Opinion: Flood disaster washes away Labor’s charade
Labor has spent the best part of four years pretending its approach to the state’s finances was actually working. But it only takes a change in the weather to bring it all crashing down, writes Steven Wardill.
Opinion
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THE Townsville flood disaster may develop into a literal illustration of what occurs when governments fail to save for a rainy day.
While the muddy water is still receding and the politicians continue to take selfies with victims, the cost of Mother Nature’s wrath remains unknown.
Townsville floods: Weather bureau’s forecasts slammed, Mayor condemns thefts
More than a thousand homes lost as cost of flood rises
Pollies are drawn to TV cameras like flies to a barbecue, no more so than in our stormy summer
But the price of this epic summer monsoon — both in terms of damage to public infrastructure and lost economic activity — is likely to have a significant impact on the Government’s Budget.
Queensland has certainly endured more expensive disasters in recent times. Cyclones Larry and Yasi, for example.
We’ve rebounded and we’ve rebuilt each and every time.
However rarely have Queensland Treasury’s books been in worse shape to respond to a disaster than they are right now.
For the past four years, the Labor administration’s fiscal strategy has been little more than good luck and guile.
It has heartily saluted its own efforts on delivering operating surpluses while sucking up whatever reserve it could get its hands on to bankroll excessive public service spending.
Good fortune, however, is fleeting.
And, now, as the bean counters begin adding up Townsville’s reconstruction costs, just how ill-prepared the Government’s finances are to deal with Queensland’s all-too-common disasters will be exposed.
Maybe Labor was lucky that this storm wasn’t worse.
Then again, the summer cyclone season is not yet over.
Arrangements with the Federal Government do ensure the Commonwealth funds a significant chunk of disaster bills.
This includes up to three-quarters of the reconstruction costs of critical infrastructure in certain circumstances.
However the State Government will still have to cover the up-front costs and fund its share while facing the prospect of revenue falling short of forecasts.
The state was already predicting wafer-thin surpluses over the next three years.
These were founded on rather heroic expectations of spending restraint.
It was already being forced to borrow more to build infrastructure, particularly to fully fund the $5.4 billion Cross River Rail.
The Government should not be in this predicament.
If it had of been more disciplined and less ideological to begin with, Queensland would be in a much better position to deal with whatever the weather threw at us.
However Labor has spent the best part of four years pretending its promise to keep state-owned assets, cut debt and build necessary infrastructure was actually working.
This charade has been helped along by some blessed conditions.
Treasury has pocketed $3.2 billion more in royalty revenue in the last three years than what it received in the prior three-year period.
It has received $3.3 billion more in state taxes and $1.2 billion more in dividends.
Yet it has still had to resort to flick-passing billions of dollars in debt on to the books of state businesses, as well as raiding public service superannuation and long-service leave reserves.
Despite all that, by the time this term ends, the Government’s debt bill will still be around the same as it was when Labor came into office.
Coal has come to the rescue of Labor’s budgets before. It could again given Treasury’s cautious 2018-19 forecasts.
However domestic economy revenue predictions may be problematic, particularly property taxes given Queensland chalked up its worst month of building approvals since May 2013 in December.
Before the Townsville storm, the Government was already facing an increasingly fraught set of finances.
It was caught up in a pincer move of its own making with escalating debt and modest revenue growth.
It was predicting skinny surpluses, but these were based on subdued spending that simply didn’t match past performance.
Issues that required unplanned spending were already proving a problem.
That’s why we’ve seen the state complain constantly about how the Commonwealth should pay, even though many of the projects have never been the remit of federal governments.
But now with the Government facing the unavoidable costs from the Townsville disaster, it faces choices that aren’t easy.
Does it slow progress or cut plans to fund other infrastructure?
Would it risk another credit downgrade and borrow more to rebuild?
Or can it find another way to dress up a tax hike as an altruistic act?
Townville was already struggling with high unemployment. The city needs stimulus beyond just reconstruction.
However, because Labor has lived large for so long, seemingly convinced the sun would continue to shine, its ability to deal with emerging problems has greatly diminished.
It’s raining and the Government forgot that one day it might need an umbrella.
Stewart plans sabbatical
QUEENSLAND’S bureaucrat-in-chief Dave Stewart is taking a six-month sabbatical.
The director-general of Premier and Cabinet throughout Annastacia Palaszczuk’s premiership, Stewart announced the news to staff this week.
“During this time I will be travelling, spending quality time with my family and doing jobs around the house that I haven’t got to in years,” he wrote.
“The dachshunds will also get lots of exercise.”
Stepping into Stewart’s shoes will be Rachel Hunter, the State Development director general who has been awarded more than a few gigs under Labor.
Symes eyes up Vasta’s patch
AS IF ROSS Vasta didn’t have enough to worry about come the election.
Spotted at the Mt Gravatt markets last Sunday, which are smack bang in Vasta’s seat of Bonner, was none other than Neil Symes.
Symes, the former Liberal National MP turned One Nation state candidate, wasn’t picking up fresh vegetables for mum’s fridge.
Instead, he’d donned an orange polo shirt and had brought with him some star power in the form of Malcolm Roberts. Symes for Bonner may be Vasta’s worst nightmare.
The week that was... and will be
Good week: Townsville Mayor and self-described “political powerhouse” Jenny Hill, who made sure she wasn’t pushed out of the picture during her city’s floods.
Bad week: Lord Mayor Graham Quirk,who thought a good way to ring in the Year of the Pig was to watch Chinese dancers perform in what looked like schoolgirl outfits.
Quote of the week: “There’s only one place my card should be, and that’s in the rubbish” — resigning chairman of the LNP’s Whitsunday state electorate council Richard Filewood before cutting up his card for the cameras, over the Jason Costigan’s expulsion from the party.
Next week: Hostilities will resume as State Parliament sits for the first time since November. Costigan’s sacking should keep things interesting.
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