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).
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.