Wednesday, October 26, 2011

What? Just Three?

Commsec has released its latest State of the States report. This has been widely reported as proclaiming that the two-speed economy is now a three-speed economy. Whatever! Good PR for Commsec perhaps but not really useful in any understanding of the current situation or an appropriate policy response.

The Commsec methodology is based on analysing eight indicators based not just on current relativities between states, but relative to longer term decade trends for each state : "Each quarter CommSec attempts to find out by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements." The three-speed methodology appears to give all these equal weighting


The key thing to notice is that among their key indicators they have listed the greatest strength and greatest weakness of each state among the eight categories. The strength of Queensland is investment and the weakness housing starts. So what didn't we know already? The surprise in an economic context is that Queensland, the only state that scores investment as its greatest relative strength (2nd behind WA overall) comes in the bottom division? This is the two-speed economy in Queensland! Queensland stands out for the divergence between strongest and weakest sectors.

Key comment in the report: "But while third fastest, Queensland’s population growth is actually the slowest
rate for that state in 11 years." Loose change has previously posted on this with comments from Bernard Salt on the decline in interstate migration (perhaps now paywalled at The Oz?).


Meanwhile Queensland Economy Watch has a relevant post on the latest OESR report. This includes some commentary on the education sector where we have been banging on for some time on the student visa policy refered to, and have previously posted on recent positive policy changes.

Note: QEW has also posted recently on stamp duty also relevant to population growth but to keep the post short we haven't gone into this and how tax reform to abolish stamp duty would be of most benefit to Queensland but will return to it?

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