THERE were great differences between the states and territories in the growth rates of their economies from 1990-2009. Their annual growth rates were (from fastest to slowest): Queensland (4.5 per cent); Western Australia (4.2 per cent); Northern Territory (3.6 per cent); ACT (3.2 per cent); Victoria (3.1 per cent ); Tasmania (2.6 per cent ); NSW (2.5 per cent) and South Australia (2.4 per cent).

Can differences in economic structure - a big mining sector, for example - explain these differences? Or were these growth differences broadly spread across sectors? In short, did state governments' economic policies matter?

To answer this question we drew on the state accounts of the Australian national accounts for the past 20 years and divided the Australian, state and territory economies into industry sectors, concentrating on those showing significant change at the national level (or important for other reasons, public administration and safety, for example).

These industry sectors are: agriculture, forestry and fishing, mining, manufacturing, financial and insurance services, professional, scientific and technical services, and public administration and safety.

It would appear that national industry sector performance can explain some of the differences between the states and territories in their economic growth performance but by no means all of those differences. Other factors also played an important role.

In fast-growing WA and the NT, and in ACT which is growing at the Australian average, the situation is clear. Their economic fortunes have been heavily influenced by their industry structure.

Mining contributed 8.4 per cent of the increase in Australia's gross domestic product from 1990-2009, but in WA it contributed 27.3 per cent of the increase in WA's gross state product, while in the NT mining contributed 31.3 per cent of the increase in GSP.

Public administration contributed 4.8 per cent of the increase in Australia's GDP from 1990-2009, but in the ACT it contributed 35.7 per cent of the increase in the ACT's GSP.

But in Queensland, Australia's fastest-growing state, the situation has been quite different. Queensland's fast economic growth was spread across every industry sector except agriculture. In every sector except agriculture, Queensland's growth rate exceeded the national growth rate. Queensland's economic growth is not just a mining story. It is broad based. It is plausible that Queensland's fast population growth rate has had a strong effect on the structure as well as the pace of its economic growth.

Going to the other end of the state and territory economic growth league, in every sector except agriculture, SA's growth rate has been less than the national growth rate.

In every sector except agriculture, financial services and public administration, Tasmania's growth rate has been less than the national growth rate.

In many respects, these states' growth stories are the obverse of Queensland's: broad-based weakness relative to the national picture.

Even in areas of past strength such as manufacturing their growth performance (especially in SA) has been weaker than at the national level.

Similarly, slow growing NSW is characterised by slow rates of growth in every industry sector during the past 20 years, compared with the national growth rates of each of those sectors.

By contrast, in Victoria, three industry sectors growth rates - agriculture, financial services and professional services - exceeded their corresponding national growth rates. Indeed the growth rate of agriculture in Victoria was the fastest among all the states and territories.

In many respects, NSW's and Victoria's growth stories confirm an emerging theme of growth patterns among states and territories (WA, NT and the ACT apart): strongly growing states show strength across many sectors, while weakly growing states show weakness across many sectors.

WA, NT and the ACT apart, differences in economic performance among the states are not driven mostly by differences in their industry sector composition, but by broader influences that have enabled some states to grow faster than others. It is tempting to believe that those broader influences have been state governments' economic policies.

On this reading, Queensland, Victoria and, probably, WA have enjoyed the best state government economic policies, while NSW, Tasmania and SA have enjoyed the least favourable policies for economic growth.
 
  
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This article was published in The Australianonline on 31 May 2010.

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