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As the Federal election comes to an end, what is the economic outlook for Clubs and Pubs?

By Geoff Wohlsen | Director | geoff@dws.net.au 

How will the new Government affect your venue?

It’s official, Shorten has conceded to Turnbull in the longest running Federal campaign in Australian history. So now that we know the Liberal party will be securing our future and leading Australia in the forthcoming years, it’s worth revisiting the Government’s budget and the impact it will have on clubs and hotels.

 economicEconomic growth

The Federal Government is forecasting 3.0% to 3.5% economic growth for the three years, ahead of the Organization for Economic Cooperation and Development (OECD) average of just under 2% and ahead of the United States at 2%. The Queensland Government has forecast up to 4.0% growth next year. This is good news for the leisure sector in the State.


Taustralian-dollarhe Australian dollar

The Australian dollar should remain low at the target rate of around 72 cents or lower, despite some strengthening against the Pound in recent weeks. This is also good news for the domestic leisure sector.


fuelFuel prices

Fuel prices are now quite high in Queensland compared with other States. The high Australian dollar combined with the high demand for fuels as the northern hemisphere cools, will place upward pressure on fuel prices which will serve to dampen leisure demand.


taxTax cuts

It remains to be seen if the tax cuts promised by the Government will get through the Senate. These tax cuts will flow through the economy and increase spending and consumption, and influence employment favourably.


interest-ratesInterest rates

Interest rates should remain low over the next 24 months. Low interest rates tend to drive hotel based demand because the demand demographic for pubs is younger and more attuned to interest rates as the cost of debt. Low interest rates can quell demand in the club sector where self-funded retirees gauge them as a source of income.


houseHouse prices

Negative gearing has been left alone in the budget but according to BIS Shrapnel, housing prices are set to fall across Australia, potentially dousing demand for leisure and entertainment.


govtGovernment spending

Queensland was initially left out of some capital spending in the initial Abbott/Hockey Budget (the Queensland Government refused to sell assets and therefore was ineligible for some capital recycling). But the in the first Turnbull/Morrison Budget, Queensland fared quite well. The Federal Budget didn’t seek to return to surplus until after 2020. This, combined with the strong Queensland state budget, means that the Queensland economy should remain relatively strong at the forecast levels of growth.

So the overall outlook economically is favourable for most of Queensland. Some areas of the state are hurting. The persistent drought in the west, impacts flowing from Queensland Nickel, and the adjustments following the mining capital phase in Central Queensland continue to impact on clubs and pubs.

Other areas like South East Queensland and Cairns should benefit from the positive outlook over the next 18 to 24 months. It remains to be seen, however, what the new look Lower House and Senate might mean for the sector.

For further insight into what is to come and how it could impact you and your venue, contact us on (07) 3878 9355 or info@dws.net.au.

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