Brisbane Economic Annual by Invest Brisbane

brisbane economic annual 2008

Cover: Aquativity, Southbank Parklands – celebrating Brisbane’s relationship with it’s river

contents 05 Introduction

John Aitken, Chief Executive, Brisbane Marketing

10 Economic E vents affecting brisbane in 2008 Mark Ludlow, Australian Financial Review

14 Economic & Demogr aphic Indicators â&#x20AC;&#x201C; 2008 19 Economistâ&#x20AC;&#x2122;s Corner

Tim Harcourt, Chief Economist, Australia Trade Commission

20 Ma jor Infr a structure Projects in South E a st Queensl and

Foreword by Graham Matthew, Partner and Head of Infrastructure & Projects Group, KPMG

28 Knowledge, L abour & Talent

Foreword by Professor Peter Andrews, Chief Scientist for Queensland

34 Commercial & Industrial Propert y

Foreword by Paul Day, Head of Research, Savills

40 Str ategic Precincts

Foreword by Dr Terry Cutler, Chair of National Innovation System Review

46 Commercial L andscape

Foreword by Michael Klug, Partner in Charge, Clayton Utz

52 In Focus

Daniel Havas, Director, Invest Brisbane

brisbane economic annual

sponsor board

brisbane economic annual

introduction FORE WORD BY JOHN AITKEN Brisbane is transformed. We are vibrant and confident – truly a new world city. The centre of the fastest-growing region in Australia, Brisbane is the engine room of Queensland’s economy. With unparalleled economic and population growth during 2008, Brisbane was fuelled by quality business investment and the largest public infrastructure spending programme in Australia’s history. Economic uncertainty grips the world, and Brisbane will not escape its effects – but Brisbane’s broad economic base and diverse sector strengths will provide a stable economic foundation. More importantly, Brisbane’s sense of optimism and creative spirit will provide fresh business perspectives and the platform to consolidate and reinvigorate. Never before has there been so much interest and awareness in the Brisbane economy. Despite this, there is no official “Annual” in the market that monitors the health of our city’s economy. The Brisbane Economic Annual provides a unique overview of the city’s business climate for 2008, identifying forces that drive growth and recognising areas of challenge. Crucially, it provides the latest key economic indicators and independent expert opinion. It gives me great pleasure to present the inaugural Brisbane Economic Annual. This is a collaborative industry initiative led by Invest Brisbane, Brisbane Marketing’s dedicated investment promotion agency, together with partners Clayton Utz, KPMG, Alba Capital Partners, Brisbane Airport Corporation and the Port of Brisbane Corporation. As Brisbane and Queensland honour our 150th year, we hope the Annual will celebrate our successes and promote further discussion on the challenges ahead for Brisbane’s economy. Brisbane Marketing and Invest Brisbane look forward to continuing their valued relationship with the Lord Mayor, Brisbane City Council and our corporate partners. Together, we will work towards achieving our collective vision of Brisbane – Australia’s new world city. John Aitken Chief Executive, Brisbane Marketing

brisbane economic annual

economic history

1897

Electric tramways introduced.

1897

Electric tramways introduced.

1859

Queensland became a separate colony from New South Wales, maintaining its own local government.

1838

First free settlers arrived.

1823

John Oxley found the river, naming it after the New South Wales Governor, MajorGeneral Sir Thomas Brisbane.

BRISBANE ECONOMIC ANNUAL

1875

1848

Brisbane School of Arts (now Queensland University of Technology) was established for technical and teacher education in Queensland.

1874

Victoria Bridge, linking the CBD with South Brisbane, opened as a toll bridge.

The Brisbane Exhibition Ground (known as the RNA Showgrounds) established.

1930

The nationâ&#x20AC;&#x2122;s only City Hall opened, at the time was the cityâ&#x20AC;&#x2122;s tallest building, designed by Architects Hall and Prentice.

1893

Flood destroyed the Victoria Bridge and ferries were used to cross the river until the bridge was rebuilt four years later.

1969

Closure of the electric tramway system.

1941

1909

World War II Brisbane became headquarters for General Douglas Macarthur and United States troops, playing a key role in the Allied war effort in the Pacific region.

The University of Queensland was founded.

1945

1902

Brisbane officially declared a city.

1925

Brisbane City Council established, replacing 20 local authorities and became the first local authority in Australia to establish a town planning department.

1940

Story Bridge, linking Kangaroo Point and Fortitude Valley opened.

One of the largest medical research institutes in the southern hemisphere, The Queensland Institute of Medical Research (QIMR) established.

1974

Floods seriously damaged many CBD buildings and the City Botanic Gardens.

BRISBANE ECONOMIC ANNUAL

1998

Smart State Strategy released to focus on broadening the economy and create new industries and making traditional industries smarter.

1976

Riverside Expressway and first sections of the South East Freeway completed.

1988

Southbank Parklands developed for Brisbane to host World Expo and construction was completed at the new Brisbane Airport.

1996

CityCat ferry service began and Boeing is attracted to locate to their Australian headquarters in Brisbane, which today employs about 2000 staff in the State, primarily in support of high technology aerospace and communications systems for defence and commercial customers.

1976

Griffith University opens, offering the nationâ&#x20AC;&#x2122;s first environmental science and Asian studies degrees.

1982

Brisbane hosted the XXII Commonwealth Games.

1982

The Queen Street Mall opened.

1999

1986

Tennyson and Bulimba coal-fired power station ceased to operate, whilst the Gateway Bridge and arterial road system opened.

BRISBANE ECONOMIC ANNUAL

Australia Trade Coast initiated by, Brisbane City Council, Port of Brisbane , BAC and Queensland Government.

2004

The biggest urban road project proposed in Australia, Brisbane City Councilâ&#x20AC;&#x2122;s TransApex is the long-term plan to improve cross-city travel allowing traffic to bypass the CBD.

2002

Inner City Bypass opened.

2001

Airtrain is launched to service Brisbane CBD and the Domestic and International Airport Terminals.

2005

Qantas opens $100m major maintenance facility.

2007

Federal government granted approval for the construction of a $1 billion runway duplication at Brisbane Airport.

2006

2003

Emirates Airlines commences services through Brisbane.

State Government announce The South East Queensland Infrastructure Plan - a response to manage substantial population growth with a $A107 billion investment plan for infrastructure over the next 20 years. Dam levels reach all time low and new restrictions are enforced. New State Library and Queensland Gallery of Modern Art opened. A $340m Expansion of the International Terminal commences at Brisbane Airport.

2008

Brisbane reaches population milestone of 1,000,000 residents.

2000

Virgin Blue Airlines officially launch services with two aircraft initially offering seven return flights a day between Brisbane and Sydney.

BRISBANE ECONOMIC ANNUAL

economic events affecting brisbane in 2008

brisbane economic annual

Mark Ludlow, Austr alian Financial Re vie w ( AFR) Australia may have been unable to avoid the fall-out from the global financial crisis in 2008, but Brisbane, to a certain extent, was insulated from the full ravages of the worst economic meltdown in decades. The Queensland economy which along with the other resource-rich state Western Australia has been driving the national economy for the past five years may be slowing for the remainder of 2008/09, but it is still streets ahead of its southern rivals. Based on the “crane count’’ – the economic barometer favoured by former Nationals premier Sir Joh Bjelke-Petersen in the 1970s and 1980s – Brisbane is still imbued with more optimism than Sydney and Melbourne about the year ahead. There may be a few less cranes on the horizon as you approach Brisbane’s CBD than in previous years, but there is enough economic activity to give the city a buzz that’s missing from the southern capitals, especially Sydney which is well and truly in the economic doldrums. Although the global financial crisis may have irrevocably changed the economic landscape when it arrived on our shores in September, the focus at the beginning of 2008 was on the newly-elected Rudd government, in particular the Queensland mafia of Prime Minister Kevin Rudd and Treasurer Wayne Swan. Along with Queensland Premier Anna Bligh, a close friend of Rudd, there was a lot of attention on the axis of political power shifting north. Bligh, who is facing an election in March 2009, will be hoping the home state connections will help secure a significant slice of the $20 billion Building Australia fund to help bring forward key infrastructure projects in Brisbane and keep the city’s economy ticking along. The growing economic clout of Queensland, especially the state’s south-east corner, was also reaffirmed last year as it recorded economic growth of 5.1 per cent for 2007/08 – the 13th consecutive year it has been above the national average.

brisbane economic annual

Although partly fuelled by the resources boom in Central Queensland, the general economic strength of Brisbane has provided the platform for the state’s strong economic performance. The state’s unemployment rate of 3.7 per cent, employment growth of 3.7 per cent and population growth of 2.3 per cent for last financial year also outperformed all states except Western Australia. Weak investment returns from the Queensland Investment Corporation may have ended the state’s dream run of multi-billion dollar surpluses in 2007/08, but the fundamentals of the state’s economy were still strong. The long-term Labor government has eased its push to lure big companies to move their headquarters from Sydney or Melbourne to Brisbane which, if anything, confirms the city’s status as the home of small and medium-sized business. Although Australia’s largest companies have regional offices in Brisbane, small and medium-sized businesses form the backbone of Brisbane’s economy. The dramatic population and economic growth that characterised the last decade continued in 2008. Over the past 10 years, Brisbane workers have also been able to close the traditional salary gap with Sydney and Melbourne. The 2006 Census showed the median weekly household income for the Greater Brisbane region increased by 74 per cent from $531 to $928 – partly in response to rising cost of living and higher property prices. In June, Queensland Treasurer Andrew Fraser delivered his first budget which gave a relatively up-beat assessment for the Sunshine State in 2008/09, courtesy of a surge in coal royalties and solid property market. But when the full extent of the fall-out from the global financial crisis hit home in the final quarter of 2008, the economic outlook for the remainder of 2008/09 was more subdued. In the mid-year economic and fiscal review in December, Fraser slashed economic growth forecasts from 4.25 per cent to 3 per cent – a big cut but still above the national average of 2 per cent, as well as above NSW (1.25 per cent) and Victoria (1.5 per cent). Employment growth forecasts were whittled back from 2.5 to 2.25 per cent, while the projected unemployment rate crept up from 3.75 per cent to 4.25 per cent. The forecast budget surplus of $809 million was cut to $54 million for 2008/09 with predicted deficits for the next three years. The decision to hike land taxes and motor vehicle registration was not popular but the Bligh government says it wanted to protect front-line services such as health and education as well as the roll-out of the government’s ambitious infrastructure plan. Although the major economic indicators for Queensland were scaled back for 2009, the state and Brisbane remain well-placed to cope with the challenges ahead. Fraser remains up-beat about Queensland’s prospects despite the slowdown and some mining companies laying off staff. “There is no question

brisbane economic annual

the one place to be in the world right now is Australia and within Australia the place to be is Queensland,’’ he says. “That doesn’t for one second distract from the fact that we, like every other advanced economy around the world, are going to feel massively the effects of what’s occurring.’’ As Citigroup’s co-head economic and market analysis Stephen Halmarick told a business forum in Brisbane last year while there might not technically be a recession in 2009 – defined by two quarters of negative growth – it will still feel like one. In a bid to ensure the economy keeps ticking along in Brisbane, the Bligh government reaffirmed its commitment to the roll-out of its $107 billion infrastructure plan, including the $17 billion capital works program for 2008/09. Premier Anna Bligh says the fact the economic slowdown – which has already seen lay-offs in the property and construction market in Brisbane – may claim some private sector projects, it was imperative the government did not delay its ambitious infrastructure projects. “I don’t want to see a single project in the private sector delayed but you have to face reality and that’s why economic activity is so critical at this point,’’ says Bligh. “As we see the private sector contract their level of activity it’s more important than ever the government keeps its pedal to the metal in infrastructure.’’ The drive from Brisbane Airport to the city reveals the crane count as an effective measure of economic activity. The $1.8 billion Gateway Bridge duplication is well and truly starting to take shape and is on track for completion by mid-2010. The first of the city’s major tunnel projects, Brisbane City Council’s $3 billion North-South Bypass Tunnel, linking Woolloongabba in Brisbane’s south to Bowen Hills just north of the CBD, was originally scheduled to open in October 2010. But work on the tunnel, named Clem7 in honour of Brisbane’s long-serving Lord Mayor Clem Jones, has progressed so well the 4.8 kilometre toll road could be finished by Christmas 2009.

2008 was the first time Federal Government engaged in direct dialogue with a local government (Brisbane City Council) about infrastructure projects.

Queensland recorded economic growth of 5.1 per cent in 2007/08 – the 13th consecutive year above the national average.

The second tunnel, the $4.8 billion Airport Link, which includes the $3.4 billion toll road, the $592 million Northern Busway and the $326 million arterial flyover at Brisbane Airport, will also be a public-private partnership. The Leighton Holdings-led consortium (Macquarie Capital Group, John Holland and Thiess) will complete the project by 2012. Other major infrastructure projects in Brisbane either under construction or in the pipeline including the new $1 billion Queensland Children’s Hospital, $130 million for the 13-kilometre Darra to Springfield rail line and $100 million to be invested in the Port of Brisbane to construct new berths and terminals and upgrade existing facilities. Brisbane City Council has already announced a major overhaul of its road network as its addresses the city’s traffic congestion. Strong population growth forecast to remain at 2.25 per cent, well above the national average of 1.5 per cent, will also continue to fuel economic activity in the Queensland capital. In fact, Bligh believes the economic slump in southern states, especially in NSW, could create a new surge of interstate residents heading north in search of a job and warmer climes. While net interstate migration to Queensland may have slowed since the last peak of 32,701 in 2004, it still remains the nation’s population magnet with 23,000 people, or 450 people a week, making the move, mostly to the state’s south-east corner. The interstate migrants moving to South East Queensland are no longer retirees but mostly young families looking for job opportunities as well as a better work-life balance. The economy may have started to slow but for now the jobs are still in Brisbane. The steady stream of new migrants and existing construction work in Brisbane in 2009 should ensure the city remains protected from the worst of the economic slowdown, with speculation things might start looking up in the second half of the year.

Ke y E xecutive Movement Arrivals Greg Clarke, Chief Executive, Mincom Prof Paul Greenfield, The University of Queensland (promoted to VC) Richard Holy, Schenker Roger Manu, General Manager, Technology One Jim Stabback, Group Executive, IT and Operations, Bank of Queensland Brett Fraser, General Manager, Australia Trade Coast Departures David Withers, Boeing Paul McLean, Savills (promoted to Managing Director and relocated to Sydney) Quentin Bryce, Governor of Queensland (Governor General) Wendy McMillan, Australia TradeCoast Ian McClenaughan, General Manager – IBM, Queensland Sir Llew Edwards, Chancellor of University of Queensland Eddy Grooves, ABC

Brisbane Acquisitions • Global food manufacturer, Heinz took ownership of Queensland-based fruit and vegetable processor Golden Circle. • Market-leading livestock genomics company, Catapult Genetics Pty Ltd, was acquired by Pfizer Animal Health to focus on developing and commercializing innovative livestock DNA tests and gene markers to assist global supply chain improve quality and profitability. • To accelerate their software strategy, multinational communication corporation Nokia acquired Brisbane Technology Park based Trolltech, a provider of cross-platform software development frameworks and application platforms. • Panbio Ltd, was acquired by multinational Inverness Medical Innovations, making them a global exporter of their diagnostics for over 30 infectious diseases. • TechnologyOne acquired Australian enterprise content management company Avand Pty Ltd, enabling the company to offer Enterprise Content Management.

brisbane economic annual

economic and demographic indicators - 2008

brisbane economic annual

Recent global economic developments, spawned from the US sub-prime mortgage crisis, have given cause for concern about its ongoing effect on the local economy. Consumer confidence and market sentiments have been challenged, with property markets in Europe and the USA depressed and access to credit dramatically reduced. No country or city economy will remain immune. The world

economy is undergoing fundamental change, said to be one of the most significant since the Industrial Revolution, and will have to evolve to incorporate the modern day challenges of climate change, rising population and food scarcity. In the wash-up of the financial storm, where will Brisbane be positioned and how will Australia interface with the emerging BRIC economies?

brisbane economic annual

Between 2000 and 2006, Brisbane contributed $19.8 billion to the total recorded growth of $147 billion in Australia’s GDP.

“Employment has been Nation-leading growth Brisbane is in a state of rapid change. The growing twice as fast as impacts of globalisation, a growing cosmopolitan population, employment growth a maze of population sinceand2000 infrastructure projects is altering the way Brisbane andtoforecasted continue is presented the world and theto way in which it’s residents and visitors operate. beyond the next two It is widely accepted that a component fuelling Brisbane’s economic activity is population growth. decades. has been growing However, with employment growth double that twicegrowth, as fast as that population of population it is clear the major driving-force behind the city’s growth has been the since 2000 and forecasted economy. This growth is essential to ensure that standards of living are maintained for the large to continue beyond the number of new residents moving into South East next(SEQ), twomost decades” Queensland of who are working within the Brisbane metropolitan region. As current pressures on land supply and infrastructure have the capacity to reduce and limit future economic prosperity, it is imperative that the future development of the region is carefully managed. It is estimated that Brisbane’s economy increased by 30 per cent during the 2000/01 to 2005/06 period, faster than Queensland and significantly faster than the national economy. In terms of its contribution to the national economy, between 2000 and 2006, Brisbane contributed $19.8 billion dollars to the total recorded growth of $147 billion in Australia’s GDP, equivalent to 13.5 per cent of total national growth and roughly equivalent to the contribution from SEQ and the rest of Queensland combined. The demand on the state’s minerals provided a flow through effect for the city’s professional services associated with the mining sector, benefiting employment, infrastructure and other services. Massive infrastructure investments underway in the city as well as those identified in the South East Queensland Infrastructure Plan and Program (a program of anticipated spending in excess of $107 billion over the next 25 years) will continue to provide a significant stimulus to the economy for decades to come. Two speed and diverse The emergence of a so-called “two speed economy” was widely documented in the Australian media over the past few years. It refers to the gains of the resource boom accruing largely to the mining sector and the states in which they are concentrated (Queensland and Western Australia), while the rest of the country is faced with higher interest rates and exchange rates resulting from the boom. Interestingly since 2006/07, coal prices have decreased significantly (to Queensland’s detriment) and iron ore prices have increased (benefiting Western Australia). However Queensland’s economic growth is still the highest in the country, driven by population growth, construction and infrastructure investment and the development of high-value, non-resource industries. While not underplaying the importance of mining to Queensland, the strong growth appears to have come from more than just the mining (and related) industries. The two-speed argument might understate the strength of the Brisbane economy with strong employment opportunities an important factor in population growth. What emerged in late 2008 was a reversal of the two-speed economy, i.e. lowering exchange rates and lower interest rates; Brisbane is expected to surge forward with more competitive higher value exports.

brisbane economic annual

Strong growth presents a platform to transform Brisbane’s economic base away from a current dependency on resource and population growth in favour of globally competitive knowledge-intensive exports (internationally, the fastest growing and highest demand sector in the marketplace). Further adding to Brisbane’s economic diversification is the increased concentration of businesses, skills and rising affluence attracted to the city since 2000. Brisbane’s economy is principally made from the growth of the business service-sector, (typical of an advanced economy) creating a large employment base with 87 per cent of all jobs in Brisbane service sector related. The service sector itself is labour-intensive, yet presents a number of highvalue professional and knowledge intensive services. Brisbane must develop this important sector to safeguard future growth potential as the demand for resources slows. Exporting to the world Both Brisbane Airport and Port of Brisbane serve as a gateway to our export industry and contribute towards Australia TradeCoast – the fastest growing industry and trade precinct in the country. Australia TradeCoast is now home to over 7,000 businesses, has been involved in more than 100 new industrial developments in the past five years and has seen over $1 billion in infrastructure development. In 2008 the Port of Brisbane saw a seven year high for total trade growth – 30.2million tonnes; and Brisbane Airport catered for a record 18.5 million annual passengers (domestic and international). Key factors influencing export performance include lower world commodity prices and the contracting Australian dollar making Queensland exports more competitive and internationally attractive again. Queensland’s goods exports are concentrated in natural resources and minimally-transformed goods, such as coal ($13 billion), meat ($3.6 billion), silver, lead and zinc ore ($2.2 billion), copper, silver, lead and zinc ($1.9 billion) and aluminium ($1.5 billion). Brisbane’s strongest services exporting sectors are tourism and education. Education exports accounted for the bulk of Queensland’s knowledge-intensive services exports. Knowledge-intensive exports aggregate the high-value, technology-intensive goods and services exports. These goods and services drive high-skill, highwage employment opportunities and are not subject to the price fluctuations faced by the homogenous, globally-traded resources that make up the bulk of Queensland’s goods exports. The concentration of businesses around infrastructure and the labour force provided in urban locations means that cities account for a large share of both services and manufacturing activities. Recently, Brisbane accounted for 52 per cent of all manufacturing employment and 50 per cent of all services employment in Queensland. Manufacturing and some services, including professional business services, logistics and distribution, education, and tourism bring most of the export-related wealth to the city.

Brisbane shows a higher cohort of 0-17 year olds and 18-49 year olds than Sydney and Melbourne.

Education is a local sector not widely acknowledged as a leading export, it is the nation’s third largest export after coal and iron ore. Foreign students seeking an Australian qualification not only have an immediate economic impact (living costs and fees) but once graduated can remain in the local economy, adding to future supply of skills. Alternatively they can return to their country of origin with an influential amount of goodwill, and an increased awareness and connectivity for Australia, vital for trade and geopolitical relations. Brisbane attracts roughly three-quarters of all international students coming into Queensland. In 2006, the direct economic impact of these students on the Brisbane economy was estimated at $1.3 billion. However, competition in the international education market is intensifying, particularly as some of the traditional source countries for these students have invested in their own education sectors to become host countries. Brisbane’s strength in the international education market lies in ensuring that the city provides excellent facilities and opportunities for students looking to select Brisbane as a destination for their education. Nationally, education exports have increased in 2000 from $4.1billion to $10.4 billion in 2006. During the same period Queensland’s grew from $670 million to $1.5 billion. Will the above components of growth be enough to protect Brisbane from the current conditions? How will our broad economic base fare in the aftermath of the global financial crisis? By the latter half of 2008, oil prices had fallen dramatically, inflation was easing and interest rates were approaching record low levels. But credit turmoil continued to dampen business activity and confidence, suggesting that an economic bounce back could still be some months away. A youthful Brisbane not a retiring one By the end of June 2007, Brisbane metropolitan was home to 1.8 million people and more than two thirds of Queensland’s population resides in SEQ. Brisbane’s age profile continues to grow younger as the job generation of the city brings more migrants

from other states in search for employment opportunities. Gone are the days when Brisbane and more specifically SEQ were perceived, from southern states, as a haven for migrating retirees and an ageing demographic. Cities with dynamic economies tend to attract and retain younger working age populations. In Australia, Brisbane, Sydney and Melbourne are all examples of cities with a younger working age population than their respective state populations and the national average. Today, Brisbane’s overall age profile compares favourably with other capital cities. Brisbane shows a higher cohort of 0 to 17 year olds and 18 to 49 year olds than Sydney and Melbourne and a proportionately lower share of population aged over 50. There is now evidence to suggest there is a flow of retirees out of urban areas and into the regions, where increased costs of living and lifestyle choices found associated with urban living are not as common. The main attraction to Brisbane and SEQ for both interstate and overseas migrants has been the rapid growth in jobs generated by the region’s growing economy, coupled with diverse lifestyle opportunities. Attractive residential communities with an outdoor lifestyle suits young families; while avant-garde music and entertainment draws younger age singles – partly due to the development of an impressive creative precinct at Southbank and Australia’s premier live music venue in Fortitude Valley. • Brisbane and SEQ have become magnets for young people – students, young professionals and families. • Interstate migrants are mostly young working age families attracted by the housing and lifestyle. • Overseas migrants choose Brisbane over any other destination in SEQ, reflecting their interest in accessing employment opportunities and a broader range of services and amenities. • Over the decade 1996-2006, Brisbane’s population of overseas born migrants increased by 54,000. • By 2006, almost one in four people living in Brisbane was overseas born, a greater share than that recorded for Queensland or Australia. Brisbane’s population is retaining a younger age demographic with the recent property and construction boom attracting a solid skills base in medium skill qualifications and occupations. Growth in wages remains strong, indicative of a robust labour market in Queensland during 2008. Further commentary on labour will be made further on in the chapter Knowledge, Labour and Talent.

brisbane economic annual

Net migration Australia’s net overseas migration is at an all time high and recent data suggest that Brisbane received 57 per cent of all overseas migrants into Queensland. For Brisbane to develop a knowledge economy, it is encouraging to learn that these migrants tend to be in identified skill shortage areas of which many are highly skilled professionals. One quarter of the city’s population were born overseas, (25.3 per cent from United Kingdom and Ireland, 19.3 per cent from New Zealand and 10.7 per cent in South-East Asia) a majority now residing in southern suburbs and originating

Official Cash Rate

Exchange Rates AUD - USD

January

6.75

Low High

February

7.00

March

0.8577 0.9002

New Car Sales (trend)

Petrol - 1 litre, unleaded (Capital Cities)

vastly from Europe. Brisbane is now attracting larger numbers of international talent and youth contributing to the city’s increased diversity. With a burgeoning population growth, the city is benefiting from the arrival of new skills, capital, ideas, innovation and cultures, plus a stronger demand for our local products. Growth is not population and economic activity alone. Growth can be measured in a maturing culture, city identity and global connectivity. The Brisbane economy is one of growth, diversity, increasing sophistication and internationalisation.

Total EmployedBrisbane SD (‘000s)

Unemployment RateBrisbane SD (%)

Building Approvals – NonResidential – Brisbane LGA ($,000’s)

Building Approvals – Residential – Brisbane LGA ($,000’s)

QLD 0.9 AUS 0.9

996.6

3.7

222,886

141,872

Low 0.8925 High 0.9466

QLD -0.2 AUS 0.4

1016.4

4.0

405,266

217,746

7.25

Low High

0.9116 0.9434

QLD -1.2 AUS -0.1

1023.1

4.0

439,657

129,289

April

7.25

Low High

0.9079 0.9497

QLD -0.6 AUS -0.4

1027.2

3.2

217,946

511,165

May

7.25

Low High

0.9318 0.9644

QLD -1.3 AUS -0.6

1030.6

3.1

207,059

171,404

June

7.25

Low High

0.9379 0.9626

QLD -1 AUS -0.4

1039.4

3.0

464,140

257,502

July

7.25

Low High

0.9434 0.9786

QLD -1.1 AUS -0.7

1032.5

3.2

644,006

268,940

August

7.25

Low High

0.8580 0.9374

QLD -2.4 AUS -1.4

1031.2

2.5

248,531

153,556

September

7.00

Low High

0.7905 0.8537

QLD -2.3 AUS -1.7

1056.2

3.5

394,651

307,450

October

6.00

Low High

0.6122 0.7962

QLD -1.8 AUS -1.4

1049.9

3.2

160,950

169,349

November

5.25

Low High

0.6186 0.6882

QLD -1.5 AUS -1.8

1052.3

2.9

269,006

131,902

December

4.25

Low 0.6408 High 0.7044

QLD -1.2 AUS -1.4

1049.7

3.3

215,309

131,284

The new Qantas A380 arriving at Brisbane International Airport for the first time on Thursday 25 September 2008.

BNE - 1.30 AUST - 1.40

BNE - 1.43 AUST - 1.53

BNE - 1.47 AUST - 1.56

BNE - 1.18 AUST - 1.27

Consumer Price Index (Capital Cities )**

BNE - 4.8 AUS - 4.2

BNE - 5.1 AUS - 4.5

BNE - 5.6 AUS - 5.0

BNE – 4.3 AUS – 3.7

The Economist’s Corner

Tim Harcourt, Chief Economist, Austr alian Tr ade Commission They say that Queenslanders “punch above their weight” for Australia on the international stage. You hear this assertion time and time again both within Queensland and out of the state. In fact, when I was speaking at a conference on Hayman Island earlier this year, Queensland Premier Anna Bligh gave a very amusing speech about Queensland’s contribution to Australia’s Olympic medal tally at the Beijing Olympics and how it related to Queensland’s similar contribution to Australia’s export haul. I guess given that Queensland provides a high proportion of our Olympic swimmers, who, in turn, make up the lion’s share of our medal tally, then it is no surprise! After all with Brisbane girl Stephanie Rice doing so well in the pool in Beijing following in the footsteps of other local greats Libby Trickett, Susie O’Neill, Grant Hackett, Kieran Perkins, the list goes on…it’s no surprise that Premier Bligh could make that statement. I pointed out to her too, that Queensland women too had made a big contribution to the medal tally in Beijing and that Queensland tops Australia for having the highest proportion of women CEOs in the exporter community. The Premier (who happens to be Queensland’s first woman Premier and the only women premier in Australia at the moment) thought there could be a link between the success Stephanie Rice in the world of international swimming and the success of Queensland women in world of the international business. After all natural talent, hard work and determination determine success in both spheres of life. But KPMG demographer Bernard Salt checked my exporter data and claimed many of the female CEOs were actually divorced Victorians who had moved north to the smart state to start a new entrepreneurial life in the sun! But in any case, the migration north of many successful people – to add to the pool of home grown success stories – points to the economic vibrancy of Queensland and Brisbane in particular. The state and the city’s ties with Asia, the Pacific and now, Latin America are well known as Queensland got in early when it comes to exports and foreign direct investment. Queensland’s natural advantages in mining, sugar, agribusiness, tourism and education are a bit like its swim team. There’s plenty of natural talent there, but you have to work hard through by innovating, being creative adding value, and concentrating on service delivery to make it all happen.

And in the case Brisbane itself, the capital of Queensland has become a major economy in its own right. It has now passed its one million people milestone and in a global economy where cities are in the market for talent, Brisbane is now attracting more international migrants than “southerners” from interstate. Many are young and educated, and in the 20-34 year old age group, the international sources of migration outnumber the domestic sources. The high profile of Queensland’s education institutions – including UQ, QUT and Griffith University – are helping attract international students and create knowledge-based jobs in emerging industries fuelled by Queensland’s Smart State strategy. Griffith was the first university in Australia to offer Asian studies and its international business programmes are world renown. And when it comes Asian languages, what better symbol is our Mandarin-speaking, Queensland-born Prime Minister Kevin Rudd! It now appears the nation’s power base has shifted north; Rudd’s Treasurer, Chief of Staff, the Deputy Governor of the RBA and The Governor General all hailing from South East Queensland. Of course, population growth is linked closely to education and employment development, with Brisbane’s employment growing twice as fast as population since 2000 and this is forecast to continue for the next two decades. This will impact on infrastructure, skills and education requirements as well as providing new sources of “creative capital” and cultural diversity that will help Brisbane’s future as a global city. And with the impact of the credit crunch affecting traditional exports and the financial markets of the USA, Europe and Asia, these benefits that Brisbane has been accumulating will come to the fore. 2009 will mark the 150th anniversary of the declaration of Brisbane. In 1859 the residents took Brisbane’s future into their hands by successfully petitioning the Governor of New South Wales for Brisbane town to become a municipality. Over 150 years, the city looked beyond its own borders to search for markets and human talent. Some have come beyond our shores and some have grown up within the state and the city itself. It’s been a matter of blending competition with community spirit and forging the best of human talent whether its origins be local or global. Brisbane’s economic success is a testimony to these values and when you see a great Queenslander like Stephanie Rice breaking world records and winning gold on the world’s greatest stage, think of all the other world beaters in the Brisbane and Queensland exporter community doing the same thing for the welfare of all of us. Subscribe to Tim’s feed www.austrade.gov.au/economistscorner

brisbane economic annual

key infrastructure projects in south east queensland Fore word by Gr aham Mat the w, Partner and He ad of Infr a structure & Projects Group, KPMG

South East Queensland (SEQ) has recently undergone and continues to undergo record levels of major capital works spending. In recent years key areas of focus have included transport, water, health and other social services. • Transport projects either under construction or committed include some of the largest infrastructure investments ever made in Queensland including the $1.8 billion Gateway Bridge Duplication, the $2.1 billon North-South Bypass Tunnel and $3.4 billion Airport Link, and extensive investments in busways and rail.

What will these investments mean for SEQ global competitiveness? In this article we outline the findings of recent international research Bridging the Global Infrastructure Gap: Views from The Executive Suite commissioned by KPMG and conducted in cooperation with the Economist Intelligence Unit (EIU). This research was conducted in November and December of 2008 based on a global survey of over 300 senior executives and board members, almost half of whom were CEOs, and highlights: • the importance to global businesses of investments in critical infrastructure,

• Water investments have included the establishment of the SEQ Water Grid, which includes 450 kilometres of new pipeline, upgrades to existing dams and a desalination plant.

• how it affects growth and costs,

• In the Health Sector three major hospitals are being developed simultaneously at a cost of approximately $4 billion at the Gold Coast, Sunshine Coast and at the new Queensland Children’s Hospital. • Plans are in place to open 72 new schools in SEQ over the next 15 years. Further investments in vocational training centres at Southbank, Acacia Ridge and Eagle Farm are also planned or currently in construction. In addition, other investments are being made in electricity network upgrades, port infrastructure, as well as social services such as education and justice areas. Funding for these investments will be forthcoming from a range of sources including the private sector and all levels of government. In addition to the Queensland Government’s traditional role in providing infrastructure, the Brisbane City Council has recently procured the North-South Bypass Tunnel and federal funding is being sought through the Infrastructure Australia process for a variety of other projects.

brisbane economic annual

• what areas of investment are considered to be most important, and • what needs to be done to enable countries to compete globally for business investment. Using this research as a reference point, we also examine both current and proposed key investments made in SEQ and compare them against those areas which are seen as globally relevant. The results make interesting reading for business leaders and policy makers at state, commonwealth and local government level and lend support to the view that the investments that are being made and which are under consideration in SEQ are in line with global trends. It will be important to Brisbane’s global competitiveness that the focus on infrastructure investment continues. We acknowledge the work of the EIU and their permission to reproduce the results the global research in this publication.

The Eleanor Schonell Bridge, also known as the Green Bridge, connecting Dutton Park with the University of Queenslandâ&#x20AC;&#x2122;s St. Lucia campus. This is Australiaâ&#x20AC;&#x2122;s first bridge designed exclusively for buses, cyclists and pedestrians.

brisbane economic annual

About the research In cooperation with the EIU, KPMG International conducted global research during November and December 2008. Extracts from the report, Bridging the Global Infrastructure Gap: Views from the Executive Suite are outlined below. On behalf of KPMG, the EIU surveyed 328 C-level executives or board members from 21 countries around the world. Representing a wide range of industries, 47 per cent of respondents were CEOs, and a third came from companies with annual revenues over US $1 billion. Respondents by region: Asia-Pacific Middle East and Africa Eastern Europe North America Latin America Western Europe

28 per cent 11 per cent 11 per cent 22 per cent 9 per cent 19 per cent

Bridging the global infr a structure gap: Vie ws from the e xecutive suite Executives around the world are concerned about infrastructure When asked about the ability of the infrastructure where they are based to support their organisations, the results were worrying. Overall, 14 per cent of executives rated infrastructure “completely adequate” and even in the most positive region, Western Europe, only 24 per cent said the same. The majority of respondents deemed infrastructure “somewhat adequate” (57 per cent), while 18 per cent were concerned that it was inadequate. Equally striking is the universal concern about infrastructure gaps. For example, in May 2008, Bidisha Ganguly, a consultant at the Confederation of Indian Industry, noted that because of India’s fast growth, “all infrastructure is strained, so there are huge gaps and bottlenecks everywhere. We don’t build infrastructure ahead of demand. We typically build it once the bottlenecks are there and fairly apparent”. In the survey, 35 per cent of respondents from the BRIC countries of Brazil, Russia, and India called general infrastructure inadequate. Interestingly, responses from executives in China were markedly different from their BRIC counterparts, with only 5 per cent citing current infrastructure as inadequate. Countries coping with rapid growth are one thing, but developed economies are experiencing problems as well. The Business Council of Australia, in October 2008, spoke of “bottlenecks at our bulk and container ports and at our intermodal hubs, inadequate rail systems, congestion on our urban roads, struggling public transport, water shortages in our cities, over-allocated rural water systems and (an increasingly acknowledged) straining electricity network.” In Canada, Gord Steves, President of the Canadian Federation of Municipalities, called his country’s infrastructure “near collapse” in November 2007. More recently, in June 2008, Michael Bloomberg, the Mayor of New York City, underlined the point by referring to “an infrastructure crisis… that threatens our status as an economic superpower – and threatens the health and safety of the people we serve.” Meanwhile,

brisbane economic annual

in California, Governor Arnold Schwarzenegger wrote in December 2008 that “Our infrastructure is more than just a quality-of-life issue. It is an economic issue…We are a dinosaur economy trying to compete in a space-age global environment.” In the survey, 11 per cent of US respondents described infrastructure there as “inadequate.” Industry experts concur: the American Society of Civil Engineers (ASCE) gives the country’s rail systems a C- grade, its air traffic infrastructure a D+, its roads a D, and its navigable waterways a D-. A lack of adequate infrastructure can be costly. Out of those surveyed in the USA, 75 per cent say they face extra operating expenses because of problems with some element of infrastructure. In Western Europe, although few called the systems there inadequate, 87 per cent cited additional operating expenses due to inadequacies in infrastructure, while the global average is 89 per cent. Availability of infrastructure is a critical issue for business Availability of infrastructure impacts operating costs and is therefore a major factor in strategic planning and decision making. In the survey, 90 per cent of executives agreed that the availability and quality of infrastructure effects where they locate and expand their business, a finding that was remarkably consistent across all geographies. There is no shortage of examples of this. In 2008, AT&T moved its headquarters from San Antonio to Dallas in part because of the latter’s better air transportation links, according to the company. Similarly, in 2006, improved infrastructure made it possible for the Coca-Cola Company to move its Africa group headquarters from Britain to South Africa. But people can become complacent about the quality of their infrastructure, especially residents in developed countries. Spending on high-cost infrastructure projects is often delayed and consequently can lead to underinvestment. Sometimes it takes a spectacular failure to remind people of infrastructural inadequacies – such as the loss of power to 50 million people in North America in August 2003 after the impact of a few trees falling on power lines in Ohio spiralled out of control. The future looks even more worrying than the present People are concerned about the future impacts of poor infrastructure on their businesses, too. Seventy-seven per cent of those surveyed are somewhat or very concerned that current infrastructure investment in the country where they work will not be sufficient to support the long-term growth of their organisation. And it is an issue for developed and developing countries alike. Roughly nine in 10 respondents in the emerging markets of India (95 per cent), Poland (93 per cent), Russia (86 per cent), and South Africa (86 per cent) said current infrastructure investment is insufficient to support the long-term growth of their organisations. Even in developed regions, such as Western Europe, the figure is 64 per cent, and in North America it reaches 73 per cent. If anything, these concerns are likely to grow. Of those surveyed, 80 per cent believe that infrastructure will be even more important to their companies five years from now, and only 2 per cent thought

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, HOW ADEQUATE IS THE INFRASTRUCTURE CURRENTLY AVAILABLE TO SUPPORT YOUR ORGANISATIONS GENERALLY? 100% 85%

80%

60%

57% 45%

40%

47%

38%

36% 31% 25%

20%

25% 18%

14% 13%

12%

10%

17% 9%

2% 0% 0%

Completeley adequate

Somewhat adequate

Total

Neither adequate nor inadequate

Brazil

Russia

Inadequate

Completely inadequate

India

China

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008 COMPARED TO TODAY, HOW IMPORTANT WILL INFRASTRUCTURE BE TO YOUR ORGANIZATION FIVE YEARS FROM NOW? 100%

80%

60%

61% 55%

53% 46%

40%

53%

47%

47% 40%

33%

34% 29%

20%

31%

26%

20%

20% 18% 17% 16% 13%

16%

9% 2% 0% 0% 0% 3% 3%

0% Much more important

Total

Somewhat more important

Neither more important; nor less important

Asia Pacific Latin America

North America Eastern Europe

Somewhat less important

1% 0% 0% 0% 3% 2% 0%

Much less important

Western Europe Middle East and Africa

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008 DO YOU AGREE OR DISAGREE WITH THE FOLLOWING STATEMENT? “GOVERNMENT SHOULD WORK TO A GREATER EXTENT WITH PRIVATE INDUSTRY TO FINANCE INFRASTRUCTURE IMPROVEMENTS.” 100%

80% 68%

60%

40%

57%

56%

41%

39%39%

42%

44%

47%

34% 28%27%

20%

23%

26% 16% 14%

16% 7%

15% 14% 11%

0% Strongly agree

Total

Agree

Asia Pacific Latin America

Neither agree; nor disagree

North America Eastern Europe

15% 5%

1% 0%

6% 6%

Disagree

1% 2% 0% 1% 0% 0% 0%

Strongly disagree

Western Europe Middle East and Africa

the opposite. There was little variance in terms of geography or level of economic development. Global business rarely speaks with one voice, so such figures indicate a notable level of consensus. Additionally, executives are not confident that enough resources and skills currently exist to tackle the infrastructure gap. Forty-five per cent of all respondents – and 51 per cent in North America – were either concerned, or very concerned that local work forces lack the relevant skills for the necessary work on infrastructure to take place. Executives are looking for governments to find new and more efficient ways to improve vital infrastructure Traditionally, governments have been expected to fund much of a nation’s infrastructure. However, executives around the world are concerned about government’s traditional role, perhaps pointing to a need to find new ways to improve vital infrastructure and develop competitive solutions. When asked how worried they are that various factors might prevent sufficient infrastructure investment to support the long-term growth of their businesses, 68 per cent rated government effectiveness as a high concern – making this their biggest worry, surpassing even the current economic conditions. This concern is both deep and global: in both the USA and Western Europe the figure reached 60 per cent, while in the BRIC countries it was 76 per cent. Similarly, about half (53 per cent) of all respondents expressed a high or very high concern that politics will hinder infrastructure investment – a proportion that also remained broadly consistent across regions. As a result, executives believe that governments should make greater use of the resources and specialised expertise of the private sector. Overall, 80 per cent of those surveyed agreed that governments should work more with private industry to finance infrastructure improvements. Infrastructure investment problems go beyond the current financial crisis. The economic downturn that began in 2008 may affect the funding of infrastructure improvements, but most survey respondents see the economy as a short-term issue. Overall, 58 per cent of executives expect the economy where they operate to improve over the next five years, against only 25 per cent who foresee a decline. Respondents from North America are similarly optimistic (58 per cent vs. 25 per cent respectively) while the deepest concern is in Western Europe, where one-half fear a decline over the next five years. The developing world, particularly emerging markets, is more confident. Seventy-five per cent of respondents in the BRIC countries expect better economic performance over the next five years with just 11 per cent fearing the opposite. The problems for infrastructure spending, however, go beyond the current financial crisis. Even the minority of 49 respondents who expect a much better economic performance over the next five years believe that finding the money for infrastructure will be a problem: 61 per cent of that group believe that economic conditions will prevent the necessary investment and 57 per cent think that a lack of financing will do the same. Thus, even the economic optimists responding to our survey fear there won’t be enough money to invest in infrastructure. Meanwhile, those who are pessimistic are still more concerned (95 per cent and 73 per cent, respectively).

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

brisbane economic annual

Transportation is in most need of attention The current state of transportation is providing the biggest infrastructure challenge to business. Sixty-six per cent of executives surveyed indicate that existing transportation infrastructure increases operating costs for their companies. Moreover, more than one in five respondents say transportation issues hurt their companies’ competitiveness (22 per cent), ability to grow (22 per cent), and attractiveness to qualified employees (21 per cent). The survey identifies a range of transportation challenges. Railroads arouse widespread concern: in all geographies except Western Europe, between 19 per cent and 26 per cent of respondents consider the need for investment here urgent. In Western Europe, which has traditionally sought to keep highspeed rail competitive with air travel, it was the most pressing infrastructure issue, cited by 48 per cent of respondents there. In developed regions, airports also appear to pose a significant problem with 24 per cent of North American and 29 per cent of Western European respondents citing them among their top infrastructure priorities. Overall, however, better roads constitute the area of infrastructure in the most urgent need of investment, according to 58 per cent of executives. In fact, roads are one of the top two concerns in every region of the world. This is hardly surprising. The British Chamber of Commerce, for example, found that 80 per cent of UK companies considered road congestion a national problem in a 2008 survey. The ASCE meanwhile, estimated in 2005 that bad roads cost American motorists $54 billion annually in extra repairs, and the economy overall an additional $63 billion because of time spent in traffic jams. Despite the collapse of the I-35W Bridge in Minnesota in August 2007 and the ASCE’s assessment that over a quarter of the country’s bridges are “structurally deficient or functionally obsolete,” American roads are generally safe compared to other regions. India, for example, has 10 per cent of the world’s road deaths with just one per cent of its automobiles. In sub-Saharan Africa, where only 14 per cent of roads are paved, the death toll from traffic injuries is the world’s highest – 28 in 100,000. Poor energy infrastructure is driving up costs Twenty-six per cent of executives surveyed say that the state of existing energy and power supply infrastructure is adding greatly to the cost of operating their organisations, while another 40 per cent claim some negative financial effect. This makes energy a bigger cost issue than even transportation. As a result, businesses see power generation as the second most important of all infrastructure areas requiring investment, cited by 47 per cent. This is particularly true in South Africa (86 per cent) and India (62 per cent). In fact, 90 per cent and 89 per cent, respectively, of respondents in these two countries say poor energy infrastructure burdens their organizations with additional costs. In China, 40 per cent cited power generation among the top three issues, and it was the leading need after water and sewage. Beyond cost, however, energy problems often pose fewer complications than poor transportation. For example, only 17 per cent of executives say it has had a negative effect on competitiveness, compared to 22 per cent for transportation.

brisbane economic annual

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, HOW CONCERNED ARE YOU THAT THE FOLLOWING FACTORS WILL PROHIBIT NECESSARY INVESTMENT IN INFRASTRUCTURE THAT WOULD SUPPORT THE LONG-TERM GROWTH OF YOUR BUSINESS?

Economic condition

95%

Governmental effectiveness

77%

Availability of financing

73%

Availability of relevant skills

50%

Political environment

50%

1-2 (Very concerned/Somewhat concerned) Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, HOW DOES THE EXISTING TRANSPORATATION INFRASTRUCTURE INCREASE OR DECREASE THE FOLLOWING? 1 Means “Increases Greatly” And 5 Means “Decreases Greatly”

Costs of operating your own organisation

95%

Ability to attract qualified employees

40%

Ability to expand your organisation

42%

35%

Abitlity to attract financing or investment for your organisation

27%

1-2

21%

39%

36%

Competitiveness of your organisation

25%

22%

43%

50%

58%

50%

95%

22%

13%

75%

100%

4-5

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, WHICH ASPECTS OF INFRASTRUCTURE NEED TO BE MOST URGENTLY ADDRESSED? (SELECT UP TO THREE) 58%

Transportation - Roads 47%

Energy/Power Supply - Generation Social Services - Schools

28%

Social Services - Hospitals

28%

Transportation - Railroads

27%

Water and sewage systems

21%

Transporation - Airports

18%

Energy/Power supply - Distribution

12%

Energy/Power supply - Transmission

11%

Transportation - Seaports

10%

Social Services - Public Housing

10%

Energy/Power Supply - Transport

10%

Energy/Power Supply - Refinement Social Services - Government Offices

4% 3%

Other

5% 0%

20%

40%

60%

80%

100%

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

Poor social services infrastructure makes it harder to operate Fifty-six per cent of executives say that a lack of infrastructure in this area adds to the costs of operating their businesses – a significant percentage, but less than those for energy and transportation. But the impact on other parts of the business is at least as wide: about one in five respondents say that poor social services infrastructure hurts their ability to attract qualified employees (22 per cent), competitiveness (20 per cent), and ability to expand (19 per cent). Education and health are the biggest concerns: schools and hospitals are the third most urgent areas for infrastructure investment, cited by 28 per cent of respondents. One complication with the social services infrastructure is that, rather than measuring an objectively identifiable need – such as an uninterrupted electricity supply of a given number of megawatts – it must satisfy subjective expectations. Western Europe, for example, has some of the world’s best health care and the average life expectancy in the European Union is 78.7 years, a figure surpassed by few countries outside of the region. Nevertheless, respondents in the states are almost as likely as those in the rest of the world to identify hospitals as a leading area in need of urgent investment (26 per cent to 27 per cent). Similarly, despite a good level of education compared to others globally, Western European respondents are the most likely to cite a need for further investment in schools (35 per cent). This may be partly attributed to the fact that many developed countries already have an adequate infrastructure in areas where other countries might be struggling, such as clean water. Yet, even the higher standards of health and education are not meeting the expectations of executives who would like to see still more investment: 27 per cent of Western European respondents complain that poor social services infrastructure is impeding their ability to attract talent, the second highest figure after Eastern Europe and tied with Latin America. Moreover, 26 per cent say the lack of social services infrastructure is hurting competitiveness, worse than anywhere except for Latin America.

Brisbane City Council is the only local government in the nation invited to directly submit infrastructure funding proposals to the Building Australia Fund against other State submissions.

Water is less pressing, but could become a big problem When it comes to infrastructure, water receives less attention. Deficiencies in this area cause problems with competitiveness and the ability to expand or attract talent for less than 10 per cent of executives. Few respondents see water as a cost issue, with just 39 per cent overall complaining that water and sewage problems led to increased expense. Of course, the fact that water is underpriced in most parts of the world could have an affect on survey responses. Yet, the overall results should not mask the fact that water is a pressing problem in certain places, especially rapidly growing economies. India, for example, has 16 per cent of the world’s population but only 4 per cent of its fresh water reserves. As a result, its water infrastructure imposes an additional cost, according to 58 per cent of executives there. Executives based in China named water as the area requiring the most urgent investment (55 per cent). Both countries also face substantial surface water pollution problems. Water and sewage infrastructure is not an issue confined to developing countries. Former US Environmental Protection Agency Administrator Christine Todd Whitman, estimates that the USA needs to spend $1 trillion to replace its aging water infrastructure. Without attention, water may rapidly become a much bigger infrastructure problem. Conclusion This report evaluates the impact of infrastructure on businesses around the world. According to the survey, senior executives globally agree that infrastructure is critically important, affecting operating costs and business decisions related to expansion. Key findings include: • Senior executives are concerned that the current infrastructure inadequately supports their businesses. Indeed, only 14 per cent believe that infrastructure is “completely adequate” in this regard. • The quality and availability of infrastructure directly affect where businesses locate and expand their operations, according to 90 per cent of senior executives surveyed. • Infrastructure will become more important over the next five years and 77 per cent of business executives surveyed fear there will not be enough infrastructure investment to support the long-term growth of their organisations. • Eighty per cent of executives want governments to partner with the private sector to finance major infrastructure projects. • Roads and power generation infrastructure are most in need of an upgrade, say executives around the world. The survey also found that social services infrastructure such as schools and hospitals is a significant concern. Complete aggregate results of the survey conducted for this report can be found in the publication Bridging the Global Infrastructure Gap: Views from the Executive Suite.

brisbane economic annual

Bridging the global infrastructure gap: The South East Queensland experience So how do recent and proposed investments in SEQ accord with those areas of investment that executives globally see as important? The South East Queensland Infrastructure Plan outlines an estimated $107 billion of infrastructure projects to support regional planning outcomes in SEQ to 2026. The distribution of the investment by infrastructure class is summarised in the following table. Infrastructure class Transport (including investigations) Water

Estimated investment 2008-26 ($m) 83,711 7,978

Health

5,215

Education and vocational education and training

3,533

Energy (up to 2011-12)

3,435

Justice services

3,295

Industry development Regional sport and recreation Total

176 111 107,454

Source: South East Queensland Infrastructure Plan and Program 2008-26, p. 15

This investment includes contributions from the state and federal governments, Brisbane City Council and government owned corporations and private firms. Electricity transmission and distribution investments are estimated through to 2010/11. The figure shows that the investments planned for Brisbane accord broadly with the infrastructure shortages identified by global executives. Further, the global survey identified that shortages of transport and energy infrastructure have the greatest effect on costs. Accordingly, the delivery of substantial investments in transport and energy infrastructure for SEQ should increase its competitiveness and attractiveness as a place to invest.

One of two 4,000 tonne boring machines digging the Clem Jones Tunnel (CLEM 7), which is a 6.8 kilometre major road tunnel, scheduled to be open in 2010.

brisbane economic annual

Transport infrastructure Transport infrastructure was the most widely identified need among all infrastructure classes in the KPMG global survey. Indeed, in every region surveyed, roads were one of the top two concerns. In accordance with these views, the South East Queensland Infrastructure Plan allocates the vast majority of the planned investment to transport infrastructure. Of the $107 billion identified, the plan allocates 78 per cent to transport investment, and, over half of this amount, some $48.1 billion, is planned for investment in road infrastructure. Some of the major transport projects identified in the plan include: • the duplication of the Gateway Bridge (at a cost of $1.8 billion) and approximately $5 billion of investments in related roads, such as Gateway arterial roads and the Port of Brisbane Motorway; • over $7 billion investment in tunnel roads to cut travel times across the city (including the North-South Bypass tunnel, Airport Link and Northern Link); • approximately $9 billion of investment in highways in Brisbane’s western corridor and Toowoomba regions (including the Ipswich Motorway and Centenary Highway); and • over $30 billion of investment in rail and bus infrastructure in SEQ (including expansion of rail capacity in Brisbane’s inner city, new rail lines in the west and the construction of busways in the north and east of Brisbane).

Senior executives globally agree that infrastructure is critically important, affecting operating costs and business decisions related to expansion.

But the focus on transport infrastructure goes beyond direct investment. The plan envisages enhancing the use of transport infrastructure by tackling urban congestion through improved land use and planning, pricing and demand management and a more accessible public transport network. Energy Queensland requires significant investments in energy infrastructure to meet growing demand. Electricity demand in Queensland is growing at twice the rate of that in other states. The need to simultaneously manage greenhouse gas emissions in the country’s most decentralised and energyintensive state adds to the challenge. The South-East Queensland Infrastructure Plan maps out some planned investments up until 2012, including: • over $4 billion to upgrade distribution in networks in Brisbane and the surrounding area; and • over $300 million of increased investment in transmission capacity. In addition to these projects, a number of private investments in generation capacity are planned, including: • the 450 MW Braemer 2 gas-fired power station adjacent to the existing 450 MW Braemer Power Station approximately 40 kilometres west of Dalby in Southern Queensland; • the 140 MW coal seam gas-fired Condamine Power Station; and • the 630 MW Darling Downs Power Station that will be the biggest combined-cycle power station in Australia. The Queensland Government also intends to diversify energy sources (towards gas and renewable sources) and encourage greater competition in energy markets. Water The severe drought that Eastern Australia has recently experienced has crystallised the need to invest in water infrastructure in South East Queensland. This need somewhat differs from the infrastructure priorities identified elsewhere in the world, reflecting the relative dryness of Australia and the pressures that have been placed on Queensland’s existing water supplies through recent population growth. Accordingly, the SEQ Infrastructure Plan identifies a range of investments in water infrastructure. At the heart of these is the establishment of a SEQ Water Grid that will enable the movement of water from areas of water surplus to areas facing a shortfall. The project includes more than 450 kilometres of pipeline, upgrades to existing dams, a desalination plant and three advanced water treatment plants. Further to these measures, the Queensland Government is investing in managing water demand. These measures include a $43 million Business Water Efficiency Program and a range of measures that assist households in installing more waterefficient devices. Health High population growth and the ageing of the population are placing, and will continue to place, increased demands on Queensland’s health sector. It is projected that the number of hospitalisations in

Costs of operating your organisation

66%

Ability to expand your organisation

33%

Competitiveness of your organisation

33%

Abitlity to attract financing or investment for your organisation

26%

52%

Abitlity to attract qualified employees

15%

17%

50%

24%

65%

20%

70%

25%

1-2

50%

75%

100%

4-5

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, HOW DOES THE EXISTING SOCIAL SERVICES INFRASTRUCTURE INCREASE OR DECREASE THE FOLLOWING? 1 Means “Increases Greatly” And 5 Means “Decreases Greatly”

Costs of operating your organisation

56%

Ability to attract qualified employees

45%

Ability to expand your organisation

32%

Competitiveness of your organisation

30%

Ability to attract financing or investment for your organisation

33%

48%

20%

65%

25%

1-2

22%

33%

50%

10%

19%

50%

20%

13%

50%

75%

100%

4-5

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

THINKING SPECIFICALLY ABOUT THE COUNTRY WITHIN WHICH YOU ARE LOCATED, HOW DOES THE EXISTING WATER AND SEWAGE SYSTEMS INFRASTRUCTURE INCREASE OR DECREASE THE FOLLOWING? 1 Means “Increases Greatly” And 5 Means “Decreases Greatly”

Costs of operating your organisation

54%

39%

Ability to expand your organisation

21%

Competitiveness of your organisation

20%

Ability to attract qualified employees

18%

Ability to attract financing or investment for your organisation

18%

1-2

69%

74%

71%

25%

50%

20%

50%

75%

100%

4-5

Source: Bridging the Global Infrastructure Gap Survey, KPMG International in cooperation with the Economist Intelligence Unit, 2008

Queensland will double as the result of changes in the population and the increasing burden of chronic disease. To meet this demand, the SEQ Infrastructure Plan foreshadows investments of $4 billion in three new hospitals (the Queensland Children’s Hospital, the Gold Coast University Hospital and the Sunshine Coast Hospital), in addition to upgrades to existing hospitals, such as the Prince Charles Hospital, the Princess Alexandra Hospital and the Ipswich Hospital. The Queensland Government also has budgeted to spend $1.9 billion for the expansion of health services and staffing over the period from 2005 to 2011. Education The South East Queensland Infrastructure Plan identifies a number of school and vocational training projects. Before 2012 the Queensland Government plans to open 14 new schools in SEQ and before 2019 it plans to open a further 32 schools. In addition, a public private partnership is currently constructing the Southbank Institute of Technology and further investments are planned in SkillsTech Australia campuses in Acacia Ridge and Eagle Farm. Conclusion The attractiveness of Queensland as a place to live and work has led to some of the fastest growth rates in the country in terms of population and economic activity. Though this growth is testament to the economic and social opportunities that are available in Queensland, it has also placed pressure on existing infrastructure. It could be said that a test of the sufficiency of a region’s infrastructure, is its capacity to go unnoticed. When people can travel, learn and be cared for seamlessly and easily they need to worry little about the state of roads, schools or hospitals. The fact that infrastructure is so much in the news today demonstrates that there is much work required to ensure that Queensland continues to meet the needs of the many people that choose it as a place to live. So for Queensland to retain its mantle of attractiveness, it must continue to invest in these essential services. The recent KPMG study shows that the quality, availability and capacity of key infrastructure are major considerations on where and when businesses will invest or expand their operations. In some respects the results are unsurprising but they are a timely reminder that infrastructure is enabling: its delivery helps to promote the growth of other sectors and businesses. As a result, Brisbane’s future economic growth and competitive position depend on improving the use of existing infrastructure and investing in new infrastructure in a coordinated way. It is apt then that SEQ has a plan to maintain and improve infrastructure commensurate with the growth in its population. Importantly, the mix of this investment (between transport, energy, health and education) broadly matches the needs and requirements of businesses, as identified by the KPMG global survey. This gives some comfort that SEQ can and will remain the pre-eminent place to invest and do business.

brisbane economic annual

knowledge, labour and talent = brisbane

Brisbane immunologist and developer of the cervical cancer vaccine Gardasilâ&#x201E;˘ â&#x20AC;&#x201C; Professor Ian Frazer.

FORE WORD BY PROFESSOR PETER ANDRE WS, CHIEF SCIENTIST FOR QUEENSL AND Brisbane is a smart and vibrant city with talented people, top education facilities, world-class research infrastructure and talented workforce. Knowledge is the platform for 21st century jobs and economic sustainability. We are emerging as leaders in sectors that are based on producing knowledge intensive products and services such as biotechnology, creative industries, aviation and aerospace, ICT, environmental and mining services. This diversity is crucial to the success of any economy. As Queensland Chief Scientist, one of my goals is to help Queensland achieve targets set out in the Towards Q2: Tomorrow’s Queensland strategy, such as increasing by 50 per cent the proportion of Queensland businesses undertaking research and development (R&D) or innovation. If you take a look at mining services, within international mining circles, Brisbane is considered an outstanding hub for research, technology and services, and in 2008 both BHP Billiton and Rio Tinto Alcan announced moving their operations here, bringing several R&D and knowledge intensive jobs with them. In aviation we’ve had a number of multinationals set up shop in Queensland, and Brisbane welcomed the news last year that Boeing would establish its R&D arm Phantom Works in the city.

The innovation of Queensland’s businesses and industries will drive future economic growth for us, so we need to ensure we have enough people with the right skills on board. While the skills shortage is being felt across many sectors, scientific and technical expertise, essential for knowledge jobs, are particularly lagging. The Queensland Government is producing a ten-year science, technology, engineering and maths education and training plan to help address this. Not so long ago it was thought that clever and creative people had to go elsewhere to carve out a career. But opportunities abound now, right here in Brisbane. Queensland has invested heavily in the world-class research infrastructure to attract world-class research talent. This has included investment in up to 26 research institutes in Brisbane and its surroundings. As a result, Queensland has attracted more than 500 new scientists in the past five years. Brisbane’s growth and differentiation as a smart city is being built around what the Smart State Council calls a ‘knowledge corridor’ running through the central city.

The corridor is anchored at both ends by precincts that are dominated by leading health and medical research facilities, as well as an up-and-coming environmental focus. The latter will build on the State’s expertise in environmental R&D and provide many of the solutions to today’s environmental challenges. Brisbane is also building an impressive creative industries precinct as part of the northern anchor of the corridor, and together with the cultural activities on South Bank is building a reputation as a design city. Recognising that we have some brilliant infrastructure in place, the Government’s new $120 million Smart State Strategy launched in 2008 is focussing on building up an even larger pool of researchers and technology workers. It has allocated some $43 million for scholarships, fellowships and other research grants to do this. Moreover, the Towards Q2: Tomorrow’s Queensland blueprint for our future, acknowledges that education is a top priority for Queensland and the aim is that three out of four Queenslanders will hold trade, training or tertiary qualifications by 2020. As Queensland’s capital, Brisbane is perfectly positioned to leverage off these initiatives, and together with its wonderful quality of life, is shaping up to be an exemplar of a smart city in a smart state. We are both nurturing existing talent and attracting new talent, and working with both groups to create inspiring new opportunities for all our residents. ts. The value of knowledge Knowledge is increasingly viewed as a critical resource in a globally functioning economy. It’s also key to future economic prosperity and we are witness to a generational low rate of unemployment (3.7 per cent during 2008). Australia’s trading partner’s hunger for our coal and iron ore has seen the biggest pay rises given in a generation. With such prosperous times, the booming job market appears to have convinced a growing numbers of young citizens to forgo a university education and take up high-paid work in industry, evidence that today’s talent pool has embraced greater mobility, creating wider and more lucrative options. How will this generation be equipped to handle expected social and economic changes expected over their lifetimes and during periods of economic uncertainty? Global knowledge Several studies have concluded that a key indicator for people deciding where to locate is destination first and then employment opportunity second. This dispels the commonly held perception that employment is the main consideration in deciding where to live. The appeal of a destination, the quality of living and opportunities that this presents plays a pivotal role and the “brand” of a city (its competitive advantages) should not only be focussed on talent attraction, but retention for when they arrive. Global cities and national governments are making it a strategic priority to attract innovative companies in order to position themselves as a knowledge based economy. To achieve this, knowledge, labour and talent play a pivotal role in the process. The Queensland Government’s Smart State Strategy positions the state as a knowledge economy; acknowledging information, education, talent, research and innovation are integral factors towards achieving this whilst driving economic growth. Brisbane is taking full advantage of such positioning, the majority of the state’s talent population reside in SEQ and an equal proportion of the capital infrastructure invested in the past 10 years is in Brisbane, including The Queensland Bioscience Precinct at UQ, the Institute of Health and Biomedical Innovation – IHBI at QUT and Esktis Institute for Cell and Molecular Therapies at Griffith to name but a few, creating some of the largest and most significant research institutes in the southern hemisphere. However, the “knowledge economy” is not based solely in scientific and technical occupations, it also encompasses professional managerial sectors. The Smart State interprets “knowledge industries” as aviation, biotechnology, advanced manufacturing and creative industries. Several commentators or political rhetoric refers to today’s global economy as one in transition, an extension of an “information society” to a “knowledge economy”. The international war for talent Increasingly, our young, creative, educated talent choose to work overseas, but as long we encourage enough of them to return, we will experience a beneficial circulation of talent rather than the proverbial “brain drain”. It also allows the opportunity for the Australian tax payer to see a return in investment from Australian educated expatriates. In the 2008 period the market experienced the highs of employment participation and the squeeze on available skills, as well as the lows of unemployment coupled with retrenchment anxiety. The later half of 2008 saw capacity utilisation eased a great deal, rebalancing the shortages and

brisban e e c o n o m ic ann u a l

During 2008 the market experienced the highs of employment participation and the squeeze on available skills, and then the lows of unemployment coupled with retrenchment anxiety.

employers are now reconsidering future labour demand, leading to several large employers shedding staff. This will have a dramatic effect on future growth and may lead to increased unemployment. An increasing number of expatriated Brisbane and Australian talent have been thinking “Should I stay or should I go now?” Especially those working on New York’s Wall Street or London’s financial centre who are wrestling with the market conditions and making a comparative analysis of their current life with one back home. At the end of 2008, there were only 14 banks in the world left with AA ratings, four of them Australian and although, Australian financial institutes are not immune from the turmoil, Australia offers the brightest horizon for talent. The 2008 economic climate presented an opportunity for returning expatriates to diversify or change career direction into other sectors, leveraging their experience into corporate roles using not just their skill set but also their global networks and knowledge gained offshore. Industry responses Industry has to be more creative to retain and attract talent on a global platform, especially in knowledge intensive sectors and in an age where global

At the end of 2008, there were only 14 banks in the world left with AA ratings, four of them were Australian.

graduate employees can pick and choose positions/locations. Recognising the need for collaboration, three of Brisbane’s largest knowledge intensive employers, Boeing, Mincom, and Suncorp developed an initiative to create an artificial knowledge marketplace in order to explore the opportunities associated with leveraging each other’s knowledge of technology, process and people capabilities. Each organisation identified a problem with capacity (high levels of attrition) and increasingly finding it difficult to attract and retain ICT positions. This is an innovation model to be applauded for promoting the cross fertilisation of knowledge, labour and talent in an increasingly competitive and global marketplace. Its not just industry that are having to look at their talent strategies, universities are having to radically review their recruitment strategies away from non-traditional talent sourcing (for both student and staff). They are engaging with prospective students earlier and in a more sophisticated/holistic manner, much the same way the defence force has had to change in response to declining intake, public perception issues and global war on terrorism.

Appealing to the new worker Over recent years, during the peak of the skill shortage, several employers discouraged annual leave or mandatory shut-down during holiday periods. Towards the end of 2008 we have witnessed the reverse of this, where most “Employment hasleave. been are actively encouraging their workforce to take accrued Reducing an organisation’s leave balancegrowing may indicate the start of a retrenchment twice as fast as strategy, but it can also be seen as an alternative to slashing the head count. The skills shortage has been restricting growth and increasingly bane forand industry population sincethe2000 over recent times. The economy does not stand still and nor does the changing forecasted towhat continue face of talent and inter-generational needs, and an employerbeyond is willing to offer them in order to attract and secure them. Best practise for the next two decades. ”talent attraction is offering employees flexibility, training and development and the opportunity to work in multiple locations. Moving forward, a demographic fault line is approaching the Australian workforce as the baby boomers enter retirement from 2010 onwards. This will only compound and exacerbate this situation, so industry and government will have to creatively address ways to keep this generation in the workplace for longer.

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Knowledge is the platform for 21st century jobs and economic sustainability.

â&#x20AC;&#x153;Employment has been growing twice as fast as population since 2000 and forecasted to continue beyond the next two decades. Employment has been growing twice as fast as population since 2000 and forecasted to continue beyond the next two decades. â&#x20AC;?

brisban e e c o n o m ic ann u a l

CELEBR ATING BRISBANE TALENT The University of Queensland Alumnus of the Year Award – Dr Quentin Bryce, AC Australia’s first female Governor-General Her Excellency Dr Quentin Bryce, AC, is The University of Queensland’s Alumnus of the Year for 2008. Dr Bryce, formerly Governor of Queensland from 2003 until this year, who was the official Visitor to the University, is a University of Queensland graduate, former UQ academic and an honorary Doctor of Laws recipient. She was sworn in as Australia’s 25th GovernorGeneral at a ceremony at Parliament House in Canberra on September 5 2008. Dr Bryce has used the knowledge and experience gained at UQ to remarkable effect, and her work will have lasting positive impacts on the lives of individuals, communities. Dr Bryce might have used her UQ Arts and Law degrees in any number of ways, but she chose to devote many years to furthering human rights and equality. Dr Bryce graduated with a Bachelor of Arts and a Bachelor of Laws from UQ where she later spent 14 years teaching Introduction to Law, Criminal Law, Administrative Law and Legal Aspects of Social Work. She has been Principal and Chief Executive Officer of The Women’s College within the University of Sydney; founding Chair and Chief Executive Officer, National Childcare Accreditation Council; Federal Sex Discrimination Commissioner; Queensland Director, Human Rights and Equal Opportunity Commission; and inaugural Director, Women’s Information Service Queensland, Department of Prime Minister and Cabinet. QUT Chancellor’s Outstanding Alumnus Award Winner 2008 – Zimi Meka With over 25 years Australian and international experience in his field, Zimi has demonstrated a remarkable capacity for developing new opportunities through technical innovation and culturally sensitive business practices. Zimi is the CEO and co-founder of Ausenco Limited which specialises in designing, constructing and commissioning mineral processing plants in some of the most difficult and remote locations in the world including Tanzania, Kenya, Laos, Vietnam, PNG, Thailand, Peru, Zambia and China. Ausenco has ridden the wave of the resources boom and currently has projects worth more than USD $3.0 billion underway in over thirty countries. Zimi has been Highly Commended by Engineers Australia Engineering for his innovations and his company has won a raft of awards. In 2005, the Ausenco / Bateman Engineering Khanong Development Group JV won the R W Hawken Award and Engineering Excellence Award for Resource Development. These awards were for developing the world’s first 60,000 tonne per year copper processing facility, utilising novel processing technologies and doubling the capacity of the existing gold plant for the Oxiana Resources Sepon project on Laos’ remote Ho Chi Minh Trail. Despite the difficulties presented by the location, the project was delivered ahead of schedule and under budget. Most recently, Ausenco has formed a JV with Taggart Global USA to pursue coal preparation plant development opportunities world-wide. For several years, Ausenco has won the Premier of Queensland Exporter of the Year Awards, and in 2007 was inducted into the Australian Exporters Hall of Fame, an honour bestowed on only four companies since 1962. Zimi holds a Bachelor of Engineering Honours (Mechanical). Griffith University Award of Doctor of the University 2008 – Dr George Miller Born in Chinchilla, Queensland in 1945, and later moved with his family to Sydney where he completed a medical degree at the University of New South Wales in 1971. After his graduation he took up residency at St Vincent’s Hospital in Sydney. His country childhood fostered his curiosity and became his apprenticeship to film making. As this curiosity continued to develop, he became more active in film making while studying medicine. Together with his brother Bill, they made a short film and entered it into a student competition. It won first prize, a course at a summer film school workshop in Melbourne in 1971. At the 1971 workshop George Miller met Bryon Kennedy, and together they teamed up to make short features. During his residency at St Vincent’s, George spent much of his spare time crewing on experimental films which included a well known collaboration with Kennedy titled “Violence in the Cinema, Part 1”. It was shown at a variety of film festivals and won several awards. George went on to co-write and direct his first feature length film, Mad Max, released in 1979. It was extremely successful, creating a cult character, and winning a variety of awards including six Australian Film Institute (AFI) awards. As a film writer, director and producer, George has continued to make popular and critically acclaimed films including Babe, Lorenzo’s Oil, Bangkok Hilton, The Year My Voice Broke, and mini series such as Vietnam and The Dismissal. He is a three time Oscar nominee for Babe (1996 Best Picture and Best-Writing – screenplay based on material from another medium), and for Lorenzo’s Oil (1993 Best-Writing – screenplay written directly for the screen). He also won the Golden Globe Award for Best Picture for Babe in 1996. More recently, George spent time in Sydney directing the computer-animated film Happy Feet, a musical epic about the life of penguins in Antarctic. It was Australia’s largest animated film project, with a crew of over 300 artists and technicians, including animation graduates from Griffith University’s Queensland College of Art which has the distinction of offering the nation’s first Bachelor of Animation degree. Happy Feet had enormous appeal at the box office and received the Oscar for Best Picture in 2007. In recognition of his outstanding contributions to film, George Miller was appointed an Officer of the Order of Australia in 1996 and was the recipient of the Queensland Advanced Expatriate Award in 2007. He has also been a member of the jury at the Cannes film festival in 1988 and 1999, Patron for the Australian Film Institute (2001-2004), Patron of the Brisbane International Film Festival, and Co-Patron for the Sydney Film Festival (2003). He praised the foresight of the Queensland Government and the University in establishing the Film School in its wonderful new location, and acknowledged the contribution of Griffith animation graduates to the making of the award winning animation film, Happy Feet.

brisban e e c o n o m ic ann u a l

commercial & industrial property FOR E WORD BY PAUL DAY, HE A D OF RE SE A RCH , S AV ILL S 2008 will be remembered as the year when everything seemed to go into a downturn including all the property sectors to varying degrees. To some, it had to happen sometime because property prices had been climbing for an extended period and property returns were shrinking across all sectors to the point where the risk premium in property investment was not readily apparent anymore. Early in 2008, property yields were still tightening while the Reserve Bank’s cash rate had peaked at 7.25 per cent, having steadily increased from its low of 4.25 per cent in December 2001. Over this time, property yields in the commercial and industrial sectors had reduced by at least 2 per cent. With the Reserve Bank’s cash rate back at 2001 levels and perhaps heading lower, are those property yields going to ease back to the 2001 levels? There is, however, a floor of support underneath Brisbane property coming from continued strong population growth. While government’s commitment to its infrastructure program continues, employment will remain comparatively strong and underpin that inflow of new residents. It is impossible to analyse the Brisbane property markets and predict what will happen over the next six months or twelve months with any degree of assuredness. In fact, it is probably easier to do longer term forecasting as eventually, all property markets recover and the next cycle begins, perhaps not all at the same time, but the characteristics are the same. Properties start to trade more freely, confidence builds, property prices start to rise, private and institutional investors borrow more from willing lenders to secure more property using their increased equity from rising property values. It all makes sense but there are winners and losers. If you are not on the “treadmill”, even basic housing can become unaffordable. Eventually, values are pushed too high relative to other fiscal measures and the markets become very vulnerable at this point. Any loss of confidence can bring the “boom” to a halt in an untidy fashion. So is this end to a “boom” period any different? Well it is definitely more complex and this time around and that is

brisbane economic annual

the problem with predicting what is going to happen. Locally, we have seen some easing in yields, decline in prices, reduction in rents or increase in incentives and all this has gone a long way to reinstating risk margins into property ownership or increasing affordability in the case of housing. At the moment, unemployment in Queensland is low at around 3.8 per cent, interest rates are low and maybe going lower. There are plenty of other sound fundamentals so recovery should be on the doorstep. However, that is not the case! Debt is high still, too high for local banks to carry at the moment. Much of our debt has been funded by overseas banks with overseas credit pipelines and those pipelines are running dry. Many of the foreign banks are withdrawing from Australia so when credit lines supplied by them falls due, they want it repaid. In the meantime, lower values means that any lines able to be rolled over will be reduced. Either way asset sell offs are approaching. Too much to sell off when buyers are scarce or unable to raise finance, spells trouble. Unemployment is the other issue. With a large component of out Gross State Product coming from private consumption, people need jobs and disposable income. The disposable income can be addressed by tax cuts and lower interest. Australia has grown dependent upon exporting its resources but if the orders dry up, and that has already started in some industries, then jobs will suffer. It will become all-important that the State’s infrastructure construction program continue and be accelerated as necessary to maintain jobs. Tourism is another job creator which should be fostered more actively, particularly as the lower Australian dollar provides a natural advantage. It looks very likely that there is more hurt to come from overseas and it will have an effect on local confidence and local business. Clearly, there will be more downward pressure on prices and rents during the year but less than is being experienced overseas. Brisbane is not a safe harbour from the global financial turbulence and volatile property markets, but it appears to be the best shelter around.

brisbane economic annual

Office Market The Brisbane CBD and “near city” office-markets total around 2.814 million square metres of office space. The small CBD area, which is only about 2.4 square kilometres, contains 1.83 million square metres with the balance in ten inner city suburbs known as the “near city” or “fringe office” market. Brisbane has seen a boom in office construction over the last year, encouraged by record tight vacancy rates and strong demand for office space. More than 225,000 square metres of new office space has been added to the CBD and fringe (+8.72 per cent), of which 125,000 square metres were taken up. CBD/Fringe vacancy rates have consequently eased from an unworkable 1.11 per cent in January 2008 to 4.61 per cent in January 2009, still regarded as low, but allowing new tenants the opportunity to find appropriate space and existing tenants to move when additional space is required. The combined office markets of Brisbane CBD and fringe have seen 77,000 square metres taken up annually over the past ten years. This accelerated to just below 100,000 square metres of office space being absorbed annually over the last five years. 2009 will see more new office buildings enter the market lifting vacancies towards double figures in the short term as demand for space is slowing but a longer term over-supply is unlikely as restricted credit, a product of the current financial climate, is regulating the supply by default. The period of tight office vacancies gave rise to unprecedented rental increases peaking in early 2008 before moderating during the later part of the year. Prime office rents peaked around $1,000 per square metre or more while secondary office space achieved up to $800 per square metre with virtually no incentives offered. These levels are well above what is regarded as the “economic” rent and led to an unusual two-tier office market emerging where pre-commitments in new buildings adopting sustainable development principles and providing a higher level of amenity, were $200-$300 per square metres below the rental cost of dated existing space. With new supply entering the market and demand for space easing, as tenants tend to make do with less space in difficult times, rents in existing buildings are expected to moderate. Landlords are offering increased incentives to retain their tenants and attract new tenants in competition with the new office stock.

CBD/Fringe vacancy rates have consequently eased from an unworkable 1.11 per cent in January 2008 to 4.61 per cent in January 2009.

An interesting situation arose in the sale of office buildings over the last two years. Rents rose sharply in a very short period of time so that most buildings were sold with income well below their potential. That is, they were underrented and offering good reversionary income in future years. This led to some unusually low yields, anything from 4 per cent to 6 per cent, at the time of sale. These yields would have been substantially higher if the current income reflected current market rents. The number of office sales reduced significantly in 2008 after a record previous year as purchasers either couldn’t obtain well-priced finance or they sensed property was likely to be re-priced in the absence of readily available credit. It is now looking more like this adjustment in the market was something that was always going to happen, one way or the other, and rightfully, risk premiums for property are re-emerging. However, it is indisputable that Brisbane has gained enormously from the office boom. The new office buildings are changing the face and skyline of Brisbane, opening up new precincts in the CBD as well as the fringe suburbs and delivering world-class standards of office accommodation in environmentally sustainable buildings.

Retail Market The Brisbane metropolitan area has a total of 195 shopping centres ranging from neighbourhood centres (supermarket plus specialty shops) right through to the super regional centres like Westfield Chermside and Westfield Carindale, with each boasting two major department stores, multiple discount stores and supermarkets. These enclosed and semi-enclosed shopping centres are monitored by the Property Council and account for approximately 2.83 million square metres of retail space. These figures exclude the myriad of local convenience centres, freestanding shops and shopping strips. Queenslanders enjoy the highest amount of retail space per capita in enclosed centres nationally, a lot to do with shoppers’ comfort in the steamy summer weather endured by Brisbane. A recent survey of the Brisbane CBD retail space found that the city had just short of 310,000 square metres of retail space spread between 1,518 shops with a current vacancy of 10,706 square metres or 3.47 per cent. The Queen Street Mall is at the heart of the CBD core retail precinct, which commands 74 per cent of the city retail space and understandably enjoys a lower vacancy of 1.89 per cent. Retail property throughout Brisbane has thrived over the past decade, producing the most consistent returns of all property sectors, a result of strong population and employment growth as well as generous disposable income for at least six years of the past decade.

brisbane economic annual

Brisbane is not a safe harbour from the global financial turbulence and volatile property markets, but it appears to be the best shelter around.

The retail property sector remains the most sensitive to location. In Brisbane, mall-front shops at high pedestrian-flow corners have secured some of the highest rents, recording up to $7,000 per square metre for a 50 square metre shop. The same sized shop in the CBD perimeter would only achieve $650 per square metre. Brisbane city is evolving at an increasing rate and the retail sector is playing its part by expanding and reinvigorating, leading to increased patronage from students and city workers as well as city residents. The growing number of residents in the CBD has been good for city retail by providing increased patronage over a wider range of hours. Consequently, Brisbane has seen convenience stores such as 7-Eleven food stores proliferate along with life-style shops such as bicycle and fitness equipment shops, pandering to a new class of city dwellers. Suburban retail has also boomed, particularly over the past three years, driving the retail centre class into a highly sought after investment. Retail trade had been growing well over 4 per cent per annum turnover and the November 2008 (trend estimate), released in January 2009 by the Australian Bureau of Statistics, still reveals a growth of 3.0 per cent on the November 2007 turnover, despite a predicted slowing in the second half of 2008. This growth and a shortage of quality stock on the market, along with value add opportunities by expansion like ATMs, kiosks, percentage rent and other methods of increasing rental income, have been reflected in yield compression and rising property values through 2007 and into early 2008. Now at the end of 2008 and heading into 2009 more property is available for purchase as many Listed Property Trusts seek to lower their debts in todayâ&#x20AC;&#x2122;s financial climate, but there are fewer buyers in the market for the same reason. Consequently, yields are starting to ease in this asset class, returning to a level where there is a reasonable risk premium above the cost of funds. The decline in the volume of sales is likely to pick up towards the end of 2009/ early 2010 as sentiment and credit availability improves and retail property is again seen for its consistency of overall performance.

INDUSTRIAL MARKET The industrial property market in Brisbane launched into 2008 following a particularly active year, which saw industrial land prices soar and the owneroccupier market particularly strong. As with other property classes, sentiment changed rapidly in early 2008 and it was clear that small to mid-sized firms changed their focus to leasing premises rather than buying or building.

brisbane economic annual

Speculative construction to satisfy a growing demand for leased premises was not a viable option at this juncture as the cost of land, which was hovering around $450 per square metre in Brisbane, put the capital invested beyond a satisfactory return that could be achieved from the rent. Especially when you also factor in construction costs for the standard warehouse with basic offices plus professional fees and statutory charges. On the other side of the equation, tenants operating on fairly thin margins were finding it progressively more difficult to afford the rental prices. Clearly either higher rents were needed or land/construction costs had to ease. Of course, what happened was a double win for occupiers with the Australian dollar falling from almost parity to the US Dollar down around 65 cents, a fall of more than 30 per cent and now land prices and construction costs are easing. Eventually, real rents are likely to ease reflecting the lower cost of providing industrial premises. From an investment point of view, this is not an encouraging outlook. Already yields are reflecting reduced investment demand and have eased by up to 100 basis points. Now there is likely to be further pressure on industrial property yields if there is no real rental growth and a possibility of reducing rents. As the Brisbane industrial market moves into 2009, there are encouraging signs that the owner-occupier of mid-sized premises is out there starting to look again and small firms remain interested in well-located strata titled office/warehouses. It is back to the scarcity of credit which is stalling any real recovery. Large national firms are mindful of containing costs and debt in the immediate future and unless larger premises are absolutely required for assured growing markets, they are content to make do with existing premises. It is important for industrial production that construction (residential/nonresidential and infrastructure) continues at reasonable levels to help firms get through a difficult period.

RESIDENTIAL MARKET Brisbane continues to be the fastest growing capital city nationally with a population growth currently around 2 per cent per annum. This means that approximately 36,000 persons are being added to the Brisbane Statistical Division each year. This means that Brisbane needs something like 14,000 new dwellings annually to keep up with this growth based upon the current household formation ratio. New dwelling approvals for Brisbane have recently been exceeding 16,000 houses and units annually so one might surmise that there is a balance between supply and demand. However, many of these new dwellings are for high-rise city apartments, student accommodation and other specialised developments. It is very likely that actual construction starts will be significantly lower than approvals, particularly in the current economic climate. The net result is that residential vacancies throughout Brisbane remain low while demand has been strong up to the middle of 2008, feeding into rising rents across all residential categories. The Residential Tenancies Authority have median rents increasing by more than 10 per cent on average during the course of 2008. A two bedroom unit in Brisbane now exceeds $340 per week and three bedroom house $360 per week. Average rents well exceed these medians depending on the suburb. While rents continue to rise for the moment, house prices are starting to ease as demand, particularly for the top end, has waned in the face of economic instability. However, the housing market has good prospects. Population growth is strong, the first home buyers are encouraged by the recently increased First Home Owners Grant and interest rates have fallen 300 basis points in the last three months of 2008. As long as employment remains stable, there should be plenty of demand for low to middle priced housing. For the present, Brisbane remains the second least affordable capital city for housing behind Sydney, but unlike Sydney, housing quickly becomes more affordable in the outer ring suburbs. Investors largely departed the residential market in the second half of 2008, as negative sentiment set in and this is unlikely to see a turnaround in the short term until confidence is restored or the housing market experiences a dramatic fall in prices. For the moment, some easing in the Brisbane median house price has occurred but only in the order of 5 per cent. Brisbane remains favoured to be the least affected by the economic downturn and the most to benefit from population growth.

brisbane economic annual

strategic precincts

brisbane economic annual

Fore word by Dr Terry Cutler, Chair of National Innovation System Re vie w There’s no place like a precinct – precinct or corridor developments remain in vogue across Australia, although the impetus may range from urban renewal, investment attraction into industrial districts or clusters, to the promotion of research and innovation hubs. Brisbane has a number of well designed and flourishing precincts, strategically planned or otherwise. In addition, with a number of Transit Orientated Developments (TODs) underway, the city is endowed with significant corridors of culture, academia and innovation and after all, it is the capital city of the “Smart State”. Brisbane is experiencing an unprecedented amount of place making and development and is growing a critical mass of flagship precincts after several years of public and private investment. However, with limited supply and strong demand for land, Brisbane will have to closely consider land use planning to sustain the city’s future growth. At the most simple level the discussion or promotion of precincts reminds us that, despite all the rhetoric about “virtual worlds”, place matters and, as the real estate agents keep saying, location is everything. Precincts refer to a particular locus or hub of activity which is bounded in some form, but which nonetheless forms and remains part of wider urban conurbations and socio-economic ecosystems. Bilateral arrangements may of course develop naturally in the context of co-location, but the important point is that a successful precinct will be an open, dynamic ecosystem with multiple participants, diverse and evolving relationships, and the capacity to change and evolve over time. Ideally precinct developments based around innovation hubs should aim to address or at least to be cognisant of some of the key trends and emerging challenges of the 21st century which will affect us all, on the ground, in one way or another. These include: • the rise of the non-routine and complex in business and industrial practice; • the increased competition between localities as multinational companies morph into global enterprises where the company’s country ‘flag of convenience’ becomes less and less salient to its investment decisions; • the growing awareness of the importance of inter-disciplinary and transdisciplinary frameworks and capabilities for addressing “wicked problems” like design, population health, or climate change; • open innovation paradigms and practices, and the growing recognition of the importance of non-linear, market-facing innovation processes, often driven from the user interface;

• growing awareness of the value of “embedded practice” in research and industry interfaces, especially where tacit knowledge and team learning is at a premium; • increasing recourse to models of shared infrastructure (such as with the Australian Governments National Collaborative Research Infrastructure Scheme). There is a growing recognition that no individual, no firm and no region can “do it alone”. There is unlikely to be “one size fits all” model or approach. The dynamics of a research and innovation precinct, an industrial zone, and a cultural or ethnic precinct are all likely to be different to some degree. Every planned precinct development will represent, to a greater or lesser degree, a socio-economic experiment. This is a good thing, as long as we recognise the importance of learning as we go along. We need to continue to explore and refine new development models, and to design development architectures which are adaptable and responsive to changing circumstances and demands. A successful precinct would be a localised ecosystem which: • revolves around a clear core development proposition which can engage the sustained participation of multiple parties who have an expectation of mutually beneficial interests; • develops a distinct identity; • mobilises the supply of supportive infrastructure, facilities and resources; • leverages individual participation and investment; • delivers sustained impact and benefits; • facilitates active collaborations and informal networking; • operates with clear and transparent rules of engagement; and • involves global engagement and linkages. A key requirement for any successful precinct development is clarity of strategic intent – what the precinct purports to address and what it does not – as well as a shared understanding among all the participants about their respective roles and expected contribution, agreed rules of engagement (governance), and subscription to basic principles of operation. These are prerequisites for the development of any culture of collaboration.

brisbane economic annual

Str ategic Precincts Phenomenal employment growth in Brisbane has lead to significant pressure on existing infrastructure which in turn has inspired an extraordinary amount of active projects around the city. From bridges and bus ways to research centres and master-planned communities, Brisbane is leading the way with new infrastructure as well as commercial and residential projects being undertaken from all levels of government. Central to accommodating all this growth for living, working and playing is in-fill development which links in with current public transport, established road networks and is ideally located to take advantage of existing infrastructure such as hospitals, schools and workplaces. To a large extent, these objectives are being met by a number of current planned communities or identified future planned communities:

brisbane economic annual

Australia TradeCoast (ATC) Development: Commercial trade, shipping and freight ports Job Creation: 63,000 (106,000 total) Completion Date: Approximately 2028 Budget: $2.8 billion committed and $3.14 billion planned The largest of all precincts, encompassing an area of 8,000 hectares that straddles both sides of the Brisbane River from Eagle Farm to the river mouth. ATC is an initiative of the Port of Brisbane Corporation, Brisbane Airport Corporation, the Queensland Government and Brisbane City Council through Invest Brisbane who have combined to direct investment and development in this vast area. The precinct boasts a shipping port, domestic and international airports, industrial and commercial sub-precincts with more than one billion dollars of infrastructure invested into the area over the past five years. ATCâ&#x20AC;&#x2122;s contribution to the state economy was measured at $4.1 billion in the year 2006/07. It is considered that ATC is Brisbaneâ&#x20AC;&#x2122;s best asset to secure strong economic growth in the region. The precinct has room for further expansion with a planned increase in the number of shipping terminals and a second runway for the airport is in development.

Bowen Hills Development: Urban renewal – commercial, retail and residential Developers: Devine Ltd and Multiplex Brookfield Job Creation: 5,000 Residential: 10,000 Completion Date: Approximately 2028 The recently named Urban Development Area (UDA) encompasses 108 hectares in the inner city suburb of Bowen Hills, a mere three kilometres from the Brisbane CBD and includes the old Museum, the RNA exhibition grounds, Bowen Hills train station and Perry Park along to Enoggera Creek. The Bowen Hills train station will play an important part in the development of the area as it is one of only four stations in Brisbane where all lines pass through. As such it will make the ideal “Transport Oriented Development” (TOD) and will be central to the redevelopment of the precinct. The area could eventually take up to 300,000 square metres of commercial offices with accompanying retail and medium to high density residential dwellings. Submissions have been called for the redevelopment of the RNA exhibition grounds that will involve new stands and facilities for the exhibition grounds and the release of some land for the development of commercial offices and/or residential apartments. Kelvin Grove Urban Village Development: Master planned community with commercial, retail and residential Developers: Queensland University of Technology (QUT), Queensland Government Residential: 800 accommodation units Completion Date: 2010 Budget: Approximately $1 billion Just two kilometres north of the Brisbane River is the master planned community of Kelvin Grove Urban Village, the 17 hectare precinct which was the joint initiative of Queensland University of Technology (QUT) and the Queensland Government’s Department of Housing. Development is still progressing within the precinct and a community has already come together around a university campus, creative industries and biomedical research centres, the Australian Red Cross Blood Service headquarters and operations centre, a live entertainment theatre, a new shopping centre with restaurants and coffee shops as well as a growing commercial office presence. There are also over one thousand apartments, catering for a diverse mix of residents and more residential developments to come. The University is also exploring major precinct redevelopment of Garden’s Point, with the view to plan a Science and Technology Precinct to complement what has occurred at Kelvin Grove around Health and Creative Industries. The current estimated cost of this project is up to $200 million.

Brisbane is building an impressive creative industries precinct as part of the northern anchor of the knowledge corridor, and together with the cultural activities on South Bank is building a reputation as a design city.

Brisbane Technology Park (BTP) Development: Technology Park with conference, commercial facilities positioned at fostering established and emerging technology based companies. Developers: Graystone Developments Pty Ltd and Queensland Government Job Creation: 2,400 (5,000 total) Completion Date: Approximately 2014 The BTP precinct commenced a number of years ago as an initiative of the Queensland Government and is an important part of the Smart State program, providing technology based companies with accommodation options in an environment with similar or complementing businesses. Home to more than 80 national and multi-national companies, BTP is an area of 33.5 hectares at Eight Mile Plains, under 15 minutes to the Brisbane CBD and around 20 minutes to the Ports area via the Gateway arterial road which also allows easy access to the Gold Coast and Ipswich. BTP is a managed technology park with conference facilities, meeting and exhibition areas with accommodation variations via multi-occupancy, single tenancy or owner-occupied options. Precincts such as these contribute to economic growth by providing incubator accommodation and support to fledgling technology based businesses. More than 22 projects have been completed with another three either in course of approval or construction.

brisbane economic annual

Health and Food Sciences Precinct Development: Research facilities in healthcare, medicine, food and nutrition, commercial and retail Developers: CSIRO and Queensland Government Completion Date: 2010 The Queensland Health research facilities at Kessels Road, Coopers Plains are being expanded to create a Science Centre of Excellence and will complement the Ecosciences Precinct under construction at the Boggo Road Urban Village redevelopment. It will be known as the “Health and Food Sciences Precinct” upon its completion in early 2010 and around 200 scientists from Queensland Health, Department of Primary Industries and Fisheries and CSIRO will join together to create a knowledge centre for health and food. The objective will be to focus on ways to help people live longer, healthier and more fulfilling lives through advances in healthcare, medicine, food and nutrition. It will be the first of its kind in Australia and covers both human and animal health as well as food sciences in one physical location. 109 Central Development: Environmental and biomedical research facilities, commercial and retail Job Creation: 30,000 Budget: $1 billion 109 Central integrates four new-and-existing science and education themed precincts into a world leading environmental and biomedical research community. Named after the bus route that connects all of the research facilities – Boggo Road Ecosciences Precinct, Princess Alexandra Hospital Health, Science and Education Precinct, the University of Queensland Precinct and the Queensland Children’s Hospital/Mater Hospital Precinct, the new precinct will result in a leading environmental and biomedical research community. Boggo Road Ecosciences Precinct & Urban Village Development: Research facilities, commercial and retail Developers: CSIRO, Watpac and Queensland Government, Job Creation: 1,200 Completion Date: 2009 (village) and 2011 (Ecoscience Precinct) Budget: $325 million This science and research enclave is a part of the 9.5 hectare Boggo Road Urban Village redevelopment, a master planned community on the site of the former Boggo Road Gaol at Annerley Road, Dutton Park. The area allocated to the Ecosciences precinct is approximately 1.63 hectares which will provide for 81,715 square metres of Gross Floor Area for the project enabling a variety of state of the art facilities including offices, workshops, laboratories, insect houses and greenhouses. The precinct will be Australia’s first centre dedicated to solving some of the country’s biggest environmental issues. Priority will be given to climate change,

brisbane economic annual

water issues and balancing the needs of our environment and growth of our industries. The first class research facilities will be recognised globally and attracting our best minds to work on the current issues, adding to Queensland’s growing reputation for scientific research and innovation infrastructure. The Princess Alexandra Hospital Health, Science and Education Precinct Development: Pharmaceutical research facilities, commercial and retail Developers: Alba Capital Partners Ltd on behalf of The University of Queensland Job Creation: 90+ (Stage 1) Completion Date: 2010 (Stage 1) 2011 (Stage 2) and 2013 (Stage 3) Budget: $100 million (Stage 1) This precinct will co-locate a number of health, science and education institutions in order to create an environment that encourages interaction and collaboration between researchers, professionals and the broader community. Princess Alexandra Hospital is one of Australia’s leading teaching and research hospitals with particular expertise in spinal injury management. The hospital is also a major centre for liver, kidney, bone, cartilage, and cornea transplants. Those groups co-locating are: The University of Queensland’s Pharmacy Australia Centre of Excellence (PACE) Precinct. This precinct will facilitate pharmaceutical research, education, clinical practice, and commercialisation. The centre will co-locate pharmacy educators and researchers, pharmaceutical and health industry organisations, commercial research and development groups and private equity joint-venture partners. The facility will allow for an increase in pharmacy graduates to meet workforce needs and promote linkages with the profession and industry to improve both teaching, research and commercialisation opportunities. The University of Queensland (UQ) appointed Alba Capital Partners Ltd to undertake the development and financing of the PACE Precinct which is designed to foster Brisbane’s growth of the pharmaceutical industry. PACE Stages 2 and 3 offer the only world-class commercial and research laboratory space available to the private sector within this PA Hospital Precinct. This will allow businesses to leverage relationships with other occupants of the wider precinct that over the next five years will grow to house more than 2000 researchers, clinicians and pharmacy sector businesses. Translational Research Institute (TRI) Development: Biopharmaceutical research facilities Developers: The University of Queensland, MMRI and Queensland University of Technology (QUT) and Queensland Government Job Creation: 600 Completion Date: 2011 Budget: $362 million

Translational Research Institute (TRI) and BioPharmaceuticals Australia, also known as the Smart Therapies Institute, will be the first institute of its kind in Australia – and one of only a few in the world – to have the ability to manage the discovery, clinical testing and manufacture of new biopharmaceuticals and treatments all in the one place. The institute is the brainchild of 2006 Australian of the Year UQ Professor Ian Frazer, whose work lead to a vaccine that could eradicate cervical cancer. Queensland Children’s Hospital / Mater Hospital Precinct Development: Children’s hospital Developers: Queensland Government Job Creation: 3,650 Completion Date: 2014 Budget: $1 billion The new Queensland Children’s Hospital (QCH) will become the only paediatric healthcare facility in Queensland, after the recommendations that the community would benefit from having a single tertiary children’s hospital. The QCH will bring together specialist paediatric staff from the Royal Children’s Hospital, the Mater Children’s Hospital as well as the Queensland Paediatric Cardiac Service (QPCS) which is transferring from The Prince Charles Hospital. Once complete it will become the largest paediatric facility in the Southern Hemisphere. The hospital will be anchored by the Mater Medical Research Institute which will occupy a significant part of the Translational Research Institute. University of Queensland St Lucia Precinct The University of Queensland (UQ) is a leader in a range of disciplines, including the biosciences, nanotechnology, sustainable development and social science. The university is home to 1,500 researchers and a number of research institutes, including the: • Australian Institute for Bioengineering and Nanotechnology • Diamantina Institute for Cancer, Immunology and Metabolic Medicine (Located at PA Hospital) • Institute for Molecular Bioscience • Institute for Social Science Research • Queensland Brain Institute (opened in late 2007, the $63 million seven-storey facility was designed by John Wardle and Associates and Wilson Architects and built by Watpac). The university is also exploring options for it’s 280 hectares of riverfront site at Pinjarra Hills on Brisbane’s western fringe. The site is currently occupied by the School of Veterinary Science which will be relocated to a $95.8 million purpose built facility constructed by Laing O’Rourke at the Gatton Campus. The construction scheduled to be completed by December 2009 in preparation for the start of teaching in February 2010. Ideally located alongside Australia largest teaching hospital, Royal Brisbane & Women’s Hospital (RBWH) the Royal Children’s Hospital and one of the Southern Hemisphere largest research institute’s the QIMR, the UQ’s new Centre for Clinical Research (UQCCR) is a $66 million facility designed to bridge the gap between biomedical science and the increasing complexity

of modern patient care. The first teams moved in around May 2008, with the building expanding over the next two years to a capacity of 350 researchers on one of Australia’s largest health campuses. The centre will focus on potential discoveries for treatment of breast and prostate cancer to therapies for dementia, stroke and brain injury. Newstead River Park - Gasworks Development: Urban renewal – commercial, retail and residential precinct Developers: FKP, Mirvac and Watpac Residential: 2,000 Completion Date: May 2018 Budget: $485 million The development is part of the governments Urban Renewal Project, utilising the site of the former Teneriffe Gas Works that enjoys a premier position with a significant frontage to the Brisbane River. The 17 hectare master-planned site, located a mere 2.5 kilometres from the Brisbane CBD, will become a suburb within a suburb, with a mix of commercial, retail and residential developments linked within a riverside setting that includes five hectares of parklands. Development of the site commenced in 2008 with construction starting on a $163 million world-standard sustainable office building of more than 30,000 square metres to be occupied by Energex as well as 2,200 square metres of ground floor retail space. Northshore Hamilton Development: Urban renewal – commercial, retail and residential Developers: Northshore Development Group, Devine Ltd and Multiplex Brookfield Job Creation: 5,000 Residential: 10,000 Completion Date: Approximately 2028 Northshore is a master planned community initiated by the Port of Brisbane in 2003 when they formed the Northshore Development Group. Originally planned to be a 64 hectare town centre community, the project expanded in 2008 when the precinct was extended further up river and named an Urban Development Area (UDA). The precinct now comprises 80 hectares of former Port of Brisbane land with two kilometres of Brisbane River frontage between Portside and the Queensland Golf Course and includes the suburb of Hamilton for a total area of 304 hectares. This is the largest master planned precinct Brisbane has seen and will be a real catalyst for re-invigorating what has been a long overlooked inner-city river frontage. The latest development plan put forward by the UDLA calls for affordable and prestige apartments in a mix of medium and high densities, as well as commercial areas set aside for employment generation.

brisbane economic annual

commercial landscape

brisbane economic annual

Fore word - Michael Klug, Partner in Charge, Cl ay ton Utz The simultaneous collapse of debt, equity and property markets globally is unprecedented, while the fallout from the sub-prime crisis in the US continues to have a domino effect on the world’s major economies. Australia has so far managed to avoid a recession however it is difficult to predict what the future holds and there is no doubt that 2009 will be a challenging environment for businesses in Australia. These challenges also present plenty of opportunities and this is certainly the case in Brisbane. As one of Australia’s largest law firms, Clayton Utz is seeing first hand the impact of the global financial crisis on business activity. While in some areas activity has slowed – there have been fewer corporate deals and equity raisings in recent times, for example – the current market conditions are seeing increased activity in others, particularly insolvency and restructuring and energy and resources. Queensland’s economy is proving more resilient than other states thus far. The State government has committed to an extensive infrastructure program and government spending is likely to continue to drive commercial activity. Continuing on the infrastructure perspective, the building of critical infrastructure to support Brisbane’s growing population remains a priority for government at both a local

and state level. A number of major infrastructure projects are currently underway including the $4.8 billion Airport Link, linking Brisbane’s northern suburbs to the airport – the largest Public Private Partnership (PPP) project undertaken in Australia to date – and the $2 billion North South Bypass Tunnel, which marked the first time a local authority (the Brisbane City Council) had undertaken a project of this nature in partnership with the private sector in Australia. Although the current economic climate has prompted concerns over how future projects will be funded, there is little doubt that major infrastructure projects will continue to be undertaken in Brisbane in coming years. We may see new funding models emerge, with a shift away from the traditional PPP model in favour of alternative models such as the Supported Debt Model (SDM), which is in use in the South East Queensland Schools Project (the first project in Queensland to utilise the model). The market will come back but it is difficult to predict whether this will occur in 2009. Although being in Australia and certainly Queensland and Brisbane, we are much better placed than a number of other economies to ride out the storm. We remain extremely confident in the long term prosperity of Queensland and Brisbane.

brisbane economic annual

The Regul atory Environment Australian and foreign business entities are subject to control by a number of authorities responsible for regulation of financial and securities markets, competition and fair trading, taxation, and incorporation and business operations. A summary on each of these authorities is set out below. The Australian Competition and Consumer Commission (ACCC) The Australian Competition and Consumer Commission was established in 1995 principally to administer the Trade Practices Act 1974 (Cth). It also has additional responsibilities under other legislation including the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth), the Telecommunications Act 1997 (Cth) and the Trade Marks Act 1995 (Cth). In broad terms, the objectives of the Trade Practices Act (and similar State and Territory legislation) are to promote competition and fair trading and provide for consumer protection. The Act covers anti-competitive and unfair market practices, company mergers or acquisitions, product safety and product liability, and third party access to facilities of national significance. The Australian Prudential Regulation Authority (APRA) The Australian Prudential Regulation Authority is a statutory authority which was formed in 1998 to promote the prudent management of financial institutions. This regulatory function covers banks, life insurers, building societies, credit unions, friendly societies and superannuation funds. APRA has powers which require financial organisations to observe prudential standards, and APRA may intervene, where necessary, to protect the interests of depositors, policy holders or members. In addition, APRA has far reaching powers of investigation, intervention and administration.

Contribution Scheme (HECS)) and the Private Health Insurance Rebate, and has responsibility for the fiscal regulations of Australia’s superannuation system. Foreign Investment Review Board (FIRB) The Foreign Investment Review Board (FIRB) is a non-statutory organisation formed in 1976 to provide foreign investment policy advice to the Government. The function of FIRB is to assess direct investment proposals submitted by foreign interests and to make recommendations to the Australian Government on the compatibility of those proposals with Government policy and the Foreign Acquisitions And Takeovers Act 1975 (Cth) (FATA). FIRB also provides information on the Government’s policies to prospective foreign investors and potential investors alike. Further information about foreign investment regulation under the FATA and the Government’s Foreign Investment Policy is set out in sections 2 and 4 below. The table below sets out investment in Australia by industry sector for the period 2001-2002 up to and including 2006-2007: 2001 to 2002

2002 to 2003

2003 to 2004

2004 to 2005

2005 to 2006

2006 to 2007

0.2

0.09

0.78

0.54

0.01

0.1

13.2

6.7

2.65

11.23

6.05

5.54

16.4

21.72

23.06

22.12

13.50

61.45

141

19.1

11.47

10.39

33.5

12.52

19.41

Approved

Investment ($billion)

4.8

5.2

0.14

3.66

Approved

111

119

111

116

Investment ($billion)

23.3

34.78

30.46

23.67

28.47

Approved

Investment ($billion)

1.7

1.47

0.72

2.64

1.54

Approved

4,043

4,257

4,059

3,949

4,755

5,612

Investment ($billion)

14.3

15.5

28.74

20.91

13.85

17.10

4,3491

4,5472

4,3633

4,2834

5,1015

6,0696

118

85.68

102.01

119.47

75.23

137.28

Industry Sector Agriculture/Forestry/Fishing Approved Investment ($billion) Finance and Insurance Approved Investment ($billion)

Australian Securities and Investments Commission (ASIC) The Australian Securities and Investments Commission (ASIC) is the national regulator of Australian registered companies and one of the three Federal Government bodies that regulate financial services. ASIC administers the national corporation law scheme, the law regulating the incorporation, operations and management of companies. ASIC is therefore responsible for supporting integrity and fairness in company affairs and in securities and futures markets. ASIC’s consumer protection function extends to the financial system, as the commission regulates the advising, selling and disclosure of financial products and services to customers. Australian Securities Exchange (formerly the Australian Stock Exchange) ASX Limited (formerly Australian Stock Exchange Limited) operates under the brand name of the Australian Securities Exchange (ASX). The ASX is the securities exchange that resulted from the merger between the Australian Stock Exchange and the Sydney Futures Exchange. The ASX is in the top 10 listed exchange groups by market capitalisation world wide and the second largest stock exchange (behind the Tokyo Stock Exchange) in the Asia Pacific Region. The ASX has markets trading in equities, derivatives and enterprises. There are branches of the ASX in Sydney, Melbourne, Brisbane, Adelaide and Perth. The ASX Listing Rules ensure that the constitutions of listed companies include provisions regarding shareholder rights, such as the necessity of consulting shareholders over major transactions, and also ensure that listed companies observe certain standards in respect of market awareness and the provision of information. Australian Taxation Office (ATO) The Australian Taxation Office, under the Commissioner of Taxation, is the statutory authority responsible for administering Australia’s taxation system. Australia’s income tax law consists primarily of the Income Tax Assessment Act 1936 (Cth), the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth), as well as ATO administrative taxation rulings and court decisions. Fringe benefits provided to employees are subject to a separate regime, under the Fringe Benefits Tax Assessment Act 1986 (Cth). Australia’s goods and services taxation law consists primarily of the A New Tax System (Goods & Services) Tax Act 1999 (Cth). The current income tax system involves the taxation of income and capital gains of individuals and businesses. The ATO administers the process of annual self assessment and conducts random audits to verify assessments. The ATO also collects excise on tobacco, petrol and alcohol, administers the High Education Loan Program (HELP) (formerly known as the High Education

brisbane economic annual

Manufacturing Approved Investment ($billion) Mineral Exploration/Development Approved Investment ($billion) Resource Processing

Services (excluding Tourism)

Tourism

Real Estate

Total: Approved Investment ($billion)

Source: Foreign Investment Review Board Annual Reports 2001-02 through to 2006-07 The table below sets out the total approvals by industry sector in 2006-07:

The table below provides a summary of the value (in A$million) of investment in Australia by location of investment for the period 2001-2002 up to and including 2006-2007: Industry Sector

Number of Approvals

Agriculture, forestry & fishing Finance & insurance Manufacturing

Acquisition cost $b

Development expenditure $b

Proposed investment $b

0.10

5.54

0.09

5.63

61.45

1.40

62.85

141

19.41

12.87

32.28

3.66

Services

116

28.47

0.46

28.93

Tourism

1.54

0.01

1.54

Real estate(a)

5612

17.10

4.29

21.39

Total

6069

137.28

19.11

156.39

Mineral exploration & development Resource processing

Source: Foreign Investment Review Board Annual Report 2006-07 (page 24)

State/Territory

2001 to 2002

2002 to 2003

2003 to 2004

2004 to 2005

2005 to 2006

2006 to 2007

New South Wales

25,800

9,600

11,390

7,850

6,594

13,621

Victoria

13,500

9,900

8,600

10,450

3,815

7,541

Queensland

6,600

11,300

14,170

9,930

11,417

10,113

Western Australia

7,100

7,900

13,750

8,310

7,705

22,320

South Australia

3,010

320

1,300

1,552

Tasmania

160

277

237

Australian Capital Territory

400

130

118

473

Northern Territory

210

630

568

214

Various locations

57,300

39,600

48,970

80,890

51,420

97,217

Offshore

5,800

1,900

1,370

890

2,539

3,099

Other

1,800

5,600

Total

117,900

85,800

102,010

119,470

85,751

156,387

Source: Foreign Investment Review Board Annual Reports 2001-02 through to 2006-07

Reserve Bank of Australia (RBA) The Reserve Bank of Australia is a statutory authority performing the country’s central banking function. The Bank is wholly owned by the Australian Government and, as at 30 June 2007, it maintained assets of around $132 billion. The RBA has two broad areas of responsibility: monetary policy and financial stability. The RBA’s monetary policy is primarily directed at maintaining inflation rates at the level most conducive to sustainable growth. The RBA’s financial stability policy aims to prevent excessive risks in the financial systems and to limit the effects of financial disturbances when they occur. Within this role, the RBA has a particular responsibility for maintaining the efficiency of the payment system. The RBA is governed by the Reserve Bank Board and the Payment System Board. The RBA plays an active role in financial markets and the payment system and is responsible for issuing Australian currency notes. The Banking (Foreign Exchange) Regulations confer upon the RBA responsibility for foreign exchange controls. Other securities exchanges The National Stock Exchange of Australia (formerly the Stock Exchange of Newcastle) and the Bendigo Stock Exchange provide alternative security markets to the ASX. Each has been established to cater for small to medium size enterprises. In this regard lower thresholds are required for listing as well as lower fees for listing. IP Australia IP Australia is the Federal Government agency that grants rights in patents, trademarks and designs in Australia. IP Australia is a division of

the Department of Innovation, Industry, Science and Research that operates independently. It incorporates the patent, designs and trademarks offices. The Plant Breeders’ Rights Act system is administered by the Plant Breeders’ Rights Office, part of the Department Innovation, Industry, Science and Research. .au – Domain Administration (auDA) The “.au Domain Administration” is an Australian non-profit company formed in 1999 as the industry self regulatory body for the .au name space. In December 2000 auDA received Government approval to assume responsibility for the .au domain space. Biodiscovery (Queensland) Biodiscovery is the search for novel compounds in natural materials, such as plants and animals, that can be developed into commercial products. The Biodiscovery Act 2004 (Qld) (Biodiscovery Act) applies to biodiscovery activities in Queensland and aims to ensure that such activities are undertaken in a sustainable manner whilst returning a fair and equitable benefit to the community of Queensland. This is achieved through contractual Benefit Sharing Agreements (administered by the Queensland Department of Tourism, Regional Development and Industry) and a permitting or licensing regime (administered by the Queensland Environmental Protection Agency (EPA). An entity wanting to collect and use native biological resources from Queensland land or waters for biodiscovery purposes is required to obtain a collection authority from the EPA, which permits the holder to collect the native biological resources specified on the collection authority. The Northern Territory has similar legislation. It is understood that other States and Territories are currently drafting legislation similar to the Biodiscovery Act.

Foreign Investment Regul ation Foreign investment in Australia is regulated by both the FATA and the Australian Government’s Foreign Investment Policy. Australia has an open and direct approach to foreign investment. There are no imposts on foreign firms seeking credit or loan facilities and there are no restrictions on capital flows, profit remittances, capital repatriation, transfer of royalties or trade related payments. This means that foreign companies may remit capital and profits freely and easily. In 2006-2007, FIRB approved 99.44 per cent of all eligible applications.

brisbane economic annual

Regulated transactions Compulsorily notifiable transactions The FATA requires compulsory notification of acquisitions by foreign persons of: • substantial shareholdings in certain Australian corporations; and • interests in Australian urban land assets (including trusts and companies with substantial holdings of Australian urban land). Failure to notify the Treasurer before entering into an agreement to acquire those interests is punishable by significant fines or imprisonment for individuals. Generally speaking, a substantial shareholding is a single shareholder owning 15 per cent or more of shares in a corporation. Voluntarily notifiable transactions There are other transactions which are not compulsorily notifiable. However, these transactions are examinable by the Treasurer and can be prohibited if considered contrary to the national interest. The Treasurer can also order that a completed transaction be unwound or that a foreign person dispose of an interest acquired through the transaction. It is for this reason that although it is not compulsory to notify the Treasurer of transactions of this type, those transactions are commonly submitted to the Treasurer for approval. Notification thresholds The Treasurer imposes different thresholds for notification requirements in respect of foreign investment transactions. As a result of the US and Australia Free Trade Agreement, thresholds for US investors (US nationals or entities created under the law of the US) are higher than non-US investors for industry sectors that are not prescribed sensitive sectors. Prescribed sensitive sectors are as follows: • media; • telecommunications; • transport (including airports, port facilities, rail infrastructure, international and domestic aviation and shipping services provided within, or to or from, Australia); • the supply of training or human resources, or the manufacture or supply of military goods or equipment or technology, to the Australian Defence Force or other defence forces; • the manufacture or supply of goods, equipment or technology able to be used for a military purpose; • the development, manufacture or supply of, or the provision of services relating to, encryption and security technologies and communications systems; and • the extraction of (or the holding of rights to extract) uranium or plutonium or the operation of nuclear facilities. Generally speaking, transactions that do not require notification under the FATA or the Foreign Investment Policy include transactions under the following thresholds:

brisbane economic annual

Non-US Investors Description

Approval threshold (if any)

Existing Australian business7

>$100M

New Australian business8

>$10M investment

Takeovers of offshore companies with Australian subsidiaries or assets

>$200M or 50 per cent of global assets

Direct investment by foreign governments or agencies

Nil (i.e. all acquisitions require approval)

Commercial real estate (heritage listed)

>$5M

Commercial real estate (non-heritage listed)

>$50M

Vacant urban land

Nil

Residential real estate and accommodation facilities

Nil

US Investors Description

Approval threshold (if any) Prescribed sensitive sector

Non- Prescribed sensitive Sector

Existing Australian business9

>$105M

>$913M

New Australian business10

>$10M investment

Takeovers of offshore companies with Australian subsidiaries or assets

>$210M or 50 per cent of global assets

>$913M

Direct investment by foreign governments or agencies

Nil (i.e. all acquisitions require approval)

Commercial real estate (heritage listed)

>$5M

Commercial real estate (non-heritage listed)

>$50M

>$913M

Vacant urban land

Nil

Residential real estate and accommodation facilities

Nil

There is little doubt that major infrastructure projects will continue to be undertaken in Brisbane.

• the investor is subject to and adheres to the law and observes common standards of business behaviour; • the investment may hinder competition or lead to undue concentration or control in the industry or sectors concerned; • the investment may impact on Government revenue or other policies; • the investment may impact on Australia’s national security; and • the investment may impact on the operations and directions of an Australian business, as well as its contribution to the Australian economy and broader community. New businesses A new business includes: • a business not already operating in Australia; • the establishment of a new tourist facility; • any new mining or raw materials processing operation; • any new agricultural, fishing or forestry project; and • the expansion of a foreign interest established in Australia into an industry that it had not previously been involved in.

Government Foreign Investment Policy There are certain transactions that even if not covered by FATA may still require approval from the Treasurer in accordance with the Government’s Foreign Investment Policy. These transactions relate to: • investments in certain regulated industry sectors (set out below); • a direct investment by any foreign government or its agency; and • a proposal to establish a new business where the investment is $10 million or more. Regulated industry sectors Investments in the following industry sectors are regulated by the Foreign Investment Policy and not the FATA: • banking; • civil aviation (domestic and international); • airports; • shipping; • media; and • telecommunications. Direct investment by foreign governments In examining proposed investments by foreign governments and their agencies, under the Foreign Investment Policy the Government will typically have regard to whether: • the investor’s operations are independent from the relevant foreign government;

Compliance Fr ame works Regardless of the type of business structure adopted, it is prudent for organisations to implement robust compliance frameworks and procedures. This is so since in the absence of an established compliance framework it is likely that the organisation or its agents may breach Australian legal requirements. Further, should a breach in fact occur, then the organisation may be subject to increased penalties since their compliance arrangements were not adequate or had not been established. Many regulators such as ASIC, the ACCC or the Offices of Fair Trading use the Australian Standard for Compliance Systems (AS3806) as the relevant benchmark to determine whether the organisation has put in place appropriate compliance measures. In summary, the standard establishes a range of principles against which compliance programs are to be assessed. These principles include a determination as to whether: • organisational commitment to compliance is evident; • compliance measures have been have been appropriate implemented; • compliance arrangements are continuously monitored and measured; and • the compliance program is subject to ongoing review and continuous improvement. Increasingly, representations and warranties as to the nature of compliance frameworks form an important parts of tender and procurement processes. Accordingly, many if not all significant Australian organisations both public and private have implemented enterprise wide compliance frameworks.

brisbane economic annual

in focus

brisbane economic annual

Daniel Havas, Director of Invest Brisbane, is in a confident mood, and with good reason. In 2008 Brisbane continued to perform exceptionally well and exceed the regionâ&#x20AC;&#x2122;s key economic indicators. Invest Brisbane attracted $472 million of new investment, which provided 1621 new jobs and a further 1478 jobs retained. Invest Brisbane has been awarded the prestigious accolade of Overall World Leader Investment Promotion Agency (IPA) for 2007/08 by London-based consultancy, GDP Global Development. Further to this, Brisbane was recognised by MAKCi

(Most Admired Knowledge Cities Awards) â&#x20AC;&#x201C; which annually identifies which cities are distinguished as social capital engines for their regions. Other cities recognised in 2008 include Seattle, Stockholm, Singapore and Boston. Yet Daniel is aware that serious challenges need to be addressed by Invest Brisbane and its partners. Here, he assesses the scale of some of these challenges and shows how Invest Brisbane is continuing to adapt to meet new opportunities for Brisbane through a series of strategic initiatives and industry collaboration.

brisbane economic annual

1. What was Invest Brisbane’s greatest achievement in 2008? The Spanish Investment Mission in October 2008 was largest trip of its kind undertaken by Invest Brisbane. Showcasing the opportunities on offer in Brisbane to Spanish companies, the mission capitalised on shared strengths in the infrastructure, technology, energy and water management sectors. Leveraging our strong relationships in market, I was accompanied by The Australian Ambassador to Spain and the Queensland Trade Commissioner to Europe. Despite being located on the other side of the world, the Australian and Spanish business landscapes have a lot in common. Spain and Australia face common infrastructure, energy and water issues and as a result has pursued some similar solutions such as desalination, renewable energy and intelligent transport technology. Invest Brisbane has been working with the Spanish Trade Commissioner to Australia, for two years, giving support to the delegates and companies brought out on missions showcasing Spain’s expertise. As a result Invest Brisbane has received reciprocal guidance and critical introductions, in particular from the Spanish Confederation of Employers Organisations (CEOE) which has been involved in missions to Brisbane and helped to facilitate part of the Spanish visit. As a result, all levels of government are now working together to pursue investment opportunities and relationships with Spanish multinationals and SMEs. There is potential for a state visit from the King and Queen of Spain, with a high-level delegation of business leaders to visit Brisbane. Expect to see some Spanish companies locating in Brisbane in 2009.

brisbane economic annual

Consultation, flexibility and aftercare are key.

2. The Regional Tourism Infrastructure Investment Plan (RTIIP) has been described as the single most important strategic initiative of Invest Brisbane. Is this still the case? The Brisbane and Moreton Bay & Islands RTIIPs, produced in 2008, are visionary plans that provide direction and a central focus for the sustainable development of tourism in the Brisbane region out to 2018. The purpose of the Plan is to identify a range of tourism related infrastructure and investment opportunities that, if developed, have the potential to ensure Brisbane’s future as a tourism destination. The plan details more than 30 potential investment opportunities, focusing on three areas with the greatest potential for the region: new tourism products and the enhancement of existing natural assets; public infrastructure needed to support the leisure offering for the region; and investment required to deliver on new projects Ten catalyst projects have been elevated as a priority because of their potential to strengthen Brisbane’s tourism offering for domestic and international visitors, maximise the economic benefits of tourism to the local economy, and help deliver on Brisbane’s tourism vision. Invest Brisbane, with the support of Brisbane City Council and Tourism Queensland, is leading and managing the investment process for each catalyst project. We are continuing work on the Moreton Bay Terminal feasibility study with our consultants, town planners Conics and transport experts McCormick Rankin Cagney. We have short-listed potential sites to determine an optimum location in terms of connectivity and the potential to increase tourism product offerings in the region. The study is to be released shortly. 3. What support and services can prospective investors expect from Invest Brisbane? Invest Brisbane is the city’s business champion – an experienced and world class inward investment agency, we play a strategic role in Brisbane business. A division of Brisbane Marketing, and supported by the Brisbane City Council, we work with potential investors in their search for suitable

business opportunities in Brisbane and provide guidance during transition and implementation. Our services include needs analysis and developing tailored business cases, providing critical introductions, identifying talent, sourcing property solutions, and assisting with grants and incentives. I have an incredibly talented group of people working with me at Invest Brisbane. My team comes from diverse business backgrounds – both public and private, and most have significant international experience. They connect investors with our extensive networks to maximise opportunities for business success. We have established and productive political, business and media relationships to help investors maximise market entry and growth into the Brisbane economy. 4. During 2008 global business conditions changed significantly. Do you think economic conditions will affect Brisbane’s business performance and attraction of foreign direct investment (FDI) during 2009? As an agency, we are adopting the three key strategies to combat the current economic uncertainty. • Flexibility: We need to adopt a more flexible approach when defining investment. Greenfield FDI will certainly decline in 2009, so Invest Brisbane will also focus on M&A, joint ventures, R&D collaborations and private equity investment as methods of market entry. • Consultation is key: We need to consult more widely with business and reinforce their sector messages. Tailoring the business solution will be imperative. • Aftercare: Protect the investments we have, as this can be the greatest source of lead generation in respect to expansions and supply chain opportunities. 5. What are the biggest challenges for Invest Brisbane in attracting new investment to the city in an increasingly competitive marketplace? One of the greatest challenges is of course the global economic crisis – companies are more likely to invest in home markets or consolidate their operations rather than pursue a global growth strategy. Of equal challenge

however is destination branding. The role cities play in driving economic development is rapidly changing – global cities are emerging as the new “city-states” of the 21st century. The test for Brisbane lies in ensuring its brand stands out against other emerging city brands. 6. Invest Brisbane has an eclectic mix of corporate partners, how does this work and benefit new investors to the city? Our Corporate Partnership is committed to the development of Brisbane as a strong, commercially competitive location for business. The objective of the partnership is to grow the Brisbane economy via the provision of expert local advice from our Corporate Partners, to companies who are considering investing in the Brisbane region. This combination of private sector and inward investment expertise provides investors with broad business advice and operational assistance to expedite business expansion. The partnership was established in 2002 and is a three-tier model with platinum, gold and silver partners. It focuses on four main areas to ensure maximum engagement and results: business development, knowledge and networking, marketing and strategy. The partnership heightens corporate partners relationships with industry and government; achieves greater penetration of key investment target markets; shares knowledge to maximise investment opportunities; and creates competitive advantage.

brisbane economic annual

7. How do you see Brisbane contributing to Queensland and the nation’s economy as a whole over the coming 12 months? With one of the fastest growing populations in the country, Brisbane is the engine room of the state’s phenomenal growth. The region’s population is projected to reach approximately 3.7 million by 2021 – an increase of nearly one million people. Even though we are seeing slowed growth in the Mining Industry, Brisbane’s broad economic base and strengths in diversified sectors should provide a stable foundation for our economy. The local and state government’s commitment to infrastructure spend will be a critical strategy in ensuring economic growth – illustrated aptly in the federal government’s proposed economic stimulus package. 8. In addition to Invest Brisbane’s established markets of the USA and UK, you have previously mentioned Spain, South America and Japan as markets of interest for future investment, how is this progressing? As mentioned earlier, the Spanish market is a key focus, especially in the areas of major infrastructure and renewable energy. South America has become of major interest not just for Invest Brisbane, but for Brisbane Marketing as a whole. We are participating in Trade Queensland’s Latin America Trade Mission in March 2009. The focus here is on education, major events (both sporting and cultural), tourism, mining and mining technologies and services.

Invest Brisbane targets Japan for FDI in agribusiness and food processing – particularly in the high growth segment of functional foods and nutraceuticals. Japan’s ageing population provides market opportunities in health products and Japanese corporations, consumers and government are concerned about food security – both in safety and supply. Australia provides solutions on both fronts. 9. Invest Brisbane again organised the Lord Mayor’s Business Awards. How did the programme change in 2008? The Lord Mayor’s Business Awards recognises and rewards excellence and outstanding contributions of the corporate sector to the growth of Brisbane’s economy. Now in its third year, the awards expanded to encompass exciting new categories – Corporate Citizenship, Employer of Choice, Sustainability in Business, Young CEO of the Year and the Lord Mayor’s Business Person of the Year. The 2008 programme saw a 50 per cent rise in nominations and a change in format from cocktail party to a black tie awards gala. Invest Brisbane are very proud to manage the awards, they provide a valuable opportunity to promote our thriving economy. All nine winners demonstrated great diversity and creativity – it is these companies that help to characterise Brisbane as an emerging world-class player and an international city to watch. The Optus Platinum Award for Outstanding Business Contribution to Brisbane was awarded to Medihoney because of its world-first clinical research into medicinal honey. Its products are being used in protecting wounds against infection, particularly with burn victims in Iraq and treating cancer patients in Germany. 10. Explain Invest Brisbane’s evolution from its days as the Office of Economic Development Invest Brisbane has travelled through a number of iterations to emerge in its current form – a world-leading investment promotion agency. Lord Mayor Sally-Anne Atkinson created the Office of Economic Development (OED) in 1990, headed by Richard Joel. The OED rebranded in 2002 as Velocity, at this point it came under the guidance of Bernd Neubauer and subsequently David

brisbane economic annual

Regan. In 2006 Velocity merged with Brisbane Marketing and evolved into Invest Brisbane, where I now lead a team of ten, who work to secure investment that will maximise long-term economic growth for the city.

Invest Brisbane’s Business Briefings As part of the Invest Brisbane Corporate Partnership, business briefings are held every quarter to provide partners and investors with a powerful leverage to network and gain commercial insights towards market trends and opportunities. During 2008, each event brought together thought leaders in the private sector to power brokers in the public sector, sharing their inspiration on Brisbane’s investment and business climate and their long-term projections on industry and economic growth for the state and the nation. Ric Deverell, 3 April 2008 Deputy Head of Economic Analysis (Regional and Industry), Reserve Bank of Australia Ric Deverall was the first speaker in 2008. With six years experience in the Reserve Bank of Australia, Mr. Deverall’s federal government portfolio also extends to the Australian Treasury and the Australian Department of Prime Minister and Cabinet. Mr. Deverell provided an overview of the economic climate which was specific to the time of the presentation. In light of protecting the RBA intellectual property and respecting that this was a private function, an overview on Mr. Deverall’s presentation has not been provided. Sallyanne Atkinson AO, 5 June 2008 Former Lord Mayor of Brisbane, Professional Company Director With extensive experience as a civic leader, international trade commissioner and company director, Ms Atkinson shared her outlook of Brisbane’s investment and trade future. As the founder of Brisbane’s Office for Economic Development, (now Invest Brisbane) Ms Atkinson believes that decisions businesses make today will have far reaching consequences in years to come for the direction of

the city’s industries. Ms Atkinson highlighted that promoting Brisbane as a world city is vital to its continued growth and prosperity. Professor Paul Greenfield AO, 7 August 2008 Vice Chancellor & President of The University of Queensland (UQ) Professor Greenfield has consulted for national and international companies and government agencies in the fields of biotechnology, wastewater management, environmental management and project evaluation. UQ are internationally recognised for its research and ability to attract funding (more than $7 million including $6.3 million in competitive grants). Professor Greenfield is also charged with an operating budget of over $1 billion, 6,000 staff and 38,000 students. He is now leading a toplevel restructure at UQ which will enable the university to vigorously pursue fundraising opportunities. UQ is one of three local universities that have partnered with Invest Brisbane. Greenfield emphasises the significance of engagement and stressed UQ commitment to extend the level of engagement with industry. Greenfield says for universities to form partnerships with business, companies must be internationally recognised as being up there with the best. “We see this as a means to continue to grow, not just survive. Engagement through all the universities in Australia is now an important concept,” Professor Greenfield said.

The test for Brisbane lies in ensuring it’s brand stands out from other emerging city brands.

“Queensland is a significant economy, as well as Brisbane particularly in areas like transport, resources and environment, the links will be here. I think the resource companies are the most sophisticated – BHP Billiton, Xstrata, Rio, they do it well. Some of the biotech companies that have reached a certain size also do it well. What we are arguing is that universities can play a more significant role in shaping the economic direction of a region.”

Peter Beattie, 13 October 2008 Trade and Investment Commissioner to the Americas, Queensland Government Former Queensland Premier of nine years, Peter Beattie, at the final business lunch for 2008 shared his insights on Queensland’s reputation around the world and emerging export and investment markets. Mr. Beattie gave a provocative talk on emerging export and investment opportunities in Latin America. In his introduction, he identified Columbia, Peru, Chile, Mexico and Brazil as opportunities for Queensland investment and trade, describing the region as the next China and India. Commissioner Beattie was positive about Queensland’s strong position in the current global financial crisis at the time. “Although Queensland will be impacted by the credit squeeze, the State has the fundamentals in place to ensure our solid economy will continue,” said Mr. Beattie. Mr. Beattie further commented on the importance of local businesses continuing to export and invest. “Whenever there is a crisis or problem, there is also an opportunity and we shouldn’t miss it. And the opportunity is to open up new markets.” He lends three key pieces of advice for local businesses: 1). Do not be too pessimistic about the world financial crisis. 2). Continue to export and identify new markets, particularly in Latin America. 3). Take advantage of the lower Australian dollar, increasing our competitive advantage internationally. As global competition for people and resources increases while environmental sustainability and the global credit crunch challenge businesses around the world; there is a growing imperative for investors and businesses to become knowledge-driven and focus on new relationships and collaborations. In 2009, Invest Brisbane is helping partners and investors to focus on engagement and provide a clear economic vision through its Business Briefing lunch program. Dr. Douglas McTaggart, CEO of Queensland Investment Corporation was the first speaker to open the program in February 2009, and he will be followed by a strong line-up of local and national speakers. Contact Invest Brisbane to find out more about the Corporate Partnership program.

brisbane economic annual

acknowledgements Sponsors Alba Capital, Clayton Utz, KPMG, Port of Brisbane, Brisbane Airport Corporation,

With Special thanks to our contributors Mark Ludlow, Australia Financial Review Tim Harcourt, Australia Trade Commission Graham Matthew, KPMG Professor Peter Andrews, Chief Scientist for Queensland Paul Day, Savills Dr Terry Cutler, Chair of National Innovation System Review Michael Klug, Clayton Utz

Images Credit Adam Sebastian West (pages 1, 10-11, 16, 30-31, 34-41, 52), Cyron (page 50), Cezary Stuglis (page 53), Safaris (page 22), John Oxley Library, Brisbane Airport Corporation, Alba Capital, The University of Queensland.

PUBLISHED BY Invest Brisbane Invest Brisbane is the city’s business champion – an experienced and world class inward investment agency, we play a strategic role in Brisbane business. Invest Brisbane are responsible for securing investment that will maximise long term economic growth for Brisbane, whose vibrant economy is taking its place on the global stage. We work with potential investors in their search for suitable business opportunities in Brisbane and provide guidance during transition and implementation. Invest Brisbane works to address gaps in Brisbane’s economic infrastructure by driving strategic initiatives. These innovative projects evolve from ongoing consultation with the business community and are critical to positioning Brisbane as the preferred destination of choice and focus on investment attraction, tourism infrastructure and brand awareness. Invest Brisbane connects investors with our extensive networks to maximise opportunities for business success. We have established and productive political, business and media relationships to help investors achieve their business goals. The Invest Brisbane Corporate Partnership is committed to the development of Brisbane as a strong, commercially competitive location for business. This unique combination of private sector specialists and inward investment experts provides investors with broad business advice and operational assistance, as well as detailed industry-specific information. Invest Brisbane has been awarded the prestigious accolade of World Class Investment Promotion Agency (IPA) for 2005/06 and 2007/08 by the London-based consultancy, GDP Global Development.

Contact

Level 12, 15 Adelaide Street, Brisbane, Queensland, Australia 4000 PO Box 12260, George Street, Brisbane, Queensland, Australia 4003 Phone: +61 7 3006 6200 Fax: +61 7 3006 6250 Website: www.investbrisbane.com.au

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www.investbrisbane.com.au

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