Outer-lying suburbs like Townsville’s Deeragun the most fertile

tfr_townsville

I am very pleased to be mentioned on the front page of today’s Townsville Bulletin in Tess Ikonomou’s article Townsville suburb Deeragun crowned NQ’s most fertile (pay-walled, sorry). As I told the Bulletin, in many cities, population pressures, and the resulting property price and rent increases in inner city areas, mean that couples in their child-rearing years typically need to live in outer-lying areas to raise their families and get established in the property market.* So, in Townsville, we see most of the suburbs having fertility rates below the replacement rate of 2.1 children per woman (the areas shaded pink in the map above), except for a few, including the outer-lying areas Deeragun and Northern Beaches.

bulletin_front_page

Townsville overall, like Brisbane and most of Queensland, has a fertility rate below replacement, with a 1.91 total fertility rate for 2017 estimated by the ABS, compared with significantly lower rates of 1.73 for Greater Brisbane (see map below) and 1.82 for Queensland as a whole.

tfr_brisbane

Given I was born in Townsville, I must say I’m disappointed to report that Townsville is behind traditional rival Cairns in fertility, with Cairns’s total fertility rate estimated at 2.05, only marginally below the replacement rate. This is likely due in part to a higher proportion of Indigenous people, who typically are more fertile, in the Cairns region. As in Townsville and Brisbane, it is in outer-lying areas where fertility is highest in the Cairns region (see map below).

tfr_cairns

You can find all the data I’ve referred to and mapped at the ABS website. The maps were created using Tableau.

*I should note that, in part, this could be driven by restrictive zoning rules that prevent re-development of many our inner city areas (e.g. as argued in Brad Rogers’s 2013 guest post Old Queenslanders in a New City).

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Upcoming QMCA breakfast presentation on the Qld economic outlook for 2019

On Friday 8 February, I will present on Queensland’s economic outlook at the Queensland Major Contractors Association’s first breakfast event for 2019. With all the uncertainty in the global economy, it’s been a very interesting holiday period, and I’ll include some reflections in my presentation on the risks of a global recession in the next two years, the US-China trade war, and Brexit.*  

Regarding Queensland’s economic outlook, the latest data published last week were mixed. We had very positive tourism figures, which pleased Tourism Minister Kate Jones immensely (see her media release):

“International visitor expenditure grew 11.5 per cent – more than double the Australian rate. We also saw record highs in international visitor numbers, with 2,762,000 visitors spending $5.9 billion in Queensland.”

However, we need to recognise the figures would have been boosted somewhat by the Commonwealth Games. Furthermore, while the figures were very welcome, the Queensland economy is much more than tourism and we need broader growth to provide sufficient jobs for our growing population. Pleasingly, job vacancy figures for November published by the ABS last week showed continuing growth in vacancies (see plots below).

rplot_vacancies_nov18

However, relative to the number of job seekers, vacancies are much lower than in the southern states. In Queensland there are around four unemployed people for every job vacancy. In NSW and Victoria, there are only around two unemployed people for every vacancy.

Last week the ABS also released November building approvals data, showing a continuation of the downward trend in approvals following the apartment building boom (see plots  below).

rplot_res_approvals_nov18

Alas, there doesn’t appear to be a resurgence in non-residential building approvals that would offset declining residential approvals (see plots below). Note these plots don’t include heavy engineering or civil construction, but the relevant data, which I’ll review in a future post, don’t give us any grounds for enthusiasm either. We’ll get the new data on the pipeline of work when the ABS releases its September quarter 2018 engineering construction data this Wednesday. 

rplot_res_non_res

No doubt partly related to our strong tourism growth, retail trade in Queensland has picked up strongly and appears much healthier than in NSW, where it would have been affected by falling house prices, as I expect there has been a drop in discretionary purchases that were previously funded by capital gains (see plots below).

rplot_retail

Mining is another sector important to Queensland’s economy, as emphasised in a recent informative post by CCIQ Chief Economist Marcus Smith:

King Coal will be an ‘Indispensable’ pillar of Queensland’s economy for years to come

Mining has helped push Queensland’s total annual merchandise exports to over $80 billion, up around $9 billion or 12% over the year. Coal exports increased nearly 11% or $3.4 billion to $35.4 billion. For these statistics, see Queensland Treasury’s handy briefing note. Mining is currently on an upswing in Queensland so I expect continued volume growth over 2019, although expected coal price declines this year may hit export values and revenues (e.g. see Coal forecast to drop off in 2019 as demand softens).

Finally, health and social services should continue to add to labour demand and GSP due to both the NDIS and demographic change. Indeed, the federal government appears to view the NDIS partly as a job creation scheme, based on its introduction to an NDIS-related grants program, the Jobs and Market Fund:

The National Disability Insurance Scheme (NDIS) is a significant social and economic policy reform representing one of the largest job creation opportunities in Australia. Achieving choice and control for participants requires a well-functioning market of NDIS providers, from which empowered NDIS participants are able to choose quality services that meet their needs. To support this vision, the NDIS workforce needs to grow by approximately 90,000 full-time equivalent workers to support 460,000 participants at full scheme.

The Australian welfare state appears to have bi-partisan support. Hence there is little likelihood our government will retreat to 30% of GDP, as advocated by the Centre for Independent Studies and which a recent study by Tony Makin and Julian Pearce suggests may be desirable from the perspective of maximising economic growth (as I noted in a CIS Ideas piece mid last year).

Overall, there are mixed signals regarding Queensland’s economic outlook over 2019. My sense at this stage is we won’t have either a boom or a downturn, but rather a continuation of the moderate economic conditions we have seen in recent years, as strong and weak sectors balance each other out. Indeed, Queensland Treasury has forecast a continuation of moderate economic growth, at 3% in 2018-19 and 2.75% in 2019-20, in its Mid Year Fiscal and Economic Review.

For a more expansive review of Queensland’s economic outlook for 2019, please consider attending my QMCA breakfast presentation on 8 February.

We’ll learn more about the likelihood of  Brexit this week when the House of Commons votes on the current Brexit deal. It’s very possible that MPs will vote against PM May’s deal, and the government is then forced to rescind the current Brexit scheduled to occur on 29 March, as the horrifying reality of what a no deal Brexit would mean becomes increasingly apparent.

Posted in Health, Macroeconomy, Mining, Retail trade, Uncategorized | Tagged , , , , , , , , , , , | 2 Comments

Concentration of Qld population in SEQ expected to increase with its higher rates of net migration

Regarding my previous post noting SEQ’s dominance in population terms, regular QEW reader Mike Willis commented perceptively:

Gene, it seems the concentration will be reinforced, if the most recent Qld government statistician’s report is any guide. State population growth is expected to be 2.3m from 2016 to 2041, of which 1.3m is in the greater Brisbane region alone (defined as Brisbane, Ipswich, Logan, Beaudesert and Moreton Bay)… http://www.qgso.qld.gov.au/products/reports/qld-govt-pop-proj/index.php

If you add in the Gold & Sunshine Coasts, your Pareto principle looks like it will be even more concentrated, with the South East corner taking well over 80% of the state’s growth.

This presents some challenges for future governments in terms of infrastructure, with transport and health services (in particular) already pressured by the current growth. The state debt level will compound this challenge.

Of course, there are opportunities for decentralisation of government services and hubs into regional and near-coastal cities, many of which offer great lifestyles.

This increasing concentration of people in SEQ is due in large part to net internal (i.e. within Australia) and overseas migration, as both fellow Australians and immigrants are attracted to SEQ’s employment, business and lifestyle opportunities relative to many other parts of the state. Typically, rates of net internal migration and net overseas migration are much higher in SEQ local government areas (LGAs) than in other regions of the state. For instance, check out the thematic map below of the net internal migration rate for Queensland’s LGAs in 2016-17, the latest available data published by the ABS.  The net internal migration (NIM) rate is net internal migration (arrivals minus departures) in 2016-17 expressed as a percentage of the population in 2015-16. Note that in 2016-17 the NIM rate was negative in many parts of regional Queensland, which in part would be attributable to the end of the mining investment boom and also drought.

NIM_rate

And here’s a map showing rates of net overseas migration, which are also typically higher in SEQ, although well-positioned coastal LGAs such as Cairns, Douglas, Cassowary Coast and Whitsunday also do well:

NOM_rate

For greater clarity here’s a closer view of southern Queensland:

NOM_rate_SEQ

Unsurprisingly, especially given the huge growth in international education in recent years, Brisbane has the highest rate of net overseas migration in the state (and also rather obviously, as it’s the largest LGA, the highest population gain due to net overseas migration).

I acknowledge the data I’ve presented in this post are only for a single year; I could quickly generate these maps as I’d used the data set in my previous post. In a future post, I intend to discuss longer-term trends based on the Census data. But I expect the story will be the same. For instance, see this article on the ABS website by UQ researchers, which shows SEQ regions the Gold Coast, Sunshine Coast, Ipswich and Moreton Bay as having the highest net internal migration rates in the five years to the 2016 Census night:

Understanding internal migration in Australia

Finally, on the increasing predominance of SEQ, also consider the projections in Jobs Queensland’s Anticipating Future Skills report (discussed on p. 15):

Around 75 per cent of growth in employment is projected to occur in the major population centres of South East Queensland. Brisbane and Ipswich are forecast to account for employment growth of 75,000, with a further 34,000 on the Gold Coast, 21,000 in Moreton Bay – North and – South (combined) and almost 14,000 on the Sunshine Coast. Employment in Queensland – Outback is projected to decline under the baseline scenario…

Councils outside SEQ will need to think even harder about how to improve the relative attractiveness of their regions to potential residents and investors with a view to counteracting the strong pull of SEQ.

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Qld Councils & the 80/20 rule – 81% of Queenslanders live in just 12 out of 78 LGAs

In the final week of 2018, the Brisbane Times published an article The capital cities that ate Australia, which opened:

They are the capital cities eating up the rest of Australia.

Already home to more than two-thirds of the nation’s 25 million residents, each capital city will soon dominate their respective state or territory in a way that will challenge Australia’s economic and political landscape.

Special projections from the Australian Bureau of Statistics show Melbourne, Sydney, Brisbane, Adelaide, Perth, Darwin and Hobart will soon account for at least half the population in each of their respective jurisdictions.

At the moment, in contrast to the capitals in other states, both the Brisbane metro area (at 49% of state population) and Hobart (at 44%) account for under half of their state populations. However, in my view, we should instead consider Brisbane, the Gold Coast and increasingly the Sunshine Coast as an SEQ metropolis, the 200km City as UQ Emeritus Professor Peter Spearritt once called it (see my 2015 post Urban sprawl filling in the 200km City).

Two-in-three Queenslanders live in the 200km City (e.g. see chart below, which shows the SEQ local government areas filling the top positions in the ranking of Queensland’s Local Government Areas by population size). The state seems much less decentralised when considering that fact (also see my Fact check: Does a majority of Qld’s population live outside SEQ?).

Pop_post_chart_2

Notice how the populations of the LGAs drop off rapidly as you go down the ranking from the top. While Brisbane LGA has 1.2 million people, the tenth largest LGA Redland has around 155,000, and there is a long tail of LGAs with much smaller populations. Out of Queensland’s 78 LGAs, only 12 have populations greater than 100,000 (i.e. Fraser Coast and above in the chart above). These 12 largest LGAs, 15% of total LGAs, account for 81% of the total Queensland population. Yes, this is a nice illustration of the so-called 80/20 rule or the Pareto principle.

The 20 smallest LGAs all have fewer than 1,300 people (see chart below). They are all remote rural or Indigenous communities. You can find all the data I use to construct these charts on the ABS website by the way.

Pop_post_chart_2b

It may be that some further amalgamations of councils are necessary in the interests of financial sustainability and governance, although I should note the financial benefits of council amalgamations have been vigorously contested (see this Queensland Times article).

Also, thinking more expansively, we could consider splitting the state into Northern and Southern Queensland, with the latter incorporating Tweed Heads, which the ABS already considers as part of the same significant urban area as the Gold Coast (see chart below). Incidentally, this would be one way of solving the daylight saving time difference across the border.

Pop_post_chart_4

Note the ABS includes Ipswich and Logan as part of the Brisbane significant urban area. I know that some of my readers living in Ipswich and Logan would disagree with this treatment, as suggested by their comments on the all-time most viewed QEW post Top twenty largest cities and towns in Qld by population.

Posted in Brisbane, Gold Coast, Population, Uncategorized | Tagged , , , , , , , , , , , , | 8 Comments

Qld less reliant on overseas migration as driver of growth than southern states

Over 2018 I have commented regularly that the Queensland economy is under-performing relative to NSW and Victoria, and this has been reflected in the state’s unemployment rate remaining above 6% while the national rate has fallen toward 5%. It should be borne in mind, however, that population and economic growth in the southern states have been boosted by very high rates of net overseas migration (at 1-1.5% of population p.a. in the southern states compared with 0.6% in Queensland). These rates are placing large strains on infrastructure in these states and may not be sustainable.

I have taken the opportunity provided by the release just before Christmas of the ABS’s demographic data for June 2018 to analyse population change by component by state/territory (see the facet plot below for financial years 1987-88 to 2017-18).

Components

In Queensland, natural increase (i.e. births minus deaths), net overseas migration, and net interstate migration make similar contributions to total population growth, while in NSW and Victoria, net overseas migration is by far the largest component of population change. If this pattern continues, the difference in the population composition between Queensland and the southern states will become even starker. At the time of the 2016 Census, around 23% of people usually resident in Queensland were born outside of Australia, compared with around 30% in both NSW and Victoria (N.B. high proportions of people didn’t answer the relevant question on the Census so these figure should be treated as indicative only).

In the facet plot above you can also see how Queensland’s rate of interstate migration, which has picked up significantly over the last couple of years, is still well below what it was during peak periods in the past, particularly in the nineties, a point which was well made by Ross Elliott in his post Net interstate migration to Qld is on the rise: Does this mean we are about to boom?

The pickup in net interstate migration to Queensland is largely due to a rebound in interstate arrivals from NSW (see facet plot below, noting NIM stands for net interstate migration and is equal to arrivals less departures). At the same time, although less significant in a numerical sense, we have seen net interstate migration to Queensland from Victoria turn positive again, after several years from around 2013 in which it was negative (i.e. Queensland was losing people to Victoria).

NIM_by_state

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Speech notes from Beautiful One Day, Broke the Next launch, 19 December 2018

PART_1545215206901

Me (Gene Tunny) & Julie from Connor Court at the launch of my new book Beautiful One Day, Broke the Next, at Connor Court Book Room, West End, Brisbane

Beautiful One Day, Broke the Next

Today’s Australian newspaper included the report “Queensland’s mounting debt sparks credit warning”. Moody’s rightly is concerned about our total state government debt increasing to over $83 billion by 2022. I told Steve Austin on his 612 ABC Brisbane show last Thursday that the critical metric the ratings agencies focus on, the borrowing-to-revenue ratio, was heading in the wrong direction for Queensland, with it projected to increase from 108% in 2018-19 to 119% in 2021‑22.

But our Deputy Premier-Treasurer Jackie Trad—whose electorate office incidentally is a 100 metre walk around the corner from here—talked about “responsible fiscal management” when she released the mid-year budget update last week. I’d say the ratings agencies don’t see letting the debt drift ever upward, on its way to over $83 billion, or around $15,500 per Queenslander, as responsible budget management.

On his program, Steve Austin was good enough to let me say a few words about my new book Beautiful One Day, Broke the Next, in which I describe the events that put us on the path to $83 billion of debt.

Many of you will remember Kenneth Clark’s brilliant BBC documentary series, Civilisation, which was subtitled A Personal View. This book, Beautiful One Day, Broke the Next, is my personal view of what’s happened in Queensland over the last 30 years. It’s a personal view informed by personal involvement, to a small extent, in some of the pivotal events that have occurred, particularly during the 2008 financial crisis when I was working in the Australian Treasury’s Budget Policy Division.

What stunned me at the time was that we were being lobbied not just by investment banks, who rather incredibly were taking advantage of the financial crisis to pitch new products, but by Queensland Treasury officials who were very concerned about their capacity to finance the Bligh government’s massive capital works program, particularly as revenues turned out to be lower than expected.

I thought this scene, of Queensland Treasury officials pleading for assistance, was absolutely extraordinary because Queensland had, historically, very strong public financial management dating from the time of the Bjelke-Petersen government, extending through to the Goss government, the Borbidge government, and into the early part of the Beattie government when we had Treasurers David Hamill and Terry Mackenroth. Incidentally, Terry Mackenroth ended up running the three largest surpluses Queensland has had, helped of course by the state of the economy and surging coal prices at the time.

So this came as a huge surprise. I wondered what on earth happened. And I’ve been wondering since. I came back to Brisbane in mid-2009, after the worst part of the crisis was over, and I watched the Bligh government go back on what was arguably an election commitment not to privatize assets.

Too late, the Bligh government realised it needed to correct its course. It had committed to too much poorly thought-out expenditure already, a combination of Beattie’s throw-money-at-a-problem-to-fix-it mentality and Bligh’s lack of a framework for understanding the future budgetary consequences of decisions she made with Beattie while Treasurer and later as Premier. Some of you in this room will recall the panicked, rushed approach to policy development and infrastructure decision making at the time, as the government struggled to cope with the three crises that defined the Beattie and Bligh governments: electricity, health, and water.

By necessity, the Bligh Labor government engaged in the largest privatisation program seen in the state, some $15 billion of asset sales and leases, including QR National, Port of Brisbane, and Queensland Motorways. Yet despite that, the debt still grew enormously to around $60 billion or so by the time the Bligh government was thrown out of office in March 2012.

Then we had the Newman government, which I argue in my book did too much too soon. That said, I think it was on the right track and they had some great initiatives such as the Public Service Renewal program, being led by former Under Treasurer and current Suncorp board member, Doug McTaggart.

Now, we have the Palaszczuk government, which, as Steve Austin noted on his show last week, I’m saying isn’t particularly worried about the debt. We have seen this in the sleight of hand that Curtis Pitt tried with the debt shift onto the energy businesses, and we see this also with the current Treasurer, who talks of “responsible fiscal management” even though she’s being warned by Moody’s about the growing debt.

What I’ve covered in this book is a broad sweep of Queensland’s public finances since the time of Sir Joh and Sir Leo Hielscher, who I hope needs no introduction to people in this room. There are two bridges named after him. He was our Under Treasurer from 1974 to 1988 and, according to Ken Wiltshire, was one of only three people who could say no to Joh. Thankfully he did that on several occasions. Sir Leo set Queensland up very well financially, fully funding the defined benefit super scheme, for example. That’s why we’ve got $30 billion or so invested at QIC. We would be in a much worse position today if it weren’t for Sir Leo’s work and shining example.

Alas, Sir Leo retired as Under Treasurer in 1988 and while his legacy continued—I’d say up until the end of Mackenroth’s time as Treasurer in the mid-2000s, before Beattie and Bligh had total control—it was subsequently lost. As I discuss in the book, partly that’s because we abandoned some strict fiscal rules that we had, particularly the fiscal trilogy that the Goss government codified.

Other relevant factors may have been generational change, the replacement of the depression and war generation by the baby boomers in the government and public service, as well as the ideological makeup of the government. While the Goss government was dominated by the centre and old guard factions, the Labor left grew in power during the Beattie government and eventually managed to install Anna Bligh as Premier.

Now a word on the title of my book. Some people have commented that it’s a bit controversial. I’m certainly taking some artistic license here. The reason is that I wanted to tell a story. The French-Swiss film director Jean-Luc Godard said once that for a movie all you need is a gun and a girl. In other words, you need drama. You need a story. I think the best stories have heroes and villains. We have one of the heroes of my story in the room here, tonight: Keith De Lacy, who was Treasurer in the Goss government. Thank you Keith for your immense contributions to our community, in both politics and business. As for the villains, there aren’t any prizes for guessing who I think they are.

I’m so glad you all came here tonight. I’m very grateful for your support. Before I finish my remarks, I’d like to say thank you to some specific people here. I would like to say thank you to Jennifer Tunny, my mother, who read through the draft and offered helpful comments, and who I wish I’d spoken to about just how difficult it is to write a book. My mother has written two books in the past. I should’ve asked her about the amount of work involved, because it is really quite staggering how hard you have to work just to get it close to something that is presentable. And even then, you’re thinking, “Well, there’s still a bit more I could do.” So I’m hoping you all buy enough copies that the print run is sold out and I can put out a revised edition in a year or so.

Also I’d like to thank Kerry Boulton, a friend of mine who read through the draft, too, and gave very helpful comments. Kerry’s a barrister and a former English teacher. So he picked me up on a lot of punctuation and grammatical issues. So, thank you, Kerry.

Keith De Lacy, too, read through the draft and provided some very kind words for the back cover of the book.

Various friends who’ve chatted with me about the book and put up with my delayed time frame over the last two years deserve my thanks, too. Originally, I thought I’d get it written and published in no more than four months. But it’s taken me nearly two years.

Finally, my deepest thanks to the publisher, Anthony Cappello of Connor Court. Anthony is doing an amazing job being an independent publisher at this time when it’s such an incredibly difficult marketplace. Anthony manages to stay afloat and to publish some very interesting and provocative titles. I encourage you to buy lots of Anthony’s books tonight to support him in the great work he does. Thank you, Anthony. And once more thank you all. Let’s celebrate. Merry Christmas and a Happy New Year!

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Gruen’s Evaluator General agency should be separate from federal Treasury

Last month, federal Opposition assistant treasury spokesman and former ANU economics professor Andrew Leigh backed, in part, Nicholas Gruen’s excellent idea for a federal Evaluator General to oversee the evaluation of Commonwealth programs (see Building a better feedback loop). With such high-profile policy failures in the past as the pink batts and green loans schemes, an agency that can promote best-practice evaluation of policies is much needed. I expect the Evaulator General would promote the adoption of a Monitor-Evaluate-Report-Improve framework of continuous improvement for policy programs (see figure below). It would also promote the running of randomised control trials of government policies, a passion of Andrew Leigh’s.

MERI

Regrettably, Leigh’s proposed Evaluator General is a watered-down version of Gruen’s original concept, which was to have the Evaluator General as an independent statutory authority (see Gruen’s Mandarin essay), rather than as a branch of the Treasury, as Leigh has proposed. In my view, it would definitely work better as an independent statutory agency for the reasons Gruen has mentioned (e.g. it would be free from political interference) and also because:

  • The Evaluator General should evaluate a range of tax and super policies overseen by the Treasury and it would be better to do that as an independent agency;
  • It wouldn’t fit well in the Treasury bureaucracy, which is geared toward responding to the day-to-day needs of the machinery of government (e.g. question time briefs, coordination comments on cabinet submissions, ERC briefings, ministerial replies, speeches, etc) rather than the deep work of policy evaluation;
  • There is a risk an Evaluator General branch of the Treasury would become the new Foreign Investment Review Board, the part of Treasury the star performers avoid because it would hold back their careers which depend so much on exposure to the Executive Directors, the Secretary, and the Treasurer’s office; and
  • As a separate agency it would develop its own culture, separate from the strong existing Treasury culture which has its pluses (i.e. technical competence and an intolerance for errors) but also its minuses (e.g. risk aversion and a fanatical devotion to prosecuting the agenda of the government of the day, regardless of its deficiencies, leading to heroic efforts such as H.K. Holdaway’s 36 hour shift to finalise the legislation for FuelWatch, which ultimately the Rudd government couldn’t get passed in the Senate).

Also on the last point, I would say federal Treasury is the best public service example of Seth Godin’s mantra “people like us do things like this” (see my This is Marketing post), so I can’t see an Evaluator General within the Treasury developing its own culture and savoir faire which it will need to effectively discharge its duties. It needs to be separate, and I hope the Opposition will rework its Evaluator General proposal before the almost inevitable change of government in May next year.

Finally, I encourage you to read Nicholas’s submission to the Australian Public Service review on his Evaluator General concept:

Nicholas-Gruen-Evaluator-General-Submission-2018

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