As was made clear when the Queensland Government lost its AAA credit rating in early 2009, our Government’s financial circumstances have deteriorated somewhat in recent years. A new report from the Centre for Independent Studies (CIS), a conservative though non-partisan think tank, has identified Queensland as the Australian state with the biggest decline in fiscal performance over the last three years:
Tax, Borrow, Spend: How the States Compare
The Courier-Mail’s coverage, including Treasurer Andrew Fraser’s criticisms of the report’s methodology, is here:
Queensland ‘worst economic performer’ of states – study
While the Treasurer makes some good points, the CIS report is broadly correct. Queensland did after all lose its AAA credit rating, and we joined Tasmania in the league of States with only AA+ credit ratings. That said, we are still in a very good position compared with governments across the world – e.g. Ireland and other EU nations that have received bailouts, and several cash-strapped US states (e.g. Indiana and Michigan), which would likely declare bankruptcy were they private sector businesses.
As the CIS report notes:
Broadly speaking, none of the Australian states is in poor financial condition. They all have the prized triple-A credit rating except Queensland and Tasmania, and even their rating of AA+ would be the envy of many comparable sub-national governments in other countries such as the United States.
Also, when reading the CIS report, it’s worth keeping in mind that our stellar fiscal performance from the 1990s to mid 2000s was partly due to us under-spending on infrastructure, which made it difficult for us to cope with our large and sustained population growth. Over the last few years, we have had to undertake a large amount of catch up investment on roads, tunnels, pipelines and other pieces of infrastructure that are essential for Queensland’s burgeoning population.
On the dire fiscal circumstances of US states, see the Economist article:
Queensland Economy Watch 