It appears that the QCA’s draft report on Industry Assistance in Queensland was released last Friday, a Friday before a long weekend, traditionally a good time to release reports that governments would rather be ignored and forgotten. But this report should not be ignored and forgotten, because it confirms ongoing, massive wastage of taxpayers’ money, on dubious schemes to assist industries such as tourism, film and racing, schemes that, as I’ve argued in the past, have no sound public policy rationale (see QCA review of Qld Govt industry assistance is great news). The report highlights poor policies in multiple areas, including drought assistance, the under-pricing of irrigation water, and subsidised electricity in regional areas, among many others.
In total, the QCA estimates around $5.6 billion will be spent by the Queensland Government in budgetary outlays on industry assistance over 2013 to 2018, and additional assistance of $1.3 billion will be provided by underpriced assets and services (see chart above). There is also $17.1 billion in tax concessions, but, given this includes exemptions from bad taxes such as payroll tax, I’m less outraged by this revelation.
Regarding tourism, the report has an excellent section on assistance to the sector that I wish I’d read before writing my post on international visitors to Queensland earlier in the week, because it provides additional evidence regarding the failure of our tourism promotion efforts. On p. 102 the QCA notes:
While it could be the case that tourism in Queensland would have been worse without destination marketing, it is losing market share to other states and territories.
The Treasury should keep this in mind for the next time it sees a funding submission from Tourism and Events Queensland.
The Queensland Government could go a long way to getting out of the fiscal mess it is in if it closely reads this report and has the courage to stand up against the beneficiaries of industry assistance, who were no doubt happy this report was released in the lead up to the long weekend.
I’m often a bit critical of the QCA. Too much sweating on the tiny (often unnecessary) details and playing glorified cost accountants in the absence of tackling some genuine economic efficiency challenges.
But this is certainly some of the better work I’ve seen out of the QCA in the past 15 years. Let’s hope the State Government knows how to use the information in this report, and they do….
Thanks Jim. Yes, it’s some of their best work.
i agree Jim – well said