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Queensland election: the battle to control the debt debate Queensland election: the battle to control the debt debate
(less than a minute earlier)
Pay off debt and keep assets? Labor’s economic plan for Queensland defies the terms of the debate set by the “Strong Choices” crowd – Campbell “Can Do” Newman’s Liberal National party government.Pay off debt and keep assets? Labor’s economic plan for Queensland defies the terms of the debate set by the “Strong Choices” crowd – Campbell “Can Do” Newman’s Liberal National party government.
The LNP says the state is $80bn in hock, paying $4bn a year in interest alone.The LNP says the state is $80bn in hock, paying $4bn a year in interest alone.
There are only three choices. Raise taxes? No can do. Cut services? Not much more fat to trim after sacking 14,000 public servants. So there’s only one thing left: sell off power, port and water assets (or lease for 50-99 years, which is really the same thing). Score $37bn, maybe $47bn. Throw $25bn on the debt and the rest is gravy – for nation-building stuff, like highway interchanges and railways for transnational mining corporations.There are only three choices. Raise taxes? No can do. Cut services? Not much more fat to trim after sacking 14,000 public servants. So there’s only one thing left: sell off power, port and water assets (or lease for 50-99 years, which is really the same thing). Score $37bn, maybe $47bn. Throw $25bn on the debt and the rest is gravy – for nation-building stuff, like highway interchanges and railways for transnational mining corporations.
These are the Strong Choices – the name of LNP’s debt-reduction plan and a trope that has robbed Newman of all other synonyms on the campaign trail.These are the Strong Choices – the name of LNP’s debt-reduction plan and a trope that has robbed Newman of all other synonyms on the campaign trail.
Labor – even while protesting that its old deficits were run up following 911, the GFC and natural disasters – feels it can’t ignore the debt thing.Labor – even while protesting that its old deficits were run up following 911, the GFC and natural disasters – feels it can’t ignore the debt thing.
It is well aware of community sentiment around the Queensland government’s nation-leading debt, whipped up by what shadow treasurer Curtis Pitt called Newman’s “taxpayer-funded megaphone”.It is well aware of community sentiment around the Queensland government’s nation-leading debt, whipped up by what shadow treasurer Curtis Pitt called Newman’s “taxpayer-funded megaphone”.
Even in green leafy progressive pockets of the state capital, economic management and state debt is polling as the top concern.Even in green leafy progressive pockets of the state capital, economic management and state debt is polling as the top concern.
But privatisation is poison for Labor. Union allies, whose electricity workers would find themselves under private managers, quit the party and gave it a bloody nose last time the “P” word came up.But privatisation is poison for Labor. Union allies, whose electricity workers would find themselves under private managers, quit the party and gave it a bloody nose last time the “P” word came up.
And yet Pitt says Labor wants no new taxes or tax hikes. Labor’s plan only seems remotely plausible when it steps outside the parameters set by Strong Choices.And yet Pitt says Labor wants no new taxes or tax hikes. Labor’s plan only seems remotely plausible when it steps outside the parameters set by Strong Choices.
Principally, this means arguing the $80bn debt figure is a beat-up.Principally, this means arguing the $80bn debt figure is a beat-up.
The “real debt”, says Labor, is $46bn. That’s general government debt. The rest is debt on the balance sheet of government-owned corporations (GOCs), which Labor says is manageably serviced by the revenue they get from their customers.The “real debt”, says Labor, is $46bn. That’s general government debt. The rest is debt on the balance sheet of government-owned corporations (GOCs), which Labor says is manageably serviced by the revenue they get from their customers.
The assets the LNP wants to privatise hold $18bn in debt, Labor says.The assets the LNP wants to privatise hold $18bn in debt, Labor says.
Those utilities service that debt while delivering the government another $2bn a year.Those utilities service that debt while delivering the government another $2bn a year.
Privatisation wipes the $18bn debt, leaving $7bn to pay off the “real debt” of $46bn.Privatisation wipes the $18bn debt, leaving $7bn to pay off the “real debt” of $46bn.
And if the debt is an LNP beat-up, says Labor, so are the interest savings it says privatisation can achieve.And if the debt is an LNP beat-up, says Labor, so are the interest savings it says privatisation can achieve.
The savings of $1.3bn a year touted by the LNP include the savings on the GOCs’ “self-supporting debt”.The savings of $1.3bn a year touted by the LNP include the savings on the GOCs’ “self-supporting debt”.
The savings on the “real debt” would be $360m a year.The savings on the “real debt” would be $360m a year.
Labor is effectively saying: forget the GOCs, they’ll take care of their own debts. And give the taxpayers $2bn a year forever after.Labor is effectively saying: forget the GOCs, they’ll take care of their own debts. And give the taxpayers $2bn a year forever after.
They claim to be in good company here.They claim to be in good company here.
The Liberal leader of another indebted mining state, Western Australia premier Colin Barnett, this week rebuffed criticism from bankers, business spivs and even Joe Hockey that the sandgropers have been slow to privatise.The Liberal leader of another indebted mining state, Western Australia premier Colin Barnett, this week rebuffed criticism from bankers, business spivs and even Joe Hockey that the sandgropers have been slow to privatise.
In Barnett’s eyes, selling off assets was a “discretionary” rather than a “strong choice”.In Barnett’s eyes, selling off assets was a “discretionary” rather than a “strong choice”.
“We can lower it [debt] tomorrow by selling a major utility,” Barnett told the Australian Financial Review.“We can lower it [debt] tomorrow by selling a major utility,” Barnett told the Australian Financial Review.
“But in the long term those utilities will provide steady income to the state. The major utilities are not for sale.”“But in the long term those utilities will provide steady income to the state. The major utilities are not for sale.”
Here’s the crux of Labor’s big debt payback: they’d take the $2bn a year from those utilities on Newman’s chopping block and “quarantine” two-thirds of it for a “debt reduction trust”.Here’s the crux of Labor’s big debt payback: they’d take the $2bn a year from those utilities on Newman’s chopping block and “quarantine” two-thirds of it for a “debt reduction trust”.
Pitt says this will give it $5.4bn to pay down on the “real” government debt over six years, then another $6.6bn over four years after that.Pitt says this will give it $5.4bn to pay down on the “real” government debt over six years, then another $6.6bn over four years after that.
He says Labor will have paid $400m off before the LNP (who still have to jump through all the hoops to unload the utilities) “have even got out of the blocks”.He says Labor will have paid $400m off before the LNP (who still have to jump through all the hoops to unload the utilities) “have even got out of the blocks”.
It would also squeeze more out of the GOCs by merging the state’s five electricity distribution and generation businesses into two, claiming savings of $150m.It would also squeeze more out of the GOCs by merging the state’s five electricity distribution and generation businesses into two, claiming savings of $150m.
Labor wouldn’t force anyone out but admits there will be job losses through “natural attrition” and voluntary redundancies.Labor wouldn’t force anyone out but admits there will be job losses through “natural attrition” and voluntary redundancies.
But where was that $2bn a year from the utilities going before? Into consolidated revenue, paying for something else. How will Labor cover that? Pitt, in his speech on Friday, didn’t say.But where was that $2bn a year from the utilities going before? Into consolidated revenue, paying for something else. How will Labor cover that? Pitt, in his speech on Friday, didn’t say.
Nicholls accused Labor of “voodoo economics”, saying they “can’t spend twice” money that was already “being used to fund the interest bill on Labor’s $80bn debt”. But that isn’t quite right either since, as just noted, it was going into consolidated revenue.Nicholls accused Labor of “voodoo economics”, saying they “can’t spend twice” money that was already “being used to fund the interest bill on Labor’s $80bn debt”. But that isn’t quite right either since, as just noted, it was going into consolidated revenue.
Suffice to say, Labor’s decision to pay down debt doesn’t leave much if any scope for expanded government services or public service wage rises, let alone rehiring any of the 14,000 people who lost their job under Newman.Suffice to say, Labor’s decision to pay down debt doesn’t leave much if any scope for expanded government services or public service wage rises, let alone rehiring any of the 14,000 people who lost their job under Newman.
In one sense, Labor has taken the sting out of the LNP’s attacks on debt. But in another sense, they’re playing the LNP on their own turf. This at a time when governments can borrow at virtually the same rate as a student loan – downgraded credit ratings be damned.In one sense, Labor has taken the sting out of the LNP’s attacks on debt. But in another sense, they’re playing the LNP on their own turf. This at a time when governments can borrow at virtually the same rate as a student loan – downgraded credit ratings be damned.
There is another area in which Labor finds common ground with the LNP. It embraces with equal gusto the looming royalties from the first full year of liquefied natural gas (LNG) exports.There is another area in which Labor finds common ground with the LNP. It embraces with equal gusto the looming royalties from the first full year of liquefied natural gas (LNG) exports.
Pitt, like many others, points out LNG is virtually the sole reason for a stonking 5.75% growth in the state’s economy next financial year.Pitt, like many others, points out LNG is virtually the sole reason for a stonking 5.75% growth in the state’s economy next financial year.
Labor is taking the credit for seeing those gasfields and processing plants in Gladstone through to fruition.Labor is taking the credit for seeing those gasfields and processing plants in Gladstone through to fruition.
“When you look at the LNG industry in Queensland, it is there because of forward-thinking previous Labor governments,” Pitt said.“When you look at the LNG industry in Queensland, it is there because of forward-thinking previous Labor governments,” Pitt said.
Indeed, as veteran environmental activist Drew Hutton said, Labor in government cut serious environmental corners on at least two gas projects to see them through.Indeed, as veteran environmental activist Drew Hutton said, Labor in government cut serious environmental corners on at least two gas projects to see them through.
But just say those gas export contracts have little clauses on them, as they tend to do.But just say those gas export contracts have little clauses on them, as they tend to do.
Clauses that allow north Asian buyers some wiggle room if the market prices for gas are actually much lower than what they’re paying because of depressed oil prices.Clauses that allow north Asian buyers some wiggle room if the market prices for gas are actually much lower than what they’re paying because of depressed oil prices.
In that case, gas royalties for taxpayers could be a little disappointing – especially considering what more than a few disgruntled farmers have been through to get to this point.In that case, gas royalties for taxpayers could be a little disappointing – especially considering what more than a few disgruntled farmers have been through to get to this point.