Recommended reading on the car industry

Posted on February 9, 2012 by Gene Tunny

The new online newspaper the Global Mail, which is funded by Wotif founder Graeme Wood, published a great article today (Car makers: Beached as) by Bernard Lagan on government assistance to Australia’s car industry, which quotes extensively from my paper in Policy Magazine last year.

Posted in Industry policy | 3 Comments

Gold Coast over-supply of residential property persists

Posted on February 7, 2012 by Gene Tunny

The Gold Coast building industry is likely to be in for another tough year at least, based on December quarter 2011 rental housing vacancy rates reported in today’s information brief from OESR:

Gold Coast tradies will log a lot more kilometres on the M1 this year. See my previous post:

Tradies know what it means to live in the 200km City

Posted in Housing | Leave a comment

RBA makes right decision for the national economy

Posted on February 7, 2012 by Gene Tunny

In leaving interest rates unchanged, the RBA has clearly demonstrated its focus is solely on the national economy – that is, it appears comfortable with the two-speed economy which this year will see Queensland and WA surging with NSW and Victoria struggling. By keeping interest rates unchanged, the RBA has caused a jump in the Aussie dollar which means people will keep leaving on a jet plane. This ABS chart published with the short-term arrivals/departures data today reflects the growing number of Australians holidaying overseas:

Posted in Macroeconomy | Leave a comment

Qld only state to record growth in building approvals

Posted on February 2, 2012 by Gene Tunny

Today’s ABS data on building approvals (see the chart below I’ve pinched from this OESR brief) and Westpac’s gloomy assessment of the Australian economy (Westpac says cutting up to 400 jobs) have made me a bit concerned about the two-speed economy.

Posted in Macroeconomy | Leave a comment

Community sector pay rise will hit the Qld budget

Posted on February 2, 2012 by Gene Tunny

Judith Sloan has a fantastic column in the Australian today on yesterday’s Fair Work Australia decision to grant large pay rises to social and community services (SACS) workers, in which she notes the budgetary costs to State Governments:

Another unsavoury aspect of this case was the complete contempt the federal government has showed the state governments, which by and large employ or fund SACS workers. Without consultation, the federal government announced its intention to tip in $2 billion to help fund the pay rises. The state governments were effectively goaded to match this sum.

No doubt the decision will annoy Queensland Treasury, as it’s another hit to the budget that will make it harder for Queensland to improve its budget balance and eventually regain a AAA credit rating.

Posted in Budget, Labour market | 1 Comment

Ipswich helps Brisbane to top economic growth ranking

Posted on February 1, 2012 by Gene Tunny

The Brisbane Times this morning reported on an interesting new report from Jones Lang LaSalle which places Brisbane as the top major city for projected economic growth. Here’s the chart showing Brisbane’s dominance:

Of course, this must refer to the Brisbane metro area, because Brisbane City’s growth isn’t that spectacular. A large part of the growth of the Brisbane metro area is the strong growth in the western corridor out to Ipswich, particularly around Springfield – one of the few master-planned communities that seem appealing to live in. The Ipswich City Council area is projected to add almost the same number of people as the Brisbane City Council area in the period to 2021 (see chart from OESR below), which is extremely impressive given Brisbane City is around five times the size of Ipswich City. Brisbane unfortunately is held back by NIMBYism in prime inner city suburbs which has limited the development of higher density living options (e.g. the complex that was planned for the old Milton tennis centre site).

Posted in Brisbane, Ipswich, Population | Leave a comment

Business confidence starts to reflect economic reality

Posted on January 31, 2012 by Gene Tunny

I was very pleased to see this news yesterday in the Brisbane Times as it confirms my belief that the Queensland economy is strengthening due to the pipeline of resources sector investments (Queensland’s business confidence growth outpacing nation):

Business confidence is on the rise and the Queensland economy is in good shape, Treasurer Andrew Fraser says.

Mr Fraser was using the latest survey from the Chamber of Commerce and Industry Queensland’s to talk up the state’s financial outlook ahead of the March 24 election.

The CCIQ survey of business conditions shows Queensland’s confidence rose by five percentage points in the December quarter to 50.9 per cent, ahead of the national economy on 48.6 per cent.

Mr Fraser said the report showed a turnaround in general business conditions with an increase to 49.8 per cent, their highest level since March 2010.

Posted in Macroeconomy | Leave a comment

Is Far North Qld recovering?

Posted on January 27, 2012 by Gene Tunny

Cairns-based blogger KS at Loose Change has a couple of recent posts on news that may suggest a (modest) economic recovery is underway in the Far North:

Airline flights boost

Unemployment falls

According to the latest OESR regional unemployment brief released today, the Far North unemployment rate (12-month average) has fallen 0.6 per cent from 9.4 per cent in December 2010 to 8.8 per cent in December 2011, but since this is a 12-month average the actual current unemployment rate may be significantly lower than this.

Posted in Cairns, Labour market | Leave a comment

Hands off our mining royalties

Posted on January 27, 2012 by Gene Tunny

OESR’s latest Queensland Economic Review released today contains an informative piece on the Grants Commission’s treatment of mining royalties – i.e. effectively taking a big chunk of them away from us (and WA) by allocating us less of the GST revenue than it would have if mining royalties were lower and we needed the GST revenue more. Thankfully Queensland Treasury is on the case and has a sound logical argument:

Under the current methodology for assessing mining royalty capacity, a large proportion of any additional revenue raised by the resource states will be redistributed to non-resource states. The resource states argue that the current redistribution process fails to take account of the costs of developing and maintaining associated economic and social infrastructure, potentially creating serious incentive problems.

Queensland considers that alternative approaches to the mining methodology must be a priority of the current GST Distribution Review.

Of course, given the budgetary problems faced in the non-resource States, especially Victoria, I’d be very surprised if we win this argument, but good luck to Treasury in prosecuting the case.

Posted in Mining | Leave a comment

Gold Coast childcare magnate gives thanks to Peter Costello

Posted on January 26, 2012 by Gene Tunny

Australia’s fertility rate reached an historic low in 2001 of 1.73 babies per woman, but by the end of the decade it had risen to 1.90 babies per woman (see One for the Country: Recent Trends in Fertility) – an amazing turnaround that many attribute to the Howard Government’s Baby Bonus first introduced in 2002. The Managing Director of Gold Coast-headquartered national childcare centre operator G8 certainly credits the Baby Bonus:

G8 Education managing director Chris Scott said the company’s Australian operations had been performing strongly, in part due to a baby boom created by Howard government treasurer Mr Costello, who put in place the controversial bonus scheme with the catchphrase “one for mum, one for dad and one for the country”.

“Our Australian operations have been performing above budget for the past six months,” Mr Scott said. “That has continued into January.

“The market for childcare centres in Australia is very strong.”

Academics have questioned the impact of the Baby Bonus, arguing that other factors such as the state of the economy and knowledge about the effects of age on the chances of having children are more important (see Baby bonus no boost to the fertility rate). But I’ve always believed it had an impact because it signaled to parents that the Government is supportive of them having and raising children. It’s certainly hard to rationalise how a few thousand dollars influence people to have children that can cost several hundred thousands of dollars each to raise, but in some odd way people may have been psychologically reassured by the Baby Bonus that the Government would continue to look after them in the future.

Posted in Population | Leave a comment