Challenging conditions outside SEQ

In his recent commentary regarding strong growth in the retail sector, National Retail Association CEO Trevor Evans noted:

“South East Queensland is performing strongly but performance in Queensland is being held back by issues in some areas…Some areas are living through the ripple effects of the downturn of mining, some areas are still suffering from the drought.” (quoted in this Brisbane Times report)

There is certainly a stark difference in economic conditions between SEQ (i.e. the Brisbane metro area, the Gold and Sunshine Coasts and hinterlands) and the rest of Queensland, as can be seen in the charts for employed persons in SEQ (on the left) and the rest of Queensland (on the right) below.

SEQ vs non-SEQ

Extremely weak conditions in regional areas such as Mackay have prompted the Government to consider accelerated works programs in other regions, not just Townsville, according to a Courier-Mail report this morning: “Ms Palaszczuk has pledged to fast track projects in other regional areas like Mackay and elsewhere affected by widespread resource industry job cuts.” The obvious point to make about fast tracking is that it is just shifting the largely temporary employment benefits of particular projects forward in time. If the Government spends the funds on particular projects today, it can no longer spend those funds tomorrow when it was going to originally. No doubt the Government will face calls for additional future funding for infrastructure to make up for the funds that are spent earlier than originally anticipated.

However, as I have noted since the last election, given it has denied itself proceeds from privatisation, the current Queensland Government faces an extremely difficult challenge in funding the future infrastructure expenditure that is likely required and is currently not fully budgeted for. See my post:

How the Qld economy performed over 2015

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This entry was posted in Brisbane, Gold Coast, Infrastructure, Labour market, Mackay, Macroeconomy, Mining, North Queensland, Queensland Government, Townsville, Uncategorized and tagged , , , , , , , , , . Bookmark the permalink.

11 Responses to Challenging conditions outside SEQ

  1. Glen says:

    Interesting graph Gene, particularly the last 2 – 3 years in the regions. I hope this graph highlights to people in SEQ the need for investment in the North Qld. This investment can only come from overseas as Australians have abandoned the North to focus on capital cities. It is imperative that Govts across all levels allow free access to the North for foreign investors. An economic zone could be set up to ensure fast tracking of approvals and deny the opportuntiy of southerners to hold up or block projects in the North, and give us the freedom to secure our future.

    • Gene Tunny says:

      Thanks for the comment, Glen. I agree we need to make it easier to get investment projects approved.

    • NSSft says:

      Hi Glen, I live in one of the northern ground zeros of economic dislocation, but I don’t think government can do much in reality, Automation, long-term shifts away from mining and climate change really mean there is not as much reason to be up here any more. And the reasons for staying decrease daily. In the end, in a free economic market, we workers need to move to the work. That is very hard – house prices here have been declining for >5 years and moving to a high cost market will be difficult. That’s my problem not the governments. Instead of developing the north we need to consider a strategic retreat.

      • Glen says:

        NSSft, some good points and the strategic retreat might occur regardless. I fully agree and market forces will determine where and how people live, as it should. My main point was in regards to restrictions put on the North by governments in regards to foreign investment, environmental conditions that make many projects simply unviable. Water, agriculture, power generation, mining projects, port expansions and others are all approved by Brisbane or Canberra or in many cases both. If these governments continue to restrict investment in the North then they have an obligation to fund other projects to ensure people have an opportunity to prosper without all retreating to the capital cities. Of course the preferred option is for governments to simply get out the way and let the people of the North control our own lives and determine our own future and the types of projects we want.

  2. Aaron Johnstone says:

    Hi Gene – this is definitely evident in our industry – the construction materials sector. Lots of cranes in Brisbane gives misleading impression about the overall state of our sector across Queensland.

  3. KT says:

    I agree with both comments. my biggest concern is where is the government going to find the dollars for this?

  4. Jim says:

    Gene

    Good post. But the truncated Y-axis you have used on the regional chart visually overstates the upside and the downside of the changes in employment. Eyeballing the SEQ data, it looks like employment growth in SEQ has grown about 22-23% over the period. But in regional Queensland it looks like employment growth peaked at only about 16% in 2013 (lower than SEQ at the time), and has now moderated to about 11% growth over the period.

    Looks like the miracle of rapid growth in regional Queensland on the back of mining was largely a beat-up anyway; while anyone who actually thought the growth in regional Queensland was permanent was just being delusional.

  5. M Ford says:

    Highlights a contradiction. LNP hurt regional cities with the cuts to the public sector but then said leasing assets would fund regional jobs.? Are they for buying jobs or not? Argument re Adani aside there is no rational reason to lease assets in order to fund infrastructure outside SEQ as there are no capacity issues at all. Ports, roads, houses, energy all in over supply. Not sure what ideology they follow at all. Darwin looks set to follow adding more competition for 3rd class northern regional cities.

    It would be insane to sell/lease profit making assets just to buy a few jobs. It is small government, free market thinking one hand and socialist on the other. Contradiction. Efficiency and productivity do demand fewer people in the regions so we either accept that reality or embrace socialism. It is simply not possible to embrace free market Neo liberalism and expect the regions to prosper, For 200 years centralisation and urbanisation has been the result of market forces. Also the structural problems in regional economies will never be fixed by spending, just a temporary fix. A regional monetary policy would do more and cost less. But that will never happen.

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