It’s budget day in NSW and Queensland and the contrast between
Australia’s highest and lowest taxing and spending states will be stark
indeed. Comparing state public sector finances has never been a strong
of Australian politics, mainly because of weak public accounting
standards, a lack of independent analysis like you get with listed
companies, and our parochial state-based media.

It’s what explains comments such as these from News Ltd’s Terry McCrann
last week praising John Brumby’s Victorian budget:

competitively clever, making Victoria a cheaper place for employment
than both NSW and Queensland at a time when both those states will find
it fiscally hard to respond. And impossible to trump.

Truth be known, Victoria’s state-based taxes are about 20% higher than
Queensland and then you have things like Queensland’s lower payroll
tax, workers’ compensation premiums and the vital issue of Victoria’s
ferally militant construction unions. I met a couple of senior
construction industry figures in Brisbane last
week and they said Victorian projects always attract a 20% cost premium
thanks to the union thuggery in the city which boasts the head office
of the ACTU. Queensland is easily the cheapest place to employ people
on the east coast, even though there are inevitable growing pains from
being the world’s second fastest growing city.

As for Queensland struggling to respond to Victoria’s tax and spend
budget last week, there is the small matter of Queensland Investment
being more than fully funded for public sector superannuation through
its $50 billion-plus investment pile – something no other state or the
Commonwealth can claim. Queensland taxpayers also still own most key
public assets such as ports, airports, rail, electricity, water and

NSW taxes are about 10% above the national average and almost 30%
higher than Queensland which dominates by having no state-based fuel
excise, although a High Court decision means these are now actually
levied by the Federal Government. In fact, Queensland’s balance sheet
is about $20 billion stronger than NSW and the gap is likely to widen
by at least $2 billion a year if NSW does nothing to alleviate its
unsustainable budget position.

Victoria is about half way between its two rival eastern
seaboard states, but trending in the wrong direction with plans to borrow
another $4 billion over the next four years despite a supposedly booming

Based on the current trends, it is simply a case of if not when
Queensland becomes Australia’s biggest state economy. Victoria will
probably be demoted to third place by 2020 and NSW could surrender its
“premier state” title by as early as 2030.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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