Why ‘back to normal’ is still bad news
A RETURN to a "business as usual" approach after the COVID-19 crisis would consign the Queensland economy to subdued growth, high unemployment and falling living standards.
The stark warning is contained in a damning new Queensland Productivity Commission research paper which found the state's economy was in poor condition before the coronavirus pandemic.
The 41-page report by the QPC, which was established by the Palaszczuk Government, found Queensland's buoyant mining sector had masked a domestic economy marred by stalled wage growth, increasing numbers of unemployed and underemployed people and evaporating investment.
"Beyond the immediate relief effort, policy needs to consider how to transform the Queensland economy to foster stronger productivity growth and increased resilience," the QPC warned.
"A return to pre-crisis economic growth will leave the economy running below its potential, limiting growth in the living standards of Queenslanders."
The warning comes just 74 days before the crucial October 31 state election that is expected to be dominated by the competing Labor and LNP blueprints to resuscitate the Queensland economy over the next four years.
According to the QPC, Queensland's employment-to-population ratio had been well below the pre-global financial crisis peak for the past five years as the state struggled to create enough jobs.
And the Sunshine State's job market had been the hardest hit during the COVID-19 crisis because of its significant tourism sector.
The paper said Queensland faced a slow recovery and insisted the path to quicken the pace was in more efficient regulation and taxes, greater infrastructure investment and controlled government spending.
The state had over 72,000 pages of regulation and 265,000 regulatory requirements in 2013 and a further 1600 rules had been added in the last seven years.
It estimated compliance with this regulation costs business up to $7 billion a year and costs Government about $3 billion to administer.
"Given the significant costs regulation imposes, care needs to be taken to ensure that it is efficient, fit for purpose and remains relevant," the QPC said.
The Commission warned Government against getting trapped in a cycle of handouts and assistance to specific industries, saying this would just impose costs on other parts of the economy.
"Industry assistance provided during downturns is likely to be most effective when it is targeted during the immediate crisis and is short-lived," it said.
Originally published as Why 'back to normal' is still bad news