The resources states of Queensland and WA were the heroes of the ABS National Accounts released on Wednesday, with very strong growth in State Final Demand recorded over 2011:

But nationally economic growth was lacklustre, and the two-speed economy continues, as noted in an interesting Sydney Morning Herald article by Malcolm Maiden that I missed on Thursday morning but which a reader alerted me to (hat tip to Toby). The article notes:

Two rivers indeed: if the four states hold their current growth rates, Queensland will overtake Victoria to take second place behind NSW in two years’ time, measured by final demand. It will get its nose in front of NSW in five years and in nine years, Queensland and WA will hold first and second spots. Their demand will exceed that of NSW and Victoria combined by about 40 per cent.

While an interesting thought experiment, this obviously won’t happen, because the huge growth in State Final Demand is related to the extraordinary surge in resources sector investment that Queensland has experienced. Private sector capital expenditure accounted for 89% of the increase in Queensland’s State Final Demand over 2011, and one component of this, new engineering construction (a lot of which will be resources sector-related), accounted for 62% of demand growth.

Now that new engineering investment has already more than doubled from $3.1 billion in December quarter 2010 to $7.2 billion in December quarter 2011, I doubt that we would be able to double it again. The current extraordinarily high level of investment is driven in part by the construction of the LNG plants at Gladstone, and the bulk of this investment will have to be completed by 2014-15, by which time all the plants will have started exporting LNG.