QCA review suggests major budget savings available from slashing wasteful industry assistance

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.

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3 Responses to QCA review suggests major budget savings available from slashing wasteful industry assistance

  1. Katrina Drake says:

    I think attracting big productions films to Queensland is very important for the tourism and arts industry. A number of young Australian actors and talent will have made their film debut as extras and body doubles on Pirates. NZ has managed to create a whole tourism sector around ‘Middle Earth’ in Lord of the Rings. Quiet a crowd gathered to see the The Black Pearl berth in the Brisbane River. I am sure there would have been a shady and dark role as an extra for you if you had of auditioned. Anyway I feel my $20 industry assistance was well spent in this instance.

    But even so, I do agree that transparency is of utmost importance in an government assistance package. There is, of course, sure to a good rort in there somewhere.

    PS – Make sure you get to the movies and see the latest Australian production ‘Last Cab to Darwin’ .

    • Gene Tunny says:

      haha, thanks Katrina, I’m sure a shady and dark role for me would have been very suitable! I think NZ got very lucky with its support for Lord of the Rings. I wouldn’t use it as a guide to industry policy, though. I can’t see how productions such as Pirates of the Caribbean will provide any noticeable long-term boost to tourism.

  2. Jenna says:

    Should we also stop the US ballet from coming to QPAC or Chinese exhibitions at QAGOMA? Did you not see the coverage Pirates got internationally (even without the dogs) and the coverage the state was given in the same? Did you see the buzz created in communities where Captain Jack was spending hours meeting the locals or the 38 million views so far of him visiting sick kids in hospitals. Thats a whole lot more than the Australian population.

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