The Queensland Competition Authority published the final report of its Industry Assistance Review on Friday, and regrettably the Queensland Government was quick to reject its recommendations regarding a cut to drought assistance and the further review of subsidised regional electricity prices. So these costly policies which lead to inefficient outcomes will continue, as will unjustifiable industry assistance in many others sectors as well. The QCA has identified $25 billion worth of industry assistance measures over 2013 to 2018, and, given the QCA’s strong criticism of such assistance, the Government should be able to find, at a minimum, hundreds of millions of dollars of savings by abolishing assistance with no legitimate rationale. The QCA notes (p. vi):
“The evidence that is available suggests that, although a number of industry assistance measures are beneficial, many others are ineffective and result in a range of costs, including resource allocation distortions, lower productivity, lower household incomes and harmful environmental impacts.”
The QCA is strongly critical of the lack of evidence regarding the impacts of industry assistance – particularly the lack of proper monitoring and evaluation of assistance provided and a lack of published cost-benefit analysis reports demonstrating programs provide net benefits. It notes (p. vi) “there is limited transparency in the provision of significant amounts of public resources to the private sector.” For example, in 2014, the Government provided an undisclosed assistance package to attract the Walt Disney Pirates of the Caribbean 5 production to Queensland. Secret deals with industry of this nature should be a major cause for concern.
I was very pleased the QCA made strong findings against support for the film industry and that it cited my 2013 Policy article on government assistance to the film industry. The QCA has sensibly recommended that the Government not provide attraction packages to attract international film productions such as Pirates of the Caribbean 5, observing the benefits of such packages are largely captured by foreign production companies, such as Walt Disney. It also recommended re-focussing assistance on activities providing cultural benefits to Queensland, and that any such assistance should be provided transparently.
I hope the Queensland Government gives the QCA Industry Assistance Review report the consideration that such a long and detailed review deserves. If not, it is missing the opportunity to make strong savings that could help demonstrate its economic credibility.