According to the Brisbane Times, at the LNP state conference on Sunday, Queensland Opposition Leader Tim Nicholls was highly critical of the Government’s economic management:
“…you certainly can’t create jobs or effectively manage our finances when the Queensland domestic economy is $6.5 billion smaller in 2017 than it was in 2015 when we were last in office.”
The Opposition Leader appears to be referring to Queensland’s level of State Final Demand or Gross State Expenditure. I am unsure of the exact data series he used, but I can get something close to his estimate using Queensland Treasury State Accounts data. That said, State Final Demand/Gross State Expenditure is not really the best economic measure to use, as it does not include exports and imports in its calculation. Rather gross state product (GSP), the comprehensive measure of economic activity, should be preferred.
During the mining investment boom, State Final Demand/Gross State Expenditure was boosted by a temporary surge in capital expenditure, which was always expected to fall back, and to subsequently lead to higher exports. Indeed, a major feature of Queensland’s economic transition at the end of the mining investment boom has been a surge in exports, as new projects including LNG plants have come online, and a fall in imports, as the investment phase and its related imports of capital equipment and supplies have ended (see chart below).
This transition has meant that, although Gross State Expenditure/State Final Demand has fallen as temporarily high capital expenditure has declined, GSP has nonetheless increased (see chart below). Over 2015 and 2016, GSP grew at an annual average rate of 2.8 percent, compared with an historical average annual growth rate of over 4 percent.
The Opposition could argue that growth has not been as strong as it could have been with better economic policies, and point out the bulk of jobs created during the Government’s term have been part-time (see my last jobs data post), but the Opposition will find it hard to argue the economy is smaller than when it was last in office.