Was COP26 just a talkfest? Latest podcast episode with Scott Hook, a former COP adviser for Pacific nations

Posted on December 11, 2021 by Gene Tunny

I caught up with my colleague Scott Hook recently to review the outcomes, or arguably lack of outcomes, of the COP26 climate change summit which was held in Glasgow last month (see Economics Explored episode 117). Scott has previously attended several COP meetings as an adviser to the delegations of Pacific island nations, so I appreciated his insights.

In particular, from Scott, I learned about the major climate change adaptation measures being pursued in Pacific island nations at risk from sea level rise such as Fiji. The Fijian Government, supported in part by the NZ Government, is moving whole communities at risk from sea level rise (New Zealand commits millions to climate relocation fund for Fiji). I couldn’t find any specific mention of Australian support for Fiji’s Climate Relocation and Displaced Peoples Trust Fund, but Australia does provide tens of millions of dollars of development assistance annually to Fiji, so we can’t be accused of shirking.

Let’s hope we don’t need to consider similar relocations of coastal communities in Australia. Earlier this week, it was reported Parts of major Queensland cities could be under water within 80 years, modelling shows. Check out how badly Cairns and Noosa in particular would be flooded in the case of storm surges in 2100 via the Coastal Risk Australia site. I can’t assess the accuracy of these long-run projections, obviously, and these awful projections may not eventuate, but they’re probably worth considering if you’re looking at investing in coastal property. That said, it’s difficult to be too worried about bad things which may happen in 2100, when we’re still stuck in a pandemic in 2021, and Queensland is about to experience a wave of COVID cases as we open up to interstate visitors on Monday.

While chatting with Scott, it became apparent to me just how difficult it will be to get any sort of binding international agreement which ensures all countries follow through on their climate change commitments. Although Australia is criticised for not putting forward ambitious targets, at least we tend to meet our commitments. Some other counties may make large commitments but won’t necessarily follow through, and there’s no point Australia bearing the cost of large greenhouse gas emission reductions if other countries aren’t going to do the same. I should note Scott is much more optimistic about the UN process ultimately achieving something than I am, so please have a listen to our conversation and let me know what you think.

Coastal communities, such as this one in Fiji, are at risk from sea level rise associated with climate change.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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Great Resignation chat with Anthony Bersz and Louise Gibson, Remedy Resourcing

Posted on December 6, 2021 by Gene Tunny

The Great Resignation is the label given to the record numbers of people leaving jobs in the US and the UK. For a variety of reasons, many people have re-evaluated their lives and careers during the pandemic. People have quit their jobs to either take up a different job, set up a business, retire early, or have a sabbatical. In Episode 116 of my Economics Explored podcast, I chat about the Great Resignation with Anthony Bersz and Louise Gibson from Remedy Resourcing. Anthony and Louise are located just around the corner from me in the serviced offices at the Johnson, Spring Hill, Brisbane.

Drawing on their industry experience, Anthony and Louise confirm what economists have observed in the Australian labour market data, that the Great Resignation is not occurring here (See Australia’s ‘great resignation’ is a myth — we are changing jobs less than ever before and No sign yet of the “great resignation” phenomenon in Australia). However, Louise makes the great point that, as we re-open to the world, we may see a big outflow of young professionals moving to take up jobs in London, New York City, etc. Hence, it may be too early to conclude that we won’t see a Great Resignation in Australia.

Here’s a video recording of my conversation with Anthony and Louise via YouTube:

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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Livestream featuring US jobless claims, Aussie GDP + farewell to Tony Makin

Posted on December 3, 2021 by Gene Tunny

I did a livestream earlier today with my regular co-host Tim Hughes on the latest economic news of the week, including the latest US initial jobless claims confirming a strong US economy, the impact of the omicron COVID-variant on equity markets, and the September quarter Australian GDP figures which revealed the adverse impacts of NSW and Victorian lockdowns. You can click on and watch the video on YouTube below. You can also download the slides I showed.  

In the livestream, from around 22:05, I reflected on the late Professor Tony Makin’s contributions to the Australian economic policy debate, particularly on whether we should worry about the current account deficit in the late 80s/early 90s and on the effectiveness of the Rudd Government’s fiscal stimulus. On the current account deficit, Tony’s articles, along with the contributions of John Pitchford, clearly led to a change in the policy consensus on the current account, so it was no longer something that would be a macroeconomic policy target. Sadly, Tony died unexpectedly earlier this week. This came as a huge shock to so many of us, and it’s obvious from all the conversations I’ve had about Tony over the last few days just how much respect and admiration his colleagues and former students had for him. Tony’s funeral is on Monday on the Gold Coast (see notice below). 

Funeral notice for the late Griffith University Economics Professor Tony Makin, who will be greatly missed by his family, friends, colleagues, and former students.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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Gov’t and renewables making disproportionate contributions to demand growth in Qld

Posted on December 2, 2021 by Gene Tunny

The September quarter National Accounts published by the ABS yesterday revealed that the general government sector made a disproportionate contribution to Queensland state final demand growth that quarter, suggesting a strong pick up in the hiring of public servants, contractors, or consultants (see chart below).* 

A chart showing government consumption spending contributed 0.6 percentage points to Queensland’s state final demand growth of 1.8% in September quarter 2021.

This was one reason, though not the only reason, that Queensland’s economy saw strong growth in state final demand in September while NSW and Victoria’s economies were adversely affected by lockdowns (see the chart below). I should note that government consumption spending grew even faster in NSW and Victoria than in Queensland (5.0% and 3.4% vs 2.8%), but total state final demand in those states fell due to big falls in household consumption spending.

A chart showing state final demand growth by state, with positive growth across states expect in NSW and Victoria where the prolonged lockdowns had large adverse impacts.

As noted above, in Queensland, total government consumption spending increased 2.8% in the September quarter. In its National Accounts writeup, the ABS observed this increase was “led by increased frontline services including police, fire and emergency services and hospitals due to ongoing border closures and COVID-19 responses.” Based on the data, it must have been more than this, however, as there was a large increase in federal government spending, too. For state and local governments, the increase was 2.1% and for the federal government the increase was 3.6%, quarterly growth rates which are obviously unsustainable I should add. Certainly there was some additional ADF activity in Queensland which could explain a fraction of the increase in federal spending (see e.g. Troops to be deployed to Queensland border to counter ‘real and present’ threat of NSW COVID-19 Delta variant outbreak). But federal consumption spending in Queensland increased by $336 million in September quarter, much more than could be attributable to ADF personnel being used to help enforce state border restrictions. Possibly the federal government has boosted spending to bolster its election prospects in Queensland.

In contrast to fast-growing government consumption spending, household consumption spending grew at only 0.3% in September quarter, much lower than the pre-COVID average of around 1%. Even considering Queensland’s reduced rate of population growth during the pandemic, this strikes me as a sub-par result on household consumption, and isn’t encouraging. 

What is encouraging, however, is that business capital investment in Queensland was up 3.7% in September quarter, and it added nearly 0.4 percentage points to state final demand growth. Total private sector capital investment, including investments in dwellings, was up 4.6%. In its commentary on the Queensland data, the ABS observed this was related in part to the “increased expenditure on renewable energy projects.” Solar PV and wind farms don’t tend to provide a lot of ongoing employment, alas, so they may not be such a boon for the economy as one would hope. Also, we still need to resolve the big challenge of integrating so much renewable energy into the grid without threatening the reliability of electricity supply. 

*SFD measures domestic sources of demand in an economy. It does not account for net exports. That is, it does not add exports attributable to a state to the figure, nor does it subtract imports into that state, as would be done in a Gross State Product measure.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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No way Qld Gov’t can cancel 17 December reopening to other states – Omicron be damned

Posted on November 30, 2021 by Gene Tunny

Fortunately, the Queensland Government gave a firm commitment to reopen the state to interstate visitors on 17 December, and I doubt the Omicron variant will force the Government to cancel that reopening. It would wreck the government politically, just as the carbon tax wrecked the Gillard Government and the U-Turn ultimately wrecked Ted Heath’s UK Government. Cancelling the 17 December interstate reopening would cause hardship for families looking to reunite and would shatter business confidence in the tourism sector, so I strongly expect the reopening will proceed as planned.

The reopening to overseas arrivals is being delayed, but from a macroeconomic perspective that isn’t a big problem because, pre-COVID, international travel meant money actually left Australia in net terms. Pre-COVID, Australians spent more money overseas than foreigners spent here, around $19 billion more (see the National Tourism Satellite Account). Of course, I should note there will be some impact of the delayed international reopening, particularly as it may delay the entry of some skilled labour needed by industry, and also it will restrict the arrival of potential foreign investors wanting to check out prospective investments in Australia.

Tomorrow, the ABS will publish the latest National Accounts which will show the full extent of the costly lockdowns in NSW and Victoria, and we will see a fall in GDP of a few percent in Australia in September quarter (see Treasury Secretary Steve Kennedy’s remarks last month reported in Australia’s economy expected to have shrunk about 3% in September quarter). Obviously, the National Accounts will reveal Queensland had a much better September quarter than NSW and Victoria, as we only had two mini-lockdowns compared with their crushing months-long lockdowns.

October retail turnover data suggest the NSW and Victorian economies recovered partly once the lockdowns were ended, NSW much more so than Victoria (see the chart below based on ABS data published last Friday). WA is way out in front, and Queensland is second among the States, in terms of retail trade relative to pre-COVID levels.* The WA and Queensland Governments will argue data such as these help justify the harsh and cruel border restrictions they have imposed. But those restrictions came at a large social cost, preventing families from reuniting and blighting the lives of many Queenslanders who have been stranded outside the state. What a shameful and awful policy measure.

Retail trade snapped back in October in NSW after the lockdown ended. WA and Queensland lead the Australian States in terms of retail trade relative to pre-COVID levels. NB estimates rebased to February 2020. SA stands for Seasonally Adjusted.

*Among States and Territories, NT is in second place, at 17.3% above the pre-COVID level, while Queensland is 16.6% above. WA remains the clear leader, at 23.1% above.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. Also please check out my Economics Explored podcast, which has a new episode each week.

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Qld reopening proceeding despite state gov’t generating confusion about entry requirements

Posted on November 24, 2021 by Gene Tunny

Queensland tourism operators would have breathed sighs of relief yesterday after it emerged interstate travellers could rely on PCR tests paid for by Medicare to enter the state. This came after some confusion and anxiety generated by the state government about whether travellers would have to pay for them. Federal health minister Greg Hunt is right to demand an apology from the Queensland Premier for the “unnecessary stress she has caused to Queenslanders and those planning to travel there” (see this Courier-Mail report). Queensland is well-placed to have a strong 2022 as interstate tourism is revived, but the Queensland Government could still stuff things up through incompetence and panicked policy responses. 

Queensland’s big test will come after 17 December when we reopen to NSW and Victoria and COVID comes in. Will our health system cope with the COVID case load, particularly with possibly thousands of unvaccinated staff unable to work, as suggested by this Sky News report? Of course, Queensland’s good weather and low population density will help slow the spread of COVID as it has in the past, so let’s hope those factors and our relatively high vaccination rates in many parts of the state keep us out of trouble (see the heat map of first dose vax rates below thanks to Adept Economics Research Officer Ben Scott). The SW-Queensland border town of Goondiwindi stands out with a first dose rate of 95%+.

Heat map of first dose vax rates for Qld regions showing Goondiwindi in the lead at 95%+. NB data are unavailable for much of the Queensland Outback and Cape York.

I was concerned about provincial cities such as Townsville, Cairns, Rockhampton, Mackay, and Bundaberg, but first dose vaccination rates there are all over 80%. For first doses, Townsville is at 83.1%, Cairns is at 85.9%, Rockhampton is at 82.1%, Mackay is at 86.4%, and Bundaberg is 88.5% (for the data go to COVID-19 vaccination – Geographic vaccination rates – LGA). Bundaberg is actually beating Brisbane which is at 87.2%. I’m hopeful the vax rates we’re seeing in these cities will mean local hospitality businesses won’t suffer hugely from having to turn away unvaccinated customers after 17 December, a state government policy which I think is absolutely wicked and over-the-top, for the record. 

We see lower vax rates in some remote areas, probably because locals perceive the risk of getting COVID is low. Most worryingly we see some very low rates in Indigenous communities such as Cherbourg (57.4% first dose rate) and Yarrabah (60.2%). We could have a major public health disaster if COVID gets into some of our Indigenous communities given the high prevalence of chronic health conditions. 

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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PM calls jobs boom, RBA warns of crypto crash, and UK inflation highest in 10 years – upcoming livestream

Posted on November 19, 2021 by Gene Tunny

As I’ve been covering on QEW and will discuss on today’s livestream (link above), there’s a lot of exuberance and optimism about the great Aussie reopening, and PM Scott Morrison has forecast a “jobs boom” based on healthy job vacancies data (see the chart below).

We’re hearing calls from business groups to resume high levels of immigration to help fill vacancies and address skills shortages and, implicitly, to put downward pressure on wages growth (e.g. see Increase skilled migration to 200,000 per year, says leading business group). I suspect we’ll see a vigorous debate in coming months about whether we return to previous levels of immigration or instead opt for lower levels which would place less pressure on services and infrastructure and would be easier to absorb into the labour market.

In today’s livestream, I’ll also cover accelerating inflation in the UK, where the 4.2% through-the-year inflation rate recorded in October was the highest in 10 years (see chart below).

We’ll also cover the RBA’s warning about cryptocurrency earlier this week (see RBA warns of ‘faddish’ crypto crash). Crypto prices have been falling this week (see chart below), reminding us of their volatility and the unreliability of cryptocurrencies as stores of value. Of course, they have proven to be extraordinarily successful investments for many people, but we should remember that investing in crypto is akin to gambling.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Tourism operators need Qld Gov’t to continue reopening and not to panic as COVID comes in

Posted on November 17, 2021 by Gene Tunny

There is a lot of excitement about the reopening of Queensland, which can’t come quickly enough, but at least it is actually happening, so long as the Queensland Government holds its nerve and doesn’t reimpose restrictions once COVID cases start rising. Tourism operators in particular need a strong Christmas-New Year period to help make up for big losses since March last year (see the chart below). Operators appear optimistic, thankfully. According to the Courier-Mail, several Queensland tourism operators are on a hiring spree as they prepare for the Christmas-New Year period “after a disastrous 18 months” (see Thousands of jobs on offer at Queensland’s biggest tourism operators). 

While international tourism has been practically non-existent, and the Queensland industry has lost nearly $6 billion of turnover associated with international tourists, domestic tourism spending in 2021 was tracking reasonably well in Queensland up until July and August when interstate border restrictions came in. Various reports suggest that, even though Queenslanders were able to travel for September school holidays, interstate border restrictions did adversely impact many operators. See Some Gold Coast businesses face ‘shocking’ school holidays, others say outlook is sunny and Far North Queensland tourism not bouncing back, school holiday numbers worse than expected. Incidentally, the state government’s tourism vouchers scheme has appeared to have fallen short of its objectives (see 42,000 winners fail to redeem Qld holiday vouchers aimed at boosting tourism).

My best guess at this stage is that domestic tourism spending in Queensland will end up at around $17 billion in 2021 compared with $19.5 billion in 2019. Taking into account almost non-existent international tourism spending, which shrank from $6 billion to $200 million per annum, the Queensland tourism sector, in 2021, has been operating on only two-thirds of the turnover it had pre-COVID. 

I really hope the Queensland Government doesn’t panic. Currently, the state is in a good position to recover further from the pandemic. The October Labour Force data released by the ABS last week showed Queensland leading the states in terms of the level of employment relative to the pre-COVID level (see the Queensland Treasury briefing and the chart below). 

I’d prefer the state government to open up the state earlier than currently planned, and not to proceed with its de facto vaccine mandate which will cost hospitality businesses some trade (e.g. see Central Queensland business owners ‘in tears’ over looming COVID restrictions, meeting organiser says), but I am very pleased that we are reopening, albeit if a little bit too slowly.  

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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Lithium and the new energy revolution – my latest podcast episode

Posted on November 13, 2021 by Gene Tunny

The modelling for the Australian Government’s Long-Term Emissions Reduction Plan has been published and, while the report makes bold and arguably fantastic assumptions about future progress, it does contain some very useful information and commentary on various technologies relevant to decarbonisation. One important technology is the lithium-ion battery and the modelling report notes on p. 20: ” Lithium-ion batteries are the cheapest form of grid-scale battery storage currently available. Costs are expected to fall further thanks to manufacturing scale up driven by the rapidly growing electric vehicles market.” There is a lot of excitement in industry about lithium, and let’s hope industry is right, so we can cheaply store all the new intermittent energy being generated by wind and solar, and we don’t end up with an unreliable electricity grid with regular brownouts and blackouts.

One industry expert who is very enthusiastic about lithium is UK-based Lukasz Bednarski, a battery materials analyst and a former commodity trader. In Economics Explored episode 113, I interview Lukasz about his new book Lithium: The Global Race for Battery Dominance and the New Energy Revolution.

In his book, Lukasz describes:

How a little-known mineral will affect our jobs and daily lives as much as, if not more than, AI or Big Data have done.

It’s a fascinating mineral to learn about: lithium, the third element on the periodic table and the lightest metal and solid (under standard conditions), so please check out my podcast interview with Lukasz and consider picking up a copy of his book.

Cover of Lukasz Bednarski’s new book: Lithium: The Global Race for Battery Dominance and the New Energy Revolution.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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GoMA inequality seminar + Keith DeLacy book launch = awesome upcoming events

Posted on November 11, 2021 by Gene Tunny

I’m honoured to be one of the panellists at an upcoming University of Queensland Global Leadership Series seminar on Poverty and inequality in an age of prosperity. Joining me are former Queensland state Treasurer Tim Nicholls MP, Karyn Walsh AM, CEO of Micah Projects, and Joshua Creamer, a nationally-practicing lawyer specialising in class actions and native title. The panel discussion will be chaired by hardman former journalist Peter Greste who endured many months as a political prisoner in Egypt over 2013 to 2015. Here are some of the other details from the website (linked to above):

According to Credit Suisse, Australia is the world’s most prosperous country. Why then, are some communities mired in poverty?
In a world of increasing austerity where social services are under growing pressure, it is urgent that we re-examine the responsibility of the state towards its most disadvantaged citizens.
Join UNESCO Chair in Journalism and Communication, Professor Peter Greste, for a thought-provoking discussion on poverty and inequality with a panel of leading experts:

Date: Thursday 25 November 2021
Time: 5.30pm for 6-8pm
Venue: GOMA, Cinema A, Stanley Place, South Brisbane
Cost: Tickets $30
Ticket includes canapés and beverages

Another awesome upcoming event is the book launch for Keith DeLacy’s autobiography, being hosted by the Australian Institute for Progress on Thursday 18 November at the Brisbane Club from midday. Check out the details regarding the event and how to book at the AiP’s website. Keith was one of the all-time great Queensland Treasurers and was a huge help to me when I was writing my history of Queensland’s public finances since Sir Joh Bjelke-Petersen and Sir Leo Hielscher, Beautiful One Day, Broke the Next. Alas, I have another commitment that day, but I’d highly recommend the book launch, because Keith has lots of good stories and valuable perspectives. Plus the food and drink at the Brisbane Club is first class.

GoMA on the south bank of the Brisbane River, next to the weird looking Kurilpa bridge.

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com. I also post from time-to-time on my business website adepteconomics.com.au, so please consider subscribing to updates there (Get in touch). Also please check out my Economics Explored podcast, which has a new episode each week.

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