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Business Investment Figures Show that Queensland is Lacking the Key Magical Ingredient of Economic Growth

30 Jun 2021 12:30 PM | Dr Marcus Smith

New Private Capital Expenditures data compiled by the Australian Bureau of Statistics (ABS) for March, 2021 show a decline in the real value of total business investment in Queensland from 2008-09 to 2020-21, despite the number of businesses in the state growing by around 40,000 (~10%) to the latest count of almost 465,000 in June 2020.


Over the four-quarter period to March 2021, the value of the real annual private capital expenditures is over $9 billion (-$9.057 billion, -30.7%) lower than during the same period in 2008-09. (Note the elevated levels in the years 2011-12 to 2014-15 include substantial capital expenditures due to the development of the state’s LNG industry.)


Disaggregating the data between mining and non-mining real private capital expenditures shows that mining investment was $1.173 billion (-14%) lower between 2008-09 and 2020-21, while private investment in non-mining including education and health was $7.883 billion (-37%) lower.


The breakdowns between types of real capital expenditures shows that investment in buildings and structures is $3.590 billion (-26%) lower, while investment in equipment, plant and machinery is $5.468 billion (-35%) lower.


ABS national accounts figures for State Final Demand (equivalent to gross state product excluding the trade balance) further illustrate how private gross fixed capital formation in Queensland has been relatively subdued over the past five years in particular.


In the 2021-22 Queensland Budgetthe State Government announced a flagship Big Plans for Small Business Strategy, which includes the establishment of a $100 million Business Investment Fund to invest in small- and medium-size businesses that:

* create Queensland-based jobs;

* have a proven product and defined market opportunity but require significant capital to aggressively build scale or grow market share;

* are relatively mature, well beyond proof of concept and are generally profitable or approaching profitability;

* are seeking capital to expand or restructure operations, enter new markets or finance significant acquisition;

* have significant Queensland growth potential and demonstrate continued economic growth in Queensland.

With private business investment being a key driver of employment and economic activity as well as a  barometer of business confidence, the absence of this magical ingredient acts as a handbrake on economic growth.

And, as the ABS figures show, the State Government certainly has some work to do to turn around what has been a sustained period of subdued business investment within the state.


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