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Brisbane's Tradecoast has been a success in attracting investment and jobs (Cameron F 'Tradecoast the toast of industrial districts', A, 24/3/05).
The Australia Trade Coast region has been very successful in attracting logistics operations (Wilson B 'Hey big spender', CM, 21/1/05).
Queensland is experiencing booming growth (2.7% in September quarter) and 10.3% over the past 12 months - while NSW continues to struggle. Queensland had a 5.7% increase in business investment compared with national growth of 1.2%. Household consumption was higher than national average (1.6% compared with 1%) while exports rose 0.9% (compared with 0.3%). Treasurer said that Queensland had experienced 15 years of sustained high growth due to reforms commenced after election of Goss Government (Mellish M and Ludlow M., 'Queensland's running hot', FR, 2/12/04).
Queensland unemployment fell below 5% - and the state's employment growth rate was 5.1% (double the national average of 2.2%). It created 55% of full time jobs last month - and 93,000 over past year. Indicators suggest strong continued growth. (Ludlow M 'Figures bring welcome sunshine for Beattie' FR, 12/11/04).
IMF suggests that Australia's growth prospects could be better than treasury forecasts. But there are risks (higher oil prices, government spending pressure on interest rates and house price fall). Progress is credited to past reforms. (Uren D 'Costello gets big thumbs up from IMF', A, 10/11/04)
Queensland and WA have lowest unemployment rates in 26 years (at 4.5%). 'Mellish M 'Queensland, WA leading the way', FR, 8/10/04)
Only in Queensland did business not see state governments as the least supportive level of government (Fenton-Jones M 'Queensland tops business poll', FR, 22/6/04).
The Gold Coast is attracting serious business location - rather than past record of 'shady people' (Allen L 'The Gold Coast is starting to grow up', FR, 19-20/6/04).
Queensland has higher than national average rate of business investment (3.9% over final quarter of 2003). State GSP grew 1.8% compared with national average of 1%. Growth was fuelled by consumption as well as dwelling and business investment. Business investment contributes 3 times as much as dwelling construction (Murdock S 'Growth in state tops the nation', CM, 22/3/04).
A substantial cluster of aviation linked industries have developed around Brisbane airport (Scholz N 'Flying high', CM, 13/12/03)
The market capitalisation of Queensland's top firms expanded faster than the stock exchange as a whole (Marx A 'State's top firms better than all ords', CM, 8/12/03) Comment - surely the capitalisation of the top firms will always increase faster than all firms - whether for Queensland or Timbuktu.
Queensland's strong economic expansion is expected to continue according to Access Economics. Economy grew 5.5% in 12months to 30 June - and is expected to grow 3.9% next year (above national average). Also farm and SARS rebound is starting, Housing boom has not peaked due to population growth. Employers are optimistic. Government sponsored research showed that productivity was main driver of state's growth. Treasurer suggested that Queensland has diversified economy which has outperformed nation. Growth has enabled extra money to be spent on services (Wisenthal S 'Queensland's strong growth outstrips other states', FR, 2/10/03) [Comment: See Does Productivity Growth confirm Smart State? ]
Queensland is forecast (by BIS Schrapnell's Richard Robinson) to experience an economic boom starting late next year - as Queensland outperforms Australia's golden economy. Resilient housing, revived mining, growing population and reduced tourism concerns, Queensland will be a top performer over the next 5 years. High interest rates in around 2008 will lead to a slump. Queensland is expected to grow at 3.5% pa - which is over the national 3.3% pa - with a 1% pa faster population growth. This strength relies on tourism making a rapid recovery. (Anderson F. 'Queensland set to lead nation', CM, 15/9/03)
A government report shows that Queensland's productivity growth is almost double the national average. It is not just retired people who come to Queensland according to Treasury Department director of economic policy, Christine Williams. Over past 15 years, Queensland with 18% of Australia's population created 25% of nation's jobs. Labour productivity increased at an average 3.4% pa since 1995-96 compared with a national 2% average. A 5% pa economic increase over the period had been partly driven by 1.8% pa population growth. Productivity gains came in many sectors - (manufacturing, services, mining). Multifactor productivity (a broader measure of efficiency gains) averaged 1.6% pa growth over 15 years - compared with 1.2% national average. Queenslanders have been working smarter rather than harder. This confirmed the benefits of smart state policy of focus on education, technology and innovation. Research was reported in report prepared with University of Queensland economics school head, John Foster. Business R&D spending growth had helped increase productivity. Most of the difference in per capita output between NSW and Queensland could be explained in terms of lower levels of completion of year 12 education (Wisenthal S 'Qld basks in its zestful youth', FR, 29/8/03) (See Does Productivity Growth confirm Smart State?)
The OECD expects Australia's economy to be only marginally affected by the drought and global economic turmoil, because of the effect of economic reforms. Domestic demand has remained strong (Mellish M., 'Australia is rated amongst world's best', FR, 4/3/03)
The long term economic outlook is excellent (ignoring events in Middle East) because of low interest rates. The lower the real interest rate the lower is hurdle rate for new investment. In the 1990s inflation rates have fallen, and taken down real interest rates. This led to a massive increase in share prices. But the real economy lagged well behind the markets. Stability of interest rates is now a further benefit. Thus very strong worldwide investment now seems likely. (Hughes T 'Growth outlook strong, as a matter of interest', CM, 24/2/03). [Comment: An interesting perspective. However low inflation can spill over into deflation - in which circumstance demand will decline because it becomes always possible to buy cheaper later]
Queensland's economy could experience a 5% growth rate - higher than expected because of housing investment and projects like AMC's magnesium plant. Most job growth has been in retail, construction, government, business services, and manufacturing services - whereas government has spent money on biotechnology (Owen R 'Strong growth leads nation', CM, 13/2/03).
Australians are always worried about being called the lucky country - yet the economy is now smooth sailing - though risks associated with housing slowdown and current account deficit need to be assessed. It is in the midst of a decade long expansion. This has reduced unemployment - which has added to spending power and consumer confidence. Interest rates are historically low. The housing slowdown may allow this to continue. Commercial and industrial investment will pick up the slack from housing downturn. Drought and the current account deficit are constraints - but economic managers should not react as global economy is out of Australia's hands. Overall the big-picture situation for Australia's economy is encouraging (James, Craig (senior macro analysts at Commonwealth securities) 'The lucky country? Of course we are', FR, 1-2/2/03)
About 1 in 5 of the fastest growing technology companies in the Asia Pacific are based in Australia (Chong F 'Australia heads list of leading tech firms', A, 7/1/03)
Brisbane has a reputation as Australia's most creative centre for computer games - and this has been recognized by the creation of a new CRC (Chester R. 'Taking it to the next level', A, 21/12/02).
Queensland's economy has been relatively unscathed by downturn in world markets and tourism - but could be hurt by droughts - according to Access Economics. Queensland's economy would be a 'buy' if it were listed on stock exchange. In recent 'scorecard' of state budgets Access said that Queensland's economy was exceptionally strong. However there are some long term impediments - eg housing downturn, drought and unpredictability of tourism. An investment surge has started, and Queensland is at the forefront. 4.5% growth could be possible driven by 18% surge in investment. Tourism remains strong because it is not heavily dependent on air travel - and is the second biggest sector pumping more than $14.6 bn into economy in 2001-02. Queensland has also had a major surge in investment in mining - still the largest sector. Being led by resource projects such as Comalco Aluminium smelter, and AMC's magnesium plant. Strong population growth has boosted retail - and helped boost unemployment. While Queensland maintained its AAA credit rating, 2002-03 budget contained causes of concern (eg $1bn hit on investment income) (Strutt S 'Drought takes gloss off Qld', FR, 25/10/02) [See comment on the weakness of institutions undertaking economic R&D]
Corporate Australia (and business leadership) has never been in better shape. The quality of CEOs is better than at any time in the past (McCrann T 'We're in top shape, thanks to world-class CEOs', WA, 24-25/8/02)
Australia's companies are in good shape - and in better condition than their counterparts elsewhere. There are primed to gain good global positions - in terms of real business-building, real sales in profit generating, employment creating terms. The $25bn China gas deal is representative of the business outlook. Australian companies big and small are lean and focused. BHP is not just the world's largest resources group, it has a lean balance sheet and a valuable portfolio of assets, operations and staff. Telstra may be the best phone company now in the world - because it escaped the crippling effects of debt. News Corp is unmatched worldwide in terms of real media business - despite share markdowns. Qantas is now possibly the strongest airline in the world in terms of both finance and business. Forsters is one of the top wine groups in the world - and may have the best growth prospects. The wine industry may capture best the dynamics of the new corporate Australia. Such companies are not just global competitors but global leaders. Brambles, Westfield, Amcor, CSR, CSL, Cochlear, James Hardie, Leighton, Lend Lease all have real and significant positions. Then there is a cohort that have entirely domestic activities - but are amongst the best in the world. Their effect has been to force the rest of corporate Australia to get cost-competitive and cutting-edge or die. And Australia's banking system retains confidence - which is unusual. The cheap dollar has also helped (McCrann T 'Our corporate sectors simply the best - and there's more', A, 10-11/8/02).
Australian companies are producing much better results than their US counterparts. Australia's reserve bank wants to raise interest rates, while the US Fed wants to cut them. Much of the external world is in trouble. Japan is in a deflationary spiral, and suffers policy paralysis. Three key Latin American countries are in various stages of economic implosion. Australian companies had two big advantages over US - the regulatory environment was tighter after reforms in the 1970s. And the $A has absorbed the volatility. others identify economic flexibility and management quality as important factors. (Bromby R. 'Weathering the storm', A, 17-18/8/02)
Queensland Government's bid to make the state into a technology powerhouse received a strong boost with Oracle, Accenture and IBM all announcing major expansions of IT operations in Queensland. The appeal lies in financial incentives, business infrastructure which government has put in place. Oracle is to expand its software development centre by 20. Mincom is to set up IT services operation with Accenture. IBM will create 65 software security jobs - heavily influenced by payroll-tax and training subsidies. Available highly qualified software engineers also significant. DSD cites payroll tax concessions, training subsidies and relocation assistance as the main lures used - in exchange for corporate commitment to job creation / investment. Strategy attracted red hat. State government also works with local councils in developing industry clusters in various regions (eg at Gold Coast DSD arranged with Delfin Lend lease to produce economic development strategy to attract $100m interstate / international investment focused on Bond University (Byrne M. 'Qld on its way to realizing tech dream', FR, 9/7/02) [CPDS Comment - See Buying Industry]
Australia's jobless rate is set to fall to its lowest levels since the 1970s. However job ads are falling nationally despite a small rise in Queensland. Over the full year Queensland job ads rose 27% due to a surge in construction and building and to interstate migration (Anderson F. 'Queensland leads jobs rebound', Courier Mail, 9/7/02)
Australian manufacturing has hit a high level - particularly in Queensland - especially due to the strength of demand coming from the non-residential (infrastructure) projects. 57% of Queensland companies experienced increased production in first six months of 2002 (Anderson F. 'Queensland manufacturing leads nation to 8 year high', CM, 26/6/02)
Australian business expects significant profit growth - which will underpin investment but not lead to jobs growth (davis M. 'Business expects profit jump', FR, 21/6/02)
Queensland's exports to Japan have increased 20% pa in each of the past two years - despite Japan's economic problems (Franklin M. 'State's exports defy Japanese economic malaise', Courier Mail, 15/6/02)
Australia's terms of trade, which traditionally fell because of dependence on primary commodity exports. have been improving steadily since 1985 (Mitchell A. 'Lack of crisis makes for dismal science', FR, 18-19/5/02)
Queensland companies are fuelling growth in Australia's manufacturing. AIG's March survey found that 46% of Australia's manufacturers reported growth over the past 3 month - with 55% in Queensland, and 70% expect growth over the next year - 15% above the national average ('State fuels national boom' Courier Mail, 28/4/02) [Query: is there really a 'boom' when about half of all manufacturing firms did not record growth?]
Massive resource and tourism growth have lifted Queensland out of the global economic slump and turned it into Australia's economic powerhouse. Access Economics' outlook for the March quarter showed that the effect of September 11 has faded. Visitors are coming back, and Australia's investment recovery is centered on the Queensland coast. The Premier stated that Queensland was undergoing a revolution with resource related investments complemented by the growth of 'Smart State' industries (Madigan M, Franklin M. and Odgers R 'State power the nation', CM, 12/4/02)
However: the growth of low productivity tourism and resource investments is a major factor in Queensland's low per capita incomes and weak tax base (eg see About Queensland's Budgets). Furthermore there seems to be a distinct lack of realism in the Smart State agenda (See Queensland's lack of serious Public Policy)
National manufacturing activity has surged to an eight-year high (with 46% of companies reporting growth) and especially strong in Queensland where 55% of manufacturers report growth. Nationally growth is being driven by consumers - while in Queensland it is coming from non-residential industry and exports (Hart M. 'Bonanza for manufacturing', CM, 28/3/02)
High levels of consumer confidence suggests that Australia’s growth rate will continue to lead growth amongst industrial countries over the next two years (Marris S ‘Consumer confidence is booming’, Australian, 14/3/02)
NASDAQ Vice Chairman says that Australia is doing better than others in getting money into start-ups (Nicholas K. 'Australia leading world in backing start-ups', Financial Review, 1/3/02)
"Queensland's Premier Peter Beattie has used Joh Bjelke-Peterson's economic activity barometer - cranes on the city skyline - to declare Brisbane is booming" (Dibben K. 'Its the Joh factor again', Sunday Mail, 3/2/02)
However: While Premier is smart to show respect for Bjelke Peterson, his crane counting indicator might indicate a return to the raw populism that characterized the Joh era (that allowed corruption to grow, and allowed Queensland to fall behind national standards in many area). The crane index is meaningless nonsense (as they only relate to property industry cycles - with booms being followed by busts). Public spending on key functions is the key to assessing the Beattie Government's performance (Franklin M. 'Crane count a cheap political trick', Courier Mail, 8/2/02)
Gladstone secured a $300m calcining plant in addition to the $1.4bn Comalco alumina refinery. Other proposals exist amongst $10bn projects in the pipeline for central and north Queensland. Other factors inspire confidence in Queensland - especially higher prices for rural commodities and coal. Queensland's September quarter GSP growth was 1.7%. An ABN Amro Morgans economists predicts rapid future growth (due to the housing boom, business investment and higher commodity prices) (Anderson F. 'Boom times are here again', Courier Mail, 2/2/02). (CPDS Comment: See below)
Many are concerned that Australia has no future in manufacturing, and suggest that a plan is needed to save the sector and its jobs. But the numbers employed in manufacturing have been stable at 1.1m for a decade (making it the second biggest employer after business services). They are not the same 1.1m as worked in manufacturing 10 years ago - because the sector has changed enormously. The standard worker is now multi-skilled and operates sophisticated machinery. Manufacturing create good jobs - creating high value, and being full time (as compared with sectors such as tourism). Many new areas of manufacturing have been emerging (eg Crystalaid in Brisbane). New style manufacturing mainly involves small operations that have the flexibility to take advantage of rapidly changing circumstances. Manufacturers markets vary between regions - being mainly oriented to major projects in Queensland and WA, to automotives (and associated government largess in South Australia) and to areas competing with imports in NSW and Victoria (Fraser A. 'Bue collar, blue chips, Australian 26/12/01)
Until recently Australia was expected to be headed into recession. But recession is impossible with Australia's super-competitive exchange rate. growth in 2001 was 4%. Consumer confidence has increased since September 2001. Jobs are increasing. The key drivers have been falling interest rates, and housing incentives. The current account deficit has fallen sharply. There is no sign of serious inflationary pressure. Interest rates have not been cut as far in Australia as in US - leaving room to move. (McCrann T. 'Why so glum? We're in great shape', Australian, 15-16/12/01)
The university of Queensland's biotechnology effort has outgunned the research efforts of all other Australian tertiary institutions. UQ has the best record in patenting its research, and its influence is increasing while the standards have fallen elsewhere (O'Malley B. 'Uni extends biotech influence', Courier Mail, 6/11//01)
"Queensland is leading Australia out of its economic slump with a business vibrancy and energy embracing the state according to media executive Lachlan Murdoch ... the economic recovery was reflected in newspaper advertising volumes which, although not at levels witnessed a year ago were coming back strongly, and were greater than Sydney and Melbourne" ('Vibrant revival', Courier Mail, 10/8/01) (Comment: it is interesting that a year-on-year decline in advertising is a sign of business vibrancy)
'Queensland's economic growth based on $13bn worth of industrial and retail projects is expected to keep Australia out of recession. An Access Economics report said Queensland is better placed to ride out the coming turmoil than in the early 1990s recession because of a more diversified economy and more exports. ... all economic indicators for Queensland apart from unemployment were (sunny)'. Export growth continues to outstrip the national average, retail turnover has already moved past pre-GST levels to a new high and population growth has moved back to the top of the class .... the low Australian dollar is making Australia an attractive destination for overseas tourists ... there were positive signs for housing from strong population growth. In non-residential building, projects related to health, retail and education stand out, with half the national total being built in Queensland ... Queensland had $3.5bn worth of retail projects under construction and $1.5bn worth of tourist developments. The state had $7bn of industrial and resource projects under construction .... (and) $28bn worth of projects in the pipeline stage. Gladstone remains the keystone of much potential work and half the projects in planning are resource based and may be slow moving into the construction with the world economy sour' (McKinnon M and Dickins J. 'Queensland powers the nation', Courier Mail, 9/4/01)
the above analysis avoids considering the impact on community welfare of the traditional types of projects and growth that are assumed likely to continue. In particular:
growth of low productivity economic activities (ie those with limited value added) will not support high community incomes, or provide a strong tax base for public spending. Despite decades of alleged 'top of the class' growth:
Queensland's per capita incomes have remained stubbornly below the Australian average, which have steadily declined by international standards;
'donor' states have launched an inquiry into Commonwealth Grants Commission arrangements under which revenues collected in their states have to be transferred to Queensland (a consequence of the weakness of Queensland's tax base) - see Proposed Review of Grants Commission Arrangements)
there are clear difficulties emerging in public financing (see About Queensland's Budget)
Queensland's economic 'success' during the 1990s often involved gaining major investment in projects that added very little value within the economy, and had narrow concentrated benefits. (see Note 9). This occurred because outdated industrial era economic management tactics were used in the face of the clear inadequacy of those tactics as a path to economic diversification - and these tactics thus gave rise to social symptoms in communities left behind by economic change, and to serious political instability (see Defects in Economic Tactics, Strategy and Outcomes).
tourism, a major diversification prospect, appears to be a sector that has little strategic economic value (ie seems generally associated with low productivity and community incomes) (see Notes from SEQ 2001: A Plan for an Under-developed Economy)
the impact of the projected growth and investment on Australia's current account deficit needs to be considered. That deficit periodically threatens a currency crisis. The difficult current account predicament has arisen from an invisibles deficit associated with borrowing mainly for consumption spending or for investment in projects that produced poor returns (eg as was the case for many resource projects in the 1990s). Even investments that result in rapid export growth may not make a positive contribution to the current account - when account is taken of (a) capital imports (b) debt service costs and (c) transfer pricing to minimize Australian taxation. Given Australia's growing inability to attract sufficient capital inflow to cover the current account deficit (as evidenced by devaluation of the $A), it is unwise not to consider the impact of such investments on the problem;
it should not be assumed that the large batch of projects in the 'pipeline' will necessarily come to fruition as easily as in the past, as resource companies typically produced very poor returns in the 1990s (probably for structural reasons linked to the virtual impossibility of successfully competing with producers in low wage countries with primarily capital intensive business strategies) and share-holders appear to be losing patience (See also Resource / Industrial Investment);
Queensland may well be facing its greatest ever requirement for rapid economic change (see Section 3 of Queensland's Challenge)
population growth is accelerating again as a 'sun-state phenomenon' which increases at times of national economic difficulties (ie those experiencing difficulties move to Queensland because costs (eg for housing) are lower. This inflow generates substantial investment and growth. However:
though Queensland's total growth is thus above the national average because of increase inputs, there is limited growth due to rising productivity, so per capita growth and community incomes are low;
many immigrants have difficulty getting decent jobs - as the reason that housing etc are cheaper is that they are directly dependent on community and business income levels; and
public services and infrastructure costs rise - without a strong tax base to finance them.
'Queensland's business environment recorded its lowest result on a major economic survey with two-thirds of firms predicting unemployment would increase. More than half the firms surveyed recorded worsening business conditions during the March quarter (Vale B. and Dickins J. 'Businesses fear more lost jobs in Queensland', Courier Mail, 12/4/01)]]