The Centre for Policy Development’s new report All Boom, No Benefit? Why Queensland needs a new economic strategy ignores some important facts about the Queensland economy and contains some half-baked policy recommendations. The report is getting media attention because it criticises Queensland’s reliance on the resources sector (Queensland’s mining focus threatening wages, report warns), and raises concerns about future coal royalties, but it ignores the fact LNG exports will commence next year and there will be a big boost in royalties from production associated with those exports (see my post from last year Qld’s economic future bright if we look beyond short-term). Given our endowment of resources, Queensland has a comparative advantage in mining compared with other States, and I expect mining will be important to our economy for the forseeable future.
Another important fact the report ignores is that Queensland is projected to have
$80 billion of debt within the next few years. Hence I’m unsure where the surplus funds required to “Establish an endowment fund to manage renewable natural resources for the long-term”, one of the report’s recommendations, are going to come from. It’s not like the Government has surplus cash to park in funds such as the one proposed. The fund may be worthwhile depending exactly on what type of natural resource management is proposed – the report is light on detail on this aspect – but a strong case would need to be made to divert money from other priorities such as health and education.
Regarding another recommendation in the report, I agree the Queensland Government should review its support to the mining industry to ensure it’s not unfairly advantaged relative to other industries. Indeed, as discussed last week (Scope to cut Qld Government industry assistance), I support a wide-ranging review of Queensland Government industry assistance.
Regarding the report’s final recommendation, “Convene a State Economic Summit to identify growth opportunities”, I fear this would be a useless, costly talk-fest and wouldn’t generate any useful economic policy outcomes. Hence I don’t support this recommendation.
I welcome the CPD’s interest in the Queensland economy, but it really needs to get a better grasp of important facts about our economy if it is to produce something of relevance to the Queensland economic policy debate.