Many Queenslanders in the construction and engineering sectors will be disappointed by the capital spending plans of the likely new Queensland Government. Previously, there was some excitement at the prospect of a large boost to capital spending across Queensland, with $8.6 billion from asset leases to be allocated to infrastructure. But, with the likely demise of the current Government, that is no more.
To its credit, the Opposition committed to only relatively modest new capital spending in its election costings, but it may have simply deferred a problem. Currently there is declining funding allocated to capital spending over the Budget forward estimates (for 2014-15 to 2017-18), which I’ve adjusted (very slightly) to account for the Opposition’s election commitments. I suspect that it will not be feasible or desirable for actual Queensland Government capital spending to decline over this period – even more so if our population growth recovers. That is, it is very likely the new Government will have to spend more on infrastructure than is currently provided for in the forward estimates.
Other fiscal challenges for the Government include:
- finding actual savings in advertising, consultancies and public service inefficiencies without compromising the quality of government administration and policy development; and
- maintaining the tight control on expenditure growth that will be necessary to have large enough surpluses to start paying back $1.7 billion in debt each year from 2018-19.
The new Government may get some benefit over the forward estimates from the “hollow logs” the current Government had stashed money in for its election commitments, but this money won’t solve the long-term fiscal challenge of paying down Queensland’s debt.
I commented on Labor’s fiscal strategy and election costings on several occasions last week: