Queensland’s current strength has been built largely on the back of historical ‘superpowers’ - stronger population growth compared to the rest of Australia, and an economy more exposed to trade than its fellow states.
That strength continues today - but in a rapidly changing landscape, it’s likely policy action is required to ensure Queensland continues to thrive.
Much has been written about Queensland's population growth, and the impact that has had on its economic fortunes. The number of residents in the state grew more than 2.3 per cent in the year ending March 2023, according to the most recent Australian Bureau of Statistics data, above the national average of 2.2 per cent. Historically the gap is even wider.
Like the rest of Australia, net offshore migration has played a role in that growth, but interstate migration has been a factor as well. Queensland’s share of the national population has increased over time, and could rise to anywhere between 6.4 and 8.27 million by 2046, according to the state’s own projections.
But keeping those people means housing them, and that means Queensland’s dwelling-affordability advantage needs to be sustained. Policy in that area is already shifting and focussed quite intently on providing additional supply.
The state’s trade advantage faces challenges global in nature. The climate transition looms large, and China's structurally slower economic growth will also be a factor for Queensland’s export market.
Queensland has never had to do much work to encourage people to move to warmer and more affordable climates. Recent economic challenges in other states, such as in Victoria, have added extra inducement.
For that to continue, houses need to remain more affordable in Queensland than in other states. Like everywhere, there's a challenge around that which is going to remain for some time.
Can it be done? The resourcing is the billion-dollar question, not just for Queensland but for every state. There are already objectives in place around expanding the supply of new dwellings and the provision of infrastructure.
Also a factor is how the climate transition will impact the way we build homes, what we build them from, and how we produce those materials in the future.
It's not obvious Queensland has the resources immediately at hand – nor is it in most places in the world. The resourcing challenge is very much alive.
On the trade side, the global economy is still doing reasonably well. Of course, the Chinese economy is getting softer, but nowhere near a recession – indeed, ANZ just lifted its growth forecast for the county to 5.1 per cent for 2023.
China is a large and critical trading partner for Queensland, and much of the state's fortunes rest on the Asian giant. For Queensland, the challenge is one of diversification - can it be as nimble with other markets as it has been with China? Already other global economies are rising to fill the gap.
For Queensland, the trade opportunity is now about looking elsewhere. That’s an important transition for the export sector to deal with.
The other challenge is, again, in climate. A big part of Queensland’s trade mix is in traditional energy markets, which also faces a transition challenge.
Queensland’s services side has already, in many ways, made a transition itself, with its modern story much more about students and internal migration than tourism. Time will tell if the trade story can be similar.
Queensland's destiny is in its own hands.
Like much of Australia, Queensland is incredibly fortunate to have been a major trade beneficiary of a traditional-energy driven world. And it has the potential to be a beneficiary of a more sustainable world, because of its access to the critical and essential minerals required for the transition.
But it is policy that will help the state move from one world to the other. Queensland needs the groundwork to get the transition to stick - and switch its trade superpower to one that can thrive in a net-zero world.
Richard Yetsenga is Chief Economist at ANZ
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