Queensland budget 2015: turning government firms into giant ATM

Pitt argues the defined benefit scheme is in surplus, so the cash is fair game. But the scheme should be in surplus following the decade-long mining boom and the uncertain economic outlook.

The “surplus” of $2.1bn, measured using standard accounting practice, is very modest indeed compared with the almost $30bn being invested on behalf of Queensland public servants.

It therefore beggars belief that, in this post-GFC, post-mining boom decade of low interest rates, a stalled global economy, and highly volatile stockmarket returns, Queensland Treasury would recommend cutting the relatively small surplus in the public-sector superannuation scheme to zero.

Indeed, the State Actuary advised the Under Treasurer on June 16: “It should be noted that any reduction in the surplus position will reduce the capacity of the fund to withstand adverse outcomes (primarily investment returns below expectation).”

But it gets worse. By funding long service leave on “an emergent basis” (that is, not as the liability accrues as per standard international accounting practice but just as our long-serving public servant is boarding his Jetstar flight to Bali), Pitt gets access to a further $3.4bn from the ATM.

Queensland’s finances are in no state to restart the spending trajectory of the Bligh-Fraser years. The 2010s have been and will continue to be the toughest of decades for Australians. Per capita incomes have been falling and the domestic and global outlook remains uncertain.

Where other Australian governments have heeded these warnings and reined in debt and spending, Queensland — like Greece — thinks it’s a special case, believing that it will be saved by liquefied natural gas exports.

There is very little doubt that Queensland’s finances will be downgraded again; the only thing that has saved them recently was a credible Liberal National Party treasurer who was able to tell a convincing story of fiscal repair.

Despite the balance sheet shuffling, the ratings agencies still know where to look.

Thanks to the Charter of Budget Honesty we have what’s called the uniform reporting framework. And at table 8.1 on page 133 of Budget Paper No 2, the cumulative fiscal deficits across the forward estimates of $4.1bn are reported, a dramatic deterioration compared with the last LNP budget.

With the best card tricks already played, what will Labor do for an encore? Pitt the Youngest is running out of cards faster than Treasury can find new ones.