National jobless rate may be lowest in 7 years, but Qld’s is ½ percentage pt higher than in 2011-12

The Australian’s Friday front page was emailed out earlier tonight, and it reports “Jobless rate at lowest in seven years.” This may be the case for Australia, but it’s not so for Queensland, where the unemployment rate is stuck around 6%, as it has been for a few years now (see chart below). Seven years ago the state unemployment rate was 5.5%. So, while the Australian unemployment rate is back around to what it was seven years ago, Queensland’s is ½ percentage point higher. That corresponds to around 15,000 more unemployed people in Queensland than we would have if we’d returned to the 2011-12 unemployment rate. As I’ve noted before, the Queensland economy is under-performing relative to the southern states.

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With a 6.1% unemployment rate, Queensland is tied with WA in terms of having the highest unemployment rate among states and territories (see chart below). NSW has an unemployment rate of 4.5% and Victoria has a rate of 4.7%.

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While Queensland experienced strong jobs growth in 2017, since then jobs growth has fallen substantially (see chart below).

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Note that many of the new jobs that have been created in recent years have gone to new entrants or re-entrants to the labour market, rather than to the unemployed. The number of unemployed Queenslanders has remained relatively stable (see chart below).

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We need to see much stronger employment growth in Queensland than over the last 12 months if we are going to see a material reduction in the state unemployment rate. Consider that Queensland’s 15+ population is increasing by around 70,000 persons each year (see chart below). The employment-to-population ratio is around 62%, meaning the Queensland economy needs to support more than 43,000 additional employed persons each year. Over the 12 months to September, employment increased in Queensland by just over 39,000, so it was several thousand short of the minimum required to stabilise the unemployment rate. So it’s unsurprising that, as Queensland Treasury noted in its latest labour force briefing, the state’s trend unemployment rate was “marginally higher over the year”, at 6.1% compared with 6.0% in September 2017.

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Qld “gets its mojo back” on international visitors

STarrivals_plot_1

Mission Beach-based economist Pete Faulkner has great coverage of the latest international short-term arrivals and departures data for August from the ABS in his latest post:

International arrivals still growing; QLD gets its mojo back while Tassie slows

As Pete notes, while the resurgence has been impressive (see the chart array above), we still lag Victoria:

When we consider the data on state of intended stay (which we Trend based on the unadjusted original ABS data) we see that year on year growth for Queensland is at its fastest pace in more than 2 years (+10.4%) while it’s up 6.8% for the annual total. Growth in the Sunshine State continues to lag that in Victoria (+11.3% y/y and +7.9% annual) as the gap between the two states widens further.

Given international visitor numbers to southern states are still growing strongly, we’re not seeing much of a recovery in Queensland’s share of total international short-term arrivals, although at least it has stabilised and no longer appears to be declining (see the chart array below).

STarrivals_plot_2

Note that short-term arrivals are defined as those staying for one year or less, meaning many students would be included. It’s very likely international students explain a large part of the surge in short-term arrivals in southern states. Also, it should be borne in mind that, even though short-term visitors may nominate one state as where they intend to stay on their passenger cards, many do of course visit other states, so we shouldn’t get too despondent about Queensland’s share of total arrivals.

Regarding country-of-origin, data for which are only available at the national level, as Pete observes in his post:

The growth from the Chinese market has continued to slow sharply (although it’s still growing) and is up 2.3% y/y (s.a.) or 2.6% y/y (Trend); the annual totals up 7.7% (s.a.) and 8.1% (Trend). While still strong these rates of growth for Chinese arrivals are now the slowest in 9 years.

China continues to be the number one source country for short-term arrivals in Australia, followed closely by New Zealand, with daylight between them and the next largest source countries, the US and the UK (see chart array below).

STarrivals_plot_3

Note: I’ve produced all these charts using the Tidyverse packages in R. The development of the Tidyverse by R guru Hadley Wickham is the best thing to happen to data analysis since Microsoft Excel introduced the pivot table feature many years ago. If you want an introduction to the Tidyverse, see the excellent R for Data Science book by Wickham and Garrett Grolemund.

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Fact check on PM’s comparison of GC film industry to tourism in economic contribution terms

On Monday, Prime Minister Scott Morrison made a bold claim regarding the film industry on the Gold Coast in a radio interview on Gold FM regarding the tax breaks used to lure the Godzilla vs Kong film and Disney Reef Break TV show productions to the Gold Coast (see Monsters to invade as GC lures Hollywood productions). The transcript on the PM’s website records the PM as having said:

So the film industry here on the Gold Coast is as big as the tourism industry – bigger – and so when we say we’re supporting small businesses, this is how we’re supporting small businesses.

This isn’t even close to being correct, as the economic contributions of the film industry and tourism to the Gold Coast differ by at least one order of magnitude. According to Tourism Research Australia estimates, tourism’s direct contribution to Gold Coast gross regional product (GRP) amounted to $2.6 billion or around 7.8 percent of GRP in 2016-17. While there are no comparable official figures for the Gold Coast film industry as far as I can tell, it is easy to figure out that the industry makes nowhere near the economic contribution of tourism, and most likely not even one-tenth of the economic contribution of tourism.

Consider the estimate reported in Screen Queensland’s 2016-17 Annual Review that Screen Queensland supported productions responsible for an estimated $214 million in production expenditure in Queensland in 2016-17. Given that Screen Queensland supports practically every significant film production that occurs on the Gold Coast, this suggests the Gold Coast film industry makes less than one-tenth of the economic contribution that tourism makes. The Gold Coast film industry’s economic contribution is measured in hundreds of millions of dollars, while tourism’s economic contribution is measured in billions of dollars.

Even if the film industry made a larger economic contribution, special tax breaks for the industry would still represent bad policy. It is unwise and unfair for governments to give special treatment to one industry relative to others. If one industry gets a special tax break, it means other industries (or households) need to pay higher taxes than otherwise to make up the revenue loss. It would be better for the economy overall if governments focused instead on keeping taxes on all businesses as low as possible, consistent with the need to pay for government services, of course.

For previous comments I’ve made on film industry assistance, see:

4BC Dora the Explorer interview: Do subsidies work?

Ragnarok in Brissywood

Should the Aquaman film production on the GC get a $22M tax break?

Despite the fact the vast majority of economists and state and federal Treasury officials view tax breaks for the film industry as poor policy, I expect governments will continue to offer them. Unfortunately, our politicians are attracted by the glamour of the film industry, and they greatly enjoy appearing on the red carpet with Hollywood celebrities.

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Daylight saving in Qld would be welcomed by hospitality sector

Tomorrow, daylight saving commences in southern states, and Queensland businesses will again experience the inconvenience of being out of sync with customers, clients, suppliers, and partners in southern states. In his latest QEAS blog post, my colleague Nick Behrens has called for a review into whether Queensland should adopt daylight saving. I agree with him, and I have previously made similar comments. For example, see my comments in this Broadsheet Brisbane article from February this year: Why Can’t We Have Daylight Saving in Brisbane, and What Are the Costs?

One potential stream of economic benefits comes from the boost daylight saving would provide to the hospitality sector. It’s obvious when you visit southern capitals how their residents are taking advantage of the extra daylight hour at the end of the day, with the sidewalk cafes and restaurants full of people.

Incidentally, Queensland’s hospitality sector could certainly do with a boost, given its recent lacklustre performance (see chart below), even though tourist numbers are up. The end of the mining investment boom a few years ago no doubt impacted the sector heavily.

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Of course, there is more to consider with daylight saving than the potential economic benefits. Having lived in Townsville during Queensland’s last experiment with daylight saving, in the late 1980s and early 1990s, I know that daylight saving can be difficult for many people living in the tropical north and other parts of regional Queensland. And, in many parts of regional Queensland, outdoor recreation and dining in Summer are less attractive options than they are in SEQ. The state government could consider splitting the state for the purpose of daylight saving, but that would mean regional businesses would be out of sync with SEQ businesses. We really need a comprehensive study into different models for daylight saving, and the relative costs and benefits of the different models, compared with the status quo, of course.

Daylight saving is certainly a challenging issue, but one which should definitely be reconsidered for Queensland, given the economic costs to the state that are currently being incurred and the potential benefits from greater recreational opportunities and the boost to the hospitality sector that would probably occur.

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NSW the biggest contributor to Qld’s net interstate migration gain

Queensland has recently returned to the number one spot among states and territories in terms of net interstate migration flows, as noted in the ABS’s media release last month Queensland the most popular state for interstate movers. Queensland gained 24,000 additional people from interstate migration in the 12 months to 31 March 2018, compared with a net gain of 15,100 for Victoria, which was in number one position up until mid-2017, since when net interstate migration to Queensland has recovered strongly.

The improvement in net interstate migration to Queensland is largely due to an increase in arrivals to Queensland from NSW (see the array of charts below based on ABS estimates), which may have something to do with housing costs (until the current correction) having surged in NSW compared with Queensland, improving our relative housing affordability.

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While, in net terms, Queensland gained around 15,100 people from NSW in the 12 months to 31 March, we gained only around 2,100 people from Victoria, around the same amount we gained from SA, and lower than the around 2,700 we gained from WA. That said, historically, Victoria has been a major contributor of interstate migrants to Queensland. And, as the charts below suggests, net interstate migration flows to Queensland from states and territories other than NSW and Victoria are typically small.  Note that net interstate migration is the difference between interstate arrivals to Queensland and interstate departures from Queensland, which were plotted in the first array of charts above.

NIM_plot

Finally, I should note there is one state which, unlike all other states and territories, isn’t contributing people (in net terms) to Queensland: Tasmania. In the 12 months to 31 March, Queensland lost around 390 people to Tasmania, which I suspect is related to an increase in retirees moving there.

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Fact check: does a majority of Qld’s population live outside the South-East?

Today’s Courier-Mail editorial Parties neglect our regions at their peril contains an interesting factoid:

…a majority of the population in this state lives outside the southeastern conurbation with a string of major provincial cities along a vast coastline…

Is this correct? No, not according to most people’s definition of South-East Queensland or the “southeastern conurbation”, which must include at least the Brisbane metropolitan region and the Gold Coast. Usually the Sunshine Coast is included, too. This is the 200 km City that Peter Spearritt first started writing about last decade.

Consider the population figures in the chart below from the 2016 Census (see this QGSO brief) which show around two-in-three Queenslanders live in SEQ. According to the Census, SEQ had 3.19 million usual residents in August 2016, while the state as a whole had 4.70 million usual residents, meaning SEQ’s share was around 68%.

regional_population_census_data

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Qld economy continues to under-perform

The Queensland economy continues to under-perform relative to the NSW and Victorian economies. In my post earlier this month, I noted that the Queensland economy remains lukewarm. Economic conditions are much stronger in NSW and Victoria than in Queensland, as confirmed by the job vacancies data released by the ABS last Thursday (see chart below*). Job vacancies haven’t surged in Queensland as they have in the southern states. So it’s unsurprising the unemployment rate in Queensland is 6.3% compared with 4.8% in NSW and 4.9% in Victoria. Based on the September quarter’s vacancy data, this gap will no doubt persist.

vacancies_state

Nationwide, the Administrative and Support Services industry division has experienced a huge increase in vacancies (see chart below). This industry division covers a wide range of services, including office administration, cleaning, pest control, and employment services, among others. I suspect a significant part of the growth is due to the roll out of the NDIS in the last few years.

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Queensland may be missing out on its fair share of job vacancies growth in administrative and support services (and also professional, scientific and technical services) due to our relative lack of national company headquarters.

I’d suggest the Queensland Treasury urgently investigates Queensland’s ongoing economic under-performance, delving into whether it’s due to inferior policy and regulatory settings relative to other states and territories. This could be a good job for a revived Office of Economic and Statistical Research (OESR). This arm of Treasury was doing excellent work researching the drivers of state economic growth in the late 1990s and early 2000s. But, in recent years, it has been operating under its original historical name, the Queensland Government Statistician’s Office, and it now appears to lack sufficient resources and ministerial support to undertake in-depth economic research. The state government should consider reviving OESR, with a view to better understanding Queensland’s relative economic performance.

*NB The reference day is the third Friday of the middle month in each quarter. 

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