Economy

Queensland’s 2020 Seinfeld Election – A Show About Nothing

On the eve of the Queensland election the campaigning has begun with the usual pomp and theatrics that the State’s long-suffering taxpayers have come to expect.

This year Queensland taxpayers have been treated with platitudes coalescing around grand plans to “keep us safe” whilst guiding us down a “road to economic recovery” by creating “jobs for the future” and undertaking the “biggest infrastructure spend ever” to “grow the economy”.

Seasoned observers of the performance of the State’s economy over the last decade in particular may justifiably be cynical of such slogans many have heard before, being merely wind chimes conceived from the minds of Cosmo Kramer types including political spin doctors, ministerial minders and other usual suspects within the political class.

Earlier this year the Queensland Audit Office released it a report on its assessment of the Queensland Government State Finances in 2018-19, which highlighted that declining revenues from GST redistributions as well as growth in expenses outpacing growth in revenues over the past couple of years was a cause for concern.

The report also outlined future challenges such as ensuring that public debt remains sustainable particularly with respect to new and emerging liabilities the government will need to fund in the future.

Businesses understand how integral budgets are to business planning, just as households do to ensure they can manage household finances.

This beggars the question of how any party can claim to have an economic plan without a detailed budget that provides a yardstick of the current state of Queensland’s finances along with a forecast of what the near-term outlook may look like?

Yet, in the classical play of “look here and not there”, the election campaigns on both sides of the political divide have avoided addressing structural issues identified in the Auditor General’s report.

It is an accounting truism, as well as a sobering reality, that increasing government expenditures can only be serviced without taking on more debt by either increasing revenue through additional taxes and/or asset sales, or otherwise cutting expenses – there is no ‘magic pudding’.

Businesses and households understand that they must live within their means. They know that when income falls they must either cut costs or divest their assets to maintain their viability and standard of living.

With the ghosts of the 2015 election result continuing to haunt both major parties, they have each chosen to rule out prudent financial management to meaningfully addressing the ballooning expenses associated with a bloated and growing public service or otherwise consider either leasing assets to generate additional sources of revenue.

Both parties have instead opted to “grow the economy” out of the challenges facing the State’s public finances.

In doing so, the alternative is inevitably higher levels of debt and future tax increases.

(Graphics taken from Queensland Government state finances: 2018–19, results of financial audits, Report 11: 2019–20 prepared by the Queensland Audit Office)