Report: Queensland's Economic Outlook 2025

The 2025 Queensland Futures Institute Queensland’s Economic Outlook forum outlined a world of rising geopolitical risk but surprising economic opportunity for the state economy. Panellists highlighted challenges around trade policy uncertainty, weak construction productivity and housing supply shortfalls, pressures from population growth and migration, and labour market constraints – particularly in construction.

Despite these challenges, there are also opportunities which must not be ignored – including around tax reform, rethinking immigration policies to focus on the benefits of skilled migration, and the potential to leverage momentum around the 2032 Olympics and AUKUS. However, while productivity will play a key role in realising these opportunities, we cannot have it all; Queensland must rationalise demand and focus on leveraging competitive advantages in key areas to underpin economic growth.

JON BERRY
Director
Geopolitics Hub
KPMG Australia

JO MASTERS
Chief Economist
Barrenjoey Capital
Partners

BRIAN PARKER
Chief Economist
Australian Retirement Trust

RICHARD YETSENGA
Chief Economist
ANZ

MODERATOR: 
GENE TUNNY
Director
Adept Economics

Gene Tunny

• Queensland is part of a global economy – so there is lots of concern around global trade policy and international tensions. Developments in the Middle East and the recent meeting of Chinese, Russian and North Korean leaders in Beijing will affect Queensland
  and Australia.
• These impacts will play out across immigration and housing – as we already cannot build
  enough houses for all the additional people coming in. There are major concerns around
  the implications this will have on housing prices and rents.
• There is also concern around our ability to deliver the 2032 Olympics – which will provide
  significant economic opportunity, but will also see some risks.
• Additionally, climate change and energy policy are also key issues as we think about climate change itself, our policy response, and what this means for energy costs – which
  impact industry such as refiners and smelters in Mount Isa, Gladstone and Townsville.
• In this context, we should consider the coal royalty regime in Queensland, and taxation
  more broadly.

Can you give us a sense of where we are geopolitically - what are the big flashpoints and what’s
should we be concerned about over the next 12 months?

Jon Berry

• There have been some major flashpoints in recent years, and their effects are still
  being felt.
• From Queensland and Australia’s perspective, many industries have adjusted to these
  risks and taken them into account.
• The bigger trend is that we no longer have an operating system of international norms
  that suppress conflict.
• Eurasia Group calls this the ‘G-Zero World’ – reflecting that we are no longer in a G20, G8 or G2 system, and there is nobody at the top willing and able to enforce international rules.
• In this situation countries and non-state groups are more emboldened to press their claims. We have seen this in Ukraine, the Middle East and North Africa with conflicts,
  regime changes and coups.
• Thinking ahead, we should be thinking about what other countries or groups might press
  their claims. For example, we have already seen conflict and skirmishes between India
  and Pakistan, which is a symptom of this ‘G-Zero World’.
• Closer to home, there are territorial claims in our region that could have a major impact on
  us if they are pressed.
• Another flashpoint is domestic anger here in Australia. There is pent-up resentment about
  living standards, immigration and other social issues.
• This is partially a result of polarised information environments, where people are consuming alternative facts from different news sources.
• When an overseas trigger occurs, like the Gaza conflict, it can light the fuse here at home.
• In this situation, when flashpoints occur overseas, they can result in local impacts where
  disgruntled citizens can be radicalised by these events.

Gene Tunny

• We’ve also seen China’s territorial claim to Taiwan mentioned last year, and recent riots
  in Indonesia.

Richard Yetsenga

• While there’s a lot of conflict – it’s not all bad news.
• The world is more unstable and uncertain, reflected in recent analysis which highlighted
  that a decade ago, 30% of business risks were insurable and now only 10% are.
• This shows the higher degree of uncertainty and the limits of conventional risk management; more thought is needed around how to manage unconventional risks.
• Despite all this, the global economy is still growing at about 3%.
• The World Bank has been warning for years that we’re on the cusp of global recession, defined as global growth below population growth - about 1%.
• However, even with tariffs and China’s structural challenges, the world may still achieve
  3% growth.
• If we focus too much on what’s wrong, we risk missing what’s right.

How dependent are the 2032 Olympics on productivity growth – particularly in the construction sector?

Dr Karen Hooper

• It’s fantastic that productivity is back in the spotlight at both the state level, with the re-establishment of the Queensland Productivity Commission, and nationally, with the  economic reform round table in Canberra.
• Productivity is the main game – and is needed to lift incomes and standards of living.
• However, the statistics are sobering: construction productivity in Queensland has
  only grown 5% over the past three decades, compared with 65% in the rest of the
  market sector.
• Since 2018, construction productivity has gone backwards, falling 9%.
• This means we now have less productive capacity to deliver the housing and
  infrastructure our growing state needs.
• If productivity had stayed at 2018 levels, Queensland could have delivered 77,000 more
  dwellings, easing housing supply and affordability.
• We need to lift productivity, but the key question is how to achieve this.
• Our first order of business when the Queensland Productivity Commission was re-established was an inquiry into construction productivity, directed by the Queensland Treasurer.
• We were tasked with identifying the factors behind poor productivity and opportunities
  for improvement, with six months for undertaking this major work and to provide
  practical, sensible solutions.
• The inquiry is well underway, and we released an interim report in July 2025.
• The terms of reference are broad, with a whole-of-state focus, and they emphasise that
  reforms must not compromise quality or safety.
• We’ve been very pleased with the level of engagement from the community,
  industry, unions and business.
• I want to thank those who’ve participated, because we rely on evidence-based
  insights to shape our recommendations for the Queensland Government.

Can you elaborate on the tax reforms in the recent Government’s Economic Reform Roundtable?

Jo Masters

• None of the 10 actionable items from the economic roundtable were material tax reform,
  despite its need.
• One positive outcome of the roundtable is that we’ve restarted the conversation and
  brought about new ideas which otherwise haven’t changed in 10-20 years and are
  politically difficult to achieve.
• There was strong consensus from stakeholders that tax is an important lever to address
  intergenerational inequality, which is one of the biggest social issues we face, and it
  plays into housing affordability and political unrest.
• The focus will be on taxing wealth more and taxing income less, but exactly what that
  looks like will become clearer over the next 18 months.
• However, this government didn’t win the election on a tax reform mandate; it won largely
  through preferences.
• While there is clear need for a frank and honest national conversation, it’s unlikely that
  we’ll see reform in this term, but the debate will build ahead of the 2028 election.
• What we will see is an opening up of the conversation – with ne w ideas like cashflow
  taxes and other proposals from the Productivity Commission.
• The Treasurer has asked Treasury to generate ideas - and we should expect negative
  gearing and the capital gains tax discount to be revisited.
• We’ll find out how brave this government is willing to be, because tax is politically
  charged and Australians have a mindset that nobody can be worse off.
• We all need to take a step back, think about “Team Australia,” and ask what we want for
  our children and grandchildren.
• If nothing changes, we risk being the first generation to leave the next with a lower
  standard of living, which would be a shocking outcome.
• We are already seeing childless suburbs in cities because children will not be able to
  live in the same cities as their parents

Can you explain the recent trade war and what this means for Queensland and Australia? 

Brian Parker

• The news isn’t good, and there appears to be no broad, coherent , sensible strategy.
• We’re revisiting tariff ideas that were disproven a hundred years ago, and the tariff wars
  are not over.
• President Trump has imposed tariffs which appear random, with no logic, research or reasoning.
• Those tariffs were geopolitically unsensible because they targeted key U.S. allies needed as a counterweight to an emerging China.
• Additionally, the International Trade Court said most of these tariffs are illegal, and the
  appeal court agreed.
• The case is heading to the Supreme Court, but until then, we have no legal certainty.
• That leaves businesses unable to plan sensibly because they don’t know the trade rules.
• For Australia and Queensland, we are relatively well placed - we don’t export much to
  the U.S., with only about 5-6% of exports directed there. These are mostly commodities
  that can be redirected.
• If China is hit hard, that would be bad for Queensland mining e xports. However, the
  Chinese government would likely stimulate their economy which would subsequently
  mitigate any adverse impacts on Queensland.

Does it make sense that Brisbane house prices are higher than Melbourne house prices? If not, what’s
going on and what needs to change?

Richard Yetsenga

• Circular migration flows are common, but they’ve been very supercharged recently.
• Brisbane and Melbourne housing stock is different - Melbourne is much more
  apartment-heavy.
• Therefore, in a relative sense, Brisbane is very expensive compared with Melbourne.
• I think we’ll see some reversion over the next three to five years, with Brisbane price
  growth slowing and Melbourne picking up.
• Relative to local incomes, Melbourne is quite affordable compared with other East
  Coast cities.
• Victoria does face substantial structural challenges, especially on the fiscal side,
  which will slow the economy’s recovery.
• But with valuation adjustments, Victoria and Melbourne are now more attractive
  places to live.
• I expect that to attract people, and I see anecdotal evidence o f migration out of Sydney
  into Melbourne because of the value in the Melbourne property market.

Gene Tunny

• Housing prices and affordability are an important driver, but people are also worried
  about youth crime – which is something that must be addressed, particularly in Victoria.

With AUKUS and increased military spending in the Indo-Pacific, what economic opportunities and
risks does this present for Queensland?

Jon Berry

• There are some really interesting issues around AUKUS and alliances more broadly.
• For Queensland, Pillar one of AUKUS is less relevant, with most benefits going to South
  and Western Australia.
• However, Pillar two - which is focused on advanced and dual-use technologies - is a
  major opportunity for Queensland.
• The State Government has leaned into this, and we already have big firms like Raytheon, NIOA and the quantum project here.
• A strong ecosystem requires not just big firms but also small specialist companies that
  can plug into their value chains.
• If those big players provide a centre of gravity and policy settings support them, Queensland can build a strong advanced tech environment around the bigger companies.
• On the less positive side, many countries feel less certain about relying on alliance
  partners.
• Being under another country’s security umbrella feels less safe, whether you’re in NATO
  or in the Pacific.
• This is driving governments to invest more in sovereign defence capabilities.
• For defence industries, including here in Queensland, this means the pie is getting bigger.
• If I were in that value chain, I’d be asking which countries will find Australian products
  geopolitically acceptable.
• Trust is becoming a critical factor in defence supply chains.
• For example, some news sources report concerns in Europe that the F-35 fighter jet
  could have an American-controlled ‘kill switch’.
• Even close alliance partners are wary of over-reliance on others’ technology.
• Positioning Australia as a trusted supplier will be essential to tap into the growing
  defence market.

Gene Tunny

• Additionally, quantum computing could rapidly solve codes, which raises fears that
  cybersecurity could be completely undermined.

If we had built 77,000 homes – had we remained at 2018 productivity levels – how much would this
have helped the current situation, with low vacancy rates and growing homelessness? What do you
think needs to be done by government to fix the construction sector?

Dr Karen Hooper

• We’ve been asked to provide recommendations to lift construction productivity and help
  supply the homes and infrastructure Queensland needs.
• In the interim report released in late July, we identified two main factors dragging down productivity: the growing weight of regulation and suboptimal government procurement practices.
• The report outlined 21 preliminary reform recommendations, 16 of them targeting regulation, as well as 12 additional reform directions for stakeholder feedback.
• We set out four key reform focus areas:
  • Government procurement: improving project selection, sequencing and contracting;
    rationalising procurement policies; including removing best practice industry conditions.
  • Land use regulation: streamlining approvals; removing unnecessary regulation of
    building form; and enabling higher-density development to lift housing supply.
  • Building activity regulation: reforming the application of the National Construction
    Code; reviewing Queensland-specific financial regulations, improving workplace health
    and safety regulation; and removing barriers to modern methods of construction.
  • Labour market: addressing labour shortages by reforming occupational licensing
    and labour hire regulation.
• We invited submissions on the interim report and received a strong stakeholder response and over the next few weeks will finalise our recommendations.
• This consultation is critical as we want to test and challenge our thinking to make sure
  we identify the right solutions.
• There are no quick or easy wins, but the interim report represents the start of the development of a reform program for the Queensland Government’s consideration.
• We’re in a sprint to finalise the report, which is due to the Queensland Treasurer on 24
  October 2025.

What’s the outlook for state governments and their borrowing programs? Are you concerned about the availability of capital to fund the state government’s infrastructure program?

Jo Masters

• Globally, in a more fragmented world, governments are increasing debt levels through defence, infrastructure and services - particularly post-pandemic.
• In Australia, state debt issuance has grown, and now the states issue more than the federal
  government, which wasn’t the case pre-pandemic.
• We are now competing with other countries for foreign investors, including AAA-rated
  economies like Germany that are ramping up issuance.
• For Australia, two key factors support our ability to attract investors:
  • Migration: done well, it’s a powerful tailwind and not something all AAA economies can achieve. It supports long-term growth and makes housing supply crucial.
  • Connectedness with Asia: investors see Australia as a way to access Asia’s growth in a more stable, regulated and protected economy.
• These two factors keep Australia on the radar of foreign investors.
• Additionally, Australian state governments offer very good risk-adjusted returns; the outright return is similar to a single A-rated US corporate, but with far less risk.
• Many foreign investors tell me Australian semis are among the best value investment
  opportunities globally.
• In Queensland, government debt is relatively low - at around 10% of the economy, compared with about 30% in Victoria.
• Queensland is starting from a stronger position, with many major projects ahead – particularly around infrastructure, energy transition and the Olympics.
• We are a well-diversified economy that benefits from migration and are therefore well placed as a great investment location globally.

Richard Yetsenga

• We’re pursuing investment for the Olympics, housing, infrastructure and defence spending all at once.
• In many ways, our productivity challenge comes from a problem of abundance.
• Our eyes are bigger than our stomachs - we want to do everything. This is a problem not just for Australia but for almost every developed economy.
• Everyone wants more housing, no cuts to infrastructure, stronger security, more defence,
  greater domestic resilience and advanced tech like quantum computing.
• Prices for inputs are going up because the market is telling us we cannot have everything, so the market will rationalise demand.
• Typically, private sector demand gets rationalised first, while public demand stays sticky due to long-term commitments.
• Housing has dropped away most easily, even while demand grows in other sectors.
• Global defence spending, after decades of decline or flatlining, has started a long-term
  upward trend.
• We need to think more about the demand side - what we can rationalise and limit; we must preserve capacity for what we most want and need.
• This approach would be less painful than continually insisting productivity growth alone will solve the problem - because it is unlikely to.

Should we be concerned about the impact of climate change on our society and the environment? How do you think about policy responses which impact traditional industries – and how does this influence how you invest as a super fund?

Brian Parker

• I see climate change as both a risk and an opportunity.
• As a super fund, managing risk for members is just as important as generating returns.
• Climate risk is something we must manage to avoid holding assets or companies heavily
  exposed to climate challenges.
• At the same time, there are opportunities in this space to allocate capital to follow the best
  returns, and we can invest in ways that help mitigate climate change while still delivering
  commercial returns.
• This reflects a pragmatic approach. For example, there is a strong case that it’s almost
  impossible to meet short- to medium-term electricity needs without gas. Gas-fired plants are a preferable firming mechanism to coal, because gas is cleaner and far more flexible; a gas plant can start generating electricity within minutes, unlike coal plants that run for hours waiting to be used.
• Therefore, in addition to investing significantly in renewables, we also invest in gas assets.
• Both are part of keeping the lights on in the short, medium and long term.
• Our approach is to manage risk while capturing opportunities as we adapt to climate change.

Dr Karen Hooper

• We’ve looked at this issue in our interim report – focusing on h ow skilled migration can be
  better utilised to support Queensland’s construction industry.
• Our recommendation is for more targeted skilled migration, especially in trades that are in
  short supply.

Jo Masters

• I think we all know migration is an issue beyond just the const ruction sector.
• Our migration system is not fit for purpose.
• One disappointment from the recent economic roundtable was that migration wasn’t a major talking point.
• Research from Brendan Coates at the Grattan Institute shows the most productive migrants are those on business visas, because business knows what it needs and what it will pay for these resources.
• Therefore, we need an overhaul to create a better targeted migration program - not a lower migration program.
• It’s also important for governments of all levels to think about t he groups most affected by largescale immigration.
• These groups may be small, but they can be politically noisy and inconvenient if they feel priced out of jobs or opportunities by imported labour.
• In this sense, selling the story is critical - immigration policy isn’t just about identifying skills and bringing people in, it’s about explaining and managing the impacts.
• Managing community expectations and responding to concerns is an important part of getting policy right.
• Migration is such an emotive topic, especially in recent years.
• But Australia’s population today is exactly where we projected it would be back in 2018.
• The path to get there was different because of the pandemic, but the final number is the same.
• This means the problem is a failure on the supply side, not a sudden surge in migration.

Jon Berry

• Migration is such an emotive topic, especially in recent years.
• But Australia’s population today is exactly where we projected it would be back in 2018.
• The path to get there was different because of the pandemic, but the final number is the same.
• This means the problem is a failure on the supply side, not a sudden surge in migration.

We talk about productivity and tax reforms – but is there any will or motivation from the private sector to improve productivity and support the reform required from the federal government? Will our three-year terms and current parliamentary system ever get genuine economic reform?

Jo Masters

• In the last nine months, corporate Australia has stepped up on productivity in a way we haven’t seen in a long time.
• The private sector was very involved ahead of the round table, showing a willingness to be
  more open-minded.
• We’re gradually reaching the point where we accept that not everyone can be better off at the same time.
• The challenge is not just the length of the federal government term - but also state 
  governments; when national cabinet meets, someone around the table is always facing an
  election, meaning Australia is constantly in election mode.
• This is critical because Australian federalism means many reforms require cooperation between federal, state and local governments.
• These changes are hard, often requiring constitutional change and referendums, which are expensive and usually unsuccessful.
• Because of this, it’s unlikely that we’ll see changes in the short term.
• That doesn’t mean we shouldn’t try to lift productivity in every way we can.
• There is a misconception that low productivity is due to lack o f reform by government – but this isn’t just government’s problem; every business can do something to become more productive.
• We all have an obligation to lift productivity, strengthen the economy’s capacity and deliver higher living standards for our children.

How might AI contribute to lifting productivity?

Dr Karen Hooper

• There is a lot of interest in how technology can lift productivity.
• In our construction productivity inquiry, technology has come up as a way to streamline
  approvals and make regulators more efficient and effective.
• There are potential opportunities in this space – and there must be a particular focus on
  identifying regulatory barriers that may block innovation.
• This includes the use of new building materials, new business models and other productivity enhancing approaches that may be restricted by rules or standards.
• The challenge for governments is to strike the right balance between the costs and benefits of technologies like AI.

Richard Yetsenga

• I think Australia is a bit fearful of AI.
• The tone of the productivity discussion suggests we should be embracing AI because we need the technological progress - and the productivity gains it can deliver.
• Surveys show Anglo-Saxon economies are the least excited and most nervous about AI, while Asia is the least nervous and most excited.
• We need to shift our position along that spectrum.
• Part of the issue is regulation – and giving people confidence that protections are in place, for example, around copyright.
• I think most of us would agree we need to move faster on AI adoption to achieve the
  productivity benefits and labour savings it can provide.
• I’m concerned that in a race environment, there is a stronger impetus for speed, which can trigger risks and fuel the emotional responses many of us feel toward these technologies.

Jon Berry

• Attitudes to technology differ around the world.
• Many analysts now describe a growing tech cold war - essentially a race for technology – and we’re seeing more trade policies designed to constrain competitors, such as U.S. restrictions on chip exports to China.
• These competitive trade policies create a tension between speed and safety.
• That tension reflects the dynamic between excitement versus nervousness about technology.
• I’m concerned that in a race environment, there is a stronger impetus for speed, which can trigger risks and fuel the emotional responses many of us feel toward these technologies.

What do you think about the level of regulation and compliance in Australia, and how does this impact productivity growth?

Richard Yetsenga

• One of the great puzzles in the productivity debate is why we can’t get regulation right.
• There are issues that everyone seems to agree on - yet reform doesn’t happen.
• The politics side of this is interesting, but when I look globally, Australia is still near the top of the list of places I want to be; our politics isn’t perfect, but even with a fragmented House of  Representatives and Senate, we remain stable.
• Australia is still the 13th wealthiest economy in the world, with very low unemployment, a
  record-low gender pay gap, and record-high female participation.
• We don’t face threats from political systems intent on wrecking the system, unlike what we’ve seen with Brexit or in the U.S.
• If we reduce the size of our appetite and make some sensible productivity reforms, Australia can keep growing at 2–2.5%. In global terms, this would be a very strong outcome.