Saturday, 7 July 2012

Queensland's money woes exposed in Commission report

Cairns political commentator Raj Patel says that the $57 million promised from the former Labor State Government for the Cairns Entertainment Precinct was the biggest lie.   They needed to borrow money to build anything.

Capital spending was financed increasingly by loans – an increase from 34% in 2005-06 to 96% in 2010-11.

The Commission's findings are horrendous. There has been little refutation of their overall accuracy. They include:

■ The government had embarked on ''an unsustainable level of spending that has jeopardised the financial position of the state''.
■ Government finances had deteriorated sharply since 2006 to the point that it was ''borrowing heavily to support the budget''.
■ State debt is now $64 billion and likely to be $100 billion by 2018-19.
■ The cost of Queensland of losing its triple-A credit rating added $100 million a year to interest payments.
■ The previous government's projected budget surplus needed urgent revision - $3 billion in ''fiscal consolidation'' (i.e. cuts) was needed for the budget to be in ''genuine surplus'' in three years.
■ Treasury's forward budget estimates were ''overly optimistic''.
■ The previous government, which enjoyed a revenue surge between 2001 and 2007, left no reserves for unexpected circumstances (e.g. the global financial crisis and natural disasters).
■ Public service productivity was poor.
■ Capital spending was financed increasingly by loans - an increase from 34 per cent in 2005-06 to 96 per cent in 2010-11.

The Brisbane Times reports that the commission's report is highly critical of both the growth in Queensland Public Service staff numbers and, more importantly, expenses due to classification creep and wage rises. Some of these problems were known beforehand, though they were not acknowledged by the Bligh government.

For example, the public service's growth and costs, which the commission identifies as a key underlying cause of the budget blow-outs, had been detailed by external researchers, such as the Institute of Public Affairs' Julie Novak in a public paper in 2009.

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