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Curing Queensland's Myopia (email sent 16/6/11)

Steven Wardill,
Courier Mail

RE: Campbell caught short on vision thing and 'Enough talk, it's time to do the walk' (Courier Mail, 21/5/11 and 11-12/6/11 respectively)

In the above articles (which are outlined on my web-site) you argued that Queensland’s Opposition enjoys a significant lead in the opinion polls, but seems unable to explain precisely how they would provide good government or deal with the state's serious budget challenges.

May I respectfully suggest that Queensland oppositions are: (a) almost always unable to present realistic policy agendas; and (b) not solely to blame for this (because their 'policy myopia' partly arises from others factors, and is shared by Queensland's community generally).  My reasons for suggesting this are outlined on my website. In particular this refers to:

  • possible answers to the Opposition leader's question about 'how things got to be so bad'. Things got to be bad (and could become worse) for much the same reasons that oppositions suffer 'policy myopia', ie;
  • the absence or weaknesses of institutions that are needed to provide reliable ‘raw material’ for public debate if: (a) political leaders and the community generally are not to suffer from 'policy myopia'; and (b) Queensland's economy is to achieve its potential; 
  • Queensland’s history of poor governments and weak oppositions;
  • the current Opposition's apparent efforts to mobilize new energy and initiative, but the inadequacy of its emphasis on ‘building Queensland’ mainly in terms of infrastructure and other government activities. There is also a need to build supportive relationships that enable cohesive initiatives within the community (ie to 'govern', as well as providing public goods and services) and a much better capacity to anticipate and respond to emerging strategic issues;
  • preliminary speculations about ways to reduce Queensland's 'myopia', and discover an appropriate ‘vision’ to motivate 'Building Queensland - Together'.

By way of background, these comments are based on study and analysis of the requirements for developing Queensland's potential over four decades (as outlined in the CV on my web-site).

John Craig

Detailed Comments


What is the Problem?

It has been suggested that Queensland's Opposition should be able explain in detail how it would provide good government for Queensland, and how it would respond to the state's severe budget challenges.

My interpretation of 'Campbell caught short on vision thing', (Courier Mail, 21/5/11): Campbell Newman and the LNP may romp to victory in the next state election, but he appears to have little grasp of some issues. He has promised leadership / energy / good government – but his initial speculations about public service cuts and further asset sales have been sidelined. The LNP’s small target strategy has returned, and as the flood euphoria has receded and people come back to thinking about cost of living and government service issues, the LNP has returned to its dominant 60-40 position in the polls. This raises the question about what ‘Can Do’ Campbell can do. The budget reply speech on June 14 would be the perfect opportunity to outline LNP’s plans. Queensland has been sick of ALP government for a long time, but the Opposition has been found wanting.

My interpretation of 'Enough talk, it's time to do the walk' (Courier Mail, 11-12/6/11): No one knows what the Opposition leader and shadow treasurer would have done about Queensland's budget challenges (eg $2bn disaster bill; shrinking GST pool; weak property revenues; poor business confidence and export markets; public concerns about rising costs). There has been a lot of talk in broad terms (eg more spending on infrastructure, while cutting taxes and restoring AAA credit rating). Newman speaks of getting things done; but what? He recently spoke of reducing waste and red tape, and making Queensland No1. Restoring Queensland's low tax status would be costly. The coming state budget will give the opposition the facts on what the financial position is. The LNP needs to start declaring its agenda.

Undoubtedly it would be desirable for oppositions to be able to do this. However, as illustrated below, they typically can't do so and this raises important questions about Queensland's whole system of government.

Moreover the Opposition leader raised another important (and closely related) question in his economic vision for Queensland namely: Given Queensland's rich natural assets, how did Queensland's economic and budgetary position become so bad?

In brief: the Opposition leader's economic vision for Queensland referred to:
  • his difficulties in understanding why Queensland's economic and budgetary position is so bad given its riches in natural beauty, climate, scenery and resources;
  • an aspiration to make Queensland number one;
  • his career and achievements;
  • problems in:
    • the economy (rating last in Commsec survey and poorly on other indicators); and
    • state finances (rapidly rising state debt; loss of AAA credit rating which even poorly managed NSW did not do; waste and inefficiency; blowouts in capital projects);
  • transforming Queensland into an economic powerhouse by a focus on the economy, and suggestions about issues to focus on to achieve this for:
    • the property industry (regulation, red tape and government charges, constraints on local authorities, rewriting the Sustainable Planning and Local Government Acts);
    • tourism (promoting tourist interest from China, India, the Gulf, and South Korea);
    • agriculture (reversing government neglect of agri-business; providing infrastructure and research support, rather than criticism of environmental impacts; reducing red-tape and providing extension services);
    • mining and resources (overcoming red tape; providing infrastructure support);
  • energising Queensland economy by: focusing on what needs to be done; rejecting bureaucracy and red tape as the way to generate wealth; opposing a carbon tax unless there is a level international playing field; restoring Queensland's economic compass; and encouraging business, investment, jobs.

In brief the likely answer to the Opposition leader's question (ie "... how could it have got so bad?") is that, while external factors have played a role, the main problem is that governments have been ineffectual and economic strategy has been amateurish (both in seeking to rely on rich natural assets, and in the methods used to try to diversify the economy). And those deficiencies arise from the same structural weaknesses that cause oppositions usually to be unable to provide clear answers to questions about their policy agenda.

How did it get so bad?

Queensland's current economic and budgetary predicament seems to have been generated mainly by the cumulative effect of poor government (and weak oppositions) over a long period. As noted below there has been very limited support from the community for effective government in Queensland because of a general lack of awareness in the community of the requirements for effective government or economic success.

In particular, it 'got bad' arguably because:

  • under Australia's federal system: (a) the tax sources that state governments have available have primarily generated revenue through increasing economic turnover rather than through maximizing economic value added; and (b) Grants Commission arrangements provide funding for state 'needs' even if they do not develop a strong tax base. Thus states (who have the main responsibility for stimulating economic development) have not had a financial incentive to take this responsibility seriously (see also Economic Development Incentives);
  • economic advice to the state government by the Queensland Treasury has long seemed inadequate. The Treasury's goal in providing the main official source of economic advice seemed to be to justify traditional economic practices, rather than seek ways to improve them (eg by a broader approach to development of the knowledge, skills and economic organisation of the community). For example, in 1983 the present writer produced the first proposal for diversification of Queensland's economy (Towards a Strategy for Technological Development in Queensland). This involved goals similar to the subsequent Smart State strategies, but quite different (ie market-driven rather than politically-driven) methods. Such ideas (and the notion that Queensland's economic performance had been sub-standard) were incorporated in early drafts of a report by a 1985 Task Force in Employment, and then edited out after after the report was 'gazumped' by the Treasury. Inadequate advice about economic strategy arguably arose from:
    • a short term focus. Expressing confidence in the economic outlook rather than highlighting the need for change is usually in the political interests of the government of the day. Expressing confidence can also have a beneficial effect on levels of investment and spending (and thus on economic growth) in the short term, even though this might constrain longer term performance;
    • the conflict of interest between the financial interests of the state government itself and the economic interests of the community generally (as noted above). In simple terms the Queensland Treasury has been financially motivated to provided 'economic' advice biased towards maximizing economic turnover (especially the value of mineral and energy exports and property transactions on which state revenues depended) rather than maximizing economic value added (which would do most to lift the incomes of businesses and workers); and
    • the quasi 'scientific' approach traditionally taken to economics. The conventional goal of economics is to understand the way an economy works so as to make predictions, whereas what is arguably required to maximize economic performance is to constantly seek market-oriented changes in the way it works - for much the same reason that innovation is widely regarded as important in increasing the profitability of enterprises (see Probable Breakthrough in Understanding Economic Development);
  • Queensland's small business and branch office economy and weak civil institutions were ill-equipped to lead when the requirement achieving a highly productive economy was recognised to depend mainly on competitive advantages (ie on knowledge, skills and and effective organisation), rather than on given 'comparative' advantages; 
  • Queensland's economic strategies have been amateurish (see below). In brief, primary reliance was long placed on rich natural assets, which is a formula for: booms and busts; declining productivity in the long term; and poor economic leadership of a community. And attempts to diversify the economy (eg the Smart State strategy) failed because they sought politically-driven, rather than market-driven, change;
  • Queensland's 'low tax' strategy (especially the elimination of death duties), when combined with lower housing costs than in southern capitals, seemed to encourage increasing interstate migration to Queensland from the late 1970s - and this  stimulated rapid economic and jobs growth and thus made high rates of migration self-sustaining (see Does Rapid Migration Cause or Cure Labour Shortages?). No attention seemed to be paid to the usual fate of naive local authorities who set rates low to encourage property development, and then find themselves faced with huge infrastructure and service costs;
  • attempts in the 1970s to develop a professional public service to provide competent policy advice and implementation support to governments were weakened in the 1980s and abandoned altogether in the 1990s.
    • Government's focus on facilitating ‘major projects’ in the 1980s through the Coordinator General seriously undermined the more purposeful and cohesive public sector that had been promoted through the Coordinator General's role in the 1970s (see The Lessons of History);
    • After 1989 the Goss Government's 'managerialist' assumption (ie that management was a generalist function that did not require deep knowledge of what was being managed) and an apparent autocratic desire to prevent its 'reform' agenda being subjected to a 'reality check' resulted in (a) completely ending the Westminster tradition of a competent and professional public service (noting that legislation was enacted to eliminate any serious requirement to consider professional merit in making 'senior' public service appointments); and (b) loss of the knowledge and skills needed to give practical effect to the long-overdue need for reform (see Decay of Australian Public Administration, 2002). As noted below, one result was the creation of extremely complex and almost unworkable machinery of government;
  • as a result of rapid migration to Queensland:
    • economic growth was much faster than the national average. This created an impression of economic success for years, even though the failure to diversify into higher-productivity industries meant that per-capita gross state product remained low by national standards;
    • infrastructure backlogs emerged due to: (a) increased demand; (b) the traditional emphasis on low taxes and funding capital spending from revenues to minimize net debts; and (c) the crippling of Queensland's capacity to provide infrastructure effectively (see Defects in Infrastructure Planning and Delivery, 2002). The latter referred to: federal fiscal imbalances; purging of relevant knowledge and skills; fragmentation of responsibility with a view to promoting competition; and attempts to apply market mechanisms in undertaking functions subject to severe market failures;
    • a need for large increases in infrastructure spending was perceived;
  • as a result of very high rates of catch-up infrastructure spending, combined with ineffectual government machinery:
  • Queensland's economy and many people's jobs became increasingly reliant on presumably unsustainable levels of capital spending;
  • the economic and state revenue benefits of a commodities boom driven mainly by China's unsustainably high (ie >50% of GDP) rates of investment in property development and infrastructure has had adverse effects on other sectors in Queensland (ie services, manufacturing, and tourism) because of the effect on their competitiveness of increasing the value of the $A;
  • an external economic shock in 2008 (the global financial crisis) and natural disasters in 2011 severely disrupted Queensland's economic and jobs growth and government revenues, while requiring substantial additional spending on disaster recovery;
  • the resulting economic reversals (combined with rising costs and perceived infrastructure deficiencies) appeared to trigger a substantial decline in migration to Queensland, and this further amplified the state's economic and employment difficulties because the growth previously stimulated by high rates of migration was no longer available (see Speculations about Queensland's Economic Predicament). 

There is nothing new about suggestions such as those outlined above, as the potential for things to 'get bad' has been obvious for decades. For example in Queensland’s Challenge: A 2006 Report Card the present writer made reference to:

  • a 2001 ‘report card’ that had noted: social stresses; political instability that arose from poor management of pressure for economic adjustment; the inadequacy of the ‘Smart State’ initiative in promoting economic diversification; the then-uncertain prospects of resource-based industries; the need for fundamental overhaul of government administration; and the lack of attention by major political groups to difficult challenges;
  • progress in reducing previously high unemployment mainly due to uninterrupted global expansion;
  • the continued failure to seriously address either social stresses or economic development;
  • international economic instabilities;
  • the shambles in public service delivery;
  • the improving quality of inputs to public policy debates, but the limited practicality of many products of those efforts;
  • Queensland’s enigmatic budgetary position;
  • The inadequacy of Queensland's corporatisation model for government-owned enterprises.

However a bigger problem is that 'bad' could easily become 'worse' for reasons that gain little or no attention in public debates. Unless the collaborative capacity of Queensland's community to anticipate and respond to hard-to-understand risks is increased, the consequences could be severe.

Poor Governments and Weak Oppositions

Under Queensland's system of government, the government executive is drawn from the party with majority support in Parliament, and has two primary roles, namely: (a) the creation of a legal and regulatory framework for activities undertaken within the community; and (b) the provision of diverse public goods and services (eg services involving health, education, transport, water etc). The primary roles of oppositions are to: (a) ensure that Parliament can effectively hold the executive government to account; and (b) potentially take over as the executive government.

The development of realistic and up-to-date policy is a complex task requiring a lot of resources and discipline, because: (a) the primary criteria for effective government is a depth of knowledge about how a society operates; and (b) information from many sources must be mobilized and appropriately used.

Policy development requires knowledge and discipline: Governments' functions (ie creating a legal / regulatory framework; and providing public goods and services) do not solely or even primarily involve 'doing things'. Rather they primarily involve managing the relationships between 'things'.

This is obvious for government's role in creating a system of law and regulation which affects how the community 'does things' (eg through sound industrial relations laws, or regulating land use where there may be dozens of different factors that require consideration).

It is less obvious in government provision of public goods and services - until it is recognised that goods and services are typically undertaken by governments (rather than by independent enterprises) because they are affected by complexities that can't be managed through commercial relationships. Those complexities might include: an inability to charge users for a service; large side effects from providing the service; or potential socially or environmentally undesirable consequences (see Intrinsic Problems in About Public Private Partnerships).

Managing relationships requires much deeper and broader knowledge (eg about the way a whole society or economy works) than that required to deal with individual 'things' (eg projects).

Moreover in the development of relevant policy options there is also a need for discipline. For example there is a need to:

  • seek a balance between practical and theoretical expertise, and between different interest groups - as policy ideas that emerge from one area may not reflect a community interest. This requires drawing on (say): (a) business and community organisations who draw upon their members, and represent their interests; (b) universities (and others) who have access to relevant theories; (c) leading practitioners and experts who are aware of international trends; and (d) government employees who should have knowledge of: the practical aspects of existing programs; the many past policy initiatives that are embodied in existing practices; and the complex interaction between policies;
  • subject 'ideas' to a reality check by those with practical experience before policy is adopted. There are 100 'ideas' that sound good for every 10 that are relevant. If policy 'ideas' are disparaged by those with experience, they can still be adopted - but failing to go through the discipline of a 'reality check' before policies are finally accepted is hazardous;
  • encourage media reporting on public policy, and on the work of theoretical and applied experts, so that the electorate is aware of operational and strategic policy issues. Political parties draw upon information available to their members, and from contacts in the community. They are only likely to be up-to-date and realistic if the media is effective in ensuring public awareness of issues, and of their complexity.

Thus reliable proposals for changing existing practices are only achievable by organisations that have a depth of knowledge and experience of those functions. Proposals for change by those without such understanding (or those adopted without the discipline of a 'reality check') are at risk of triggering unrecognised and perhaps serious side-effects.  

Thus oppositions can only be effective (ie participate in well-informed policy debate and present meaningful alternative policy proposals to the electorate) to the extent that they have access to inputs of reliable policy options from external sources (eg international precedents) or from local civil institutions (eg associations, research institutes, universities). Governments have another source to draw upon in formulating policies, ie the public service. Under the Westminster tradition that Queensland inherited from Britain, the public service was expected to be professional and politically independent in implementing government policy and providing informed policy advice. Its role was particularly important as a repository of collective knowledge about the complex issues affecting particular policies and programs, and as means of (collegially) managing the interface between various complex functions that cannot be coordinated through market mechanisms or social relationships within the community.

Unfortunately the policy advice available to both governments and oppositions from Queensland's civil institutions has always been weak. In fact such entities have been notable for their ignorance of, and lack of serious concern for, the practical requirements for ‘good government’. The present writer's involvement in strategic policy R&D suggested that:

  • there were virtually no civil institutions willing or able to provide realistic and up-to-date advice to the state's political system about the requirements for effective government;
  • there was often a 10-15 year gap between the emergence of new policy concepts elsewhere and their recognition in Queensland;
  • the very nature of government's core role (ie 'governing', which involves creating a framework within which others can do things) was not understood, as government was conceived to be simply about providing goods and services (its secondary role);.
Sources of institutional Weakness:

Weak contributions to realistic public policy debates from local civil institutions reflects a community that is unwilling / unable to take responsibility for its future (see More Competent External Support to Parliament).  This apparently arises because of:

  • Queensland’s recent (ie 19th century) colonial origins and the significant population share comprising migrants that results from rapid growth;
  • the rich natural assets that make success seem easy and encourage manifestations of the ‘curse’ of rich natural resources, such as: (a) a significant role for foreign investors in taking economic initiatives; and (b) a community that looks to government mainly for benefits (rather than being concerned for what government would have to do to govern effectively);  
  • a typically small business / branch office local economy;
  • a tradition of copying international policy precedents

An aside: Some years ago, a University of Queensland economist with a German background (Dr Tom Riha) suggested in a personal communication that Queensland's problem was that 'there is no people here' (ie no community that sees itself responsible for its own welfare).


  • given the primarily small-business and branch-office character of Queensland's economy, there is little awareness of strategic issues or how to manage large organisations or the economy. While many organisations have reasonable understandings relevant to their own operations, such knowledge does not extend to the way in which governments or whole economic systems operate. There is thus a tendency to encourage governments to focus on the sort of operational issues that suit small firms (ie doing things / projects, rather than enabling things to be done) even though these are not appropriate for leaders involved in large organisations, in 'governing' or in developing an economy ( see Management Gaps in Queensland);
  • the combination of rich natural assets with ignorance / apathy about government / economic policy in the general community both: (a) creates incentives to ‘capture’ the policy process; and (b) reduces the community’s ability to counter such efforts.
  • The most obvious ‘policy capture’ consequence that has emerged from Queensland’s history and circumstances involves and incestuous / crony-ist relationship that has often existed between the ‘private sector’ and government (see Dependence Characterises the Queensland Economy). Queensland’s (so called ) ‘agrarian socialist’ economic style for the first 2/3 of 20th century seems to have been a variety of ‘state corporatism’.
Corporatism is a style of political economy that is quite different to both democratic capitalism and socialism (the other two major Western alternatives). It involves the view that the means of production should be privately owned but none-the-less be treated and act an extension of the state. State corporatism involves an administered rather than a market economy and has a long history in Europe and an association with fascism.

State corporatism has been given effect in Queensland not only through ‘agrarian socialism’ but also through:

  • a highly regulated economy – noting that Queensland has many more regulations than other states;
  • a strong role (via the state Treasury) in attempts to organise Queensland business and financial institutions in the 1980s;
  • the cronyism exhibited in the 1980s (eg noting government responsiveness to the so-called ‘white shoe’ brigade);
  • the purging of capabilities developed in the public service in the 1980s to take a more sophisticated approach to the economy by the incoming Goss administration in the early 1990s – even though this was contrary to the nominal policies of that supposedly-reformist administration (see Autocratic Ignorance Purges the Public Service);
  • the corporatisation of GOCs (as pseudo-commercial arms of government) in response the National Competition Policy in the 1990s (as compared with their privatisation in Victoria); and
  • the numerous ongoing indications of cronyism revealed over the last couple of decades (see Reform of Queensland Institutions - or a Rising Tide of Public Hypocrisy?.

The apparent view that the government is the core of the economy, rather than the regulator of the economy led to repeated assertions (led by the Treasury) that Queensland had a ‘strong’ economy because, at one time, the government’s financial position was strong (ie no net debts) – even though the productivity of Queensland’s economy was very low by national standards (ie Queensland’s gross state product / capita was about 85% of the national average, and national per capita incomes had then declined by international standards for all of the 20th century). Such claims (which impeded reform effects, but benefited those whose economic prospects depended on exploiting resources or government connections) constituted a major obstacle to the changes needed to develop a more modern productive economy that would probably have benefited the community generally (see Queensland’s Traditional Economic Strategy).

  • the incentive for civil institutions to provide the policy raw material that effective state government requires have been eroded because fiscal imbalances in Australia’s federal system have severely impeded the ability of state governments to take real responsibility, or be held democratically accountable, for their nominal functions (see Federal Fiscal Imbalances). And this has been compounded because federal governments have reacted to the resulting weaknesses in states’ performance by seeking to micro-manage state functions centrally - a 'solution' that is likely to be counter-productive (see A Federal System has Important Advantages).

Concern for the requirements of effective government have been further impeded by changes introduced since the 1980s with the aim of boosting the performance of Australia's economy. Greater efficiency in the provision of public goods and services was sought by the use of market mechanisms and business-like methods that were at times incompatible with the functions of government (see Governing is not Just Running a Large Business). The fact that governments have to 'govern' (as well as producing 'public' goods and services) and what is needed for them to do so effectively has apparently been seen to be irrelevant.

Until the 1990s governments had relied heavily for policy advice on the public service and on external sources (eg UK precedents, OECD analyses) though the latter were not always strictly locally applicable. However since then:

Because of the unreliable support available to them from local civil institutions and the erosion of alternative sources of policy advice, Queensland Governments have tended to be poor, and oppositions 'myopic'.

This can be illustrated by an overly-simplistic 'history' of recent Queensland's governments, though Queensland is anything but unique in this respect.

A simplistic overview of Queensland administrations from the recent past:
  • until the 1990s, governments held power for long periods while oppositions were weak;
  • the final long-serving government in that era (led by Joh Bjelke-Peterson) was noted for: his ‘Don’t you worry about that response’ to policy questions; gaining popular support on the basis of government support for projects proposed by mainly-external investor in Queensland’s natural assets (which as noted below is not a formula for economic prosperity); and neglect of 1970's efforts to professionalize government machinery;.
  • The Goss administration which gained power in 1989 focused on reforming Queensland’s run-down public sector. But its reform agenda had apparently been devised in academia and by political advisers. Despite its populist appeal, that agenda primarily resulted in the creation of unworkable (ie highly centralised and very complex) government machinery and a public service from which much of the knowledge and experience needed to give real effect to overdue reforms was purged (see Queensland's Worst Government?). That purge, though less severe, can be compared with the purge of all officials who knew anything about what was required to govern after the US led invasion of Iraq, which contributed to that country's subsequent collapse into chaos;
  • An ill-prepared Borbidge administration unexpectedly won government in 1996 and found  that it could not rely on a crippled  public service to compensate for its lack of substantive policy agenda. It commissioned umpteen inquiries in an attempt to find a way forward. However by the time these reported it was too late;
  • The Beattie Government in 1998 seemed determined to ‘do things’ rather than fix government machinery, and did so. Unfortunately many of the ‘things’ that were done were poorly considered, and some of the expenditures that eroded Queensland’s credit rating over the next decade was wasted. And repeated crises resulted from Queensland's still-crippled administrative machinery;
  • In 2007 an emphasis on preventing (rather than merely apologising for, and promising to fix) crisis emerged, when the current premier (Anna Bligh) assumed that office. However the legacy of history has proven hard to overcome.

And there is nothing unusual about the poor quality of recent Queensland governments (see Undesirables).

Weak governments and oppositions are not limited to Queensland noting: (a) the populist but insubstantial agenda of the incoming Rudd Government in 2007 (see Populism Trumps Electoral Victory); (b) concerns about the effectiveness of the present federal Government and Opposition (see Unstable Government); and (c) frequent criticism of the effectiveness of other state governments.

Given these circumstances it is unrealistic to expect oppositions to be able to express reliable policy agendas. Moreover, unless and until the quality of policy contributions improves, any opposition that gains government in Queensland is likely to be a repeat of something like:

  • the Goss Government, which crippled the machinery of government and achieved little of practical relevance because it believed that it knew it all (and thus did not need advice from those with practical experience or feedback from the general community);  or
  • the Borbidge Government, which gained government unexpectedly and spent its term undertaking umpteen studies in the hope that this would allow it to make informed decisions; or
  • the Beattie Government, which escalated government spending on trendy-but-often-ineffectual programs and projects, while suffering repeated administrative crises which were typically 'solved' by throwing a few hundreds of millions of dollars at them.

Perhaps running for government in Queensland is a little like a dog chasing a car. Anyone who wins government, while not really knowing what to do with it, could be in as much trouble as a dog that succeeds in catching a car.

'Building Queensland's Future - Together': A Complex Challenge

Queensland's current Opposition circulated an email on 6/5/11 entitled 'Building Queensland's Future - Together' in an apparent attempt to mobilize new energy and initiative in addressing Queensland's challenges.

Text of email received 6/5/11

“Last week in Gladstone the Shadow Minister for State Development, Infrastructure, Planning and Reconstruction, Jeff Seeney, and I announced an urgent investigation into Queensland’s infrastructure needs.

Over the past 20 years, Labor has failed to plan for the future and invest in important infrastructure and this affects us all, whether we live in cities or regional areas. I’ve been travelling Queensland since I was elected LNP Leader four weeks ago and I have seen firsthand the sorry state of many of our regional hospitals, the pot-holed roads and highways that have been flooded and it is simply not good enough.

As Shadow Minister, Jeff Seeney has been tasked with consulting communities across Queensland and compiling a list of key critical infrastructure needs including roads, flood proofing measures and health facilities.

Over the next 90 days, Jeff will be travelling the length and breadth of the state putting together this list and I encourage Queensland’s councils, community groups, business organisations and agriculture sector to highlight their key infrastructure needs and have them incorporated in the LNP’s strategic blueprint, Building Queensland’s Future – Together.

An important point to make though is that due to Labor’s reckless financial management the budget cupboard is bare – so there can be no instant fixes – but with this plan we can be ready to make a practical start on Building Queensland’s Future - Together.

You might be interested to know that Premier Bligh was also in Gladstone last week – announcing a gas company will fund a new renal dialysis unit and upgrade to the operating theatre for the state government’s hospital. I believe government, not business, should be providing this critical health infrastructure.

A CanDo LNP Government will ensure taxpayers' money goes to funding critical infrastructure and the delivery of front line services, not glossy publications and publicity stunts.”

While 'building Queensland - together' seems like a constructive idea, what is required is far more than the Opposition seems to realize. 'Building Queensland' is not just about providing infrastructure or taking other government initiatives. There is also a need to build the capacity of the broader community to cope with its opportunities and challenges, including those that are not yet even understood.

More than a List of Infrastructure Options

Suggestions about possible infrastructure projects were all the Opposition sought in its email on 'Building Queensland - Together'. However soliciting such suggestions is not likely to be particularly useful.

Why? In the first place more than uninformed suggestions (ie guesses) are usually required to identify constructive infrastructure options, so there is a limit to what can be achieved by simply seeking public proposals for projects. For example:

  • Infrastructure typically involves investments that have complex relationships with related (government and private) functions and other regional facilities, as well as requiring extensive technical / economic evaluation. Wivenhoe Dam was approved only after six years of feasibility studies. By contrast the Traveston Dam option for boosting Brisbane’s water supply was reportedly identified by a brief desk-top study. However Traveston Dam may well not have been technically adequate, and political backing for a project on the basis of what amounted to a guess seemed to result in large public sector losses (see Saving 'Brand Labor' from Traveston Dam?);
  • Many transport infrastructure investments in SE Queensland seem inadequate, because they were apparently adopted on the ‘obvious’ basis of continuing traditional patterns of urban development and styles of transport in an environment in which quite different requirements are likely in future (eg see Brisbane's Transportation Monster). The global ‘peak oil’ event might be a ‘game changer’ in terms of transport and urban infrastructure requirements. However, though it is increasingly suggested to be imminent and warnings of disruptive consequences are more widespread, its implications have not yet been adequately analysed (see General notes on the 'peak oil' issue). Ultimately many traditional ideas about infrastructure and economic options may require reconsideration.

To genuinely identify and act on Queensland’s infrastructure needs, it is likely to be more constructive to strengthen the machinery that identifies and implements infrastructure on an ongoing basis.  And, some years ago it was apparent that Queensland’s infrastructure development machinery suffered serious deficiencies which needed attention (see Defects in Infrastructure Planning and Delivery in Queensland, 2002).

Also 'building Queensland' does not simply require identifying infrastructure options, even if this were done more reliably. This can be illustrated by:

  • the rapidly escalating debt levels the Queensland Government faces, which means that funding infrastructure requires hard judgements about priorities as well as about tax levels and their social and economic impacts;
  • the proposals for government initiatives to energise the economy in the vision presented by the Opposition in early July 2011 were not limited to infrastructure (see above).

More than Government Initiatives

But the challenge goes deeper because 'building Queensland' does not just require government initiatives. For example, even the goal of "making Queensland No 1" economically arguably requires:

  • that economic directions be set by the market (rather than being pre-empted by political guesses);
  • strengthening systemic supports to businesses that neither arise naturally nor are able to be provided or organised by governments, and yet are vital for success in addressing high value-added opportunities;
  • emphasis on creation of competitive advantages (through the community's skills and effectiveness) rather than primarily relying on natural strengths (ie so-called comparative advantages) as the Opposition had suggested;
Explanation: as for simply seeking proposals for infrastructure options, achieving the 'making Queensland No 1' aspiration of the Opposition's economic vision is anything but as straightforward as just acting on the initiatives that were suggested because:
  • if the desired outcome is to be achieved, the direction that Queensland's economic 'compass' points towards must be determined by the market, and market requirements can't be reliably determined by the democratic political process (see Economic Solutions Appear to be Beyond Politics),  The latter refers to the problem of interest group pressure, and the difficulties of acquiring relevant information in a timely manner. This does not mean that nothing can be done, but that the process of determining what needs to be done can't simply emerge from democratic processes;
  • what government does (eg via regulation or provision of services) constitutes only (say) 30% of the environment business faces, and it is both necessary and feasible to enhance 100% of the business environment in order to make Queensland No 1 for business. Work on the role of industry clusters has shown that as well as government's influence on the business environment, " interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g., universities, standards agencies, trade associations) in a particular field that compete but also cooperate" [1] are also important;
  • there are complications related to the support for industries based primarily on Queensland's natural riches that the Opposition's economic vision refers to because:
    • those activities constitute Queensland's 'comparative advantages' (ie natural advantages) but it was recognised decades ago that high productivity typically required emphasis on competitive advantages (ie advantages created by strategy, as a result of the knowledge, skills and organisation of the community);
    • Queensland had a long term orientation to activities based on natural assets, and this was associated with a relatively low level of economic productivity and community incomes (eg Queensland's gross state product / capita has long been well below (ie about 85% of) the national average, and for most of the 20th century (ie until the mid 1990s) Australia's national income averages had been declining against international benchmarks);
    • reliance on commodity exports is a poor economic tactic because such industries are subject to periodic booms as demand rises, and this induces excess investment which results in 'bust' due to overcapacity when demand declines. And as noted below, there is a serious risk that the commodity boom currently expected to drive Queensland's growth will prove to have been a bubble;
    • also emphasis on natural riches can lead to dominance in business and politics by those who simply seek to gain from those assets but provide poor economic leadership to the community (see comments on the 'curse' of natural resources). Resource-poor countries generally outperform those that have rich natural assets. This does not imply that Queensland natural assets are unimportant, but merely that if these are the focus of attempts to strengthen the economy then: (a) the risk of political corruption is greater; and (b) the result will be inferior to efforts directed towards strengthening the competitive capabilities of the community (and thus its ability to generate competitive advantages as well as benefit from natural advantages);
  • Queensland's traditional tactics for supporting business have been ineffectual both in reliance on natural comparative advantages and in attempts to develop competitive advantages (eg via the Smart State program). Reasons for this are suggested in Queensland's Economic Strategy and Commentary on Smart State). Problems include: direct government 'assistance' services to businesses which inhibit the development of effective industry clusters; attempts to achieve economic change through 'political push' rather than 'market pull'; and failure to implement effective processes to stimulate the development of market-oriented industry clusters (see Defects in Economic Tactics, Strategy and Outcomes, 2000). In particular there has been a traditional bias towards provision of government 'assistance' to industry where market gaps (ie deficiencies in the way the market economy operates) have been identified. The creation of such 'assistance' services both politicises economic activity to some extent, and also blocks development of the economy (ie the creation of non-governmental options for bridging the market gaps within the market economy itself). Methods to stimulate the latter changes are available and would seem likely to produce better outcomes.

The aspiration of the Opposition leader's economic vision can probably be achieved. But doing so requires methods that enable many different types of organisations to simultaneously discover mutually reinforcing initiatives, rather than treating the community as an audience that waits for government to do 'things' for them.

How: Methods that could energise Queensland's economy are outlined in Lifting Productivity: Considering the Bigger Picture and A Case for Innovative Economic Leadership.

The latter suggests ways to develop the productivity and competitiveness of the economy (or to generate independent initiatives that address social and environmental challenges and opportunities) by enabling accelerated learning about opportunities within industry clusters or communities - stimulated by organisations that operate under democratically approved protocols, but without direct political control of outcomes.

Those methods would also provide Queensland's government with guidance on initiatives that allow it to play its part in energising Queensland's economy, but resulting actions would not be limited to what government can do.

The suggested methods would parallel those used in East Asia to engineer economic 'miracles' but would different in that they would be compatible with a democratic capitalist system of political economy and thus avoid the macroeconomic distortions that arise in (say) Japan and China (see Impacting the Global Economy).

Thus, while the Opposition's suggested emphasis on various economic functions (eg agribusiness; mineral and resources; and indeed any globally-competing economic activity operated from or in Queensland) would be of value, 70% (say) of the emphasis should be on support to such enterprises by enhancement of the industry cluster itself, while only (say) 30% related to what government might do (eg in terms of regulations, taxation and services).

Likewise, in meeting social needs there is arguably more to be gained at times by motivating and enabling individuals to help one another, rather than providing government social services that impose ongoing costs on taxpayers and risk creating dependency (see Is the Smart State a Just State: A Commentary, 2003). And, as for achieving market-oriented economic development, this requires empowering leadership by entities that enable opportunities for changes within the community itself to be discovered rather than create an ongoing need for government programs.

As the above examples illustrate 'building Queensland' has to be as much about developing supportive relationships within the community and the economy, as it is about government 'doing things' (eg providing goods and services).  The importance of building effective relationships can also be seen by considering: the support individuals receive within functional families and communities; and the role teamwork plays in cohesive and efficient organisations.

Learning about the Unknown

However 'building Queensland' can not only involve changes to existing and well-understood functions. It must also involve addressing ‘strategic’ challenges (ie important emerging issues that have not previously been meaningfully addressed at all, and may not yet even be well understood).

At present strategic challenges that need consideration arguably include:

  • constraints on the effectiveness of Australia’s traditional system of government due to changing circumstances (eg see Australia's Governance Crisis and the Need for Nation Building). The latter suggests that the requirements to create a framework in which governments in Australia can be effective now go well beyond the institutional support than might have been adequate 30-40 years ago, because (for example): (a) complexity has increased, and thus generated ever increasing 'failures of rationality'; (b) past reform efforts have had unwanted side effects that have made governments less effective; and (c) current arrangements under Australia's federal system seriously distort and disrupt effective government;
  • the rise of 'Asia' that has made it necessary to deal with unfamiliar social / political / economic systems;
Explanation:  Australia is increasingly influenced East Asian models for social and economic modernisation that are based on traditions that are quite different from those established in Australia on the basis of its Western heritage.

In simple terms Australia's society works through the creation of simplified social spaces (eg via a rule of law and reliance on money as a means of exchange and store of value) within which individuals can make rational decisions (as citizens, workers, employers, politicians) - see Cultural Foundations of Western Strength).

However East Asian societies tend to operate on the basis of quite different traditions and social relationships - eg with an emphasis on social hierarchies and consensus, rather than on individuals, rationality and a rule of law (eg see East Asia in Competing Civilizations) and Understanding East Asia's Neo-Confucian Systems of Socio-political Economy. There are parallels between the hierarchical and consensual functioning of such societies and the way an effective bureaucracy works in western societies in handling the relationships between complex functions. To over-simplify, it might be said that in East Asia whole societies operate as a quasi-bureaucracies.

These differences, which are by no means easy to understand, have destabilized the established international economic order, and even though they may well not prove sustainable, they need to be recognised by government and the community in order to function effectively in Australia's current environment and avoid unnecessary risks (eg see Babes in the Asian Woods and Comments on Australia's Strategic Edge in 2030.

  • economic challenges that arise from an uncertain international economic environment,  While a boom related to resource investment seems to be expected to drive rapid economic growth (in Queensland and Western Australia in particular) risks in the current international environment suggests that this expected boom could prove to be a 'bubble'.
Economic Risks: There are serious risks to the global economy (see also Unstable Environment) which have the potential to undermine the commodity boom on which Queensland's 'good' economic prospects in resource rich regions (and constraints in those focused on services, manufacturing and tourism) seem to depend. In particular:

International financial imbalances have not yet been resolved (see G20 in Korea: Unreal Optimism). Those imbalances: (a) have their origins in demand deficits and high savings rates that are necessary to avoid financial crises under neo-Confucian systems of socio-political-economy in East Asia; and (b) arguably make and global growth unsustainable. Thus the systems that currently generate high levels of demand for Australian resources are probably also severe constraints on global economic recovery generally (see Economic Recovery is Constrained by Dead Weight Economies).

Partly as a result of those systems (and partly as a result of some electorates demanding more benefits that their economies can support) there are general constraints on the global economy associated with high levels of public debts (especially in Europe, Japan and US). This increases the prospects of: (a) constraints on public spending; (b) much higher interest rates on government bonds; (c) sovereign defaults; and (d) a disruption of international trade (because global growth has depended on the US’s role as ‘consumer of last resort’, and it would no longer be able to play this role if / when high public debt levels force frugality).

The era of cheap credit is probably ending. Loose monetary policy (ie provision of cheap credit) has been used by US and China in particular to maintain economic growth in the post-GFC era. This has been a factor in the emergence of the commodity boom on which Australia’s economic growth and government revenues have become dependent (due to China's efforts to maintain growth in the post-GFC era to avoid political instability, and also to commodities being sought as (speculative) investments in the face of limited opportunities elsewhere). However rising commodities’ prices are feeding inflationary pressures, and thus making cheap credit risky as a means for boosting economic recovery.

China's growth has become important to many trading partners in the post-GFC era (especially Australia), yet China probably faces structural economic problems and political instability. At one level China's current economic challenge seems to be a property bubble (as such investment has been a major factor in sustaining post-GFC growth and affordability constraints have become severe). However there are probably more fundamental but-yet-unrecognised problems implicit in China’s version of Japan’s non-capitalistic neo-Confucian economic model (see Heading for a Crash?). Moreover the potential for political instability in China seems to be increasing largely because of the incompatibility between the social equality aspiration of its nominal Communism and the inequalities of the social hierarchies that have been the basis of the neo-Confucian techniques used to accelerate economic modernisation (see Communism Versus Confucianism: The Continuing Contest in China);

  • Social stresses related to: underemployment; housing affordability; dysfunctional families (as evidenced by violence,  child neglect and abuse); drug and alcohol abuse; homelessness and the emergence of an underclass. It has been claimed (though this is hard to realistically assess) that a ‘Third of Qld in or at risk of poverty’ (24/5/11) – because the rapidly rising costs of essentials puts low income earners under severe pressure;
  • the potential impact of the probably-imminent global ‘peak oil’ event on: international and regional transport; urban / regional form; and industries (such as tourism) that depend on relatively cheap transport (see General notes on the 'peak oil' issue).

There will, of course, be other strategic issues that need to be taken into account - and thus a need for a process to identify, and develop appropriately considered responses to, them. 

Speculations about Curing Queensland's 'Myopia' and Mobilizing Initiative

To genuinely 'build Queensland - together' (as the Opposition suggested) there is a need to inform, mobilize and empower many different types of organisations (including but not only government) so that mutually reinforcing initiatives can be taken. Doing this, and identifying what ‘building Queensland – together’ could mean in practice, might (over-simplistically) require:

  • Identifying key issues requiring attention related to both existing government and community activities and ‘strategic’ issues, through broadly based consultation with practitioners and experts;
  • undertaking analyses of these issues with a goal of both developing indicative plans for initiative within the community or by businesses, and public policy options;
  • ensuring that the results, and those involved in producing them, are generally accessible;
  • Seeking reactions from those with relevant practical experience and involvement, in terms of both: (a) possible independent initiatives; and (b) a rational consensus of views about public policy options that could be considered for adoption by government or the opposition.

In order to allow a sense of direction and commitment to emerge it would first be necessary to strengthen Queensland’s civil institutions. Leadership in providing a sense of direction that does not simply attract rent-seekers and degenerate into wealth redistribution must be provided outside the political system. This might, for example, be achieved by:

  • conducting informal or formal experiments of ways in which civil institutions can simulate discovery of independent initiative to address challenges and opportunities through a form of indicative planning, as well as providing policy options for political consideration. Though some guidance could be provided on what is required to achieve this, undoubtedly much could be learned from experience;
  • requiring the initiatives emerging from such processes to be approved through established accountability practices (eg being commercially viable or politically acceptable);
  • democratically endorsing protocols through which this could be undertaken on an ongoing basis;
  • increasing financial resources to those operating under such protocols, eg by: (a) exploring options for such processes to be directly rewarding (commercially or otherwise) to those involved; or (b) providing a pool of funds from public revenues which are directed to particular institutions on the basis of the numbers of electors who indicate support for their activities.

It would be extremely unwise to defer practical actions required to address existing requirements until effective civil institutions were put in place or processes like those suggested above to systematically explore key issues were undertaken. For example, there is a clear need in Queensland to more effectively undertake government’s role as a regulator and provider of public goods and services.

Suggestions: Options to create a more effective public sector that are now somewhat out-dated were in Towards Good Government in Queensland (1995); Renewal of Queensland's Public Service (2000) and Improving Public Sector Performance in Queensland (2005).

More recent comments on creating conditions in which government is likely to be more effective in Queensland are outlined in Response to - An open note to Campbell Newman (23/3/11) and Beyond Populist Rhetoric (27/3/11).

However unless steps are taken to overcome Queensland chronic 'myopia' (and if 'luck' does not hold) then Queensland's 'bad' situation could become much worse.