Ten years since Queensland lost its AAA credit rating

Ten years ago, on 20 February 2009, then Queensland Treasurer Andrew Fraser released the Economic and Fiscal Update which forecast lower revenues, large deficits and burgeoning debt. S&P promptly downgraded the state of Queensland from a AAA credit rating to AA+ (see this Brisbane Times report). Ten years later, while we have an ever increasing state debt, on a trajectory to around $83 billion by 2021-22, there is little hope of regaining a AAA rating any time soon.

In my book published at the end of last year, Beautiful One Day, Broke the Next, I tell the story of Queensland’s public finances since the late 1980s, and the loss of the AAA credit rating is an important part of that story. I should note that, since the book was published, I have received many comments from readers regarding people or topics I now wish I had covered in the book.

For example, I wish I would have mentioned some of the outstanding Queensland public servants in the post-war era outside of the Treasury who were Sir Leo Hielscher’s contemporaries, such as Sir Sydney Schubert, who served as the state’s Coordinator-General during the 1970s and 1980s, those critical decades in Queensland’s economic development.*

cover

Also, if I were writing the book again, I would have a closer look at the Bligh government’s massive $15 billion privatisation program in 2009-10, after it finally realised the need to correct its fiscal course. What has been referred to as a fire sale of state assets may have resulted in some of the assets being sold or leased out for much less than their fair values, costing Queensland taxpayers millions. The 99-year lease of Queensland’s forest plantations has been identified by a former forestry official as a bad deal for the Queensland taxpayer. In 2010, the Gympie Times reported:

QUEENSLAND taxpayers have been dudded with the sale of major forestry assets, including in the Gympie Region.

That is the view of ex-Gympie resident, private forestry advocate and environmental academic, Gary Bacon…

…He said the government in May announced the sale of a 99-year lease on Forestry Plantations Queensland freehold property to the North American based Hancock Timber Resource Group.

While the land will remain in government hands, the right to grow and harvest trees on it is worth an estimated $1370 million, according to Prof Bacon.

The sale price to Hancock was $603 million, he said.

This could be a very interesting case study with major lessons for what makes a successful or unsuccessful privatisation program, and I would certainly cover it if I get the chance to produce a revised edition. So I’d encourage any reader who hasn’t purchased my book yet to buy a copy, so the publisher can sell out of this print run and we can print a revised edition.

*Please note that in my book I do acknowledge the high level of corruption that Queensland was notorious for in the post-war years up until the Fitzgerald Inquiry reforms. 

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