With One Nation as likely power brokers, expect greater share of Qld Gov’t CAPEX in regions

If I were the Managing Director of an engineering firm, I’d start investigating the availability of office space in Queensland’s regional centres, including Maroochydore, Rockhampton, Toowoomba, and Townsville. I would want the firm well-positioned to win new work from a State Government that will undoubtedly spend more on regional capital works, to satisfy the likely new power brokers  from One Nation, which is expected to win several regional seats. And I wouldn’t count on Cross River Rail going ahead.

Today’s Sunday-Mail is reporting One Nation Queensland leader Steve Dickson is anti-Cross River Rail, and instead wants some major regional projects funded, including a duplicated Sunshine Coast rail line and an expansion of the Borumba dam (to rival Wivenhoe in capacity) in the Gympie region (see this Gympie Times report). After the Traveston dam debacle, I suspect the likelihood of getting environmental approval for expanding the Borumba dam is pretty close to zero, but no doubt One Nation will find many other regional projects to fund.

The betting odds reported by Centrebet currently suggest Tim Nicholls is favourite to become Premier after the upcoming State election (see screenshot below). This is plausible, given Queensland currently has a minority government, One Nation is expected to win several seats, and Labor has ruled out a deal with One Nation. Election punters have obviously heavily discounted polling results suggesting Labor is well in the lead, as these are based on an assumed 55-45 preference flow from One Nation to the LNP and Labor, respectively. Many poll watchers expect the preference flow will more heavily favour the LNP than is currently assumed by Newspoll, so the election will be closer than Newspoll suggests.

Qld_election_odds

Despite the betting markets currently favouring an LNP victory, I still expect Premier Palaszczuk to call an election this year. The Government is already in campaign mode and won’t want to lose momentum over the Christmas-New Year period. Also, it can point to an improvement in economic conditions over the last year or so (see my previous post). And consider that, by holding the election this year, the current Government would shorten the term of the next Government, possibly by over half a year. This may be attractive to Labor if it thinks it will lose the upcoming election. As explained in the Brisbane Times earlier this year, due to the transitional arrangements for four-year fixed terms:

…if an election is held before December 31, 2017, the next election will be held on October 31, 2020. If it is held between January 1, 2018 and May 5, 2018, the next election will be held on October 30, 2021.

Betting markets can be wrong, of course, as they were in the 2016 US Presidential election. Labor is exceptionally good at campaigning in marginal seats and can generally rely on more manpower and dollars, much of them coming from the union movement, than the LNP. So it would be unwise to discount Labor’s chances. It is certain to be a bitter and hard-fought election battle.

Even if Labor ends up winning in its own right, I suspect One Nation will remain influential and may force the Government into boosting its regional capital expenditure. Expect to hear a lot about so-called “good debt” being used to finance Queensland infrastructure in future years.

As I have noted in previous posts (e.g. see Townsville Bulletin report on funding feud), capital works spending per capita in Queensland has been higher in regional Queensland than SEQ (partly because of economies of scale and the need to spend so much on disaster recovery). I expect the regions will continue to receive a generous share of State Government capital spending after the next election regardless of who wins, and that the share going to the regions would increase sharply if an LNP minority government assumes power with One Nation support.

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4 Responses to With One Nation as likely power brokers, expect greater share of Qld Gov’t CAPEX in regions

  1. I think you are spot on with this analysis Gene. Labor look to be in campaign mode already. And yes, One Nation is going to hold a lot of power for the next 4 years in Queensland.

  2. Glen says:

    I think investment in regional infrastructure is a good thing, however the fact that most of that funding is given to those who whinge and complain the loudest ( Townsville) who have had a private investment drought over the last few years, the govt should look at funding that is going to be effective in attracting quantifiable private investment to compound the Govt spend. The fact is that Townsville has an anti development local council and should not be simply provided many millions in govt funding to make up for the shortfall in private investment, something that seems to be happening more and more.

    • Gene Tunny says:

      Many thanks for the comment Glen. Very good points. I’ll have to look more closely at what TCC’s been up to, as I recall you’ve mentioned previously it’s anti-development.

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