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July 26, 2012
I watched Campbell Newman perform at COAG for the media. We had all these slogans. "Queensland is broke." It's suffocating from a huge debt burden--Labor's debt. "Queensland cannot afford to be a part of a national disability insurance scheme."
The debt is so bad that the Newman Government just has to slash funding, cut 20, 000 public service jobs, and privatise public services. You can see more of the Newman Government's political spin here and the deconstruction of it here. The partisan rancour behind the "any government debt is bad" sloganizing from Newman was straight from the US Republican textbook--the strategy is one of causing gridlock to help destroy a federal government.
The justification is of the massive black hole thesis of the Queensland Commission of Audit headed by Peter Costello, the former Liberal Treasurer in the Howard Government.
He argued that the Government of Queensland had embarked on an unsustainable level of spending which has jeopardised the financial position of the State. Queensland cannot be a high spending and low taxing State. It needs to choose between two alternatives: (1) high taxing and high spending; (2) lower taxing and lower spending.
Given the relatively narrow State tax base and the heavy reliance on Australian Government payments, there are limited prospects to boost revenue. It is likely therefore that a major part of the adjustment burden will need to be borne by the expenditure side of the budget.
There you have the justification for the slash and burn politics of austerity, and the neo-liberal rhetoric of black holes, balanced budgets and household economics. Queensland, according to Costello, is currently locked into a debilitating cycle of over-expenditure, ever-increasing levels of debt, and crippling increases in debt servicing costs. A major task of fiscal repair is the imperative to prevent further damage to the future prosperity of the State.
And here's me thinking that Queensland, the coal state---we're in the coal business, says Newman---is a boom state in which economic growth would pay off the debt incurred from the global financial crisis and the floods. So what has happened to the massive mining boom and Queensland experiencing an unprecedented period of expansion and the huge inflow of capital ($75 billion) to fund the mining expansion?
Or is that Queenland's mining boom that is pushing up the exchange rate and this causing the manufacturing sector to shedding jobs for the past four years; or for accommodation and food services industry, which includes a large portion of the tourism industry, to not have positive economic growth in five years? Could it be the unconstrained growth of the mining industry that is causing Queensland's economic woes?
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Re CoAG---Leigh Sales on the 7.30 Report held that the National Disability Insurance Scheme failed to get off the ground at CoAG because it was Gillard's fault.
She didn't put enough money on the table to fund it. Gillard put $1billion on the table and asked the Liberal states for around $40-$70 million over four years. They refused!
Sales would have known this but she still blamed Gillard.