How Queensland business is begging for reform but both sides are turning their back
What would it take to get economic and business reform in Queensland? Not even an election, by the look of it.
Business scandals like the bankruptcies in the building sector and the one embroiling Star Entertainment tend to hog the headlines, but it’s what isn’t being said about business in the state that is a real worry.
According to the Business Chamber Queensland the sector is crying out for reform and had been pinning its hopes that the election would deliver something. Good luck with that.
Key policy areas of our biggest industries: coal, construction, retail and tourism should be key, but they’re not. So far, it’s a race of populism and caving in to pressure groups.
The opportunity of the Olympics has descended to a slanging match in which the mediocrity of Labor’s plan is thrown at the vacuum offered by the LNP. Seriously guys, commit to something.
The biggest business scandal of the era, the Star Casino debacle, was not even discovered by government oversight, but by a journalist, Nick McKenzie. Talk about being asleep at the wheel.
It’s noteworthy that the casino and the total failure of government oversight has not even become a political issue.
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Business policy takes a backseat in state elections because it’s hard to get voters interested in it, but Queensland business recently hit a record: the longest sustained period of weak business confidence in 30 years. That alone is a major problem.
It’s not all about interest rates, though much of it is related. Inflation may be getting under control in the broader economy, but it is still strangling business as are construction costs. According to the Business Chamber Queensland’s Pulse survey, it’s also the historically high operating and labour costs, the restrictive employment and regulatory environment and a tight labour market.
But while housing construction is in crisis, Deloitte’s Stephen Smith said the hourly output of the construction workforce per worker had fallen 18 per cent in 10 years.
In a recent report, the Queensland Futures Institute said the key challenge around projects was providing the required supporting infrastructure and housing. It said Mackay was facing a severe housing shortage, which hindering its ability to attract workers.
Regional areas face underinvestment in public infrastructure, which hampers their ability to take advantage of opportunities and attract new residents and businesses.
That poor results in the Pulse survey are not the entire picture and it’s surprising the economy barely rates a mention. Westpac recently dived into the data to find that while Queensland’s economic momentum was slowing, its economy was outperforming the nation.
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State final demand, a measure of the domestic economy (excluding exports and trade) was up 1.8 per cent in the June quarter, which puts it in line with pre-Covid levels.
But business investment retreated in the June quarter, never a good sign, and while consumption was up, it was probably a factor of the ballooning population growth. The working age population in Queensland has jumped 11 per cent since mid-2019. Without that, the economy would be significantly worse, probably disastrous.
Does that warrant some political debate in an election? Apparently not.
Also, government spending is now about 30 per cent of the domestic economy.
While the Pulse survey found that businesses wanted reform there isn’t much happening. The LNP policy platform devoted eight paragraphs to small and family business, but it also plans to reinstate the Productivity Commission.
The LNP’s big ticket item is the $1 billion housing infrastructure fund. Apart from that, business policy gets pushed into the weeds.
On the Labor side, it continues to congratulate itself for taking a baseball bat to the coal sector with a massive hike in royalties which delivered Treasury billions of dollars in revenue just as very expensive crises were developing.
Labor and the property sector have a strained relationship. Almost as bad as the coal sector and developers claim $17.8 billion in housing investment in the sector has been lost since Government introduced taxes on foreign capital.
Labor has had some wins like maintaining Virgin’s presence in Brisbane, a reduction in payroll tax for small business and Boeing establishing its Ghost Bat drone program at Wellcamp. The judges are out on the almost $1 billion the state and federal governments tipped into PsiQuantum.
So, it hasn’t been a disaster. But neither side has offered a cohesive strategy for the next four years. We’ll just have to muddle along.
