Queensland’s ability to turn population growth, investment and major projects into lasting improvements in living standards will depend increasingly on productivity, regulatory reform, housing supply and the state’s capacity to embrace technologies such as artificial intelligence.
That was among the key messages from the Queensland Futures Institute’s latest economic outlook forum, Queensland’s Economic Outlook: Growth, Investment and Reform, which brought together Productivity Commission Chair Danielle Wood, ANZ Chief Economist Richard Yetsenga and Queensland Treasury Corporation’s Dennis Molloy.
The discussion ranged from Australia’s long-running productivity slowdown and growing regulatory burden to housing, AI, infrastructure investment, critical minerals and the changing global economy.
Ms Wood said Australia’s weak productivity performance had important consequences for wages, incomes and living standards.
Average productivity growth over the past decade had been around 0.3% a year, less than a quarter of the long-term average, contributing to weak growth in real wages and a stalling of the generation-on-generation income gains Australians had traditionally expected.
The Productivity Commission’s data shows labour productivity growth over the decade to 2025 was around 0.26% a year, compared with a 60-year average of about 1.6%.
Ms Wood said productivity was ultimately about producing greater value for every hour worked, allowing economies to support higher wages, better goods and services and improved living standards.
She pointed to a series of structural factors behind weaker productivity growth, including lower business investment, reduced economic dynamism, a shift towards less capital-intensive services and a declining emphasis on major policy reform.
Regulatory burden featured prominently in the discussion.
Ms Wood said regulation had become the single policy issue raised most often with her by businesses, reflecting concern about the cumulative cost of compliance rather than any one individual rule.
She cited Australian Institute of Company Directors research showing ASX 200 boards now spend an average 55% of their time on compliance issues, compared with 25% a decade ago, potentially reducing the time available for strategy, investment, technology and workforce planning.
Queensland businesses were experiencing similar pressures, with Business Chamber Queensland research showing one-third of surveyed businesses had dedicated compliance staff and the median cost of managing compliance was $30,000.
Ms Wood said governments needed to consider not only the burden of existing regulation, but also how new rules were introduced and administered. The Productivity Commission has recommended a national target to reduce compliance costs by $10 billion by 2030.
She also highlighted the economic cost of different regulatory regimes between states, pointing to examples ranging from single-use plastics to heavy vehicle licensing and product standards.
Mr Molloy said the revitalised National Competition Policy framework offered a proven mechanism for reform, but argued stronger Commonwealth financial incentives would be needed to encourage governments to implement changes.
He said the current $900 million pool for competition payments was relatively modest compared with the scale of incentives used during the reform period of the 1990s.
Artificial intelligence emerged as one of the strongest potential sources of future productivity growth.
The Productivity Commission estimates that existing AI applications alone could add around 4% to Australian labour productivity over the next decade.
Ms Wood said Australia had embraced AI strongly at a consumer level but business adoption remained behind comparable economies including the United States, United Kingdom and Germany.
She said governments had an important role in creating the conditions for successful adoption, including enabling data centre investment, avoiding unnecessary technology-specific regulation, improving government service delivery and supporting workforce skills.
When asked where Queensland should concentrate its efforts, Ms Wood pointed to the regulatory and skills settings surrounding AI as a particularly significant opportunity.
Mr Yetsenga said the scale of global AI investment could create a significant opportunity for Australia and Queensland, particularly as geopolitical instability increased the attractiveness of secure and relatively isolated locations.
He said projected global AI expenditure next year could reach around US$3.5 trillion and argued Australia was well positioned to attract significant investment because of its geography, infrastructure and connectivity.
However, the opportunity would also add to existing competition for construction skills and resources.
Mr Yetsenga pointed to electricians as an example of a workforce already in strong demand across housing, critical minerals, mining, data centres and major infrastructure projects.
Housing supply was another recurring theme, with Ms Wood arguing that unaffordable housing can reduce economic productivity by making it harder for people to live near jobs and economic activity.
She said Brisbane had benefited strongly from interstate migration, but rising housing costs were increasingly pushing prime working-age residents away from inner areas and towards more affordable parts of southeast Queensland.
Productivity in residential construction had also fallen sharply.
Productivity Commission data shows the number of dwellings produced per hour worked has fallen by more than half since the mid-1990s, while construction labour productivity measured by value added per hour has declined 12%. Economy-wide labour productivity rose 49% over the same period.
Ms Wood said Australia needed a stronger “build” mindset, including increased density in appropriate locations, better coordination between housing and infrastructure, simpler approvals and regulation focused on areas where it was genuinely required.
The Productivity Commission has estimated that regulatory requirements can add substantial costs to new housing, including around $204,000 for a house and $90,000 for an apartment.
Mr Molloy said Queensland’s growth and infrastructure pipeline continued to attract significant interest from global investors.
While investors closely examined state debt levels, Queensland and Australia remained relatively low-debt jurisdictions by international standards.
He said an important part of Queensland’s investment story was that borrowings were being used predominantly to fund infrastructure rather than operating expenditure, helping support the state’s long-term productive capacity.
The state’s diversified economic base was another strength, with Queensland combining major resources industries with a large and increasingly sophisticated services economy.
Mr Molloy said the nature of the economic challenge had also shifted. Where much of his career had been dominated by concerns about inadequate demand, the issue now was increasingly one of capacity and how quickly the economy could expand without creating additional inflationary pressure.
Mr Yetsenga said Australia also needed to adjust to a fundamentally different global economic environment.
Geopolitical uncertainty, supply-chain disruption and concerns about economic security had prompted governments globally to take a much more active role in industry policy, including critical minerals and strategic manufacturing.
He said the number of industry policy interventions internationally had roughly doubled over the past five years, while their focus had moved increasingly from competitiveness and climate towards strategic competition and domestic resilience.
That shift presented opportunities for resource-rich Queensland, but also required governments and businesses to think differently about supply chains, investment and economic resilience.
Mr Yetsenga argued that Australia remained comparatively well placed, particularly given its natural resources, institutional strength and geographic position.
The forum reinforced that Queensland enters the next phase of its economic development with considerable advantages, including population growth, significant infrastructure investment, a diverse economy and strong demand for its resources.
The challenge is ensuring those strengths translate into higher productivity and improved living standards.
Across the discussion, speakers repeatedly returned to the importance of reducing unnecessary regulatory costs, unlocking housing supply, attracting investment, strengthening workforce capability and ensuring Queensland is positioned to take advantage of major technological and global economic shifts.
For QFI, the discussion also highlighted the increasingly interconnected nature of those challenges. Housing, skills, infrastructure, technology, regulation and investment cannot be considered independently if Queensland is to sustain growth while improving productivity and prosperity over the decades ahead.
QFI CEO Steve Greenwood said the forum demonstrated the value of bringing together senior economic, government and business leaders to explore the issues shaping Queensland’s long-term prosperity.
“These forums are about getting beyond the headlines and creating an opportunity for informed discussion about the challenges and opportunities facing Queensland,” Mr Greenwood said.
QFI's Economic Outlook forum connected leaders across the state to test ideas, challenge assumptions and identify where collaboration can make a difference. For QFI members and invited guests, that opportunity to engage directly with senior leaders from across Queensland is an important part of the Institute’s role in shaping the state’s long-term future.