Queensland Investment Corporation CEO Damien Frawley made some astute observations on the outlook for Queensland’s economy, which were reported in the Courier-Mail this morning:
THE resources boom will leave a lasting legacy for Queensland’s economy regardless of when it runs out of steam, the state’s leading money man has told The Courier-Mail’s leadership forum.
Queensland Investment Corporation chief executive Damien Frawley, whose organisation manages almost $68 billion in client funds, has cautioned Queenslanders against relying on a “one-trick pony” to keep the state’s economy going, instead urging a greater focus on sectors such as agriculture and construction.
“Queensland’s a bit of a one-trick pony around resources,” Mr Frawley told the forum, which also included Premier Campbell Newman, Police Commissioner Ian Stewart, Catholic Archbishop of Brisbane Mark Coleridge, Opera Queensland artistic director Lindy Hume and Racing Queensland Limited chairman Kevin Dixon…
…”I don’t think it’s a bad thing that we’ve taken a bit of a breather in resources because it switches the focus on the other stuff that we do,” he said.
“I think construction, agriculture . . . these things are much overlooked as being big levers for our economy, and I think they’re the things that, frankly, we’ve got to focus on.”
The comment referring to the “one-trick pony” has some basis, as mining has been the only one of the four pillars that has been generating jobs in recent years (see chart below based on ABS data released last week). Note that tourism isn’t technically an industry – rather a range of industries benefit from tourism spending – so it isn’t included on the chart below. Nonetheless, based on Tourism Research Australia data, we know that there was a downturn in tourism activity relative to the period before the financial crisis. Thankfully recent data suggest tourism is recovering (e.g. see Domestic tourism continues to recover in Queensland).
I strongly agree on the outlook for agriculture, as I’ve previously posted on (Treasury forecasts agricultural boom). There is certainly scope for agricultural output and employment to increase, although the increasing use of labour-saving irrigation machines and other farm machinery (see this useful fact sheet) will mean employment probably won’t grow as strongly as output. As for construction, I expect the sector will continue to recover, but I wouldn’t expect a repeat of the strong growth prior to the financial crisis – at least not until people forget the lessons from that period of irrational exuberance.