Just a few months after acquiring a prime Broadbeach site on the corner of First Avenue and Surf Parade, family-run developer <a href="https://www.apartments.com.au/developers/raptis">Raptis</a> has filed fresh plans for a new apartment development.

Raptis is seeking to deliver a <a href="https://www.apartments.com.au/new-apartments/17-19-first-avenue-broadbeach-qld-4217">29-storey tower with 73 apartments</a> on the 818 sqm site. It will be the developer's seventh project in the suburb, as they are approaching completion of The Sterling on George Avenue.

There will be a pool, barbecue and outdoor dining area, residents lounge and dining, sauna and steam room, gym, and a Yoga and Pilates studio.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="b554da3f-7344-49aa-b1c9-44cf459af0d7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%2010.41.45%E2%80%AFAM.png?VersionId=zzjWu1iO1wnuYv4EV4fyOyf5nSXjGYut" />

Raptis Joint Managing Director, Evan Raptis, says they remain&nbsp;committed to developing quality infill sites across the Gold Coast in the lead-up to the 2032 Brisbane Olympics.

"This project continues our long track record of delivery in Broadbeach, and we look forward to bringing another premium development to this thriving precinct."

The announcement follows strong delivery momentum for Raptis, with The Sterling Broadbeach nearing completion and construction well underway on the final stage of the Waterpoint community adjacent to Harbour Town. The developer's continued investment in the Gold Coast reflects confidence in the region's apartment market fundamentals, underpinned by sustained Southeast Queensland population growth.&nbsp;

The outlook for the region is further bolstered by infrastructure investment tied to the Brisbane 2032 Olympic Games, which is expected to drive continued economic and population growth across the SEQ corridor.&nbsp;

Subject to a favourable response from Gold Coast City Council, construction on the new First Avenue tower is targeted to commence before the end of 2026.&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/it-s-all-in-the-family-four-decades-later-raptis-continues-to-shape-the-gold-coast-skyline">It’s all in the family: Four decades later, Raptis continues to shape the Gold Coast skyline</a>

Read more: <a href="https://www.apartments.com.au/news/qld/raptis-secures-prime-surf-parade-site-for-next-broadbeach-apartment-development">Raptis secures prime Surf Parade site for next Broadbeach apartment development</a> 
&nbsp;

Gold Coast developer brings seventh Broadbeach project to market, targeting construction commencement before year end

Joel Robinson

First look: Raptis lodges plans for new 29-storey Broadbeach tower 

Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368853]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available.

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

First look: S&S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street

A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Mining Investment

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It may be the biggest mistake property investors make: once they have bought something, they stop researching.
There’s a common mentality among real estate consumers that the need to stay informed disappears once you’ve fulfilled your buying criteria.
Prior to purchase, some (not all) will spend some time and/or money on research and advice. But they won’t make the same effort, or any effort, to stay informed beyond acquisition. 
I recently hosted a webinar in which Melbourne buyers’ agent and author Miriam Sandkuhler was the guest presenter. One of the key points she impressed upon her audience was the importance of a regular review of your property portfolio and your overall goals and strategies.
Most Australians don’t do that. Set and forget seems to be the overriding philosophy. And many with that approach get caught in bad situations.
Hotspotting receives a lot of distress calls from investors who bought in locations where property values have fallen subsequently.
Sometimes they’ve bought in locations that were never going to perform. But often they’ve bought in an area that delivers growth initially, until something fundamental changes. That causes a downturn in the market – but investor owners often find out too late.
Queensland boom-bust industrial city Gladstone provides a case study. Five or six years ago, this looked like a good place to invest, with three gas projects worth a combined $60 billion (bringing tens of thousands of jobs) poised to start construction. And, for a couple of years, that promise was borne out by results. Rents and prices rose strongly.
But then big changes occurred in that market. One was that developers had flocked in large numbers to that market and too much new product was being built. The problem was exacerbated by the second fundamental shift, which was the decision by the resources companies to use primarily FIFO workforces with personnel staying in temporary accommodation camps, rather than buying or renting local dwellings.
We wrote extensively about the shift in that market and the likely consequences. The message was: stay out of that market – or, if you already own there, now might be a good time to sell before the market drops.
But many of those who had already bought in Gladstone had tuned out. They no longer had their finger on the pulse. By the time many owners realised the tide had turned against them, it was too late to sell without taking a loss.
Anyone who bought in coal-mining town Moranbah in the early part of the century would have enjoyed a decade of the most spectacular capital growth in Australian history. If they’d sold at any point before 2013, they would have made lots of money.
Then the market turned for reasons that are similar to those for Gladstone, with the added element of the big downturn in coal prices. What followed by the polar opposite of the previous spectacular growth. 
Similar, though less dramatic, scenarios are being played out regularly in markets around Australia. Two or three years ago the middle-market suburbs on Brisbane’s northside were market leaders for sales activity and price growth. Small to medium sized developers saw an opportunity and suddenly these areas are awash with development of new units and townhouses. Vacancies have risen to unacceptable levels in some suburbs. 
If you bought something in that precinct two years ago and then focused on other things, you’re probably not aware of the change in the market.
The message again and again is: you can’t stop the research process just because you’ve filled your current buying criteria. You need to stay up to date. And you need to conduct that regular review of your investment situation suggested by Miriam Sandkuhler.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a>
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terryryder-YECXbqmri2

Property price slides in mining towns Gladstone, Moranbah playing out around Australia

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While Clermont locals are celebrating the approval of the controversial Adani mine in Queensland’s Galilee Basin, property investors should be careful before entering the market, according to RiskWise Property Research.
The $2 billion Carmichael coal mine, one of Australia's largest thermal coal mines, will comprise six open-cut pits and five underground mines covering about 447sq km.
Adani states it will produce between 10 to 15 million tonne per year of coal, with an option to increase this to 27 million tonnes.
Employment creation figures have been disputed with Adani claiming there will be between 1500 and 1800 ongoing jobs, while Nationals MP Brigid McKenzie last year stated it would be as few as 100.
The recent sign-off by Queensland State Government on the mine's groundwater management plan was cause for celebration among ‘locals’ in the town of Clermont, 160km southeast of the site.
<a href="http://www.riskwiseproperty.com.au/" target="_blank">RiskWise</a> CEO Doron Peleg said while this might make it look like an attractive option for property investors, the economy of Central Queensland had been in decline “at an alarming rate” since the end of the mining boom.
He said, overall, investments in mining towns carried a higher level of risk. <a href="http://www.riskwiseproperty.com.au/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable"> </a>
“Our research has found that when you apply an in-depth risk-return approach with a macro-overview, and review this over three years, many ‘hotspot’ areas have significantly underperformed the market,” Mr Peleg said. “This has most certainly resulted in many investors losing money, often having negative equity, particularly in regional and mining areas.
“Only 37 per cent of houses and 33 per cent of units of the Top 100 2014 Property Hotspots, many in mining areas, performed as well as the market benchmark over a three-year period, which means that, overall the 2014 Hotspots, performed significantly lower than the benchmark. And the results were also similar for the 2011 and 2012 Hotspots.”
He said a comprehensive analysis on region, location, suburb growth, property type and features helped identify and accurately assess the risks and the projected returns.
“The second issue is that other macro-factors were probably not taken into consideration. For example, property investment in mining towns is strongly correlated to movements in the commodities market."
"This was demonstrated following the recent mining boom when business investment in these towns was poor, leading to poor economic growth, a weak job market, low population growth, and therefore, poor capital growth in many so-called ‘Hotspots’ in Western Australia and Queensland."
“When it comes to Clermont, there has been a huge decline in dwelling prices. According to CoreLogic’s data, over the past five years, house prices decreased by 29 per cent and for units an incredible 65.5 per cent."
“You then have to also consider that Clermont is really in the middle of nowhere and far from employment hubs."
The closest is the city of Mackay and that is 500km away. This does not set it up for good property fundamentals and consequently increases the risk for negative capital growth, despite the Adani mine getting the go ahead.”
Mr Peleg said this placed Clermont into the high-risk bracket when it came to property investment, for the same reason Central Queensland and Western Australia suffered after the end of the last mining boom.
“These areas experienced negative capital growth on a major scale, with some such as Gladstone – Biloela experiencing price reductions of 28.7 per cent for houses and 39.9 per cent for units in the past five years.
“We need to learn from this and not make the same mistakes made in mining towns in the past.”
Visit <a href="http://www.riskwiseproperty.com.au/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">www.riskwiseproperty.com.au</a>
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j.ballantyne1990-6AQqhLzZaK

Riskwise warns against mining town property investment following Adani approval

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EXPERT OBSERVER
Mining accounts for about half of Australia’s exports. In terms of ‘economic complexity’, the nation ranks 59th in the world, between Kazakhstan and Lebanon.
Three years ago, then prime minister Malcolm Turnbull went to an election spruiking the wonders of innovation. “There has never been a more exciting time to be an Australian,” government advertising had enthused in the months before.
But the public wasn’t enthused, and Turnbull’s government barely scraped back into office.
Since then innovation policy has spooked the political class. They see it as a vote loser, and a threat to jobs – mostly their own.
Consequently, innovation and industry policy has received the least attention just when the decline of investment in <a href="https://www.smh.com.au/politics/federal/worrying-trend-in-australian-research-and-development-20180705-p4zpnh" target="_blank">research and development</a> may matter most to our economic future.
<hr>
<a href="https://images.theconversation.com/files/274790/original/file-20190516-69182-gyqlpw.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/274790/original/file-20190516-69182-gyqlpw.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> The red bars show the average intensity of the member states of the OECD and the European Union. Data for Argentina, Australia, New Zealand, Poland, Switzerland, Turkey, and South Africa is from 2015; data for Singapore is from 2014. <a class="source" href="https://www.oecd.org/sti/DataBrief_MSTI_2018.pdf" target="_blank">OECD Main Science and Technology Indicators Database</a>
<hr>
Here’s how we got to where we are.
<h2>A deafening, blinding boom</h2>
After the terms of trade downturn of the 1980s and the economic reforms of the 1990s, Australia enjoyed the biggest, unanticipated mining boom in our history, thanks to the rise of China. John Howard wanted us to be “relaxed and comfortable” and we were, at least while it lasted.
Increased commodity prices boosted our terms of trade, without any extra effort on our part. By contrast with <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radionational/programs/ockhamsrazor/how-australia-got-left-behind-in-manufacturing-and-innovation/6163528" target="_blank">Norway</a>, which prepared for its post-oil future with a 76% resource rent tax and sovereign wealth fund, Australians enjoyed tax cuts and a spending splurge.
However, the underlying structural problem of our economy had not gone away. Measured by the research intensity of our exports, Australia’s “<a href="https://atlas.media.mit.edu/en/rankings/country/eci/" target="_blank">economic complexity</a>” ranks at 59, between Kazakhstan and Lebanon.
This index compiled by MIT’s Observatory of Economic Complexity is topped by Japan, Switzerland and Germany. Our position in <a href="https://www.globalinnovationindex.org/analysis-indicator" target="_blank">global innovation rankings</a> is no less dismal, especially when it comes to turning ideas into products.
While recent domestic growth has been driven by services, retail and construction, our future living standards will depend on how we pay our way in the world. This means identifying new, more sustainable sources of export income.
Of course, resources will still have a part to play, but not as unprocessed raw materials. For example, we have everything we need for renewable energy production, battery manufacture and hydrogen exports. And how could anyone contemplate continuation of the barbaric live animal trade?
The graphic below shows Australia’s export profile in 2017. Of US$244 billion in total exports, US$131 billion were mineral products.
<hr>
<iframe src="https://atlas.media.mit.edu/en/visualize/embed/tree_map/hs92/export/aus/all/show/2017/?controls=false" frameborder="0" scrolling="no" width="100%" height="550"></iframe>
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This rebalancing won’t happen automatically through the market. It will require <a href="https://www.afr.com/brand/chanticleer/no-need-for-any-more-innovation-reviews-20151203-gletj5" target="_blank">active intervention</a> to manage the post-mining boom transition to an inclusive and dynamic knowledge-based economy. And to reverse the slowdown in productivity growth associated with current wage stagnation.
<h2>Too obvious to ignore</h2>
During the boom, high prices for coal and iron ore masked Australia’s <a href="https://theconversation.com/what-would-it-take-to-raise-australian-productivity-growth-83505" target="_blank">deteriorating productivity performance</a>. Now mining no longer contributes to growth, the impact on our national income has become all too obvious.
That’s why it was so important to Malcolm Turnbull to reinvigorate the <a href="https://www.afr.com/leadership/innovation/malcolm-turnbulls-innovation-lovefest-20151210-glkiwk" target="_blank">national innovation and science agenda</a> with a focus on startups and business-university collaboration, after Tony Abbott’s $3 billion cuts to Labor’s programs.
And why it was then so disappointing he could not build on his agenda for an “ideas boom” to replace the mining boom.
<iframe src="https://www.youtube.com/embed/sfCjdToaXwU?wmode=transparent&amp;start=0" frameborder="0" width="440" height="260"></iframe> Prime Minister Malcolm Turnbull launches the National Innovation and Science Agenda in December 2015.
The Coalition government has cycled through three prime ministers and six industry ministers. It continues to cut science and innovation programs. Its latest budget “savings” included $4 billion from the Research and Development Tax Incentive scheme, $3.8 billion from the Education Investment Fund and $2.2 billion from higher education.
As a result, Australia’s <a href="https://www.theguardian.com/australia-news/2018/jul/10/australias-spending-on-research-plummets-far-below-oecd-average" target="_blank">total spending on research and development</a> is now just 1.88% of GDP, from 2.11% five years ago. The government contribution (0.57%) is where it was in the 1980s. Meanwhile Japan and Sweden are committing more than 3%, and Korea and Israel more than 4%.
<h2>Small target strategies</h2>
For any mention of innovation and industry policy in the current election campaign, you have to look hard.
The Coalition has confined itself to some low-key announcements on a new space agency, defence innovation, genomics, food, marine science and manufacturing.
It has rejected or parked the recommendations of its own <a href="https://www.afr.com/news/economy/we-still-dont-have-a-joined-up-innovation-and-research-system-20180131-h0r12c" target="_blank">Innovation and Science Australia 2030 strategy</a>, including using any savings from winding back the R&amp;D Tax Incentive to promote high-growth export opportunities.
Labor has committed to a <a href="https://www.innovationaus.com/2019/05/170-boost-for-RD-Tax-Scheme" target="_blank">“collaboration premium”</a> to encourage business engagement with universities and the CSIRO as part of a restructured R&amp;D Tax Incentive (another key recommendation of the 2030 strategy).
However, it will also “bank” the Coalition’s savings to achieve its budget surplus. In this context, it will be all the more challenging for a new Labor government to achieve its R&amp;D target of 3% of GDP, given that this will require additional investment of at least $20 billion.
In addition, Labor has announced an “off-budget” $1 billion Manufacturing Future Fund and a series of initiatives on renewable technologies, biofabrication, food and fibre, artificial intelligence, blockchain, space, hydrogen, electric vehicles and “digital skills hubs”. In an important symbolic gesture, it has also promised to rescue CSIRO climate science.
These initiatives are clearly worthwhile, but do not restore the funding that has been lost, let alone increase it.
If new policy must be paid for, why not cut expenditure that actually impedes economic transition? The <a href="https://theconversation.com/estimating-the-cost-of-fuel-tax-credits-is-a-tricky-business-62777" target="_blank">diesel fuel tax rebate</a>, for example. This $6 billion scheme, whereby taxpayers subsidise fuel costs for the resources sector, is equivalent to almost half the entire annual budget outlay for research and innovation.
<h2>Weighing the costs</h2>
Most successful economies around the world use “knowledge foresights” to identify national priorities in areas of existing or potential competitive advantage. They have long-term, coherent <a href="https://theconversation.com/five-things-about-innovation-australia-can-learn-from-other-countries-50966" target="_blank">policy frameworks</a> for pursuing these priorities.
Australia’s next government will have a chance to devise such a framework, in cooperation with business, unions and research organisations. Of course, it will require substantial public as well as private investment. But we can no longer afford a “do nothing” approach.<img src="https://counter.theconversation.com/content/116966/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/roy-green-3866" target="_blank">Roy Green</a>, Emeritus Professor &amp; UTS innovation adviser, <a href="http://theconversation.com/institutions/university-of-technology-sydney-936" target="_blank">University of Technology Sydney</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/its-the-only-way-to-save-australia-from-a-deep-hole-but-innovation-policy-is-missing-in-action-116966" target="_blank">original article</a>.
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Australian innovation policy is missing in action

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GUEST OBSERVER
Queensland election campaigns often focus on big projects for the regions, such as for roads, power plants and mines. But research suggests that mega projects, such as in gas and coal, have not transformed skills or improved employment prospects in regional Queensland.
Take away the temporary booms from construction and other short-term jobs, and employment growth overall is no better than before the global financial crisis. Certainly Queensland’s regions are no more resilient. Instead of these mega projects, what’s needed are new sources of economic value in knowledge, services, and technology.
Between 2010 and 2013 investment in coal mining surged 400% in the Bowen Basin. Further south, in the Surat Basin and at Gladstone, four international consortia spent more than A$70 billion fast-tracking a coal seam and liquid natural gas industry.
These projects fell far short of generating new skills and enduring businesses in the regions. Continuing dependence on resources and agriculture also creates its own vulnerabilities, as both are challenged by market and investment volatility, and increased climate risk.
Overall the focus on mega projects has weakened social and economic resilience in communities across Queensland. Resilience refers to the capacity of regional communities to handle risks and manage change. Resilient regions deepen and diversify their economies.
Megaproject sugar highs
Annual construction spending in the resources sector peaked at A$36.6 billion in Queensland in 2013-14, and has dropped by 70% since. Unemployment has doubled in Queensland’s northern, central and outback regions.
The impact is seen in Townsville, Rockhampton, and Gladstone, who are now pitching to become bases for “Fly In Fly Out” workers. Rather than drive their own local economic development, these cities are punting on the next big mining project.
Gladstone is already the pin-up of the construction boom-bust development model. The port city boasts a highly trained workforce in alumina and aluminium processing, cement, liquid natural gas and chemical manufacturing. Still, it waits on the next big mining construction boom.
What regional Queensland really needs is politicians to abandon short-term economic fixes, in favour of a sustainable long term vision. Policies would have greater impact if they focused on skills and enterprise training. Stronger regional collaboration to broker opportunities for smart businesses is essential.
Just north of Brisbane, Moreton Regional Council is showing the way by transforming a former industrial site into a university campus. Tertiary education will come to the fast growing region along with a research and technology park, creating the jobs of the future.
Regional Queensland can also learn from the European Commission’s “smart specialisation” structural assistance programs that help regions build knowledge-based competitive industries through strategic public funding and support for research and development etc.
By 2020, smart specialisation in Europe is expected to deliver 15,000 new products to market, 140,000 new startups and 350,000 new jobs.
Integral to the European strategy is strong collaboration between the research and university sectors, and regional industries. Strong cooperation between levels of government is key to the success. The industries are as varied as cheese manufacturing in Spain, new transport systems in Finland, and materials manufacturing in France.
The Europeans have found that changing business culture and boosting entrepreneurship are just as important to creating opportunity as large infrastructure projects.
What Queensland should do
Queensland should rethink its big projects for a big country approach. Regional jobs that depend on project investment without generating local income are not sustainable. Small business and community must be restored to centre stage in development strategy.
Small and medium businesses collectively account for more than 99% of all business in Queensland, and three times as many people work in the state’s A$20 billion manufacturing sector (169,000) as work directly in the resources sector (48,000).
But small and medium businesses lack the profile of the “big end of town”, and the large resources companies have been effective at selling the narrative that they are central to the A$300 billion Queensland economy.
The priority for developing Queensland’s regions should be investment that generates small business growth, local income, new skills and communities. Particular emphasis has to be given to attracting and retaining talented people.
The state government can best help regional Queensland by heeding the Productivity Commission’s call to help regional Australia adapt and exploit the opportunities of ever present change. This requires greater local initiative, making the most of competitive strengths, and training people to better engage with the world.
The global services sector is a $US47 trillion industry. For regional Queensland to tap into this sector will require skills in fields as diverse as big data, biotechnology, genetics, robotics, communications, and digital manufacturing.
A good start has been made in the Advance Queensland Regional Innovation Programs which have challenged regions to think outside the box, collaborate, and come up with their own strategies. It complements the federal government’s Building Better Regions Fund.
<img src="https://counter.theconversation.com/content/86622/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">This approach challenges the current politically dominated top down model of regional development. It’s a vision for regional Queensland that extends beyond resources, agriculture, tourism and construction to the people themselves.
John Cole, Executive Director, Institute for Resilient Regions, University of Southern Queensland.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/why-big-projects-like-the-adani-coal-mine-wont-transform-regional-queensland-86622" target="_blank">original article</a>.
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Why big projects like the Adani coal mine won't transform regional Queensland: John Cole

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GUEST OBSERVER
After showing some tentative signs of lifting, non-mining business investment has dropped back again as a share of GDP.
The capex survey and non-residential approvals data signal only a modest lift non-mining investment this year.
However there are some more positive signs for business investment.
These include high levels of business conditions and confidence, rising capacity utilisation and a lift in company profits.
The strong pipeline of infrastructure spending and the revival in the manufacturing sector are also supportive of stronger investment. 
Non-mining business investment remains the missing ingredient in the successful transition from mining to non-mining led growth. A pick up in non-mining business investment would be a welcome driver of growth in the short-term. It also boosts productivity in the medium to long-term, which is essential for maintaining growth in the face of an ageing population and a potentially slower population growth rate. 
<a href="https://www.propertyobserver.com.au/images/2017/06/19/Screen%20Shot%202017-06-19%20at%201.07.23%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/Screen%20Shot%202017-06-19%20at%201.07.23%20PM.png" alt="">
Mining sector investment seems to have stabilised for now. However non-mining business investment is yet to show a meaningful lift. In fact, as a share of GDP, 8 non-mining business investment has fallen back close to the recent lows in late 2013. This is despite record low interest rates and a relatively stable, and lower, Australian dollar.
In the past we have discussed some of the reasons for weak non- mining business investment (see here). These included unrealistic hurdle rates and slower growth in consumer spending which has dampened business’ expectations of future demand. Many of these factors are still relevant. 
In this note, we take a fresh look at what the forward indicators of business investment are telling us. We find that the “hard” data such as non-residential approvals and capex spending intentions point to only a very modest increase in business investment in the year ahead. However the background conditions for business investment have improved. In particular there has been a strong lift in business conditions and confidence and a lift in capacity utilisation. Other positives for business investment include the revival in the manufacturing sector.
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And also 208 the big lift in public infrastructure spending underway. The note concludes with our outlook for non-mining business investment in the years ahead. 
Non-residential building approvals: Non-residential building is one component of business investment. The approvals data tells us the amount of building activity that is likely to enter the pipeline. This data suggests that there should be some pick-up in non-residential building activity this year due to a large spike in approvals in September 2016.
The lift in approvals was in the retail, entertainment, recreation &amp; accommodation, and office sectors. However since the spike, approvals have been running broadly in line with their average of recent years. So we need to see a further pick up in the approvals data in order to see this component of business investment lift meaningfully.
Capex survey: The ABS capital expenditure survey includes business’ estimates of new capital expenditure. And the results are not encouraging. Early estimates for spending plans can vary significantly from actual spending. However at this stage, based on the historical relationship between estimates and actual spending, it looks as if non-mining capex spending for the 2017/18 financial year will be similar to 2016/17 (see here). 
However it is possible that these estimates could be revised sharply upwards (or downwards) if the economic landscape changes. Another caveat is that the capex survey also excludes some sectors including health, education and agriculture. Investment in health and education tends to be structural rather than cyclical and demographic factors suggest that it should remain firm.
Business conditions and confidence: Survey measures of business conditions and confidence have generally been on an upward trend for several years now. Business conditions are at their highest level since the GFC. Business confidence is the highest since 2010. Both are well above long run averages
Business conditions are buoyant for most industries, with the exception of retail and more recently construction. Conditions are have improved in most States. The exception is the mining State of WA where conditions remain very weak.  
Capacity utilisation: Capacity utilisation is rising. However it is important to consider in which industries it is rising as some businesses are more capital intensive than others. Research from the RBA finds that goods-related industries plus transport tend to be more capital intensive than services-related industries. So high levels of capital utilisation in the goods plus transport industries are more likely to result in additions to capital stock. Whereas for services industries, high capacity utilisation more often prompts additional labour hire.
Capacity utilisation has trended higher in recent years for these more capital intensive industries and is now around its long run average. This has historically been consistent with a higher level of non-mining business investment than is the case now.
The capital stock has also aged which provides further impetus for new investment. However while business hurdle rates are still high we may need to see capacity utilisation rise to high levels before businesses are willing to investment in more capital. 
Return on investment/Tobin’s Q: In addition to demand conditions, the expected rate of return on investment is also an important determinant for business investment. On that score there appears to be plenty of scope to increase non-mining business investment.
The rate of return on the non-mining capital stock is running around 12% and well above most business borrowing rates. However unrealistic hurdle rates are preventing businesses from undertaking some profitable investments.
Also, according to Tobin’s Q theory of investment, growth in non-mining business investment should also be higher than current rates. Tobin’s Q measures the market value of capital relative to its book value. A ratio greater than one suggests that companies should invest more in capital because it is valued more than its replacement cost. Tobin’s Q is hard to measure in practice. But our proxy shows the Q ratio has been on an upward trend since early 2009 and is now well above one.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/Screen%20Shot%202017-06-19%20at%201.09.29%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/Screen%20Shot%202017-06-19%20at%201.09.29%20PM.png" alt="">
Revival in the manufacturing sector: There is somewhat of a revival going on in the manufacturing sector (see here). Employment in manufacturing has picked up. Exports have risen too and are not too far below their pre-GFC levels.
A lower and relatively stable Australian dollar in recent years has helped. RBA research shows that a 10% depreciation in the real exchange rate will boost manufacturing exports by more than 15% three years later. The lift in infrastructure spending has also contributed, lifting demand for building materials, metals and transport equipment.
These stronger conditions have seen manufacturing capital expenditure lift 12% over the two quarters to Q1 2017. Although according to the capex survey estimates of future capex spending are still subdued. They imply roughly a 5% fall in capex spending for 2017/18 compared to 2016/17. But given the lift in conditions in the manufacturing sector we may see an upgrade to intentions as the year goes on. 
Positive rural conditions are also pulling out more agricultural capital expenditure. Farm capex spending has picked up with annual growth running at around 13%.
Consumer spending: Current household spending patterns and the outlook for future spending are also important factors to consider when thinking about future business investment. Firms in the RBA’s liaison program have indicated that they are reluctant to commit to a substantial increase in investment until they see a sustained pick up in sales.
Consumer spending growth has been slower on average than before the financial crisis. However spending growth has run ahead of income growth as households have cut their savings ratio. Household debt levels are elevated which means household may be reluctant to cut savings further. We think that we will need to see further improvement in the labour market, particularly a fall in the unemployment and underemployment rates, or a lift in wages growth, to lift growth in spending.
Public infrastructure spending: Increased public infrastructure spending can “crowd in” private business investment. For example, new transport infrastructure can make previously undesirable land, more desirable. This attracts new spending on dwelling construction, which in turn attracts businesses to set up in the these new areas. Private sector businesses also provide inputs into the building of infrastructure so stronger demand can enable these businesses to expand.
Australia is about to go through an infrastructure boom. The State governments have ramped up infrastructure spending. In particular there are many large transport infrastructure projects underway in NSW and Victoria. The Federal government is also planning on a large infrastructure spend. The latest Budget includes $75 billion in transport spending over the next ten years.
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<img src="https://www.urban.com.au/images/2017/06/19/Screen%20Shot%202017-06-19%20at%201.10.29%20PM.png" alt="">
Studies by the IMF find that an increase in public infrastructure spending in advanced economies increases private business investment in both the short and long term.1 They find the effects are largest when spending occurs in periods of economic slack and easy monetary policy, when it is invested efficiently, that is where public spending is allocated to projects with high rates of return, and when spending in financed by debt rather than tax increases.
You could argue that Australia meets these conditions. Firstly, interest rates are at record lows and are likely to stay there for some time yet. There is also a degree of economic slack in the economy.
Over the year to Q1 the economy grew at just 1.7%, below our estimates of potential growth of around 23⁄4%. While we expect growth to lift to above potential in 2018, a decent share is coming from net exports due to the ramp up in commodity exports following the earlier surge in mining investment. Gross national expenditure, which excludes net exports, doesn’t look quite as strong.
Secondly, in the 2017/18 Budget the Federal government has committed to provide funding for four of the seven projects considered to be “high priority” by Infrastructure Australia. A further three projects on the “priority” list will also receive some funding. And thirdly, these projects will be funded by debt with the Budget not expected to return to surplus until 2020/21.
Sources of funding: Business lending remains soft. Commercial lending growth is in negative territory. Business credit growth is showing a similar lacklustre picture, with soft monthly growth rates since early 2016. Over the year business credit is up just 3.1%. Weak lending is consistent with lacklustre investment.
Another way companies can fund new capital expenditure is by using profits. After five years of lacklustre growth, non-mining profits have begun to lift and are around 17% higher over the year to the March quarter. The lift in profits has been broad based with seven out of nine non-mining categories posting an increase in profits over the year. Mining sector profits have also surged which has positive flow-on effects for industries that service the mining sector.
So what’s the outlook for non-mining business investment?
At this stage we are expecting only a very modest lift in non-mining business investment over the remainder of 2017. This is consistent with the capex survey of business’ intentions and relatively subdued non-residential approvals data. Weak business lending data also points to subdued investment ahead.
However the background conditions for investment are improving. Business conditions and confidence are high and business balance sheets have improved due to stronger profits. Capacity utilisation has lifted and the capital stock has aged.
Other positives for business investment are improving conditions in the manufacturing sector. The strong pipeline of infrastructure spending may also work to “crowd in” business investment. One significant hand brake on stronger capex spending is the fact that business hurdle rates are high given the low interest rate/low yield environment we are in. As a result we have a moderate pick up in non-mining investment in 2018 in our forecasts. 
Kristina Clifton is economist and financial market analyst for CBA and can be contacted <a href="https://www.commbank.com.au" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

The outlook for non-mining business investment

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GUEST OBSERVER
Construction work, having trended lower in recent years, stabilised over the past half year. The drag from the mining investment downturn has diminished and public works is providing a boost.
In the March quarter 2017, construction work declined by a relatively modest 0.7 percent, following a 0.6 percent gain in the final quarter of 2016 (revised up from -0.2 percent). By comparison, over the year to September 2016, construction work declined by 10.7 percent, to be $5.6bn below a year earlier.
The March quarter 2017 result broadly met expectations, (market median -0.5 percent and Westpac -0.2 percent).
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In NSW and Qld, activity in the most recent quarter appears to have been disrupted by wet weather and flooding.
The wet weather impact is evident in the private home building segment, where work nationally on new dwellings fell by 4.8 percent and renovations were down by 6.3 percent. In NSW, total residential building activity fell by 4.9 percent in Q1, while Qld experienced a sharp 13.6 percent decline. These outcomes are weaker than suggested by earlier strength in approvals and the sizeable pipeline of work.
Home building activity is likely to rebound in the June quarter. Beyond that, there is a looming downturn in home building activity. Notably, private new dwelling approvals in Q1 2017 were 12 percent below the level of a year earlier.
The drag from the mining investment downturn has clearly diminished. Private infrastructure activity surprisingly rose in the March quarter, up 1.8 percent. We still expect some further modest downside over coming quarters.
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In the mining state of WA, where work on gas projects under construction is nearing completion, total infrastructure activity is declining at a slower rate. Over the past half year, work fell by 12 percent, down $0.7bn. For the year prior to that, work fell by 51 percent, a decline of $5.5bn.
Public works is a growth driver as governments commit to additional projects. Public works increased in each of the past seven quarters, up a cumulative 21 percent. That is the longest run of consecutive gains since 2008 to 2010, associated with the post GFC fiscal stimulus package.
Victoria is performing strongly, with construction work in Q1 up 3.4 percent/qtr, 9.2 percent/yr. Strength is evident in building activity, +12 percent/yr, both residential and non-residential.
In NSW, construction work consolidated over the past year, with a Q1 outcome of -1.7 percent/qtr, +0.8 percent/yr. While infrastructure work moved higher, +6.6 percent/yr, building work eased, -2.2 percent/yr, led lower by a pull-back in commercial work.
In Qld, construction work has stabilised, printing at -1.9 percent/qtr, -1.0 percent/yr in Q1. This follows falls of 22 percent in 2014 and 24 percent in 2015 associated with the mining investment downturn. Over the past year, infrastructure work rebounded by almost 14 percent.
In WA, construction work fell by -4.8 percent/qtr, -37.4 percent/yr in Q1.
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<img src="https://www.urban.com.au/images/2017/05/26/v3.png" width="700" height="462">
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.linkedin.com/in/andrew-hanlan-4302223/" target="_blank">here</a>. 
 
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Construction work stabilised over the past half year: Andrew Hanlan

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The latest state economic handbook by National Australia Bank predicts the end of the mining investment downswing may be nearing in mining states Western Australia and Queensland.
Riki Polygenis, NAB Head of Australian economics said the report said some indicators are stabilising.
“What we can see in today’s update is that Victoria and NSW will continue to benefit from buoyant population growth, strong services activity and infrastructure expenditure," she said.
"Non-mining business investment in these states has also started to strengthen and will gradually pick up speed. 
“Mining states like Western Australia and Queensland are currently receiving an income boost from higher bulk commodity prices, which are flowing through to corporate profits and state government revenue, although the flow on effects to investment and employment are expected to be limited given the temporary nature of the commodity price surge.
"Looking forward, Victoria and New South Wales will remain ahead of other states, while Queensland will experience the strongest growth overall thanks to resource exports. 
State breakout
NSW
Solid consumption growth, combined with private and public investment has helped NSW retain its mantle as the fastest growing state in the country. Final demand growth rose 4.1 percent in the last quarter of 2016, well above the national aggregate.
“While some of the timely economic partials are now painting a mixed picture, we remain generally optimistic about NSW’s prospects,’’ said Ms Polygenis.
“Overall, Gross State Product (GSP) growth is expected to moderate to around 23⁄4 percent in 2016-17 and then pick up slightly to 2.9 percent in 2017-18 (from 31⁄2 percent in 2015-16), but remain a standout (together with Victoria) in terms of state final demand.”
“We expect the all-important housing market to shift down a gear going forward, as the residential construction boom approaches its peak and price gains slow – reflecting greater supply, credit constraints and affordability constraints,’’ said Ms Polygenis.
“While a severe property price correction is not expected, growth in Sydney housing prices is expected to slow after four consecutive years of double digit growth.’’
VIC
Victoria will also remain a standout across the states despite some moderation expected, with growth neck and neck with NSW. Employment and population growth (particularly from overseas and interstate migration) is expected to continue, while infrastructure spending, services activity and exports and a gradually recovery in non-mining investment will be key pillars of growth. Residential building approvals have peaked, and dwelling construction is not expected to add as significantly to growth going forward.
“House price growth in Victoria is also forecast to ease through 2017, while apartment prices are expected to decline modestly as extra supply comes on line. However current strong momentum in the housing market, and measures to reduce stamp-duty for some first home buyers do suggest some upside risk,” said Ms Polygenis.
TAS
The Tasmanian economy has slowed into 2016-17 despite strength in tourism, agricultural and fisheries industries, although should improve moderately into 2017-18.
“A depreciating AUD would also be supportive of export-oriented industries in Tasmania. However an ageing population, low levels of educational attainment and a concentrated industry structure remain headwinds,” said Ms Polygenis
ACT
The ACT economy continues to improve post the earlier Federal public sector job cuts and has recorded stronger state final demand growth over the past two years.
“We expect the ACT economy to continue to recover, with higher population growth, stronger household consumption and increased dwelling investment underpinning its GSP growth. However with Federal Budget repair still very much on the radar, downside risks remain,’’ said Ms Polygenis.
We expect GSP (Gross State Product) growth to pick up modestly to 21⁄4 percent and 21⁄2 per cent in 2016-17 and 2017-18. The ACT unemployment rate is expected to remain below the national average at 4.3 percent in 2016-17 and 2017-18.
NT
Since construction on the Ichthys LNG terminal peaked last year, project employment has begun to slide, with significant knock-on effects for the NT economy.
Business investment is currently strong, but will slow down sharply once the Icthys LNG project is complete, while volatility in the housing market makes 2017 tricky to predict.
“Tourism statistics for the NT continue to present mixed picture, although we note that domestic tourism is booming with interstate visitors up 22 percent to 361,000 in the year ended September 2016,” said Ms Polygenis.
SA
In 2015-16, SA net exports (in real terms) grew significantly on the back of a depreciated AUD, with services exports rising by a record rate of 12 eprcent in the year, while merchandise exports expanded by the fastest rate since 2010-11 at 11 percent.
“South Australia will experience moderate growth, with infrastructure spending and shipbuilding to provide some offset to the impact of auto manufacturing closures this year. The state has some long-term challenges, including an ageing population and negative interstate migration, but employment and consumer spending are holding up for now,” said Ms Polygenis.
QLD
“The Queensland economy’s transition post the mining boom continues to gain traction and the state will experience the strongest rate of economic growth in 2016-17 owing to a surge in LNG exports and strength in tourism and education,” said Ms Polygenis.
However, business and labour market conditions remain subdued as the state economy continues to transition post the mining investment boom.
Regional Queensland (especially north Queensland), faced with variable commodity prices and drought conditions, is still struggling with depressed business activity, subdued house price growth and elevated unemployment.
WA
“Economic indicators are still extremely weak in WA, with the weakness relatively broad-based across the economy as the mining cycle continues to dominate economic trends. However there is some sign of stabilisation in business conditions, indicating a reduced pace of decline. The current surge in iron ore prices is unlikely to spur additional investment or employment, but is having a positive impact on government finances,” said Ms Polygenis.
Overall, we expect very weak real GSP growth in 2016-17 and a moderate rebound in 2017-18 as LNG exports add to growth.
Despite signs that the property market may soon stabilise, property prices are expected to underperform again in 2017, while the unemployment rate expected to stay around current levels before seeing only a gradual improvement. 
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jonathanchancellor-7SQnKwU6yx

End of mining investment downswing may be nearing: NAB

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A number of mining towns are recording ongoing falls in vacancies, signalling that the housing bust in the mining towns is possibly coming to an end, according to SQM Research’s latest newsletter.
Residential vacancies in Karratha, Port Hedland, Mackay and Gladstone are all down compared to his time last year.
<a href="https://www.propertyobserver.com.au/images/2017/02/24/Screen%20Shot%202017-02-24%20at%2010.32.12%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/24/Screen%20Shot%202017-02-24%20at%2010.32.12%20AM.png" alt="">
Reflecting its high vacancy rate, Darwin continues to record big falls in asking rents, with units falling by another 2.5 percent for the month of January (houses down 0.1 percent).
Perth continues to record the largest yearly declines.
However, rents did rise slightly for the month at 1.1 percent for houses and 0.5 percent for units.
Meanwhile, Hobart is the strongest rental market in the nation with rents up by 6.7 percent for houses in January and 11.6 percent for units.
As noted, Hobart also has the lowest vacancy rate of all capital cities at just 0.7 percent.
Brisbane remains a flat rental market with falls in rents being recorded for units in the inner ring of between 2.5 percent to 5 percent declines, against the background of a relatively high vacancy rate of 3.3 percent.
Overall, rents continue to rise at about 2 percent per annum nationwide with some variability reflecting the mixed Australian housing market. 
So far, the feared oversupply for Sydney and Melbourne has not yet eventuated and we are aware of some scaling back of developments, particularly in the Melbourne rental market.
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Mining towns continue to have high vacancies and falling rents: SQM

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GUEST OBSERVER
Growth was considerably weaker in the third quarter of 2016 than was expected, with real GDP falling on the quarter for the first time since Q1 2011. 
However, the fall appears to reflect the coincidence of a number of one-off factors, including a temporary disruption to coal exports and inclement weather affecting construction activity, rather than the beginning of a more significant downturn. Recent numbers for retail sales, business conditions and international trade already suggest a solid pick-up in GDP growth is likely in Q4 2016. 
In addition, there has been a substantial pick-up in coal and iron ore prices recently. Although this rise did not arrive in time to support the Q3 2016 GDP numbers, it should flow through to a significant boost in income growth in Q4 2016 and beyond. Australia’s commodity price index has risen by 20% in AUD terms since Q3 2016. Our estimates suggest that the pick-up in commodity prices should add around 2.0pp to nominal GDP over the coming year.
<a href="https://www.propertyobserver.com.au/images/2017/01/09/Screen%20Shot%202017-01-09%20at%2012.39.47%20PM.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/01/09/Screen%20Shot%202017-01-09%20at%2012.39.47%20PM.png" alt="">
Overall, the strong rise in commodity prices and end of the mining investment decline are changing the local growth story. For the past five years, the Australian economic story has been about rebalancing growth away from being driven by mining investment at the end of the commodity prices ‘super-cycle’. Lower interest rates and the fall in the AUD over recent years have supported a housing boom and rising services exports, which have rebalanced growth. The mining sector is now stabilising and is no longer set to drag on growth and incomes. 
Given the recent downside surprise to GDP growth, we now expect growth of 2.4 percent in 2016 (previously 2.9 percent), rising to 2.8 percent in 2017 (previously 2.9 percent) and 3.2 percent in 2018 (unchanged). 
Although local inflation is currently below the RBA’s 2-3 percent target and wages growth is sluggish, we expect both to rise gradually through 2017. Supporting this, we see the rise in commodity prices as likely to lift national incomes, tax revenues, corporate profits and wages growth. Non-mining business investment is also already showing signs of rising modestly and, although the labour market has spare capacity, it is worth keeping in mind that job creation tends to lag the cycle, rather than lead it. We retain our view that the RBA is likely to keep its cash rate on hold at 1.50 percent through 2017 and have recently shifted our call for 2018, with 50bp of RBA hikes now pencilled in. 
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Policy issues 
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The Australian government has passed legislation to re-instate the Australian Building and Construction Commission, which is an indication that there has been some progress on labour market reform. This legislation was difficult to pass and was the trigger for the July 2016 ‘double dissolution’ Federal election. 
The government has also passed a number of fiscal reform measures, including the ‘backpacker tax’, with the measures set to save the government AUD21bn over the next four years. Tax revenues are also expected to get a boost from rising commodity prices. Offsetting these measures, slower-than-expected wages growth has weighed on the personal income tax take. The government’s focus on fiscal reform has become more pressing since one of the major rating agencies, Standard &amp; Poor’s, put the Australian government on ‘negative outlook’ for its triple-A sovereign rating in July 2016. 
Financial stability concerns remain an ongoing issue for the central bank, given a further recent pick-up in housing prices and a modest revival in investment activity in Australia’s housing market. The pick-up in housing market activity has occurred despite local prudential settings having been tightened over the past two years. The pick-up in investor credit growth adds to the case for the RBA to keep its cash rate unchanged over the next few quarters. 
Risks 
We view the risks to growth as evenly balanced. On the upside, the lift in commodity prices and boost to incomes could provide more support for growth than we currently expect. On the downside, slower-than-expected growth in China could weaken demand for Australian commodities or services exports. The risks to our inflation outlook are tilted to the downside. Changing patterns of employment could put more persistent downside pressure on wage growth, and thus local underlying inflation, than we have currently factored into our central case. 
<a href="https://www.propertyobserver.com.au/images/2017/01/09/Screen%20Shot%202017-01-09%20at%2012.41.15%20PM.png" target="_blank">Click to enlarge</a>
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 <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. 
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Commodity price rise to boost incomes: HSBC'S Paul Bloxham

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<img src="https://counter.theconversation.edu.au/content/67942/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
It wouldn’t be too unkind to suggest that Western Australia is not considered as the national benchmark of sophisticated public policy.
Indeed, the state has recently attracted much attention – and derision – for the way its policy making elite squandered the wealth generated by the resources boom.
True, we now have more sports facilities than you can poke a stick at, not to mention a major makeover of the city foreshore – albeit noticeably empty of the promised high profile developments that were supposed to succumb to its irresistible allure. But you can’t accuse the Barnett government of not having big ideas. 
Funding them has been another issue. Quite how WA managed to emerge from the once in a lifetime mining boom with an estimated debt burden of $40 billion by 2020 and a projected budget deficit of $4 billion is one of the West’s great mysteries. Or not, if you bother to look at what happened to all the <a href="https://www.academia.edu/27612380/Booms_busts_and_parochialism_Western_Australias_implacable_political_geography">riches the boom generated</a>.
WA Nationals leader Brendon Grylls certainly has, and that’s why he’s launched a rather lonely campaign to make the miners pay more tax. Even though this fiscal horse has long since bolted, he’s got a point. Not only did the big miners pay a measly 25 cents per tonne royalty to the WA government – a rate fixed in the early 1960s – but the WA government actually subsidised the miners throughout the boom.
According to the Australia Institute, taxation revenue across Australia in 2013-14 (before the collapse in prices) only accounted for about 5% of government revenues. In WA this situation was made worse by a subsidy regime that gifted the big miners some $6 billion at the height of the boom. No surprise that Grylls is on the warpath given his signature ‘Royalties for Regions’ program has been an early casualty of a more austere era.
Was this wasted opportunity and fiscal failure inevitable? Absolutely not. Not only have we been here before and should have learned similar lessons from the boom and inevitable bust of the 1970s, but other countries have been much cleverer in the way they have handled their good fortune.
Every policymaker in Australia should be made to read Paul Cleary’s excellent analysis of the way Norway handled its boom: <a href="https://www.theaustralian.com.au/arts/review/norway-resources-the-good-oil-on-a-trillion-dollar-miracle/news-story/02c157d020b2e26aa506323ae07803d4">Trillion Dollar Baby</a>. The experience could hardly be more different and the comparison would be laughable were it not for the fact that future generations will come to rue the folly and myopia of our current leaders.
The key lesson that emerges from Cleary’s analysis is that even small states can have a big say in determining what happens to the windfall revenues booms generate - but only if they understand what is happening at present and have a plan for the long term future of the country.
Norway had both. First, they had a capable government and skilled bureaucrats (yes, they are valuable and important) who quickly realised that Norway’s oil boom had to be managed for the benefit of Norway, not the multinational oil companies. This meant not being intimidated by powerful multinational corporations and recognising the inherent bargaining strength of national governments. You can only exploit resources where they are. Host governments can - and should - determine how they are developed.
In contrast to successive state and federal governments in Australia, this is precisely what the Norwegians did. First, they compelled the oil majors to build their required oil platforms in Norway, developing a world class manufacturing capability in the process. Secondly, and in another unflattering and revealing contrast to Australia, they ensured 90% of the windfall revenues derived from the oil boom in Norway remained there. 
Norway’s “problem”, unlike ours, has been what to do with the astounding amounts of wealth generated as a direct consequence of its activist and enlightened policies. A third critical innovation was establishing a sovereign wealth fund.
Sovereign wealth funds serve two purposes. First, they put aside the windfall revenues of today for future generations – a possibility our own leaders seem incapable of contemplating given their truncated political horizons. Second, by investing most of the wealth overseas, they put downward pressure on the domestic currency, allowing other domestic industries to survive.
At a time when we are collectively waving farewell to much of the manufacturing sector, this is another sobering lesson – especially for the young who will not benefit from all that squandered wealth and may wonder where they will actually work. 
The current debate – such as it is – in the West will likely go nowhere. Kevin Rudd’s demise is a reminder of what happens to politicians in this country who dare to take on the miners. The WA Labor Party is unlikely to be any braver or far-sighted on these issues than its federal counterparts. In short, don’t look to the West for a revolution in public policy. But if you want somewhere spacious and well equipped to kick a footie around.
Mark Beeson is professor of International Politics, University of Western Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/mark-beeson-60300" target="_blank">here</a>.
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