It really does make you want to cry. How on earth does the Beattie Government get away with announcing a staggering $7 billion debt blowout over the next four years whilst our national financial daily continues to claim the state’s finances are somehow in surplus and booming?
Forget the fiscal largesse of the Cain-Kirner years, Queensland is set to borrow an additional $24 billion by 2010, up from $17 billion in the 2006 budget, in what is the biggest new borrowing program Australia has ever seen by a state government.
Whilst the Hawke-Keating government left a net debt of $96 billion, even it struggled to increase debt by $24 billion in any one four year period. Is it any wonder the Beattie Government has resorted to power privatisations to raise more than $1.8 billion in cash over the past six months?
The AFR’s page one headline yesterday claimed Beattie was “flush with cash” and today we were told the mid-year budget update provided figures that were “better than expected”. Yet the table on page 6 clearly showed even the bogus surplus figures for 2006-07 and 2007-08 had actually been projected down by $19 million and $37 million respectively and even the mining royalties forecast for 2006-07 was cut by $70 million to $1.45 billion.
It is true that Queensland still easily has the strongest balance sheet of any state and the lowest taxes, but the key point is that a state simply cannot keep borrowing at the staggering rate of $6 billion a year. Something has to give, whether its tax rises, spending cuts or more wholesale privatisation.
The media seems fixated with this notion of Queensland and WA being the boom states, but that doesn’t automatically mean that state budgets are booming too.
Queensland Inc has adopted this corporatist position of publicly funding a range of new rail lines and ports to service the resources sector. This seems a little odd given that they flogged the Dalrymple Bay coal terminal in Mackay to Babcock & Brown five years ago for almost $600 million.
Whilst building critical water infrastructure is a more clear-cut state responsibility, it seems wrong that Queensland taxpayers are spending billions being hocked to the eye-balls building infrastructure for multi-national mining giants like Rio Tinto, BHP and Xstrata. In WA, the Pilbara rail lines are all privately owned but Beattie’s Queensland Rail last year even borrowed to buy into the WA rail freight business.