CPDS Home Contact Professionalism: Chronological Summary

Email sent 4/11/09

Professor Scott Prasser,
Australian Catholic University

Why does Queensland have a financial problem?

Re: 'Deficit in cash, not people', Courier Mail, 2/11/09

Your article noted suggestions, which originated in the Institute for Public Affairs, that Queensland's financial mess can simply be ascribed to increasing numbers in the public service. I would discount such claims.

Queensland's financial mess, as far as I can see, has more complex causes (ie massive increases in spending over the past 15 years, and some very dodgy accounting practices to conceal the extent of the deficits that existed). My attempt to follow what has been going on is in On Queensland's Budgets Since 2001. Spending increases well in excess of other states were funded initially by raiding the balance sheets of government owned corporations (ie requiring them to borrow to pay special 'dividends'), then by significant increases in borrowings (some of which, Enron-like, were apparently shifted off balance sheet to hide them). Those borrowings financed large increases in capital spending (that often did not achieve a great deal because of administrative incompetence, the breakdown in machinery for planning and delivering infrastructure and cost blow-outs resulting from high spending during a resources boom), while the practice of diverting some borrowings to recurrent spending (so as to give the impression of balanced budgets) seemed to be carried out in other ways.

There has long been, and is, a serious lack of transparency in Queensland's budgets (see comments in relation to 2009-10 budget). The latter noted, amongst other things, that over the course of 2000-09 there was a $13.1bn fall in Queensland's financial wealth - an outcome that arguably reflects some of the chickens coming home to roost, though what happened was entirely unexplained in any budget document.

It is grossly simplistic to suggest that public service numbers are the problem. Increases in staff numbers above the national average would be expected in Queensland because: (a) population growth has been greater than average (and I saw some data at one stage, but can no longer locate it, suggesting that Queensland's ratio of public servants to population has remained pretty stable); and (b) Queensland's spending has increased faster than others - so that increased public service numbers could be the consequence rather than the cause of the budget problem. There may also have been some blow-out in public service numbers because of administrative incompetence (noting the politicisation and deskilling that resulted from incompetently managed 'reforms' in the early 1990s, and the (apparent) effect of naive techniques for evaluating senior public service positions which may have created a bias towards increasing staff numbers)

John Craig