Fellow Queensland economist Nick Behrens and I sat down with 612 ABC Brisbane’s Steve Austin to chat about the latest report from the Auditor-General on Queensland’s state finances. Of course, COVID is the big story since March last year, but, as we cover in the discussion, Queensland’s public financial management problems pre-dated COVID. I mentioned the big debt build up which began during the Beattie-Bligh years and the raid on the funds set aside to meet the defined-benefit superannuation liability by the current government. One consequence of the latter is that now, based on one calculation methodology, the defined-benefit super liability exceeds the value of assets set aside to meet it, as highlighted by the Auditor-General in his latest report. Retired public servants will still get paid their superannuation, but the smaller asset pool means lower investment earnings for the Government to help pay the defined benefit payments, meaning, e.g., lower spending on frontline services or higher taxes and charges for a given budget balance.
Of course, we knew all this already from the state budget and state actuary’s review of QSuper. I told Steve the only thing that was really new and noteworthy in the Auditor-General’s report was the recommendation that the state Treasury should publish an update on state finances prior to each election – i.e. similar to the Commonwealth’s Pre-Election Fiscal Outlook (the PEFO) – which is something I recommended many times in the lead up to the 2020 state election. As the Auditor-General writes: “The Queensland Government’s financial statements are reliable but not always timely”. Yes, particularly when timeliness would be politically inconvenient.
Check out our conversation from 43:00 on the audio recording of Steve’s Drive program today.