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Unreal Expectations? - email sent 25/3/12

Scott Murdock
The Australian

Re: Industry looks to Campbell Newman to get Queensland moving, The Australian, 24/3/12

I should like to suggest that the expectations of the Queensland business leaders recorded in your article seem unrealistic. Given the difficulties that exist, and the lack of heavy-weight effort to work out how they could be overcome, there is a real risk of a disappointment equivalent to that of earlier governments.

My interpretation of your article: Queensland business wants a new government to get the state back on track by renewing confidence, encouraging investments and restoring the state’s AAA credit rating. LNP has fiscal measures at the centre of its campaign. Cuts to 4.75% payroll tax have been promised. A 4% unemployment target and a 3% public sector employee expenses cap have been announced. A $7000 stamp duty discount for home owners will be restored. ANZ Queensland chairman (Russell Shields) points to the need for confidence, increasing government efficiency, cutting red tape, a streamlined development process, and improved planning for major projects to get them through the cycle more efficiently. Developer Kevin Seymour points to the need for confidence and getting rid of red tape. Queensland’s financial position has worsened due to global financial crisis (GFC) and floods, requiring asset sales to bring deficit under control. Seymour says that infrastructure development is vital. Suncorp Bank CEO (David Foster) says the state needs to invest in infrastructure to maximize the mining boom benefits. NAB says that Queensland can be the second best performing state as mining output recovers from floods. Property Council (Kathy MacDermott) says that a holistic view of the tax system is needed to attract investment. 0.5% land tax surcharge (supposedly a temporary GFC measure) should be abolished immediately. Hutchinson Builders chairman (Scott Hutchinson) points to need to restore the AAA credit rating.

Your article suggested that Queensland experienced fiscal problems (and thus had to sell assets) because of the GFC and natural disasters. However, rates of capital spending (apparently with strong business community encouragement) that were unsustainable given Queensland’s revenues, had arguably put the state on a path to fiscal problems years before the GFC (see Recovering from Queensland's Debt Binge). And, as the latter noted, Queensland’s debt binge over the last 15 years did not arise in a vacuum, and was by no means the only symptom of substandard government.

Public enthusiasm for the reformist Goss administration evaporated in the early 1990s as little was achieved when autocratic amateurs tried to implement an idealistic but poorly considered policy agenda. Its successor, the Borbidge Government, struggled briefly with both the unworkable administrative machinery it inherited and its own lack of any solid policy agenda. The Beattie Government’s tactics (ie spend-up-big despite the lack of workable machinery of government) have clearly passed their use-by date. And the Bligh Government’s efforts to restore more effective and accountable administration without dealing with institutional constraints (such as those suggested in Queensland's Next Successful Premier, 2007) have recently been rejected by the electorate.

Until attention is given to fixing the institutional weaknesses both inside and outside the public sector that caused past administrations to suffer repeated crises, there seems little prospect that the expectations that business leaders now have can really be met. While the LNP has developed an extensive policy ‘wish list’, this seems light-weight in terms of both its aspirations for Queensland and its proposals for re-creating competent machinery of government to help it achieve those aspirations. Thus severe disappointment probably awaits Queensland business and the electorate in a year or two.

John Craig