Qld economy continues to disappoint

Queensland’s economic under-performance, which I’ve been commenting on regularly (e.g. see Deloitte’s weird definition of “strong employment growth”), is a major part of the reason why Australia’s GDP growth for September quarter came in lower than expected yesterday. The ABS has estimated national economic growth in September quarter at 0.3% and through-the-year growth at 2.8%, in seasonally adjusted terms. Queensland’s State Final Demand (SFD) fell by 0.4% in September quarter compared with growth of 0.3% across all states and territories (see the ABS summary). NSW’s SFD increased at the strong rate of 1.1% while Victoria registered only 0.2% growth (see chart below).


My colleague Nick Behrens at his QEAS blog nicely summarised the disappointing September quarter National Accounts data for Queensland as follows:

Latest ABS data confirms Queensland’s domestic economic growth has now peaked and is falling away which has considerable implications for future employment growth in the Sunshine State…

…Quarterly domestic economic growth for Queensland peaked in the December quarter 2017 following a strong two year period that generated considerable employment growth. However our domestic economic growth has progressively eased across 2018 which is now actively influencing our State’s employment growth at present.

The decline in Queensland’s SFD is primarily related to declining capital investment, particularly in non-residential construction (and more precisely heavy/engineering construction), which forms a large part of business capital investment (see chart below and my post Industry groups right to say Qld economy failing to create the number of jobs needed). This of course is a volatile component of SFD and should rebound somewhat over the next few years as major projects (e.g. Queen’s Wharf, Brisbane Live, Adani Mega Mine, Cross River Rail PPP) ramp up. So I’m not panicking yet, but I would like to reiterate my suggestion that the state government urgently review the full range of regulations and legislation that could be impinging upon business activity and job creation.


Also on the disappointing September quarter National Accounts figures, see Mission Beach-based economist Pete Faulkner’s post GDP disappoints.

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Deficient Qld state public administration is a major theme of my new book

Sadly, Queenslanders are getting accustomed to regular stories of failures of state public administration, with two major stories this week. We have learned about the $250 million digital hospitals program cost blow out and the results of the inquiry into the botched $4.4 billion procurement of the New Generation Rollingstock (NGR) trains. Yesterday the Courier-Mail reported:

AN INQUIRY into the State Government’s botched delivery of new trains worth $4.4 billion could end in a lawsuit.

Commissioner, retired judge Michael Forde said yesterday that his four-month inquiry into the project’s flaws found no evidence that successive ministers or top officials had been told the train design breached disability access legislation.

But he said the inquiry exposed a lack of consultation with the disability sector.

The design issues were not raised with Transport director-general Neil Scales until 2016 – three years after the contract for 75 new trains was signed with a consortium led by manufacturer Bombardier.

It’s pretty hopeless and rather incredible that senior public servants were unaware of the major issues involved in a multi-billion dollar procurement. They need to be accountable for either the lack of proper stakeholder consultation conducted by their department or for what may be a “she’ll be right” culture of dismissing and not conveying bad news up the chain of command. I’m surprised there aren’t loud calls for mass sackings of senior Transport and Main Roads bureaucrats.

Queensland’s sub-standard public administration is a major theme of my new book Beautiful One Day, Broke the Next, now available for pre-order from the Connor Court website. This is a state in which we’ve had a water crisis, health crisis, electricity crisis, health payroll debacle, fake Tahitian prince scandal, hospitals cost blow out, rail fail and the NGR procurement snafu, among other public administration stuff ups.

There is something deeply wrong with Queensland’s public administration. Partly this is due to the lack of an upper house, which was abolished in the 1920s, although I’m not necessarily advocating for one to be restored. We need to strengthen the role of parliamentary committees in overseeing government business and also we need to improve the quality of the state public service. It’s been widely observed that successive governments have politicised the public service and we now have very few long-term career public servants with the skills to administer high quality policy development and program delivery.

On Queensland’s recurrent failures in public administration, in addition to my book, I recommend Ken Wiltshire’s excellent 2016 Courier-Mail opinion piece Take the politics out of policy.


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Industry groups right to say Qld economy failing to create the number of jobs needed

I am pleased to see that peak industry bodies (e.g. the Property Council of Australia and the Infrastructure Association of Qld) are saying the same thing I have been regarding Queensland’s lacklustre jobs growth, with the Sunday Mail* today reporting:

Queensland is attracting rising numbers of people to live in the state—but failing to create the jobs they need, says new analysis.

Peak industry groups for property, business and infrastructure are challenging the Palaszczuk Government to use next week’s mid-year fiscal and economic review (MYFER) to refocus policy direction and close a growing “performance gap” between Queensland and New South Wales.

I have discussed this performance gap in previous posts (e.g. Deloitte’s weird definition of “strong employment growth” and Qld only state/territory with 6%+ unemployment rate). The September quarter construction activity and private capital expenditure data released by the ABS last week confirmed the diverging trends between Queensland and southern states. For instance, contrast the plateau in construction work done in Queensland over the last few years with the upward trends seen in southern states (see my facet plot below and this ABS summary of the new data).


While there are some major projects that are expected to boost activity in Queensland (e.g. Cross River Rail, Queen’s Wharf, Brisbane Live, Adani mega mine) over the next few years, I doubt these projects alone will be sufficient to close the performance gap we have seen. Indeed, NSW’s economy appears set to be injected with large additional amounts of public infrastructure investment, with the Sunday Mail reporting:

Analysis commissioned by the Property Council said that Queensland consistently spent a much greater proportion of Gross State Product on developing infrastructure than NSW did between 1999 and 2014. But forward budget outlooks showed that trend would be reversed for the first time between 2019 and 2022—a period during which NSW would invest $87.2 billion on infrastructure, almost double Queensland’s $45.8 billion spend.

Again, I am pleased the peak industry bodies have raised the performance gap as an issue with the state government. As I have previously argued, we need to review the full range of regulations, taxes and charges that impinge on business activity in Queensland.

*A hat tip to Nick Behrens who writes at the QEAS blog for alerting me to the Sunday Mail article. 

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Deloitte’s weird definition of “strong employment growth” for Qld

I was surprised when I read Deloitte’s latest commentary on the Queensland economy, as reported by the Courier-Mail on Thursday (Jobless rate hides Qld’s economic success story), because the commentary makes little sense:

QUEENSLAND’S economy is performing strongly despite the country’s highest unemployment rate, analysis released today reveals.

“Queenslanders are more positive about finding a job,” Deloitte Access Economics partner Natasha Doherty said in the latest quarterly outlook report on the state.

Although the 6 per cent ­jobless rate is 1 per cent above the national average, it has to be viewed in the context of more people seeking work, Ms Doherty said.

“This is against the backdrop of strong employment growth with 35,000 jobs added over the year to September.

The quoted 35,000 jobs growth over-the-year to September corresponds to a growth rate of only 1.4%, compared with 2.4% nationwide and state population growth of 1.8%. This cannot be considered strong employment growth and, indeed, I would call it moderate at best. Oddly, Deloitte hasn’t quoted the latest ABS Labour Force Survey data which show Queensland employment growth at the lower rate of 1.1% compared with 2.3% nationwide through-the-year to October (see my post on these figures and Queensland Treasury’s briefing). Deloitte emphasises that, according to the ABS data, much of recent jobs growth has been in full-time positions. But Queensland’s rate of full-time employment growth at 1.8% is lower than the national rate of 2.4% and is around the population growth rate, so it’s nothing extraordinary.

Deloitte is also wrong to point to more people seeking work as an explanation of the state unemployment rate staying at 6%+ while the national rate has declined to 5.1%. Deloitte would have been right to point to an increase in state labour force participation in 2017, but over the year to October 2018 Queensland’s participation rate has fallen from 65.9% to 65.6% (see chart below). Furthermore, in October, the participation rates for Queensland and Australia were equal at 65.6%. We can therefore reject Deloitte’s hypothesis that Queensland’s current 6%+ unemployment rate is due to more people than usual seeking work, which would require the labour force participation rate to have increased over the year, something which did not occur. Instead, Queensland’s current 6.2% unemployment rate is related to the state experiencing only modest employment growth, at a rate lower than the population growth rate.


Deloitte’s commentary on the Queensland labour market is inconsistent with the latest data and makes little sense.

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My comments in “Liberal bloodbath” Diplomat article

Brisbane-based writer Anthony Fensom has written an excellent article at The Diplomat titled Liberal Bloodbath Repels Australian Voters in which he quotes me among other commentators:

Similarly, economist Gene Tunny said the 2019 result was already a foregone conclusion, despite positive economic factors including a shrinking budget deficit, low unemployment, and inflation.

“There are a lot of positives about the economy, but people don’t seem to be feeling it. Wages growth has been low, practically in line with inflation for a few years, so people aren’t feeling that increase in living standards,” said Tunny, principal at Adept Economics.

“The government is trying to run a campaign [on the economy] but it’s had trouble showing it’s got a positive program that will convince people to vote for it.”

Australia’s low wages growth was the topic of a panel discussion I participated in a couple of months ago on Emma Griffiths’s 612 ABC Brisbane Focus program:

ABC Brisbane radio panel discussion on low wages growth

Wages growth and CPI inflation to Sep 18

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Townsville ESA seminar on regional economies incl. new NQ state discussion

I visited my hometown of Townsville last week to participate in an Economic Society of Australia (Qld) seminar on regional economies in a digitised and globalised world. The seminar feature presentations by James Cook University Associate Professor Riccardo Welters (Regional economies and automation) and well-known Townsville economist and NQ state advocate Colin Dwyer of DS Economics. I am grateful to Colin for the following summary of his presentation. These are Colin’s views and should not necessarily be attributed to me. For my own views, see this ABC News article. GT

New State Pre-Feasibility Test

Colin Dwyer, DS Economics

At the inaugural Australian Economic Society seminar in Townsville, the first of its kind in a regional location, Founder of Our Fair Share Colin Dwyer told a strong audience that for regions to adapt meant to remain technology takers, but to prosper (politically, economically, socially, technologically environmentally and legislatively) regions need to be technology producers. In order to do that we need to encourage entrepreneurs better than we are, and in North Queensland’s case it needs to own its destiny.

Founder of Our Fair Share Mr Dwyer said around a century ago regions had more population than cities. Technology, supply chain efficiencies, migration, entrepreneurs and legislation changed that equation to benefit cities. Now we have global cities that complete with other global cities and with further digitization regions need to find ways to have their contribution recognized or be ignored.

Prospering in today’s globalized economy means being technology adapters but also technology providers, encouraging entrepreneurs and owning your destiny are important elements in regional futures.

Mr Dwyer, the Our Fair Share founder, said “Regions don’t encourage entrepreneurs well enough. We don’t help them identify opportunities.  We don’t give them incentives to have a go. We need to change that mind set and develop ways of supporting and attracting entrepreneurs, while regulating their activities for a net social and environmental benefit.”

Mr Dwyer said that while Brisbane owned the legislation and economic purse strings distant regions would be adapters rather than innovators. He presented a formula ‘Dwyer’s new state test’ that supported sections 121-124 of the Australian Constitution. It is a pre-due diligence test that involved appraisals of population*, economic activity, social assets, common interest, distance from existing capital, risk assessment and precautionary test.

The Our Fair Share founder presented information that rejected the old North Queensland as viable for further due diligence but presented his 5 statistical division model that complied with the Dwyer new state test.

In the New NQ presentation Mr Dwyer completed analysis from his New State test and a comprehensive New NQ state budget, which found New NQ would have a surplus of
$3 billion. He then discussed opportunities to support entrepreneurs, mining company head office moves from global cities, improved transport, health and education options.

Mr Dwyer said North Queensland needs to write its own story. If you let others do this, they will get it wrong. We care about the future of our places, there’s more comprehensive work that’s required and we need an NQ institute to prosecute sections 121-124 and own our future.

The New State pre-feasibility test has foundation in the royal commission into northern NSW becoming a new state. The referendum was held in 1967. It was unsuccessful, some say due to positioning of the boundary and consequential community of interest.

* In his presentation, Colin noted one million people would be a good benchmark for a new state. By Colin’s definition of NQ, which also includes central Queensland, and  importantly for his budget numbers much of the Bowen basin and its lucrative coal mines, NQ’s current population is over 900,000 people. GT


View from Castle Hill, Townsville; photo by Jennifer Tunny. The distinctive “Sugar shaker” building, formerly the Hotel Townsville but now the Grand Chancellor, is in the centre of the photo.


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My book Beautiful One Day, Broke the Next can be pre-ordered now

Regular readers will know I’ve commented extensively on Queensland’s state debt and budget policies over successive recent governments, and that I’m concerned that not enough is being done to restrain the growth of state debt, currently on a trajectory to over $80 billion. I’ve chronicled Queensland’s fiscal deterioration in my forthcoming book Beautiful One Day, Broke the Next: Queensland’s Public Finances since Sir Joh and Sir Leo, published by Connor Court. The book will be released early next month, and can now be pre-ordered:

Beautiful One Day, Broke the Next

It’s just in time for Christmas.


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