Qld economy well positioned in 2nd quarter 2018, esp. given Commonwealth Games

We are now in the second quarter of 2018, and it’s a good time to review the economic outlook for Queensland. Job vacancy data released by the ABS last Thursday were very encouraging, and suggest the current economic upswing, encompassing a variety of sectors including health and aged care, education, tourism, and mining, will continue into this quarter. As Peter Martin pointed out in his article Best odds since the mining boom: 10 unemployed for each 3 vacancies, the ratio of unemployed persons to job vacancies is at a very low level nationally, so it’s a good time to be a job seeker, particularly in NSW and Victoria (see my chart below).


Peter Martin noted that Queensland was one of the worst states in which to search for a job. But job vacancies are actually surging in Queensland, too, being 23% higher in February 2018 than in February 2017. There is a good reason Queensland’s unemployed-to-vacancies ratio hasn’t fallen as low as in some other states and our unemployment rate remains higher (6.1% in Qld versus 4.9% in NSW, 5.7% in Victoria, and 5.5% nationwide). The reason is that Queensland has had a very strong recovery in workforce participation—i.e. an encouraged worker effect—as the state economy has woken up from its post-mining-investment-boom slumber (see chart below).

Participation rates

As you’re no doubt aware, Queensland’s economy is expected to receive a substantial positive shock early this quarter with the Commonwealth Games on the Gold Coast from 4-15 April. My colleague Nick Behrens, Director of QEAS, has a great post at his blog on the Games:

Is hosting the Commonwealth Games really worth it?

Nick has a good summary of the expected increase in visitors and expenditure associated with the Games:

More than 1.1 million visitors are expected in the lead up to, during and post the Games spending more than $870 million in Queensland.

Within this it is forecast that the Games themselves will attract approximately 672,000 visitors, spending $323 million (356,000 day trippers, spending $35 million; 265,000 domestic overnight visitors, spending $225 million 50,000 overseas visitors (including more than 6000 athletes and officials), spending $63 million).

The day trippers are probably mostly from SEQ so their expenditure is largely irrelevant to calculating an economic impact, because any Games-related expenditure reduces the amount they can spend elsewhere in the Queensland economy. Also, a reasonable share of the domestic overnight visitors will be from elsewhere in Queensland, and the same logic applies. I would guess the genuine Games-related additional spending in the Queensland economy in the 2nd quarter of 2018 would be around $250 million. This amounts to additional spending of around 0.3% of Queensland’s expected Gross State Product in the second quarter.  The spending wouldn’t all translate into additional GSP, because of leakages associated with imported inputs and also due to the crowding out of some other economic activity, but there is no doubt the positive shock will be substantial.

The state government is hoping for an ongoing rather than just a temporary economic boost from the Games, via greater tourism as a result of the international exposure, but I’m pretty skeptical about purported long-term economic impacts from sporting events. For example, the 2000 Sydney Olympic Games resulted in a surge in visitation for the period of the Games but no lasting impact (see this Conversation article Hosting the Olympics: Cash Cow or Money Pit? by two of Australia’s leading economic modellers, John Madden and James Giesecke).

Despite my skepticism about a Games-induced long-term boost to tourism, there is no doubt tourism will continue to contribute to the growth of Queensland’s economy. Generally, tourism has been growing at a good rate in Queensland (with international visitors up 4.3% in 2017), although less strongly than in NSW (up 7.4%) and Victoria (up 8.1%). For these figures and more, see:

TEQ’s 2017 International Tourism Snapshot

I noted Queensland’s potential to improve in international education in my previous post, and the same can be said for tourism more broadly. We need to remove the web of restrictive regulations that are constraining tourism investment and consider, for example, Brett Godfrey’s excellent suggestion to open up our national parks to eco-tourism opportunities (see his January 2018 Courier-Mail opinion piece).

Incidentally, based on Tourism Research Australia data released last week, domestic overnight travel (i.e. travel within Australia by Australians) is expanding at a healthy rate in Queensland, but at a significantly lower rate than in NSW and Victoria (see chart below). It’s time to reassess whether the $100 million or so provided by the state government each year to Tourism and Events Queensland could be better spent.


In summary, Queensland’s economy seems well positioned at the start of the second quarter in 2018. Note I will have a close look at the outlook for construction and mining in a post very soon.

This entry was posted in Labour market, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s