Queensland’s prosperity path

Annastacia Palaszczuk’s prospects of setting our third-largest state economy back on to the path to prosperity depend on her ability to capitalise on the departure of Jackie Trad, her former deputy and treasurer. Ms Trad’s dominant Left faction has been influential in draining the energy from Queensland’s once-enterprising and winning business culture. But the promotion of Cameron Dick from the Right to Treasurer and the pragmatic Kate Jones to State Development, as well as Tourism and Innovation, gives Ms Palaszczuk, the leader of the Right, the opportunity to break free of the big-government approach that has been her administration’s hallmark since February 2015. That dead-end approach, in no small measure, stemmed from Ms Trad and the trade unions that have called the tune for too long north of the Tweed.

Queenslanders, as Joh Bjelke-Petersen and Peter Beattie understood, have never been averse to a bit of state jingoism. Ms Palaszczuk’s homespun “putting Queenslanders first” rhetoric and promises of her “permanent appointments to my new cabinet” and concentration on job creation strike the right note. Achieving the turnaround will be harder than promising it, however, when facing the prospect of $100bn in state debt within two years.

In rebooting their economic and fiscal strategies, which must be their priority, Ms Palaszczuk, Mr Dick and Ms Jones would be wise to study the approach of Queensland’s most fiscally responsible and competent right-wing Labor government of the past 30 years. From December 1989 to February 1996, Wayne Goss and his treasurer, Keith DeLacy, employed an economic strategy reminiscent of the best of the Hawke-Keating years. It was based on low taxes and sound financial management. “Market enhancement”, as Goss described it in 1992, was designed to create an optimal environment in which business could operate efficiently, with minimal government interference. It freed up government to concentrate on areas in which markets prove inadequate.

Those principles, Mr DeLacy wrote in The Australian last year, were encapsulated in a “fiscal trilogy” to repel “wanton spenders”. It included fully funding long-term liabilities such as superannuation; funding social capital assets such as schools and hospitals from recurrent revenues and borrowing only for commercial assets that could service their debt; and maintaining low taxes. The mantra worked. Queensland’s real gross state product grew by an average 4.4 per cent in real terms, Mr DeLacy recalled, while growth for the rest of the nation was 1.9 per cent. Queensland also generated 55 per cent of new jobs in Australia; the state’s AAA credit rating was enhanced.

Decades on, years of loose spending, especially by the current government on public sector wages, have weakened Queensland, before the economic ravages of coronavirus. In February, Queensland Auditor-General Brendan Worrall warned the state government it risked not being able to meet its operating costs with revenue alone unless it increased revenue or cut spending growth, which rose 11 per cent between 2016-17 and 2018-19. And in December Ms Trad announced $5bn would be taken from the public sector defined benefit superannuation fund to create a debt offset account, to be invested by the Queensland Investment Corporation.

Against that background, but mainly on principle because governments’ role is not to pick winners (which often turn out to be losers), the bid for a stake in Virgin is not in Queenslanders’ best interests. Mr Dick has told the QIC to look at buying into the airline, which is in voluntary administration, $7bn in debt. Reviving Virgin would help the beleaguered tourism sector. There is no shortage of investors lining up. The state would do better, as Labor’s Peter Beattie did in 1998, to focus on industry strategies to kickstart investment and jobs. Rather than buying assets, Queensland should be seeking maximum returns leasing or selling government assets. The debt handicapping the state must be addressed by both political sides before the October 31 election.