CPD responds to the draft Queensland Plan, asking where economic growth will come from to lift incomes above the rest of Australia.
All boom, no benefit? from the Centre for Policy Development argues Queensland must chart a new course toward reliable, sustainable and equitably distributed growth – or face a future of fewer jobs and economic disruption.
Queensland is at a fork in the road. The days of easy coal mining revenue are running out, and Queensland’s incomes are yet to match the rest of Australia. In fact, average Queensland household incomes are 5 per cent below the national average. Experience from previous mining booms suggests incomes may fall further behind as the investment phase of the latest mining boom cools.
A new era of global growth will challenge the performance of commodity exporting economies. Focusing on economic diversity is now more important because the structure of the global economy is changing rapidly. The transformation underway is unlikely to be smooth. Slowing demand for coal, a new economic growth model in China, and high commodity price volatility are likely to be permanent features of the next phase of global growth.
Key findings from the report include:
- Coal prices have dropped at least 30 per cent from their 2008 highs, and the rest of Asia is unlikely to replace falling Chinese demand.
- China’s new growth model will reshape Queensland’s economy, since it represents Queensland’s largest export market. Exports to China were Queensland’s largest growth point over the past decade, increasing from $1 billion to over $9 billion.
- A tripling in commodity price volatility will challenge Queensland’s less competitive mines and impact government budgets.
- Agribusiness, tourism, education, health and wealth management are industries forecast to grow rapidly over coming decades, while mining is forecast to grow slower than global GDP.
- Only 26 per cent of jobs from new mines and related infrastructure are long-term.
The draft Queensland Plan shows Queenslanders understand these risks and want to develop a much more diverse economy to prepare for them. The Queensland Plan represents a step in the right direction toward governing for the future – if it has staying power through multiple election cycles and no gaps in its measures of progress. If Queensland misses this opportunity to chart a new path, it is likely to be forced through a rapid economic transit ion as underperforming industries and their assets become stranded.
The report recommends Queensland adopt a new economic strategy that focuses less on attracting capital investment, and more on promoting economic diversity. To capitalise on its natural competitive advantages, Queensland should level the playing field for non-mining industries, establish an endowment fund to manage natural resources, and convene a State Summit to identify growth opportunities.
Download the All boom, no benefit? report by Laura Eadie and Michael Hayman
Read more about the Too Many Ports report showing the under-utilisation in Queensland’s existing ports and questioning the need for port growth.