Professor explains how Premier's Adani veto hurts investors
PREMIER Annastacia Palaszczuk's decision to veto state support for Adani's $1 billion NAIF loan application will have a negative impact with future investors, an economist says.
CQUniversity regional economics professor John Rolfe (pictured) yesterday said Ms Palaszczuk's position, announced early in the recent election campaign, was a deliberate move "to target urban voters".
"The veto on state support was a sharp reminder that governments can change rules suddenly, which is always a negative for investors," Professor Rolfe said.
"The extent of the fallout will depend a lot on whether attention continues to be focused only on Adani, or resource developments more generally."
Professor Rolfe yesterday took time out of his busy schedule to answer a series of Morning Bulletin questions about the election and its implications for Central Queensland.
Morning Bulletin: Professor, thank you for your time... what are your thoughts on the election result and a returned Palaszczuk Government, now with a majority?
Professor Rolfe: The election brought out the differences between southeast Queensland and the regional areas in terms of economic drivers and community attitudes.
Voting patterns are quite fractured, indicating that there are a variety of issues important to different groups of voters.
However, support for the minor parties did not really shake the dominance of the two major parties.
What is more noticeable about this election outcome is that the make up of the Labor Government in terms of seats and cabinet positions is much more focused on southeast Queensland than we have seen before from either side of government.
Whether this is a once-off or a longer-term trend is hard to say, but it does create some potential challenges for government and the regional areas.
Morning Bulletin: What were your thoughts on the Premier's position to veto state support for Adani's NAIF loan? Are there consequences of this for our region?
Professor Rolfe: I view the change a deliberate choice to target the urban voters.
It illustrated how difficult it has been for Labor to appeal to inner-city demands about issues such as coalmines and renewable energy, while at the same time pursuing growth policies in regional areas.
The consequences are that it increases the challenges for the project and reduces the certainty that it will go ahead.
Morning Bulletin: Do you think the mining sector has confidence in the government and will major infrastructure investments still go ahead?
Professor Rolfe: The veto on state support was a sharp reminder that governments can change rules suddenly, which is always a negative for investors.
The extent of the fallout will depend a lot on whether attention continues to be focused only on Adani, or resource developments more generally.
The green lobby has focused almost exclusively on Adani, but this is just the largest of the potential projects around.
There are other potential projects in the Galilee Basin, as well as smaller potential expansions of existing mines in the Bowen Basin.
Prices for both thermal and coking coal have been quite strong in 2017, especially over the last four months, which will help to generate some interest in other expansions.
Morning Bulletin: Do you think the regions are getting a fair go from the major parties?
Professor Rolfe: The attention of the political parties on southeast Queensland reflects the reality that the majority of voters live there and the region is the largest economic zone in the state.
The focus there is understandable, even if it is not good news to the regions.
Morning Bulletin: What is the future for our region if the focus is on the southeast corner?
Professor Rolfe: There is still a bright future for regional areas.
The key focus should be on developments in the primary sectors such as agriculture, where improvements in technology and management on the back of current higher incomes should help to increase production in the future.
There should be opportunities for more niche developments in tourism and agriculture, and the mining sector will continue to be a major driver for the region.
Morning Bulletin: How do you see the Rockhampton region's economic year ahead?
Professor Rolfe: I think the likely scenario is a holding pattern with some low-level growth, not too dissimilar from Rockhampton's historic patterns.
Our big sectors of mining and agriculture should have some growth on the current year, although these will not flow through to major job increases.
However, they should put a floor in the economy.
Much of the services sector is underpinned by the existing population, so remains quite stable, and there is some potential growth in areas such as education and tourism.
If Adani goes ahead, that will start to stimulate some additional growth pressures.
Morning Bulletin: Thank you professor for your time. Have a great Christmas.