplot2 package in R. 

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Net interstate migration to Qld by age group – evidence of brain drain?

Over the ten years to 2017, Queensland gained residents via interstate migration across all age groups, but it gained far fewer people in net terms in their twenties than you might expect (see chart below based on the relevant ABS.Stat data set). This could be related to Queensland not being as attractive a place as NSW or Victoria for young people to start their careers, which is reflected in the 20 to 29 year age group making an under-sized contribution to total net interstate migration (i.e. permanent arrivals to Queensland from interstate less departures interstate from Queensland).


The issue of brain drain was raised in a comment by regular reader Mike regarding my post last week on Queensland’s higher-than-national-average unemployment rate. Queensland’s very low rate of net interstate migration among 20 to 29 year olds is associated with many young Queenslanders leaving for graduate and early career opportunities interstate, offsetting interstate arrivals to Queensland in this age group to a large extent. Certainly, the rate of departure interstate of 20 to 29 year old Queenslanders is higher than for their peers in NSW and Victoria, who benefit from a wider variety of graduate and entry-level career opportunities in their own states and have less incentive to migrate (see chart below). I should note the difference between the departure rates for Queensland and the southern states has trended down over time, possibly reflecting some improvement in career opportunities for young people in Queensland over the last two decades.

NIMplot_Qld_NSW_Vic_departuresIn the five years to 2017, Queensland actually experienced a net loss of around 1,400 people in 20 to 29 year age group via interstate migration (see chart below), which I suspect was associated with the end of the mining investment boom and public service staff cuts, as well as lacklustre economic conditions more generally.


Breaking it down further, the net loss of 20 to 29 year olds over the five years 2013 to 2017 appears largely related to increased departures of 25 to 29 year olds during this period (see chart below). There was a net loss of around 3,100 25 to 29 year olds over this period, which was partly offset by a net gain of around 1,800 20 to 24 year olds.


Since 2017, Queensland is no longer losing people in their twenties in net terms via interstate migration, but their contribution (1,300 people) to total net interstate migration (around 22,500 people) in 2017 remains much smaller than you would expect (see chart below).


Finally, I’d like to refer readers to an excellent post on interstate migration from Ross Elliott earlier this year:

Net interstate migration to Qld is on the rise: Does this mean we are about to boom?

In this post, Ross makes the point that rates of interstate migration to Queensland are still much lower than they were in the 1980s and 1990s. You can see this across all age groups from the late 1990s in the facet plot below which I’ve produced based on the data set I’ve analysed for this post.


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Occupational employment shares in Qld & rest of Australia over the last 30 years

In my previous post I compared the shares of employed people in different occupations across states and territories: Professionals’ share of employment much lower in Qld than in southern states. Based on several questions I’ve had regarding that post, I thought readers might be interested in the plot below of trends in occupational employment shares in Queensland and the rest of Australia (ROA) over the last thirty years. The long-term trend away from traditional factory and industrial employment and toward employment in the services sector is apparent. There are long-term declines in the shares of labourers, machinery operators and drivers, and technicians and trades workers, while those of professionals and community and personal service workers (a broad group including enrolled nurses, child care workers, hospitality workers, etc) have increased. The share of total employed persons classified as clerical and administrative workers has declined, obviously due to the widespread adoption of information technology.


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