Queensland Economy Watch

Queensland Government research (Skills for Jobs and Growth 2010) identifies that some skill shortages are genuinely due to a lack of skilled workers (e.g., pilots, farm managers) but others are simply due to employers not paying high enough wages to attract skilled staff (e.g., receptionists, sales assistants, bus drivers).

A key challenge facing Anna Bligh’s new Skills Commission is to improve Queensland’s vocational education and training (VET) system so that it better responds to genuine, emerging skill shortages (e.g., through shorter more targeted training courses).

To date, it appears the Government has been constrained through a lack of suitable and timely information on skill shortages.  The recent Queensland Education and Training Department discussion paper Skills for Jobs and Growth notes (p. 28):

Numerical measures of hard to fill vacancies do not exist at present despite a strong and consistent demand for such information by a range of VET stakeholders. Where policy makers continue to maintain responsibility for identifying and addressing skill shortages then there would appear to be a strong justification for establishing an ongoing hard to fill vacancies database for Queensland.

This is a good idea, and it’s surprising we don’t already have one set up. Let’s hope the Skills Commission will be able to garner some more resources for research into Queensland’s VET system and labour market.

A Treasury paper released on Friday confirms the expectation of economists that Commonwealth Government debt won’t push up interest rates, and that US debt is a much bigger influence.

This is not surprising, given the nature of global capital markets.  Bond traders around the world are looking for the best bond yields / interest rates, so if Commonwealth Government borrowing temporarily pushes up Australian interest rates, bond traders in New York, London and Tokyo will notice the higher yields on Aussie bonds and buy a few more, lifting their prices and bringing down bond yields (bonds pay a fixed $ coupon amount on a regular basis, so a higher bond price means a lower yield).

Australian interest rates tend to be higher naturally than US interest rates, however, because investors need to be compensated for the risk of our dollar depreciating.  The Treasury research is showing that investors don’t think the levels of Commonwealth debt they’ve seen over the last twenty years have made the Australian economy / dollar a riskier investment proposition.  If Australian government debt levels did worry investors, then the margin between Australian and US interest rates would increase.

The Treasury paper is here:

Reconsidering the Link between Fiscal Policy and Interest Rates in Australia

While Queensland university students once marched through Brisbane streets chanting “Queensland Police State”, Queensland is definitely a police state no longer, and, if any state deserves that tag, it’s NSW.

Since 2007, Queensland prisons have housed, each day on average, 5,500 – 5,700 people in full-time custody.  Because the adult population has grown strongly since then, the imprisonment rate has fallen from around 175 to 166 prisoners per 100,000 adults.

In NSW, prisoner numbers have grown from around 9,600 to 10,400 since 2007, with a sharp increase in the imprisonment rate from 180 to 187 per 100,000 adults.

(Source: ABS Corrective Services Australia, June 201o)

It’s unclear what’s happening in NSW.  They have experience a drop in recorded crime along with the other states (see ABS Recorded Crime – Victims), although there was a noticeable increase in assaults for a few years in the second half of the noughties.

Queensland’s justice system appears to be doing the right thing, with a reduction in imprisonment rates as recorded crime has fallen.  Perhaps the reduction in crime explains why there are so many police hanging out at shopping centre coffee shops nowadays.

Oprah Winfrey will find it tough to sell Australia as a holiday destination to her audience if the Australian dollar stays near recent record highs against the US dollar:

Australian dollar up late, reaches two year high against US dollar

In addition to discouraging international visitors, the strong Aussie dollar will result in more Australians holidaying overseas rather than domestically.

The tourism industry isn’t confident Oprah will revive their fortunes:

OPRAH Winfrey’s visit won’t be enough to lift Australian tourism out of the doldrums, a peak industry group says.

The Tourism and Transport Forum (TTF) says the talkshow host’s visit will provide a huge boost for the industry.

But new figures show Australians are still heading overseas to holiday in record numbers, undermining any bounce the industry will get from attracting more international travellers.

The June quarter National Visitor Survey, released on Wednesday by Tourism Research Australia, shows overnight visitor numbers for the year ending June 2010 fell by 1.0 per cent, with visitor nights up 0.4 per cent and total spending up 1.9 per cent.

Source: Tony Bartlett, Oprah not enough to save tourism, Toowoomba Chronicle, 15/9/10

In a positive development, given the risks to our waterways from rusting, abandoned shopping trolleys, a sign that popped up at Toowong Village today announces that anyone taking a trolley away from the shopping centre would be subject to a $200 fine:

Newly appointed Commonwealth Trade Minister Dr Craig Emerson is the most experienced economist and one of the best policy thinkers in the Gillard Government, but he is being wasted in a ministerial portfolio that no economist could enjoy: Trade.  The Courier-Mail reported today:

Queensland exporters are to receive top-level assistance breaking into lucrative overseas markets with new Trade Minister Craig Emerson eager to help discover fresh opportunities.

From what I’ve seen, Queensland exporters are already alert to fresh opportunities, especially in China.  Indeed, Chinese buyers are actively seeking them out.  At the 2010 Australian Cotton Conference on the Gold Coast, Dr John Cheh, CEO of Esquel Enterprises (manufacturer for major global brands including Gant, Ralph Lauren and Tommy Hilfiger), pleaded with cotton growers to grow more Pima cotton.  If they grew it, he would buy it.

Economists think trade promotion by government is a waste of money, because exporters and buyers in global markets have pretty strong incentives to find each other and do business (i.e., there’s no market failure justifying government intervention).  We’re talking about sophisticated operators in global markets – people like Esquel’s Dr Cheh, who oversees a company with $US 1 billion in revenues.

It’s wishful thinking to suppose we’ll ship more product because some random, international CEO enjoys a nice glass of champagne and some hors d’oeuvres at an Austrade cocktail party.

In a breakfast celebrating Ipswich’s 150th anniversary, Premier Anna Bligh referred to the “renaissance” of the Ipswich CBD, which has been recently re-developed.  The Premier was very upbeat about Ipswich’s capacity to maintain its own identity and industry base separate from Brisbane’s:

Bligh promises city bright future

But is the Premier aware of the risks to Ipswich’s future from abandoned shopping trolleys?  As reported in today’s Courier-Mail:

A CONSUMER backlash has forced grocery giant Woolworths to review its rollout of coin-lock shopping trolleys in some parts of Australia.

The voluntary program had been heralded as a powerful tool in the fight against trolleys being dumped in waterways, parks, on footpaths and in alley ways.

But Woolworths said strong negative feedback from customers had prompted it to discontinue their use in some locations, including Ipswich southwest of Brisbane.

Consumer backlash forces Woolworths to rollback coin-lock trolleys

Ipswich Councillor Paul Tully isn’t prepared to risk the Ipswich renaissance being spoiled by abandoned trolleys, however:

He called on shoppers to boycott Woolworths stores, saying its decision would lead to more pollution, clogged waterways and runaway trolleys.

“Woolworths obviously cares more about profits than protecting the Australian environment,” he said.

He said Woolworths may be forced to reintroduce the system in Ipswich, with plans to amend local laws to force all major supermarkets to have coin-locks on trolleys.

Good on him.  To the extent, Woolworths’s negligence regarding its trolleys is imposing a cost on the community, the community has a right to demand action, and, if Woolworths doesn’t prevent abandoned trolleys through coin-locks, then it should pay a contribution to the community to clean up the abandoned trolleys.  How about some corporate social responsibility?

Miners and property developers are clearly at the top of the heap but, reading Queensland’s top 100 Rich List in the Courier-Mail back on August 15, I was surprised that three top 100 fortunes came out of waste management, namely:

Terry Peabody (no. 20 with $411 million)

Richards Family (no. 40 with $242 million)

Wanless family (no. 72 with $134 million)

When you think about it, it’s probably not that surprising given garbage is a high volume business, and it’s likely to be recession proof.  Perhaps also it’s an industry that doesn’t inspire entrepreneurs to come in and try to snatch some of the super profits.  It would be pretty hard to get excited about garbage, but the lesson here is to look out for those smelly, unglamorous opportunities that everyone else avoids.