For the first time in some time, Queensland plans to borrow $10 billion over the next four years to help provide much needed infrastructure. A good thing, too.
The State Budget is no different to a set of financial accounts for a commercial enterprise. It should indicate long-term fiscal wellbeing, highlight core priorities, as well as revealing the effectiveness of key management decisions made by CEO Beattie and CFO Bligh.
Yesterday was the annual general meeting of Sunshine State Pty Ltd. As shareholders, we should be asking a whole lot of questions, including why Queensland has so little debt.
Business 101 tells us successful companies use long-term borrowings to finance a proportion of their productive asset base. Debt is cheaper than hard-earned equity - the taxes coughed up by shareholders.
Would you rather see a city tunnel or urban rail link built with your taxes or a combination of tax revenue, user-pays and debt? These assets are going to be around for 50 years or more. It’s therefore reasonable future shareholders pay a little interest down the track instead of us digging deeper into our pockets.
In previous decades, state governments carried debt because they had no choice. Rather than capitalise on recent good times, most of them have neglected infrastructure basics and now require debt to support the catch-up.
The dramas in transport, water and electricity have reminded politicians of the need to consider the longer-term in more detail. To look a lot harder at where to spend budget funds and whether to pay for it now through existing revenues, later via borrowings or bring in the private sector to lessen the financial burden.
As Anna Bligh points out, there is also the matter of actually delivering on the promises. While there are undoubted skills shortages, the biggest constraint on making commitments a reality is the capability of those working for the Sunshine State.
The re-emergence of debt on the Queensland’s balance sheet and the difficulties with infrastructure mark an opportune time to instill a more corporate philosophy deep into the workings of government.
Having government adopt commercial practices doesn’t mean it has to become fixated on the dollars or surrender non-financial measure of success. Nor does it mean we should resurrect the white shoe brigade or Queensland Inc.
While every other area of the economy has had to cope with the harsh demands of micro-economic reform, the culture and skill set of governments have essentially remained in a time warp.
If the Queensland Government was listed on the stock exchange tomorrow it would be taken over, restructured and transformed into something more efficient and responsive.
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