Queensland ‘Well and Truly Out of the Mining Downturn’: Deloitte
Deloitte Access Economics’ September 2018 business review forecasts Queensland’s LNG industry as one of three big catalysts for an economy that is now “well and truly through the gloom years” of the mining investment downturn.
Queensland is set to become the world’s second-largest gas exporter with its multibillion-dollar-a-year liquid natural gas export businesses booming, the leading business report identifies. Qatar in the Middle East is the world’s largest exporter of liquified natural gas.
Queensland’s LNG sector produced its first billion-dollar export month in November 2017, when $1.1 billion in gas was exported.
This good news is set against frustrating “higher than national average” unemployment figures and high energy costs, the report notes. “Things are so good that gas is on track to overtake coking coal as Australia’s second-largest resource export this financial year,” the Deloitte Access Economics monthly review says.
The Committee for the Economic Development of Australia in October 2018 noted the Queensland government should expect $286 billion from liquid natural gas over the next 15 years.
“By 2018 Queensland alone will rank as the third largest LNG exporter in the world alongside Algeria and Malaysia,” CEDA’s October 2018 newsletter reports. “We expect an increase in Queensland’s gross state product of $427 billion from now until the period to 2035.” “Over that same period we expect the Queensland government to receive $286 billion in revenue from the LNG revenue.”
Almost all of Queensland’s liquefied natural gas is exported from three plants on Curtis Island in Gladstone run by the Australian arms of three multinational companies, Shell, Origin Energy and Santos.
However, the frustrating “above national-trend” unemployment figures and high energy costs remain a problem for Queensland, Deloitte says. Queensland’s trend unemployment rate in March 2018 was 6 per cent, while the national figure was 5.6 per cent.
“High energy prices remain an ongoing concern for many businesses, while the 3.5 per cent lift in the minimum wage from 1 July, 2018, has also affected some players within manufacturing,” the report says. “Although conditions in the sector have been on the mend for a while, they haven’t improved enough to warrant a new round of investment.”
Sydney’s high house prices are also helping Queensland. In the past 12 months people have begun to shift to the Sunshine State, frustrated by Sydney’s house prices and cost of living, the report notes. “Queensland has been the number one destination for net interstate migration over the past 12 months, eclipsing Victoria’s spell in that spot,” Deloitte says. The increasing population helps the Queensland economy by adding to domestic demand.
“The state’s economy is expanding at a faster rate than that of Australia, with its growth coming from both the public and private sectors,” the report says.
Queensland faces some uncertainty linked to the drought and to next federal election, the report says. Infrastructure project announcements can be linked to political issues, such as election promises. “Its political impact looms larger still – regional Queensland and New South Wales will be a central battleground in the coming federal election.”