Shuffling debt is not repaying it

In June last year, Judith Sloan awarded Queensland Treasurer Jackie Trad the wooden spoon for economic management among states. Sloan focused on the state’s raids on the government superannuation fund and its “shifting around debt between the ledgers of government-owned corporations and the general government sector”. It was a prescient insight. On Thursday’s front page, Sarah Elks reported that Ms Trad’s much-hyped debt-reduction plan carries a 50 per cent risk of driving Queensland’s $90bn public service defined benefit super scheme into deficit, potentially forcing the government to raid the budget to top it up. Under that scenario, retiring teachers, nurses and public servants would receive their payouts, which are guaranteed by the state and which would be topped up by taxpayers. It would be akin to robbing Peter to pay Paul, then robbing Paul to repay Peter.

Last month, Ms Trad announced she would establish a Queensland future fund to help pay down the state’s soaring debt — which is forecast to hit $91.79bn by 2022-23 — by taking $5bn from the surplus of the bureaucrats’ defined benefit superannuation fund. The new debt offset account is to be invested by the Queensland Investment Corporation. But independent advice from State Actuary Wayne Cannon, released this week, has revealed the risks of Ms Trad’s move to the public service defined benefit scheme, which is the only fund of its kind in the ­nation to be fully funded.

The answer to Queensland’s fiscal problems, which the Palaszczuk government has refused to face since it won office in 2015, is curbing the state’s ballooning public sector workforce.

As Sloan wrote last month, Queensland, with three-quarters the population of Victoria, has employee expenses similar to those of the southern state. At this stage, neither the government nor the LNP opposition has produced a credible debt-reduction strategy. Both are resistant to asset sales or leases for political reasons. But as the October election draws nearer, they need to produce effective debt-reduction policies