Qld economy was goosed up by gov’t spending in final quarter of 2018

Australia’s weak 0.2% GDP growth in December quarter has prompted talk of a “per capita recession”, as our economy has now been growing at a slower rate than the population for two consecutive quarters (see this SMH report). The national economy is slowing, as housing construction falls, now the apartment building boom has ended, and as household consumption is no longer being supported by capital gains associated with once rising house prices.

Oddly, Queensland recorded a respectable growth in state final demand of 0.9% in December quarter, compared with 0.6% in Victoria and -0.1% in NSW (see the ABS summary). The ABS data reveal there was a very large increase in government consumption expenditure in Queensland in December quarter of 3% (an annualised rate of 12.6%). This contributed around 0.6 percentage points to the 0.9% growth in Queensland’s state final demand in December quarter (see chart below).

contr_dec19

The $520 million government consumption spending increase in Queensland in December quarter was made up of an increase of $201 million from the Commonwealth and $319 million from the state and local government sector. I expect it’s largely related to Commonwealth NDIS spending and the state government’s ever-growing public service workforce.

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6 Responses to Qld economy was goosed up by gov’t spending in final quarter of 2018

  1. Russell Rogers says:

    Hi Gene. Like many people I am concerned about the growth in public device numbers in QLD. In part because we can’t afford it and also because it encourages more Labor voters to ensure this government stays in control. An interesting analysis would be comparing to other states on a percapita basis and indicating how much growth is reasonable for population increase and how much is not. Given the improvements in productivity through technology the number of back room jobs should be deceasing in my view.

    • Gene Tunny says:

      Thanks Russell. Yes I’m concerned about the growth in public service numbers too. We certainly shouldn’t have a target of growing it at the population growth rate which makes no allowance for efficiency improvements as the current government does.

  2. Nick Behrens says:

    Hi Gene, I was always enjoy reading your insightful comments. I am struggling to get my mind around all this talk of a ‘per capita recession’. For example Queensland has always relied on population growth as a key ingredient of our prosperity. Growth is growth regardless of how it occurs (excl perhaps gov recurrent spending). Yesterdays national accounts data were on the soft side and our economy could certainly be doing better but talk of a recession is fanciful at this stage.
    Keep up the great work mate. Cheers Nick

  3. Holly Vincent says:

    Great blog Gene!

    >

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