Facing up to problems
Queensland is facing some performance challenges, but the state’s government is readying plans to tackle the issues head-on
New challenges are facing the Sunshine State, with its underperformance in the years since the GFC affecting employment measures, the housing sector, and the confidence of both families and small businesses.
However, Deloitte Access Economics partner Chris Richardson says he is cautiously optimistic about the state’s overall growth outlook, though not by a big margin. “A last hurrah of gas development plus the slowing pace of federal and state government cutbacks should ease the squeeze on Queensland’s growth, but it will be a few years before the export dividend from those gas [projects] arrives, and that phase will bring few jobs with it.”
Exports from a number of new gas projects will not cut in until 2015 or 2016, by which time the slightly improved current construction spend will have already wound back, which points to 2014–15 as a weaker year for state growth, he continues.
It is worth keeping in mind that the state’s population growth remains above the national average, which will provide important support for Queensland’s growth performance to offset some of those construction-cliff negatives, Richardson says. “So while the risk of a short-term growth pothole hasn’t been completely eliminated, we expect Queensland to continue carving out a greater share of the national economy over time.”
It is not really a question of if but of when, and how strong, the eventual rebound will be, he says. “Compared to the sort of ratios that have existed between population growth and housing starts in the past, the state should be building about 10,000 more houses per year than it is. That has helped halve vacancy rates across the past two years, and seen house prices begin to rise again, two factors that may help spark the expected recovery.”
Further, Queensland’s claim to be a resource titan remains incontestable, with “mega gas projects and some pretty impressive coal projects doing some heavy lifting in the state’s construction sector”, Richardson emphasises. “Indeed, the combined value of the state’s three largest LNG projects underway – the Australian Pacific LNG project, the Curtis LNG project and Santos’s Gladstone LNG – have a combined value of over $63bn and will provide work until at least 2016.”
A forensic focus on growth
Meanwhile, the state government recently released Governing for Growth: Enabling a Stronger Queensland Economy – a framework that aims to identify where the government can set the right environment for business to flourish and grow.
In the face of increased global competition and uncertainty, the government cannot afford to be complacent; instead, urgent and strong action to restore Queensland’s economic performance is needed, deputy premier Jeff Seeney says. “The new jobs, the new products, the new ideas that will lift us up will be born in the mines, the factories, the shops and the offices of the private sector, not in an office of George Street.”
Everything from international trade to local growth, competition to innovation, regulation to infrastructure spending will be put under the microscope, he says. “A forensic, relentless focus on growth is what you will get from this government, and the time to encourage investment and break down barriers is now. All agencies and departments are in the process of carrying out a top-to-bottom review of all regulations to remove ones that hurt growth, and speed up those that boost growth.”
The government wants to provide the clear leadership and certainty that the private sector needs to invest, and aims to make it as easy as possible for businesses to start, grow, and to create new jobs, Seeney continues. “We will clear away the obstacles to growth – costly regulation, complex and lengthy approvals and wasteful government spending.”
Investors cautious
According to new research by credit reporting agency Veda, Queensland property buyers are more cautious than buyers in most other parts of Australia.
While the research shows the volume of mortgage enquiries has increased in all states, mortgage enquiries in Queensland increased by just 1.6% in the June quarter. Mortgage enquiries are a good indicator of homebuyer demand, with movements in mortgage enquiries tending to lead movements in house prices six to nine months later, Veda’s GM consumer risk Angus Luffman says.
“The overall increase in mortgage enquiries appears to suggest better housing market conditions, a good sign in light of the potential tests facing the Australian economy in the future.”
Suburb to watch
Greenslopes
Hilly terrain – including one of Brisbane’s largest hills, Stephens Mountain – dominates the small suburb of Greenslopes, which lies 6km southeast of the city’s CBD.
Lachlan Walker, from local real estate agency Place, says Greenslopes’ selling points are that it is close to town and easily accessible (with a busway station and the Pacific motorway to the west of the suburb), with quiet streets and strong local infrastructure.
Amenities in the area are solid, Walker says. There are a number of primary and high schools, along with the Australian Institute of Applied Sciences College of Natural Medicine, and also a private hospital for war veterans. “The local shopping precinct is Greenslopes Mall but, generally, the shopping and cafes are due a bit of a facelift,” he adds.
Greenslopes is noted for its multicultural community and has a population made up of Indians, Middle Easterners, Northeast Africans, and a sizeable Jewish community. This diversity is also reflected in the wide array of different religious congregations and eateries.
Typical properties in the area are three- to four- bedroom houses, although there are some older walk-up type apartment buildings, Walker says. Many of the dwellings are “character homes” of pre-war construction and, as such, are subject to city council controls intended to preserve the character of the suburb.
Situated amidst higher-priced suburbs, Greenslopes is yet to go through significant growth, making it an affordable buying option with an upside as the market enters its next cycle, Walker says. “As the suburb generally improves, and development extends into the area, it will change for the better.”
