New Qld Government should allow plenty of time for thorough review of spending

I noticed that former Olympian Kieren Perkins has cast doubt on Queensland’s ability to host an Olympic Games and has pointed to the Queensland Government’s lack of a clear strategy to pay down debt (see today’s Courier-Mail). While the Queensland Government could probably borrow the money to pay for Olympics-related infrastructure spending, I agree that would be undesirable from the perspective of paying down Queensland’s debt and eventually restoring our AAA credit rating.

Regarding the Government’s fiscal strategy, while it did produce a high-level strategy for repaying debt before the election, it didn’t present the firm measures required to generate the multi-billion dollar surpluses it will need. As I’ve commented previously, the new Government did ask the public to take a lot on faith, as the bulk of its proposed debt reduction was occurring beyond the forward estimates – i.e. beyond the years that can be properly considered to be budgeted for – from 2018-19 onwards (see my speech on the black hole election). Now the then Opposition is now the Government, it will have to formulate budget measures that will allow it to run the multi-billion dollar surpluses it will need from 2018-19 to repay debt according to its fiscal strategy.

Hence it may be desirable for the Premier to slightly postpone the Budget, usually presented in early June, if it means the Government can give fuller consideration to budget savings measures. A good place for the Government to look for budgetary savings would be the hundreds of millions of dollars that is currently provided annually as industry assistance, and I hope the Government has received a full briefing on the progress and findings of the QCA’s industry assistance review (see my post Government should wait for QCA report before committing to new industry assistance).

Finally, on the merits of hosting the Olympics in Brisbane in 2028, hosting the Olympics would probably fail a cost-benefit analysis even if the State had massively paid down debt by then, as the experiences of past Olympic host cities, most notably Montreal and arguably Sydney, have shown. Queensland’s current fiscal situation makes the case for not going ahead with the Games bid even more compelling.

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4 Responses to New Qld Government should allow plenty of time for thorough review of spending

  1. Jim (another one) says:

    Gene

    Great post. A major overhaul of industry assistance would be a good start. Even just a simple filter like… “is there a market failure we are addressing with this programme” would probably mean the bulk of the assistance could be cut.

    Also I agree 100% regarding comments on the Commonwealth games. The experience of hosting them always appears to be that the benefits are a fraction of what was first envisaged, the costs are higher, and the infrastructure developed to host sports becomes a long-term financial liability for the host city as it is grossly under-utilised. I had a look at the Sydney Olympic Park financial last night. When you take out the “revenue” from the State Government grant, the site is losing $20 million a year (and that site already hosts the bulk of major sporting events for Sydney).

    • Gene Tunny says:

      Yes, good point about a market failure filter. Interesting data for Sydney Olympic Park. Stadiums are very costly to run it appears. Our own Stadium Qld loses money I think. Thanks for the comment.

  2. Katrina Drake says:

    I have long felt that the Olympics should be returned to Greece, and stay in Greece. It is an international waste of resources to spend 4 years building facilities, for a 2 week event. A permanent home should be built in Greece, and each country that participates contribute a registration fee to build and maintain the facility.

    As for the Queensland economy, industry assistance is probably a good place to start. I know I harp on this point, but as a community we need to tackle the burden of that $13B Health budget, half of which is waste. Just brushing our children’s teeth daily will save us over $24M per annum – how easy it that ! Stop asking what the government should be doing, and start thinking of what we can contribute to reduce the burden !

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