The Queensland Competition Authority has announced that the Government has commissioned it to review State Government industry assistance (see Review of Queensland Government Industry Assistance), which the Productivity Commission has previously estimated at over $800 million per annum (See Scope to cut Qld Government industry assistance). It’s a wide-ranging review which I expect will cover all forms of industry assistance, including grants to businesses, subsidies to industry through lower electricity and water prices (e.g. for sugar cane farmers and irrigators more broadly), concessional finance (e.g. through Screen Queensland), and tourism promotion expenditure.
I expect the QCA will identify large potential savings for the Queensland Government, given a lot of industry assistance cannot be justified from an economic perspective. While there is a case for some Government assistance to promote innovation, there are Commonwealth programs that do this (such as the R&D tax incentive), and a lot of what State Governments do is to give money to industry for things that it should be paying for itself.
Among others, important issues for the QCA to consider will include:
- subsidised electricity prices in regional Queensland, which judging from submissions to a recent QCA review of regional electricity prices, are important to sugar cane farmers and irrigators more broadly;
- why the State Government is involved in film financing through Screen Queensland (see Drum opinion piece – Taxpayer money wasted chasing film productions); and
- the subsidies the Queensland Government provides to some Government-owned corporations, such as the Port of Townsville, which appears to have been subsidised $17 million from the Government over 2011-12 and 2012-13 (see p. 41 of the 2012-13 Annual Report and Brad Rogers’s post Queensland Ports For Sale).
I wish my friends at QCA well for this review, as I expect it will make a signficant contribution to improving the State’s budget balance over the next few years.
Queensland Economy Watch 
Agree Gene, but lets be careful. I am almost always against subsidies (Car subsidies should be stopped now, Qantas should be not receive anything) as the government should not prop up business. However, where there is a good to better chance of return and jobs then a small subsidy is a good idea but for the short term only . At the moment our economy is struggling (as stated in your previous articles) and a small boost at the start is a good idea and stops people moving to Victoria. I have been invited to participate and have registered.
Lets hope there is some good results
Thanks KT. I can agree that there may be cases where a small amount of temporary assistance may be acceptable, but I worry that what could start off as temporary assistance may end up continuing. If the car manufacturers hadn’t decided to pull out, the Australian Govt would have ended up paying so-called transitional assitance to the industry for over two decades.
Yes, let’s hope there are some good results from the review. The QCA should be able to find some juicy budgetary savings for the Treasury.
thanks Gene. QCA should also focus on the GOCs too (as noted above) as they should not receive any advantages and like your other articles should be sold.