CommSec’s latest State of the States Report is out today, and, while I think its placement of Queensland in around the middle of Australia’s States and Territories (5th out of 8) is reasonable, I have some sympathy for Queensland Treasurer Curtis Pitt who has criticised the methodology of the Report. Mr Pitt was quoted in the Brisbane Times as follows:
“CommSec compares select current economic data with an average for the previous decade…It means we are being compared to conditions in the past resources investment and construction boom. This gives an incorrect picture of current performance.”
I agree with the Treasurer that the methodology is questionable, as I noted in a 2010 post. That said, it nonetheless appears to be placing Queensland around about where it should be based on recent economic performance. As I have noted previously, the Queensland economy is under-performing, particularly compared with NSW and Victoria (see e.g. my Jobs Growth Summit Paper). In talking up the Queensland economy, which of course is part of his job description, the Treasurer has to rely upon forecasts of future good times that have not yet occurred, as reported by the Brisbane Times:
Mr Pitt hoped voters would look to the Deloitte Access Economics Business Outlook, which in March predicted Queensland would be “near the front of the state pack” for growth over the next five years.
This may well be the case, but we have to live and work in the economy as it is today, and that is what CommSec is trying to assess, albeit in an imperfect fashion.
Other economic news today came from CoreLogic RP Data, which released its Home Value Index results for April. SEQ appears to be doing well, and better than Melbourne in the growth in house values, but unit values only increased 0.2% in Brisbane and actually fell 1.1% in the Brisbane-Gold Coast area in April (see chart below). The looming over-supply of units may see a large correction in residential construction activity, currently one of the Queensland economy’s bright spots, over the next couple of years.
The rest of the week will be exciting for economy watchers, with an interest rate cut very possible tomorrow (though arguably unnecessary and undesirable given the national economy appears in reasonably good shape), and the Budget to be released tomorrow night.
Regarding the Budget, it appears that, while Queensland will benefit from higher than previously expected GST revenue (see my April 10 post), we may not get access to funds for infrastructure that are tied to “asset recycling,” i.e. privatisation (see the Queensland Treasurer’s media release from this afternoon). I am a big supporter of privatisation, but I cannot see the public policy rationale behind linking Commonwealth funding for new infrastructure to the privatisation of existing government-owned businesses. The Commonwealth may have wanted to incentivise good policy but, given the strong opposition of Queenslanders to asset sales, it would be bloody minded to deny us funding because our political system will not deliver privatisation.