Opinion: Only things certain in Budget are lies and statistics

IT’S Budget season for the State Government, and that means three things are certain to emerge: lies, damn lies and statistics, writes Steven Wardill.

• Stop boom-bust cycle
• Spending Trad-jectory up
• No pre-election Budget

IT’S Budget season for the State Government, and that means three things are certain to emerge: lies, damn lies and statistics.

Already we’ve seen the first whiff as the Government attempts to spruik a budgetary bonanza to Queenslanders, despite evidence to the contrary.

On the weekend, the Government talked up a “massive $45 billion” four-year infrastructure spend.

“That’s a big number,” Premier Annastacia Palaszczuk assured.

The 2018-19 budget for roads, school, hospitals and the like would be a whopping $11.5 billion, apparently – $1.4 billion more than what was supposed to be spent this financial year.

In isolation it sure sounded like the good times were back and that Labor had steered Queensland towards a new halcyon era of construction.

But peel back the bombast and the figures tell a much different story.

For a start, the $10.1 billion capital budget for 2017-18 was the second lowest in a decade as a proportion of the Queensland economy, meaning the state has been doing less of the heavy lifting compared to what it once did. Only 2016-17 was worse.

That decade did include the post-GFC spending spree, but the picture isn’t any rosier over a longer horizon.

So, the slated increase is not just welcome but essential.

Jackie Trad (left) and Annastacia Palaszczuk. Illustration: Brett Lethbridge

However, that increase was also already planned in the 2017-18 Budget. In fact, that Budget forecast a $11.7 billion building spend in 2018-19, which means what was announced at the weekend by Palaszczuk and Treasurer Jackie Trad was actually a cut.

And if you assume the $359 million in Labor’s capital promises from November’s State Election is worked into the mix, that means $559 million worth of other projects has been pushed out.

It is also hard to get excited about governments and their infrastructure budgets, given the record of over-promising and under-delivering.

Analysis conducted for Master Builders Queensland recently shows only $4 out of every $5 promised for building projects is actually spent.

Over the three financial years to 2016-17, the infrastructure underspend was a staggering $4.2 billion.

On that trend, the Government could have fully funded and built the $5.4 billion Cross River Rail project over the past four years if it had actually spent what it promised on infrastructure.

Cyclones, floods and contract negotiations play a part in these underspends.

But the trend is far too consistent to blame only on Mother Nature.

What’s squeezing out infrastructure spending is the debt, an issue that neither side of politics has a plan to address.

Over the past three financial years, the interest on the borrowing was an incredible $6.2 billion, eclipsing the underspend.

Artist’s impression of a Cross River Rail station

That’s another Cross River Rail plus a big down payment on the ongoing cost of the 10.2km rail route.

The underspend and interest payments are impossibly entangled.

As much as they might try, Queensland governments simply can’t spend what they once did on infrastructure while paying the interest bill on what they’ve already built.

Both sides of politics have retreated to a “we’ll grow the pie” argument.

What that means is they’ll chaperone economic growth, which will increase revenue and therefore decrease proportionally the size of the debt.

But it’s pie-in-the-sky stuff given government has an unblemished ability of finding ways to spend money before making it.

Trad’s first Budget as Treasurer on June 12 will be a case in point.

Labor reduced debt last term by starving infrastructure spending and raiding hollow logs.

But it has still had to resort to squeezing an extra $500 million from new taxes to offset expense growth.

Trad has also inherited a particularly tricky scenario where overall expenses are forecast to be contained to just 0.5 per cent, or a miserly $300 million in 2018-19.

But that unrealistic figure has already been blown, given Labor’s relatively small recurrent spending promises from the election add up to $435 million.

The Pacific Motorway section of the M1 is also in line for Budget funding.

And if the past is a guide, balancing the Budget will be a particularly fraught highwire act, given average expense growth was 4 per cent over Labor’s last term.

That adds up to a $1.9 billion gap between what Labor said it would spend and what it most likely will.

It won’t be as easy as shuffling off some spending to future years, either.

The heroic claim that expense growth would be negligible in 2018-19 was based on projections that employee expenses would flatline.

Unless Labor is going to slash the public service, that’s hard to believe, given the wage bill grew by about $1.3 billion on average last term and wage rises are already locked in.

Once again, that kind of increase would be affordable in a growing state if we weren’t spending such a large chunk of our own-source income paying interest.

Still, the State Government will soldier on, talking about the big numbers and selling Budget baubles. The Opposition will claim mismanagement while failing to offer much in the way of a solution.

Unfortunately, Budget season will continue this way in Queensland until nobody believes the lie anymore that debt is not a problem.

Steven Wardill is The Courier-Mail’s state affairs editor