NSW's economy regains lead over Victoria

NSW's economy regains lead over Victoria

Peter Martin, James Robertson

NSW residents spent 18 per cent more on electricity and gas during 2012-13, almost 4 per cent more on food, and less at hotels, cafes and restaurants.

The figures emerge from the annual state accounts prepared by the Australian Bureau of Statistics, which show NSW returning to the lead over Victoria, where the economy has outperformed NSW for most of the past five years.

The Northern Territory has Australia's fastest growing economy, expanding by 5.6 per cent during 2012-13. The other leaders are Western Australia (5.1 per cent) Queensland (3.6 per cent) and the ACT (2.7 per cent). NSW comes in at 1.8 per cent, Victoria 1.6 per cent and South Australia 1.3 per cent. Tasmania is in recession. Its economy contracted 0.6 per cent during 2012-13, the first time any Australian economy has contracted during a financial year since 2000-2001.

But the Victorian figure is far worse than it looks.

Although its economy grew 1.6 per cent, its population grew by about 1.8 per cent, meaning its production per capita shrank 0.2 per cent. It is the only state outside of Tasmania in which production per head went backwards.

''Victoria specialises in those sectors most hurt by the high dollar,'' Bank of America Merrill Lynch chief economist Saul Eslake said. ''It is strong in manufacturing, and it is strong in agriculture. NSW on the other hand has some mining and NSW has the strongest government it has had in years.

''Victoria hasn't had a strong government with a clear majority since 2010. Brumby, Bracks and Kennett provided a decade of strong leadership. Businesses knew where they stood. Back then NSW was a political basket case. It isn't now.''

NSW is clearly ahead of Victoria and gaining in the bureau's best measure of purchasing power - gross household disposable income per capita, a measure of what is left over after essential expenditures such as rent.

Western Australia leads the Australian states with a gross household disposable income per capita of $51,481, followed by NSW ($44,771), Queensland ($42,446), South Australia ($41,186), Victoria ($40,857) and Tasmania ($38,540).

The outsized 18 per cent increase in spending on electricity in NSW is broadly in line with Treasury modelling.

It expected the carbon price to push up electricity prices by an extra 10 per cent in 2012-13. The previous year spending on electricity climbed around 8 per cent.

ABS figures released this week showed Melbourne will have outgrown Sydney by the middle of the century; a crossover that might have been inconceivable in 2000.

''Sydney seemed destined to move even further ahead,'' Glen Searle, associate professor of planning at Queensland University, said. ''It was booming through the 1990s, then it had the Olympic Games.

''But it didn't happen that way.''

Professor Searle and the University of Melbourne's Kevin O'Connor will present a paper on Friday that charts how Sydney's growth slowed in four areas - housing, tourism, airport arrivals and professional jobs.

New housing in Melbourne can be built at two-thirds the cost. Land is more expensive, but taxes and other duties are also $60,000 higher, Professor Searle said. In Sydney, new homes grew by 11.4 per cent, compared with 19 per cent in Melbourne.

Melbourne has steadily eroded Sydney's dominance as a tourism destination. In 2000, fewer than one-third of tourists spent most of their time in Victoria than NSW. Today, it is more than half. Sydney has now copied Melbourne's method of courting visitors: bidding for special events, expanding convention facilities and revitalising bars and laneways.


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