But a significant part of it could have been down to tax minimisation and accounting shuffles.
The data from the Australian Bureau of Statistics national accounts showed a 5.7 per cent increase in private investment in Queensland, a result cheered on by Treasurer Cameron Dick.
Nationally, the figures showed GDP growth of 0.7 per cent for the June quarter which came as a surprise to most commentators and meant Australia had dodged entry into a technical recession for now.
Gene Tunny, who heads Brisbane based economic analysis consultancy Adept Economics, said in his blog that on the face of it the result “sounds like a great number’’.
“The June quarter National Accounts data were good news for Queensland, but the good news won’t last obviously, given the lockdowns in southern states, a likely lockdown in southeast Queensland any day now, and ongoing border closures,’’ he said.
“It’s a shame that the strong growth in business capital investment we saw in June quarter probably won’t be sustained, because the Queensland economy will need all the help it can get over the rest of 2021.’’
He said the Treasurer Dick referred to the data relating to fixed capital investment, rather than investments in shares, bonds, or even land. It includes capital investments in new houses and apartments, as well as business capital investments.
“If we exclude dwelling investments, we find the business Investment sub-component of private GFCF grew at 7.2 per cent in Queensland in June quarter, compared with 0.8 per cent nation-wide,’’ Tunny said.
“In Queensland and nationwide, investment in machinery and equipment grew strongly at 7.4 per cent and 3.4 per cent respectively in June quarter.
“In Queensland, we also saw strong growth in non-dwelling construction (i.e. offices, shopping centres, infrastructure, etc.) in the June quarter of 8.7 per cent compared with a fall of 1.9 per cent nationally. Hence, Queensland massively out-performed national average business investment growth in the June quarter.
“First, consider that the strong growth in machinery and equipment investment in June quarter is probably related to generous accelerated depreciation or instant asset write off/temporary full expensing incentives.
“So some of it will be brought-forward expenditure that would have been made in a future quarter. “Also, some of the spending counted as business investment may reflect tax minimisation rather than genuinely expanding businesses.
“Indeed, we’ve seen strong growth in the number of new businesses registered in the first half of 2021, which could be related to tax minimisation (e.g. by claiming home or lifestyle expenses as business expenses).’’
He said there hadn’t been any significant expansion of the pipeline of private sector infrastructure investment or non-residential construction over the last few quarters, so there should not be any expectation of the growth to continue.