Tasmania Leads Australia’s Economies

Tasmania has held the top spot in CommSec’s State of the States quarterly report for the fifth consecutive quarter, bolstered by population and economic growth, and equipment investment.

The quarterly report ranks the states based on eight key measurable indicators, reflecting the state of the local economies.

The Australian Capital Territory was second, while Western Australia has had a strong quarter, moving from sixth to third place.

CommSec chief economist Craig James said the ACT had continued its best performance in the economic rankings during the past four years.

“Tasmania and the ACT have firmly held their positions at the top of the performance rankings due to above-average population growth in Tasmania and a strong job market in the ACT,” he said.

“As a result, it’s unlikely we’ll see any considerable change at the top of the rankings in the near future.

“The main challenge will come from Western Australia … [its] economy has significant momentum provided by mining and home building.

State of the States rankings

_{^Source: State and Territory Economic Performance Report - April 2021}

1. Tasmania

Tasmania remains on top of the charts after leading three of the eight economic indicators used in the State of the States quarterly report. These were relative economic growth, relative population growth and equipment investment.

Equipment investment in Tasmania was up 27.8 per cent on the decade average. Investment was up 43.5 per cent on the previous year.

2. ACT

The territory is leading on relative economic growth. Economic activity in the ACT in the year to December was 22.1 per cent above its ‘normal’ or decade-average level of output, ahead of Western Australia with output of 19.3 per cent above the ‘normal’ level of output.

The ACT recorded the fastest nominal economic growth, up 5.2 per cent during the year to December, supported by a firm job market.

It was also the strongest performer for retail spending, 19.4 per cent above decade-average levels in the December quarter, ahead of Tasmania and Queensland.

It also topped the relative unemployment measure. Despite the Covid-19 shock, unemployment in the ACT is at 3.4 per cent, 14.8 per cent below the decade average.

3. Western Australia

CommSec chief economist said the robust Western Australian economy could topple Tasmania’s footing at the top, underpinned by strong mining and homebuilding markets.

It also has a strong jobs market with a 4.8 per cent jobless rate, 12.6 per cent below the decade average.

It also experienced strong population growth up 1.24 per cent, second only to Queensland at 1.33 per cent.

4. Victoria

Victoria’s construction rate is 17.5 per cent up on its decade average. It is a shining beacon of economic recovery for the state, which also tops the rankings for housing finance.

The value of home loans in Victoria is up 87.7 per cent on the long-term average.

Victoria eased from equal third place, to fourth in the latest report. It was ranked seventh on relative unemployment and relative population growth.

5. South Australia

South Australia has moved from equal third place to fifth in this quarter’s rankings, despite strong relative population growth.

Dwelling starts were also high—South Australia remained in third place with starts up 15.6 per cent on the decade average.

6. Queensland

While Queensland ranked sixth, Commsec chief economist Craig James said the state could be the dark horse in the near future with strong population growth and housing finance.

“Queensland also has scope to lift its ranking in 2021 due to improvement in the job market, rising in-bound migration and increased domestic tourism demand,” James said.

The state ranked eighth for equipment investment and relative economic growth.

7. New South Wales

Urban Taskforce chief executive Tom Forrest said New South Wales was “lagging behind”, ranking last for relative economic growth across the country.

“The NSW government oversaw a slowdown of planning approvals well before Covid-19,” he said.

“The planning system ground to a halt at the end of 2019 and stayed there in 2020 … that is bad news for NSW.

“The property development and construction industry represents 10 per cent of the NSW economy.”

New South Wales also ranked last for annual population growth, the slowest in more than 25 years.

8. Northern Territory

Northern Territory ranked second on equipment investment and sixth on relative economic growth, but continued to lag behind the rest of the country on all other six indicators according to CommSec chief economist Craig James.

“Equipment investment in the Northern Territory rose by 53.8 per cent in the quarter to 5.5-year highs,” he said.