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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.
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