Struggling retail sector would benefit from longer trading hours – National Retail Association bid deserves to win

The National Retail Association bid for extended trading hours deserves support because it would be good for consumers and may provide a boost to a struggling retail sector (see my post from earlier this month: Economic weakness hits Queensland retailers). Today’s Courier-Mail reports:

The National Retail Association will today launch a legal bid to overhaul trading hours across the southeast, allowing stores from Coolangatta to Noosa to open from 7am to 9pm, Monday to Saturday.

The proposal, which covers Brisbane, Ipswich, Logan and the Gold and Sunshine coasts, is a fresh push to clarify Queensland’s garbled trading-hours regime, which costs the state more than $100 million in revenue and leaves shoppers stranded outside supermarkets every Saturday.

As I’ve noted before, the huge crowd at the Baroona Rd, Milton IGA every Saturday night around 6pm, after nearby Coles’ and Woolworths’ stores have closed, suggests there is a large demand for extended trading hours at supermarkets. While IGA does a reasonable job, its product range is much smaller than that of Coles and Woolworths, meaning consumers won’t get the maximum benefits from their shopping dollars.

It’s about time we end Queensland’s archaic trading hours restrictions, particular given that traditional justifications for restrictions appear less relevant in today’s economy and society. For example, see my posts:

Traditional small business lobby much smaller than it once was – should make trading hours deregulation easier

24 hour retail trading inevitable and desirable

Posted in Retail trade | Tagged , , , | 4 Comments

Local government regulatory reform process fails to stop silly heritage listings in Townsville

In its report on cutting red tape last year, the Queensland Competition Authority noted that “the Government will consult with local government in late 2013 on a regulatory reform program for local governments.” This consultation obviously didn’t achieve much, because major local governments such as Townsville City Council haven’t got the regulatory reform message yet. For example, it’s reported in today’s Townsville Bulletin that a number of properties of dubious heritage value have been secretly added to Townsville’s heritage register, meaning the owners are now restricted regarding the modifications they can make to the properties (see Dirty dozen get heritage stamp). The silliness of the heritage listings is made clear in a comment from one of the property owners, who points out her house doesn’t really have any heritage value:

The owner of a red brick home in Belgian Gardens, who did not want to be identified, said it would have been nice to know of council’s intention to add her home as a site of heritage value.

“It is a lovely house but it is not even an old Queenslander,” she said.

“I don’t know why I wasn’t told, I should have had a courtesy letter.”

Townsville City Council is a repeat offender on silly heritage listings, but there are possibly similar examples in other parts of Queensland, as well as examples of unnecessary and costly applications of other regulations at the local government level. The Queensland Government needs to revive its local government regulatory reform agenda, and it might be worthwhile for it to commission the QCA to undertake a thorough review of regulations at the local government level.

Previous posts on heritage issues by me and my former colleague Brad Rogers include:

Townsville CC knocks back Nuns’ plans to rebuild convent

Heritage protection could hold back Townsville CBD revitalisation

Old Queenslanders in a New City

Posted in Housing, Townsville | Tagged , , , | Leave a comment

How important is the return of leased out assets in 99 years time in a cost-benefit analysis?

The Premier’s interesting comparison of the proposed leasing out of Queensland Government assets to the long-term lease of Hong Kong, which was eventually returned to China, made me think about how important the eventual return of assets should be in Government decision making (see Brisbane Times coverage of the Premier’s comments). Given that very few Queenslanders alive today will be around when the assets would revert back to Government control next century, it seems obvious to me that very little weight should be given to the fact the assets are eventually returned.

In any cost-benefit analysis of the decision to lease out assets or not, the Government should be mostly concerned about the benefits and costs to Queenslanders over the next few decades. Under typical assumptions for the time value of money (i.e. the fact a dollar today is more valuable than a dollar in the future), the value of the returned assets in 99 years time would be relatively tiny, and likely have very little if any influence on the bottom-line result for the cost-benefit analysis of whether to lease out assets or not (see chart below).

timevalueofmoney

The return of assets to the Government after the lease period ends provides some cover for the Government in the privatisation debate, but it really shouldn’t be a major consideration in the debate. The eventual return of the assets isn’t that important from our point of view today, so we may as well sell off the assets and maximise the privatisation proceeds.

Posted in Budget, Queensland Government | Tagged , , , , , , , , | 7 Comments

Top 10 posts from the first 1,000

Yesterday I posted my 1,000th post, and below are links to the most clicked from the first 1,000. Having grown up in Townsville, and knowing the intense debate the issue causes up North, it didn’t surprise me that a post on whether Cairns or Townsville is the capital of North Queensland was number one. Also, there was a lot of interest in posts on the carbon tax and unemployment. Thanks to everyone who has read my blog over the last four years and a bit.

Posted in Cairns, Climate change, Labour market, Townsville | Tagged , , , , , , | 6 Comments

GST hike appears very likely, but Commonwealth retreat less so

Prime Minister Tony Abbott has, it seems, given the green light for raising more revenue via the GST in a speech at Tenterfield on Saturday (Sir Henry Parkes Commemorative Dinner):

…the Commonwealth could stop funding programmes in areas of state responsibility and stop using its financial power to influence how the states deliver services.

In that case, the Commonwealth would be ready to work with states on a range of tax reforms that could permanently improve the states’ tax base – including changes to the indirect tax base with compensating reductions in income tax.

The obvious change to the indirect tax base would be to raise more revenue from the GST, by either raising the rate or removing exemptions on fresh food, education and health.

The budgetary challenges facing the Commonwealth and State Governments across Australia certainly mean that raising more revenue from the GST is a very attractive proposition for Governments. The Commonwealth can blame the States, saying they wanted it, while the States can say they were forced into it by reductions in Commonwealth funding. The States, which get the increased GST revenue, get more revenue to meet their budgetary challenges, and the Commonwealth can save money through reducing other grants to the States. Ultimately, the States and the Commonwealth all win and everyone blames each other.

While I can see greater reliance on the GST for revenue raising is very likely, I think it’s unlikely the Commonwealth would retreat completely from policy areas such as education and health. Plausible increases in the GST could raise say $20-30 billion extra for the States, but, as the PM noted in his Tenterfield speech, the gap between spending by the States and own-source revenue is some $100 billion. Assuming that State income taxation will be put in the too hard basket, there will likely still be a substantial gap between State spending and own-source revenue, meaning the Commonwealth will still be involved in funding State services and will still want a say.

Indeed, some influential groups in the community would be very concerned about any Commonwealth retreat from particular services. For example, many Catholic and Independent Schools have become significantly reliant on Commonwealth funding (e.g. see my post Large savings for Qld Govt from shift to private schooling), and may be concerned any lost funding from the Commonwealth wouldn’t be replaced by State Governments.

So, while I can see greater reliance on the GST in the future, I don’t think this will be accompanied by a reduction in Commonwealth involvement/interference in State-delivered services such as education and health.

My previous posts on the desirability of GST reform include:

New Treasury modelling supports change in tax mix towards GST

Dr Parkinson right that the GST should be broadened

GST changes should be considered as part of wide-ranging tax and expenditure review

Government has to rely on inefficient taxes to fix budget – GST reform needed

Posted in Education, Tax | Tagged , , , , , , , | 4 Comments

Ticket scalping crack down unnecessary and undesirable

Some unnecessary and undesirable interference in the natural workings of markets was supported by a Queensland parliamentary committee on major events last week (see the Major Events Bill report). It appears the Government is proposing to extent current laws that apply to major sporting events, such as those held at Suncorp Stadium, to a wider range of events. It was reported in Friday’s mX newspaper that:

A Queensland parliamentary committee report has recommended measures to crack down on overpriced black market ticket resales at busy events.

Under the proposed legislation, anyone caught selling their ticket for more than 10 per cent above the original purchase price could face hefty fines.

People will also no longer be able to flog unwanted tickets at major event venues, with face-to-face resale to be considered an offence in some areas.

It seems odd to me that we can accept the efficiency and desirability of secondary markets nearly everywhere else in the economy, including for stocks and bonds, real estate, and anything you can buy over eBay or Gumtree, but we make an exception for concert or sporting tickets.

I’ve previously posted on the economics of ticket scalping. While I can understand the equity argument for cracking down on ticket scalping, I don’t think it makes any sense economically.

A close reading of the Committee report suggests that the Committee itself has some reservations about regulating ticket scalping, as it has requested further information regarding at exactly what events the new regulations would come into play. I hope that the Government intends that the regulations apply only in very limited circumstances, such as for only a limited number of events at the upcoming Commonwealth Games on the Gold Coast.

Posted in Arts, Queensland Government | Tagged , , , | 4 Comments

4BC interview on hospital cost blowout – Govts need to crunch numbers properly before spending decisions

I spoke to Ben Davis from 4BC’s Drive program yesterday afternoon about the Auditor-General’s report on the Beattie Government’s decision in 2006 to build three new hospitals, including the Lady Cilento Children’s Hospital and new hospitals on the Gold and Sunshine Coasts. It turns out that the hospitals ended up costing around $5 billion when completed, compared with the initial cost estimate provided by the Government of around $3 billion.

The problem appears to have been that the initial cost estimates were prepared in a hurry, possibly based on incomplete specifications of the projects and out-of-date or inappropriate cost data. As the announcement was made in the lead up to an election, the Government might have been too excited about the electoral appeal of the hospitals to do the detailed analysis that is generally expected before committing billions of dollars. Unfortunately, once the election announcement was made and a public expectation was created,the Cabinet would have felt unable to stop the project, had it wanted to, once it saw more realistic cost estimates in the business cases eventually prepared by Queensland Health.

Ben asked me about the comments former Premier Beattie made earlier in the day, which reportedly included the comment that you can’t expect detailed business cases for hospitals because they’re not built to make money but to treat people. I told Ben I thought this was a distraction from the real issue. The debate isn’t over whether hospitals should be run as private businesses, but rather whether the Government should have done more work assessing the costs and benefits of the new hospitals before committing to build them. Clearly it could have and should have. “Business case” is now a generic term for an assessment of the merits of any project or investment, not necessarily a business investment designed to make money. Business cases could have been prepared for the hospitals with more reasonable cost estimates than the Government announced, after the appropriate advice from construction cost experts was obtained, of course. These business cases could have contained an assessment of whether the three hospitals were the most cost-effective means of meeting anticipated future community needs.

Governments can make very bad decisions when they haven’t done the proper analysis. It’s possible that, if the Government had known the hospitals would cost $2 billion more than expected, Queensland Health would have looked for other options for meeting the identified needs in the community. The hospitals decision reminded me somewhat of the Rudd Government’s decision to build the $40 billion plus National Broadband Network, a project that was heavily criticised for being committed to without a proper business case and cost-benefit analysis.

Where there are billions of dollars at stake, the Government has an even clearer obligation to the community to crunch the numbers before making any decision. While Governments often do the right thing, and there are guidelines and expectations in place for the preparation of business cases in many jurisdictions (e.g. see Queensland’s Project Assurance Framework), Governments sometimes bypass the usual processes, alas, so they can score quick political points.

Posted in Health | Tagged , , , , | 8 Comments