Opinion: Building plans bring Budget headaches

A DOWNGRADE of Queensland’s credit outlook is an ominous sign for the Labor Government’s current term.

IS THE Queensland Budget careering towards a significant crash this term under the Labor Government?

Rating agency Fitch’s recent downgrade of Queensland’s credit outlook is certainly an ominous sign.

The Government does not, however, seem abashed by the Fitch finding.

In fact, Labor ministers were this week quick to highlight the tough-love Budget of South Australia’s new Liberal Government as evidence of how well they’re doing.

“No matter the state, the story is the same,” Treasurer Jackie Trad insisted.

“All LNP governments do is cut, sack and sell.”

The SA Government is certainly doing its share of all three.

It is cutting about 2500 full-time-equivalent positions to arrest a ballooning wage bill caused by public sector jobs running at 15.9 per cent of the workforce, compared with a national average of 12.6 per cent.

It is closing regional TAFE campuses and privatising a prison.

However, to give that some perspective, its Labor predecessors were also planning public service cuts, albeit on a much smaller scale.

And it sold plenty over four terms in office, such as the Motor Accident Commission, Lands Titles Office, Lotteries Commission and South East Forests.

Unlike Trad, the SA Government didn’t have a massive gain in coal royalties to save it from tough decisions.

However, come next Budget, the Queensland Government might need the resources sector to deliver an even bigger windfall, which is saying something.

Fitch warned “Queensland’s rating could come under pressure up deterioration in budgetary performance, weak fiscal discipline or failure to control capex (capital expenditure)”.

Just three months after Trad delivered her first Budget, there is evidence of all of the above. The central tenet of the Treasurer’s blueprint is that operating surpluses will be achieved by ensuring heroic spending restraint.

Labor has promised a miserly 1.5 per cent increase in 2018-19. To provide context to that, the 2017-18 Budget forecast 3.9 per cent growth in spending, and achieved 6.3 per cent.

Basically, all the extra money was spent as soon as it arrived, and then some.

Loose fiscal discipline has been a constant theme. Capital spending over the next three years will be $7 billion more than the previous three years. Most of that extra money is being ploughed into one project: Cross River Rail.

Treasurer Jackie Trad delivers her first State Budget in June.

However because of a dearth in spending on infrastructure last term, numerous projects across the state remain unfunded. And political pressure will build to spread infrastructure funding elsewhere in the state given Brisbane is getting a $5.4 billion rail project.

Each time Labor succumbs to those calls for cash, it will add to a debt bill that is already concerning rating agencies because of its upwards trajectory.

Just last week the Government wilted to union demands, at a cost of $250 million to taxpayers.

The money will build publicly owned renewable energy projects, because the unions complained the electricity generation sector was being privatised by stealth.

Trad couldn’t say where the money came from. And it is unclear over how many years it will be distributed.

It is, considering the size of the Queensland Budget, a relatively small amount. But it is illustrative of the kind of ill-discipline that Fitch and other rating agencies have cautioned about, that could lead to another downgrade of the state’s credit rating.

If that occurred, it would be a big blow to the Queensland Budget, increasing the cost of borrowings and taking the state further away from regaining an AAA credit rating.

It would also crash Labor’s economic credibility, which has survived so far on disciplined spending in some areas, but also healthy lashes of clever accounting and dumb luck.

Queensland’s improving resources sector will likely prevent a major Budget meltdown.

However if it’s not enough, then someone might have to make the tough decision to cut, sack and sell.

Party games in order

LAST week’s state executive meeting of the LNP turned out to be a fizzer.

There had been chest beating before the post-coup get-together that president Gary Spence could get rissoled for waving pompoms for Peter Dutton.

However the motion was ruled out of order because it was based on a false premise, and another passed backing Spence.

If only Malcolm Turnbull could have done so well mustering support.

They think he’s the pits

SPEAKER Curtis Pitt is getting on the nerves of his Labor comrades.

Some believe the Speaker is giving short shrift to colleagues he used to clash with in Cabinet.

Meanwhile, the Old Guard, or Labor Unity as it is also known, has become the forgotten faction, literally.

The Government’s caucus meeting got under way on Monday before anyone noticed the pint-sized faction’s six members weren’t there.

Walking dead

LORD Graham Quirk is cutting speed limits on Ann St in Brisbane’s CBD after 10 serious pedestrian accidents in five years. Pedestrian impatience and distraction were causing more crashes, he reckons. However countdown clocks installed at traffic lights across the city seem to be having little effect, with many pedestrians simply ignoring them.

Trad fires up over pub

JACKIE Trad is on a mission to save the derelict Broadway Hotel in ­Woolloongabba, which was heritage-listed in 1992.

The late-1800s pub with its distinctive Victorian architecture was hit by fire yet again recently after a blaze caused its closure in 2010.

Former premier Campbell Newman’s brother-in-law Seb Monsour had planned to whack a 27-storey apartment block on the site, but has run into some legal troubles. There is no suggestion either had any involvement in the fire.

There must be a better way to ­protect our heritage other than handing it over to developers.

Week that was... and will be

Good week: Member for Burleigh Michael Hart, who got to skip this week’s State Parliament sittings to take a break, but still used the free parking on the precinct for his car.

Bad week: Katter’s Australian Party staff who lost their jobs after Premier Annastasia Palaszczuk stripped the party of funding over Senator Fraser Anning’s controversial speech.

Quote of the week: “To infinity and beyond” — Speaker Curtis Pitt drops a dad joke that neatly sums up the State Government’s decision to enter the space race.

Next week: The parliamentary committee investigating the Government’s abortion laws will travel to Townsville and Cairns for what are expected to be contentious public hearings.