The Review of State Finances (see p. 80) produced by Queensland Treasury to inform the 2015-16 Budget is clear that Queensland Government “debt is too high.” The Treasury acknowledges that the State’s balance sheet is not “in a position to absorb a significant shock without a credit rating reaction and/or the need for corrective measures.” Treasury is also concerned that our borrowing costs could blow out when interest rates return to more normal levels.
Having acknowledged Queensland’s serious debt problem, oddly, the Treasury recommends a very slow, medium-term, ten-year debt reduction strategy, implying a lack of urgency and raising the likelihood the necessary debt reduction is never achieved. This is especially the case given the possibility of a shock within the next ten years that compromises our balance sheet (e.g. what if there is an economic or political crisis in China?). Treasury should have recommended strong expenditure restraint over the forward estimates and should have resisted the surge in public service numbers.
I was interviewed by Steve Austin on 612 ABC Brisbane radio yesterday morning concerning my reaction to the State Budget: