Me (Gene Tunny) & Julie from Connor Court at the launch of my new book Beautiful One Day, Broke the Next, at Connor Court Book Room, West End, Brisbane
Beautiful One Day, Broke the Next
Today’s Australian newspaper included the report “Queensland’s mounting debt sparks credit warning”. Moody’s rightly is concerned about our total state government debt increasing to over $83 billion by 2022. I told Steve Austin on his 612 ABC Brisbane show last Thursday that the critical metric the ratings agencies focus on, the borrowing-to-revenue ratio, was heading in the wrong direction for Queensland, with it projected to increase from 108% in 2018-19 to 119% in 2021‑22.
But our Deputy Premier-Treasurer Jackie Trad—whose electorate office incidentally is a 100 metre walk around the corner from here—talked about “responsible fiscal management” when she released the mid-year budget update last week. I’d say the ratings agencies don’t see letting the debt drift ever upward, on its way to over $83 billion, or around $15,500 per Queenslander, as responsible budget management.
On his program, Steve Austin was good enough to let me say a few words about my new book Beautiful One Day, Broke the Next, in which I describe the events that put us on the path to $83 billion of debt.
Many of you will remember Kenneth Clark’s brilliant BBC documentary series, Civilisation, which was subtitled A Personal View. This book, Beautiful One Day, Broke the Next, is my personal view of what’s happened in Queensland over the last 30 years. It’s a personal view informed by personal involvement, to a small extent, in some of the pivotal events that have occurred, particularly during the 2008 financial crisis when I was working in the Australian Treasury’s Budget Policy Division.
What stunned me at the time was that we were being lobbied not just by investment banks, who rather incredibly were taking advantage of the financial crisis to pitch new products, but by Queensland Treasury officials who were very concerned about their capacity to finance the Bligh government’s massive capital works program, particularly as revenues turned out to be lower than expected.
I thought this scene, of Queensland Treasury officials pleading for assistance, was absolutely extraordinary because Queensland had, historically, very strong public financial management dating from the time of the Bjelke-Petersen government, extending through to the Goss government, the Borbidge government, and into the early part of the Beattie government when we had Treasurers David Hamill and Terry Mackenroth. Incidentally, Terry Mackenroth ended up running the three largest surpluses Queensland has had, helped of course by the state of the economy and surging coal prices at the time.
So this came as a huge surprise. I wondered what on earth happened. And I’ve been wondering since. I came back to Brisbane in mid-2009, after the worst part of the crisis was over, and I watched the Bligh government go back on what was arguably an election commitment not to privatize assets.
Too late, the Bligh government realised it needed to correct its course. It had committed to too much poorly thought-out expenditure already, a combination of Beattie’s throw-money-at-a-problem-to-fix-it mentality and Bligh’s lack of a framework for understanding the future budgetary consequences of decisions she made with Beattie while Treasurer and later as Premier. Some of you in this room will recall the panicked, rushed approach to policy development and infrastructure decision making at the time, as the government struggled to cope with the three crises that defined the Beattie and Bligh governments: electricity, health, and water.
By necessity, the Bligh Labor government engaged in the largest privatisation program seen in the state, some $15 billion of asset sales and leases, including QR National, Port of Brisbane, and Queensland Motorways. Yet despite that, the debt still grew enormously to around $60 billion or so by the time the Bligh government was thrown out of office in March 2012.
Then we had the Newman government, which I argue in my book did too much too soon. That said, I think it was on the right track and they had some great initiatives such as the Public Service Renewal program, being led by former Under Treasurer and current Suncorp board member, Doug McTaggart.
Now, we have the Palaszczuk government, which, as Steve Austin noted on his show last week, I’m saying isn’t particularly worried about the debt. We have seen this in the sleight of hand that Curtis Pitt tried with the debt shift onto the energy businesses, and we see this also with the current Treasurer, who talks of “responsible fiscal management” even though she’s being warned by Moody’s about the growing debt.
What I’ve covered in this book is a broad sweep of Queensland’s public finances since the time of Sir Joh and Sir Leo Hielscher, who I hope needs no introduction to people in this room. There are two bridges named after him. He was our Under Treasurer from 1974 to 1988 and, according to Ken Wiltshire, was one of only three people who could say no to Joh. Thankfully he did that on several occasions. Sir Leo set Queensland up very well financially, fully funding the defined benefit super scheme, for example. That’s why we’ve got $30 billion or so invested at QIC. We would be in a much worse position today if it weren’t for Sir Leo’s work and shining example.
Alas, Sir Leo retired as Under Treasurer in 1988 and while his legacy continued—I’d say up until the end of Mackenroth’s time as Treasurer in the mid-2000s, before Beattie and Bligh had total control—it was subsequently lost. As I discuss in the book, partly that’s because we abandoned some strict fiscal rules that we had, particularly the fiscal trilogy that the Goss government codified.
Other relevant factors may have been generational change, the replacement of the depression and war generation by the baby boomers in the government and public service, as well as the ideological makeup of the government. While the Goss government was dominated by the centre and old guard factions, the Labor left grew in power during the Beattie government and eventually managed to install Anna Bligh as Premier.
Now a word on the title of my book. Some people have commented that it’s a bit controversial. I’m certainly taking some artistic license here. The reason is that I wanted to tell a story. The French-Swiss film director Jean-Luc Godard said once that for a movie all you need is a gun and a girl. In other words, you need drama. You need a story. I think the best stories have heroes and villains. We have one of the heroes of my story in the room here, tonight: Keith De Lacy, who was Treasurer in the Goss government. Thank you Keith for your immense contributions to our community, in both politics and business. As for the villains, there aren’t any prizes for guessing who I think they are.
I’m so glad you all came here tonight. I’m very grateful for your support. Before I finish my remarks, I’d like to say thank you to some specific people here. I would like to say thank you to Jennifer Tunny, my mother, who read through the draft and offered helpful comments, and who I wish I’d spoken to about just how difficult it is to write a book. My mother has written two books in the past. I should’ve asked her about the amount of work involved, because it is really quite staggering how hard you have to work just to get it close to something that is presentable. And even then, you’re thinking, “Well, there’s still a bit more I could do.” So I’m hoping you all buy enough copies that the print run is sold out and I can put out a revised edition in a year or so.
Also I’d like to thank Kerry Boulton, a friend of mine who read through the draft, too, and gave very helpful comments. Kerry’s a barrister and a former English teacher. So he picked me up on a lot of punctuation and grammatical issues. So, thank you, Kerry.
Keith De Lacy, too, read through the draft and provided some very kind words for the back cover of the book.
Various friends who’ve chatted with me about the book and put up with my delayed time frame over the last two years deserve my thanks, too. Originally, I thought I’d get it written and published in no more than four months. But it’s taken me nearly two years.
Finally, my deepest thanks to the publisher, Anthony Cappello of Connor Court. Anthony is doing an amazing job being an independent publisher at this time when it’s such an incredibly difficult marketplace. Anthony manages to stay afloat and to publish some very interesting and provocative titles. I encourage you to buy lots of Anthony’s books tonight to support him in the great work he does. Thank you, Anthony. And once more thank you all. Let’s celebrate. Merry Christmas and a Happy New Year!