Commerce Queensland Business Update

Coal, recreational travel services to overseas tourists and beef were Queensland's largest export earners in 2006-07.

Services to overseas tourists increased in value by three per cent to $3 billion while beef exports rose three per cent in value to $2.9 billion, despite the drought. Coal exports earned Queensland $13 billion, representing a drop of ten per cent over the previous financial year. The top export markets were (in order) Japan, the Republic of Korea, India, China and Taiwan.

Queensland's exports rose two per cent to $43.2 billion (volumes up two per cent, prices down 0.3 per cent), with Queensland becoming Australia’s third largest exporting State/Territory with 20 per cent of Australia’s exports. In addition to travel and beef, key export successes in 2006-07 included:

Commerce Queensland is currently preparing a draft response to the Queensland Competition Authority's announcement of another proposed increase to the Benchmark Energy Retail Cost Index for 2008/09. The announcement is only a draft with final submissions closing 29 February 2008.

The draft increase is 7.01 per cent on top of the 11.3 per cent increase last year. This is a significant increase in view of rising interest rates, fuel prices and a softening in business conditions. However, the rules for developing the Index are locked in - the greatest component of the increase is 4.4 per cent for network costs which allows Energex and Ergon to expand and maintain the network and 2.6 per cent for energy - drought and the lack of water being the major contributor.

Commerce Queensland's response will focus on the cessation of water restriction arrangements for Tarong North and Swanbank power stations and its resultant impact on the energy component of the increase and the need for a competitiveness of Queensland electricity prices.

The Commerce Queensland St George Pulse Survey of Business Conditions for the December Quarter 2007 has been released with results indicating:

A significant deterioration in business confidence as measured by the 12 month outlook for both the Queensland and National Economies;
Skills shortages as the number one constraint on business growth at present with interest rates now also featuring prominently; and
Payroll Tax as the number one priority for a reduction in business taxes over the next three years.

Commerce Queensland has lodged its submission for the 2008-2009 State Budget and will discuss the State Budget with Treasury on 26 February.

Commerce Queensland has also prepared a supplementary submission following the Pulse Survey for the December Quarter 2007. The Pulse Survey results highlighted payroll tax, insurance duty, mortgage duty and motor vehicle registration charges are the priority areas for reform. Interestingly payroll tax is a priority for not just medium and large businesses but for micro and small businesses as well. This is primarily attributed to their desire to grow and that the tax impedes economic growth and is a tax on employment.

The survey results conclude that tax savings would be used to the benefit of the Queensland economy by being invested in plant and equipment, buildings, increased employment and training. The results confirm that carefully crafted business tax reductions do not reduce Government income as they generate significant improvement in economic activity further stimulating taxation receipts.

Commerce Queensland supports statements made by the Treasurer that the Queensland public service needs to become more streamlined.

Commerce Queensland has urged the State Government to embrace the need for a small, flexible, highly skilled public sector with the knowledge and capacity to work cooperatively and engage with the business community. Strong efforts must be made to ensure the growth in departmental operating expenses does not rise unchecked. Recent public sector employment trends are of concern and the current size of the public sector is not sustainable and has placed unnecessary pressure on private sector wages and the ability to attract skilled labour. Indeed the Queensland State Service has grown by 15 per cent since 2000 and on a number of persons per State Government Employee basis is clearly over governed compared to New South Wales, Victoria and the National Average.

The Queensland Water Commission (QWC) has released its Drought Exit Strategy for the easing of water restrictions in South East Queensland. The new Drought Exit Strategy proposes a new restriction regime, with four new consumption targets. The Commission's analysis indicates that SEQ is not yet in a position to undertake general relaxation of restrictions with the level of the Wivenhoe, Somerset and North Pine Dams below 40 per cent capacity.

The Commission proposes that, should dam levels reach 40 per cent, the Extreme Level 6 restrictions could be reduced to High Level Restrictions, which provide small, strictly limited improvements in outdoor watering restrictions and a new Target consumption – Target 170.

Commerce Queensland has written to the QWC clarifying what business (non WEMP) responsibilities are under 'extreme', 'high', 'medium' and 'permanent' restrictions. Advice received confirms that the WEMP program is permanently in effect and that monthly reporting requirements and related activity will not change. Level 6 restrictions (what QWC are now calling extreme level) for businesses still apply. When Dam Levels reach 40 per cent, South East Queensland will move to High Level Restrictions with business able to:

Use a hand-held hose for 30 minutes each week at 4:00pm on either Saturday or Sunday, depending on their street number - this can be used to wash cars.
Bucket water their gardens on any day between the hours of 4:00pm and 8:00am
Buckets can be used for cleaning at any time
Businesses that are required to be licensed and operate under guidelines must still do so.
Retrofitting will still be required.
The wet afternoon on the weekend of March 1 and 2 applies to businesses, industry and residents.

Commerce Queensland has forwarded a letter to Minister Pitt urgently requesting additional funding for the Business Water Efficiency Program (BWEP) including temporarily accessing the $15 million set aside for businesses in regional Queensland.

Commerce Queensland has also met with Minister Warren Pitt’s Office to discuss this issue and has since forwarded additional correspondence to the Minister confirming that concerns relating to the over-subscription of the BWEP have proven to be correct and that the $40 million package is now fully allocated. Approximately 400 applications worth in excess of $20 million remain pending.

Commerce Queensland has separately written to the Queensland Water Commission highlighting that the lack of funding has implications for the time-frame for delivering water savings provided for under Water Efficiency Management Plans (WEMPs).

The Australian Government is developing the National Greenhouse and Energy Reporting System (NGERS) as a single, streamlined framework for the mandatory reporting of greenhouse gas emissions and energy consumption and production by Australian corporations. The system aims to meet the current and prospective needs of government, business and the public, and will affect approximately 70 per cent of all businesses.

The legislative framework for NGERS is established by the National Greenhouse and Energy Reporting Act 2007, which was passed by the Australian Parliament and came into effect in September 2007. The Act makes it mandatory for Australian corporations to report annually on greenhouse gas emissions, energy production and energy consumption at certain thresholds.

Commerce Queensland has been working to inform businesses of the Act's mandatory requirements. For further information contact Nick Behrens on (07) 3842 2279 or email nbehrens@commerceqld.com.au.

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