CPDS Home Contact Professionalism: Chronological Summary

Lobbying Resource Companies to Buy Australian:
Building on the Achievements of the Beattie Government?
- email sent 30/8/11

Professor Ross Fitzgerald,
Griffith University

Re: Beattie a good choice for resources champion, The Australian, 25/8/11

I have to pour a little cold water on your article’s glowing assessment (which is outlined below) of the performance of Queensland’s Beattie Government.

Irrespective of Mr Beattie’s qualification for the role in lobbying resource companies on behalf of Australian industry that the federal government has now commissioned him to undertake, I submit that your assessment of the Beattie Government’s performance was misleading. While his Government was probably not Queensland’s worst, this was arguably only because that title has been so hotly contested (see overview of recent Queensland administrations).

One can only hope that Mr Beattie’s lobbying on behalf of the federal government’s Buy Australian at Home and Abroad package will be more effective than his crisis-ridden, inept and fiscally-imprudent Government. While there are many causes of dysfunctional government in Queensland (eg see How did it get so bad?) and his Government inherited many of these from its predecessors, it did little to ease, and a great deal to exacerbate, those problems. My reasons for suggesting this are outlined in more detail below this email.

John Craig

Outline of Article and Detailed Comments

My interpretation of ‘Beattie a good choice for resources champion’: Appointing former Queensland premier (Peter Beattie) as resource sector supplier envoy is smart move by the federal government. Beattie has a strong history in resources and value adding. Queensland’s energy policy was changed in 2000 to require 13% of generated energy from gas – and this lead to coal seam gas industry. When Beattie retired in 2007 Queensland’s AAA credit rating was intact, mining was booming and the budget was in the black. His smart state strategy had spawned biotechnology research institutions and economic activity. An aviation strategy ended up employing 6000 people. Beattie promised 5% unemployment when the level was 10% and left office when it was 3.7%. He initiated the biggest infrastructure plan in Queensland’s history. The Bligh government has struggled since he left (eg with lack of follow-up on gas industry expansion leading to divisions between farmers and miners). As premier, Beattie established international industry links, which have been expanded in his role as trade and investment commissioner for the America’s. Thus he has the knowledge to ensure that Australian companies benefit from the expansion of gas exports from Queensland and WA. The federal government established a Buy Australian at Home and Abroad package to increase Australian industry participation in the resources sector. This includes a high level forum (including senator Kim Carr and Martin Ferguson) to identify opportunities, and a suppliers’ advocate as well as a resources sector supplier envoy to champion Australian industry participation. Beattie will: champion Australia’s manufacturing capabilities to national and international companies; facilitate their access to supply chains; and provide feedback to government / industry and investment strategies.

While the Beattie Government certainly did all of the things that your article mentioned:

  • It was repeatedly confronted by crises (eg see Evidence of Dysfunctions and note in particular those connected with: child protection and electricity distribution in 2004; hospitals in 2005; and water supply in 2007). The characteristic response to crises was a sincere apology and a promise to ‘fix the problem’ (usually by throwing huge amounts of public money at it). When Mr Beattie retired in 2007, the challenge facing his successor (Anna Bligh) was seen to be to ‘shake the crisis-ridden tag of the Beattie Government’ (see Queensland’s Next Successful Premier, 2007);
  • Not everyone sees the Beattie Government’s dealings with resource industries in flattering terms. For example one close observer suggested that: the Government was never on top of resources’ issues or at the leading edge, and tended to be destructively interventionist; the relationship between officials and resource industries was poor; a $100m government investment in the magnesium industry failed due to a lack of due diligence; and environmental problems with coal seam gas were highlighted but ignored, as were environmental risks facing other resource industries [personal communication]. Another close observer of the resource sector suggested that: most of the suggested successes were not originated by Mr Beattie; and that the problems affecting government ‘snowballed’ under his administration [personal communication];
  • The Beattie Government’s economic strategy (and the ‘political-push’ rather than ‘market-pull’ methods chosen to promote Smart State goals) were amateurish – see Queensland's Economic Strategy (2002) and Commentary on 'Smart State': Illustrating Queensland's Lack of Serious Public Policy (2003). Certainly large amounts were spent on supporting biotechnology research, but the economic spin-offs from this were unlikely to justify that cost (see Queensland's Biotechnology Bubble, 2002). The ‘aviation strategy’ that apparently produced 6000 jobs had first been mooted in the 1980s. Australia (including Queensland) benefited from the global ‘long boom’ from the 1990s to 2007, and this drove down unemployment rates generally. Queensland’s economic growth was above the national average for much of this time – but this was primarily a consequence of rapid migration-driven population growth. In per capita terms, Queensland’s GSP remained well below the national average, and infrastructure backlogs escalated as the needs of a fast growing population outstripped infrastructure spending. Since the migration-driven growth surge ended in 2009, Queensland’s economy has been decidedly weak (see Speculations about Queensland's Economic Predicament, 2010);
  • While Queensland still had a ‘AAA’ credit rating in 2007, the signs that all was not well with the state budget had been accumulating since about 2001 (see Queensland's Budgets). Those signs include: boosting revenues initially by stripping the assets of GOCs; other apparent ‘creative capital accounting’ (see Enron-itis; About the 2003-04 Budget); and growing pressures for significant increases in state taxation. And, after those difficulties were compounded by the GFC and came to a head with the loss of the state’s AAA credit rating at the time of the 2009-10 budget, it remained difficult to be sure exactly what was going on (see The Need for Transparency);
  • Massive spending on what your article described as ‘the biggest infrastructure plan in Queensland’s history’ was a significant factor in Queensland’s ultimate budgetary (and economic) crisis. Queensland’s infrastructure spending rose to about $18bn pa in 2009-10 even though, in 2002, the Beattie Government had claimed that $5bn pa was the maximum affordable without significant tax increases. Moreover much infrastructure spending was arguably mis-directed because state machinery had been rendered incapable of competently planning and developing infrastructure (see Defects in Infrastructure Planning and Delivery in Queensland , 2002). And heavy infrastructure spending at the time of a resources’ boom contributed to large (eg 30%) cost blowouts (eg see Ball Y., etal, 'Key projects come under pressure as costs blow out', Australian Financial Review, 8/6/05) and to skilled labour shortages.