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An Industry Policy for Queensland

Paul Boreham and Chris Salisbury provide an overview of innovation-led industry policies that engage in long-run strategic investments to create and shape industry trajectories rather than just responding to problems of industry decline. The paper draws an outline map of how such policies might be applied to the Queensland economy.


Many countries are pursuing innovation-led industry policies engaging in long-run strategic investments to create and shape industry trajectories rather than just responding to problems of industry decline. This has required public agencies to lead and direct the creation of new technological opportunities and innovations. The predictable response from bureaucrats and politicians steeped in economic liberalism (that industry policy is not an appropriate instrument of public policy) must face rebuttal as both economically ill-informed and unjustified by evidence. This paper provides an overview of the key issues exemplifying the development of industry policy in many of the advanced economies and draws an outline map of how they might be applied to the Queensland economy.


The structure of the Queensland economy has changed significantly in the past decade. Manufacturing, as a component of Gross State Product, has declined from 10.4 per cent in 2004-5 to 7.2 per cent in 2014-5. The sector’s contribution to State employment has declined from 10 per cent to 7.2 per cent. Likewise, mining’s contribution to Gross State Product has fallen from a peak of 14.8 per cent in 2008-9 to 7.3 per cent in 2014-5 while its contribution to employment has increased only slightly from 2 per cent to 2.8 per cent. Underlying these figures are significant changes in industry and occupations: a freefall in heavy manufacturing offset in part by new ‘advanced’ manufacturing processes; a downturn in mining construction and housing associated with the mining industry; a substantial growth in some but not all of the disparate occupations involved in the services sector. These changes in economic activity and employment have happened, if not serendipitously, then without a great deal of political oversight or direction.

The challenges currently facing Queensland’s economy and society require policy responses at odds with the narrow frame of reference in which they are generally cast. Some political attention has recently been focused on rebalancing the economy with new sources of innovation and productivity to offset diminishing industry sectors associated with commodity exports and heavy manufacturing. What is at stake in these deliberations is the need to develop a public policy competence taking cognizance of the need to foster regional economic development, employment growth in a high skill, high wage economy and an equitable distribution of income.

The contemporary process of policy formulation in this context takes as axiomatic the proposition that markets, in the absence of regulatory impositions, normally generate optimal outcomes for economic development and employment. These assumptions inspire policies aimed at the removal of impediments through deregulation of product and labour markets and privatisation of public enterprises. More disappointingly, they determine an emphatic rejection of enhanced regulation and industry support by government (see Banks 2008). Based on a review of research evidence over several decades, this paper takes a contrary view. We argue for a more integrated, strategic industry policy which emphasises both demand management intervention through using government capital expenditure to provide the infrastructural support for private investment, as well as interventionist supply-side measures designed to influence the level and composition of Queensland’s investment and productivity. The aim is to give direction to and accelerate the transformation of Queensland’s industrial structure from one based on resource-based exports whose terms of trade are declining to internationally trade knowledge-intensive manufacturing and services.


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