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Politics of pandemic hits state's business investment

Business

Business investment in Queensland plunged $1.6 billion in the March quarter with the mining sector showing a sharp downturn.

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The Chamber of Commerce and Industry Queensland said the sudden drop in capital expenditure in the Australian Bureau of Investment data followed the first business closures in Australia without stimulus support during the most recent lockdowns in Greater Brisbane.

“There are few businesses in Queensland that are in a position to invest in new capital without blinking an eye. Instead, capital investment requires careful forward planning before entering into a loan contract,” CCIQ economist Jack Baxter said.

“The COVID-19 pandemic still requires sudden action by the state government leaving businesses with no ability to plan for the future. Clearly, this has translated to fewer businesses willing to invest to grow.

“Regardless of the latest results, Queensland is still outperforming New South Wales and Victoria in terms of the average level of investment by business.

“However, it is worth noting that more than one in three dollars of capital expenditure in Queensland is still generated by the mining sector.”

Adept Economics’ Gene Tunny said a factor in the result was lower coal prices and weaker demand.

Tunny said the internal division within the State Government over coal mining was also an issue because it “hasn’t made it easy to get new mining projects up and running’’.

“Overall, private sector capital expenditure data (is) discouraging for Queensland,’’ Tunny said.

“Nationwide capex was up 6.3 per cent in March quarter but it was down 0.4 per cent in Queensland.

“While Queensland has so far had a superior recovery to the rest of Australia from the COVID recession, there is now a risk we’ll fall behind other states.

“Of course, the COVID outbreak and lockdown in Victoria should mean we’ll continue to outperform Victoria at least.’’

Tunny said Federal and State governments had let the country down by failing to grasp the magnitude of the vaccination challenges and to act with the necessary urgency and vigour.

“The result is that Victorians are once again locked down, interstate travel is restricted, and people in other states must now be worried about lockdowns being imposed upon them. It’s looking like it could be a dreadful winter,’’ he said.

The ABS data shows steady investment by the industry over time, with Queensland’s quarterly mining capital expenditure averaging $2.1 billion over the past 12 months, which is roughly in line with its five-year quarterly average of $2.2 billion.

The Queensland Resources Council said capital expenditure was also only part, roughly 25 per cent, of the direct spending story.

According to the ABS data mentioned, in 2019-20, Queensland mining capex reached $9.7 billion.

“Once you count the operational expenditure, salaries and royalties measured by the QRC contribution data, total direct spending by QRC members reached $37.8 billion, or nearly four times the size of capex alone,” QRC chief executive Ian Macfarlane said.

“The other positive news for Qld is that the latest ABS employment data shows the Queensland resources sector – including explorers and producers in coal, metals, oil and gas – added almost 10,260 jobs, which is more than one extra job every hour, over the 12 months to February this year.

“This is in spite of the impact of COVID-19.

The State Government has also just launched a future-focussed development plan for our industry which is all about promoting growth in the sector, and removing roadblocks identified by industry as investment disincentives.

“The QRC is working with the government on this plan and has high hopes for its ability to drive a whole new era of sustainable resources development in Queensland.”

 

 

 

 

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