I am delighted to publish this guest post regarding the first week of the Queensland election campaign from my old friend and former Treasury colleague Joe Branigan. GT
2018 State Election – week 1 highlights from Joe Branigan
Letterboxes stuffed with glossy blue, red and burnt orange policies, matte-grey images of Campbell Newman haunting a matte-grey Tim Nicholls, a ban on 15-yr old kids in Townsville seeing the 8.30pm movie at Event Cinemas on a Friday night, 4 dams, 2 Planning Commissions, 2 M1s, 1 Report on State Finances, 1 red helicopter with a 5-million watt halogen searchlight (to find the stray 15-yr old kids), several outbreaks of coal panic syndrome (CPS) most notably from the Premier, and an LNP electricity policy to gazump all electricity policies.
That was week 1 of the Queensland State Election campaign.
On a more serious note, perhaps the most revealing (and surely the most bizarre) event of week 1 was the Premier walking away from supporting Adani’s NAIF concessional loan application to the Commonwealth Government, to underwrite the building of a rail line that connects the Galilee Basin’s thermal coal reserves to Adani’s Abbot Point Terminal near Bowen in North Queensland. The Adani loan debacle has left the Government appearing confused, incoherent and indecisive, and has added to the perceived sovereign risk involved in investing in Queensland.
Given that this has happened in the middle of the State Election campaign, I doubt the Adani issue is about the economic and broader public policy principles around whether to offer a concessional federal loan to a foreign (or domestic for that matter) private company, or about the need to avoid a conflict of interest. The only logical explanation for the Premier’s decision to veto a NAIF loan to Adani, rejecting the advice of her own Integrity Commissioner, who said all she needed to do was recuse herself from relevant CBRC meetings, is that Labor thinks its best path to victory is to trade regional seats for SEQ seats. Could the Premier be as cunning as a fox who’s just been appointed Professor of cunning at Oxford University (thank you, Blackadder)? Perhaps too cunning by half, but we will see. Labor will need to regroup fast, unless it thinks it can get away with narrow-casting one message into regional Queensland and the opposite message into SEQ.
Despite the recent surge in revenues, it has been difficult for the Government to gain any traction on economic management. Again, being too cunning by half has exposed Labor to criticism in its public financial management. Pretending that the overall state debt doesn’t matter, and that money can be transferred from funds outside of the general government sector (such as from GOCs and public servant’s superannuation and leave funds) indefinitely and without consequence, has left Labor wide open to criticism from policy experts, commentators and the LNP. I have described Labor’s fiscal policy, whereby there are multiple uses for the GOC dividends, as utilising the latest advances in quantum entanglement theory, such that the Treasurer can make the same public dollar appear in two places at once.
Controlling the growth in employee expenses (i.e. number of public servants * wages) is critical. Unless expenses growth is at or below the long-run average growth in revenue, things will go backwards quickly. The 8-year moving average for revenue growth reported in the 2017-18 State Budget is 5.6% per year, with a low of -8.8% in 2012-13 and a high of 11.9% in 2013-14. Revenue growth in Queensland is highly volatile and extremely hard to predict. Whoever wins this election would be well advised to request detailed analysis and advice from Treasury about how to deal with these fluctuations in revenue.
Reviewing the 60-odd policies on the LNP website, a number of things stand out. First, they’ve clearly done their homework and it’s hard to find a policy that hasn’t successfully weathered the 24-hour news cycle. Second, the LNP’s overall philosophical direction is clear: economic development in both SEQ and the regions, address high unemployment in the regions, fix the electricity debacle, and be tougher on crime than Labor. And third, there is a strong focus on things that matter right now, such as reducing electricity prices asap, reducing road congestion and reducing high unemployment in regional Queensland. Still, much of the Opposition’s economic credibility will come down to whether its policy costings statement withstands external scrutiny (presumably in the last week of the campaign), and aligns with its stated objective to target the fiscal balance (rather than the ‘looser’ net operating balance target).
Of course, there is the odd disproven, ineffective or unworkable policy lurking among the LNP policy manifesto, but in the scheme of things they are pretty harmless and hopefully short-lived. These include tracking 15-yr olds with a red helicopter, banning plastic bags, and the container deposit scheme. Incidentally, Labor also supports banning plastic bags and the container deposit scheme, so what’s the difference?
So that was Week 1. The LNP appears to have done their homework, while Labor looks off balance and deeply confused on its policy toward the Adani mega mine, but perhaps it’s all a cunning plan. Meanwhile, Pauline Hanson is back in town and the latest Galaxy poll looks ominous for Labor and the LNP.
Policy of the week
It’s a tough call between the red helicopter and the 4 public holidays…but who doesn’t enjoy a public holiday, so I’ve given the Week 1 policy award to the Greens.
Bring on week 2.
Joe Branigan is a Brisbane-based economist, Senior Research Fellow at the SMART Infrastructure Facility UOW and independent consultant. He is not a member of any political party.