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The Highs and Lows for Queensland Businesses in 2017

In the last days of 2017 I wanted to share with you my top highs and lows for Queensland’s business community.  It was a year that will have significant impacts for many but it was also a year where a lack of things failed to occur. So let’s go ……

Lows for 2017

  1. Queensland electricity bills continued to skyrocket following years of unsustainable increases mainly in the areas of network charges (over investment and government dividend policy) and green environmental schemes.  Yet politicians spun the debate on this pivotal issue as one of entirely renewables vs coal generation.
  2. Which is why I have the standard of political debate as the second low for 2017.  When you thought we could not go any lower we reached another low ebb in the political discourse in this State and Country.  You only have to look at the vision championed by both sides as part of the recent State Election and question time in both parliaments to get a gauge on the standard of political discourse at present.
  3. A failure on all sides of politics to tackle the issue of debt which is on a trajectory to hit $81 billion by 2020-21.  This has been further compounded by a ballooning public service (20,721 FTEs since the 2015 State Election) that has bolted on $2.1 billion in recurrent expenses with no identified linkage to frontline services for Queenslanders.  At a Federal level regardless of budget repair net debt will peak at near 20% of GDP.
  4. The growing rise of protectionism across Australia and a potential 2.2% threat to Australian GDP if tariffs are reintroduced and State Governments implement ‘going it alone’ procurement policies.
  5. Tropical Cyclone Debbie that crossed the Queensland coastline near Airlie Beach causing widespread physical damage and economic loss to the tourism, agriculture and resources sectors to the tune of $2 billion.
  6. Queensland’s underemployment and low wages growth.  Whilst there are now only 150,000 Queenslanders technically defined as unemployed there are an addition 233,000 persons employed but seeking more hours of work.  Queensland has an underutilisation rate (unemployment rate plus underemployment rate) at just under 15%.  With excess supply of labour Queensland's wage growth remains at historic lows.
  7. The announcement to lift Queensland’s Land Tax rate to 2.5% for properties and holdings greater than $10 million and the substantial flow on impact it will have on jobs and the economy.

Highs for 2017

  1. A Queensland domestic economy that has started to grow again with latest year to the September quarter growth at a healthy 2.7%  This has fed into a resurging labour market with the unemployment rate dropping to 5.8%, the creation of over one hundred thousand jobs across 2017 and the return of interstate migration as population flows towards employment opportunity.  Both employment growth and interstate migration are at their highest levels since before the GFC.
  2. A company tax rate reduction from 30.0% to 27.5% for businesses with a turnover between $10 million and $25 million. In addition businesses with a turnover between $2 million and $10 million are now eligible for the instant asset write off initiative.  Business with a turnover less than $2 million are already eligible for these initiatives.
  3. Businesses in fast food and hospitality have had Sunday penalty (rates) loadings reduced by 25% bringing the final rate down to 125% and 150% respectively and businesses in the retail and pharmacy sector have had their loading reduced by 50%.
  4. The passing of legislation to collect GST on low dollar amount international transactions (less than $1,000) thereby levelling the playing for Australian retailers.
  5. The passing of same sex marriage legislation that not only addresses an equality issue but creates a $139 million stimulus to the Queensland economy in the first year alone.
  6. The Turnbull Government's Royal Commission into Australia’s banks and other financial institutions that will hopefully address a litany of small business complaints against them.
  7. Finally Brisbane’s Cross River Rail will go ahead and is great news in addressing congestion in SEQ as well as 1,500 jobs created and a net economic contribution (NPV) of nearly $1.9 billion.

In looking to 2018 the Palaszczuk Government’s legislative agenda starts afresh following the unwinding of LNP reforms across its first term and delivering outcomes driven by the influence that the Queensland union movement has had on it.  Issues that I am particularly looking forward to over 2018 that will have an impact on Queensland’s 425,000 businesses include:

  • State Government looking to make good on its growth, infrastructure and employment election commitments.
  • The 2018-19 State Budget that will be foundation opportunity for the Treasurer to announce her debt pay down plan.
  • Releasing the Deloitte Report into the linkage between State public sector growth and frontline service delivery.
  • The running of the Commonwealth Games and the legacy it will have on improved customer service and Queensland as a visitor destination.

At the same time a Federal Election is in the wind with hopefully meaningful debate on tax reform (and not just the company tax rate) and also Australia’s federation arrangements including both vertical and horizontal fiscal equalisation.  Embracing holistic tax reform, which includes the GST will not only deliver revenue adequacy to address Australia’s increasing age dependency ratio but can boost the simplicity and international competitiveness of our tax system.  I am somewhat concerned by the increasing militancy of the unions at a national level and their agitation for a further shift of the workplace relations pendulum towards the employee.  This will play out in 2018 for sure.

Finally there are two things that I would really love to see in 2018:

  • Debate on a trial of daylight saving before a referendum on Queensland moving to embrace consistency of time zones across the Australian east coast during October to March each year.
  • For all politicians in 2018 to ditch the negativity of the political discourse in Queensland and Australia.  I am wanting to see politicians start to inspire us with vision that lasts beyond their term of office.

These are fanciful expectations but I have always been an optimist.

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