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Queensland election result and fiscal policy

By Mikayla Novak - posted Wednesday, 28 March 2012

The postmortem of the state election result has begun in earnest, with many issues already bandied about as factors explaining Queensland Labor's seismic defeat.

Some of the major issues identified in exit polling include the mismanagement of key areas of current state government responsibility, including in health and transport, and strong increases in the cost of living of recent years.

But it should be said that any of these issues could have been diluted, perhaps even substantially, if a general impression of basic incompetence by the previous government was not in existence.


The fact of the matter is that the words 'competence' and 'Bligh government' could no longer be strung together, and there was no more fundamental measure of incompetence than the state of the government's own financial books.

The problems of Queensland's public finances were well canvassed during the election campaign – a state budget in the red, a government saddled with over $85 billion in debt and counting, and a Queensland that lost its historical low-taxing position.

In many senses the parlous state of the budgetary books fed into some of the issues seen as decisive during the election campaign.

Rising taxation liabilities over time feed into the cost of living and associated issues, such as housing affordability, while much greater government spending often comes with greater laxity in cost control and an increasing risk of resource misallocation within the public sector.

The sharp deterioration in the Queensland budget from being the best in Australia to the worst was, in large part, the product of deliberate policy strategies pursued by Labor over the best part of twenty years that would have made Fabius Maximus proud.

Beginning with Wayne Goss in his second term, and later taken on by Premiers Beattie and Bligh with some gusto, Labor increased the scale of state government expenditure which eventually exceeded the average levels of provision found in other states.


Accusing previous conservative governments of spending 'neglect,' they repudiated the Bjelke‑Petersen legacy of low taxes and extensive private sector services provision that kept the state budget balanced and the economy growing strongly during the 1970s and 1980s.

The magnitude of the spending under Labor was so relentless that, as revenue growth began to wane after Mining Boom Mark I, the previous government lacked the political will, or simply didn't know how, to apply the speed brakes.

During Bligh's brief tenure as state treasurer general government expenditure increased by a staggering 14 per cent in 2006‑07, more than double the revenue growth in that year.

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About the Author

Mikayla Novak is a Research Fellow with the Institute of Public Affairs. She has previously worked for Commonwealth and State public sector agencies, including the Commonwealth Treasury and Productivity Commission. Mikayla was also previously advisor to the Queensland Chamber of Commerce and Industry. Her opinion pieces have been published in The Australian, Australian Financial Review, The Age, and The Courier-Mail, on issues ranging from state public finances to social services reform.

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