The structural change the Australian economy has experienced in recent years, including the decline in manufacturing and the decline of small retailers, at the same time as health care and other service sectors are booming, reveals itself in the latest business counts data based on ABNs released by the ABS today (see figure below). Between June 2012 and June 2016, across Australia, the number of health care and social assistance businesses increased from around 105,700 to 123,400, while, in contrast, the number of retail businesses fell from 142,900 to 131,200. The data also confirm Queensland’s relatively lacklustre economic performance over 2015-16, with business counts increasing 1.9% in Queensland compared with 3% in NSW and 2.8% in Victoria.
Recent comments of mine on these trends can be found in the following posts:
Comments in Courier-Mail on Qld regional economies and structural change
Queensland Economy Watch 
Hi Gene
This looks like there is just an increase in government spending on health, education and science. Otherwise, are people getting sick more? What do you think this all means for the future of QLD economy?
Thanks
Brad
Thanks Brad. Yes, a lot of this is driven by government expenditure. And there is much more to come with the aging of the population and NDIS. Obviously resources are being attracted from activities that may otherwise be in the market sector which means we could have lower productivity growth and lower income per capita growth than otherwise. Either taxpayers will end up paying for the extra expenditure through higher taxes or future generations through debt repayments as I expect these trends mean budgets will remain in deficit and debt will continue to grow.
Gene
I’m not entirely sure you can read too much into this data about the prospects or the structure of the economy at all. I think what the data does show is how the economic pie is now distributed across different entities, rather than anything about the size of the economic pie. If $1M of engineering consulting work is done by 1 or 2 businesses, does it really matter?
It think what the data does do is reinforce some of the contemporary anecdotal observations about how different sectors are responding to changes in technology and the broader economic environment.
Lots of the sectors where business number are growing are typified by rapid changes in technology that are making market entry and establishing a new business pretty easy. Gene. Take yourself as an example. You probably establish your business over the web (company registration, insurances, establish a presence via a blog etc)., and a laptop costs next to nothing. Hey presto. A consulting business is formed. This wasn’t the case even 10 years ago. This is a trend across much of the service sectors where the growth in small bespoke operators is rapid. But that doesn’t necessarily translate to major growth in activity.
When you look at the sectors where business numbers are declining (e.g. manufacturing, mining, retail etc), we have seen a lot of merger activity in response to declining margins. And declining numbers of wholesale and retail trade businesses probably reflects a bigger part of the retail pie going to on-line shopping (again made possible by technological change).