Tuesday, 18 September 2012

Op Ed -Right owe debt of gratitude to fear

THESE days, parties of the political right around the world seem to have a single mantra - debt. Whether it is Romney, Cameron, Abbott, Newman - it's debt, debt, debt and more debt.

There is a reason for this. The political right like scaring the life out of people. They know fear is a highly potent emotion. That's why they use it.

They also use it to delegitimize their political opponents. The message they want to punch through, whatever the facts happen to be, is that only they can be trusted with money.

And that message has the added bonus for them that unlike the rest of us, they don't feel any obligation to put forward a plan for how they would actually govern the country or the state: their plans for the future growth of the economy, the future of education, health, transport, infrastructure, housing, the environment, and emergency services.

So let's go to the absolute core of the argument: should governments borrow, what should they borrow for; and how do our national debt levels compare around the world?
First, governments borrow to build economic infrastructure including roads, rail, ports, power generation and transmission systems, and national broadband because these are the economic backbones that allow the rest of the economy to function and grow.

Second, governments of both political persuasions have adopted this approach for the last 100 years. If previous Queensland governments had not borrowed, there would be no railway network. Simple as that.
Same with Premier Newman when he was Mayor of Brisbane and financing the new tunnel network.  These were record council borrowings which according to the Council’s own budget papers will rise 114% of council revenues by 2015 .

According to the public reporting of his last budget as Mayor the 2010 Council Budget had revenue of $1.9 billion while spending $2.8 billion. And we take his assurance that this is sustainable for Council finances over time.

Third, governments borrow when the global economy collapses and you want to avoid a recession or a repeat of the Great Depression.

That's what happened when the Global Financial Crisis hit, starting in December 2007, which required extraordinary intervention by the Australian government to keep Australia out of recession and to keep people in employment. The result: Australia is the only major advanced economy not to go into recession.

The basic economic lesson of the Great Depression and all subsequent recessions is that when the private economy collapses, governments should step in and temporarily fill the gap to avoid mass unemployment.  Because not only is mass unemployment bad in itself, it also means less taxes being paid, more benefits being paid and greater debt than would otherwise be the case.

Furthermore, when the private economy recovers, that’s when governments should begin returning their budgets to surplus.

That’s why the Australian government projects returning to surplus this financial year and the previous Queensland Government projected to do that by 2015.

Mr Newman could of course improve on that by a stringent approach of efficiency dividends across the public sector and the huge turnover which occurs each through natural attrition.
Fourth, state government finances were also affected by the Global Financial Crisis. State taxes and charges were all down. Then in Queensland, we had Cyclone Yasi and the Queensland floods which compounded the impact.

Finally, there is the politically driven, non-independent "Commission of Audit” that Mr Newman uses to justify his current assault on job security and critical services like health.

Asking Peter Costello to "independently" audit the public finances of a Labor Government should be seen as "independent" as my asking Paul Keating to audit the large scale borrowings of Mr Newman's time as Mayor.

The bottom line also is that the Costello commission deliberately changed the definition of general government sector debt and used a new definition not used by the previous National Party state governments and not used the current Liberal-National governments of Victoria and WA.

The core point is this: Mr Newman's campaign of slash and burn is based on a politically driven, gross exaggeration and gross distortion of debt. He demonstrated this for all to see when he made the ridiculous but still damaging (for Queensland) claim that Queensland was like Spain.
Good grief: Spanish unemployment is four times that of Queensland at 24%!

Mr Newman was elected with the biggest majority in Queensland history. He has a mandate to implement his pre-election program.

Sacking up to 20,000 public servants was not part of his mandate. Nor was the abolition of multiple government services, such as turfing out 170 people from a caravan park without any offer of alternative social housing. This is nothing more than a breach of trust with the Queensland people.

The sheer arrogance of this LNP Government is breathtaking. They believe that because of the size of their majority, they can simply get away with it. The rumblings are already underway to replace Newman with Nicholls.

With his budget due, it's time for Mr Newman to start governing for all Queenslanders, stick to his mandate, stop playing politics with everything that moves, and help positively navigate the State’s future.
Queensland deserves better than this.


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