The scale of the negative economic shock Queensland is currently experiencing from the decline in resources sector investment is extraordinary, as revealed by new ABS data on construction work done released today (see chart above, noting “Engineering” covers the heavy construction associated with resources sector and other infrastructure projects). Total construction activity in Queensland in December quarter 2014 was $3.4 billion below its peak in September 2013. This is equivalent to around 4% of quarterly Gross State Product, which is a massive difference.
Obviously, the huge negative shock Queensland is experiencing has profound implications for the economy, and a large range of businesses that supply services to the resources sector are feeling the knock-on effects. So the new Queensland Government may well face further increases in unemployment. Unfortunately, state governments don’t have many levers to affect unemployment, and those that they do have are relatively expensive to use – e.g. directly employing people or boosting subsidies to apprenticeships and traineeships. It appears likely that the new Government will have a testing first year in office.