The Bligh budget blowout

A report released by the Institute of Public Affairs on state government finances is a wake-up call to Queenslanders about our state's mismanaged finances and poor delivery of services.

While the total budget deficits for all states this financial year is forecast to be $2.9 billion, we should take notice that $1.9 billion - or 65 per cent of this combined deficit - is Queensland's.

While most of the other states are expected to be in surplus by 2011-12, Queensland, along with Western Australia and the ACT, will not emerge from deficit until much later.

Two issues need to be considered.

First, how could a growth state such as Queensland, that has benefited so much from the resources boom under the Peter Beattie and Anna Bligh regimes, be in such a financial mess? Is it just the global financial crisis, as the Bligh Government contests, or are there more home-grown factors at work?

Second, why is Queensland going to take so long to return to a Budget surplus?

The Bligh Government has too easily blamed the global financial crisis for why Queensland's once-robust finances are now in such a mess.

Certainly the crisis affected the resources sector but not as much as was expected, as shown by the latest figures pointing to China's continued growth. Recent assessments from Prime Minister Kevin Rudd also suggest the impact of the financial crisis on Australia has been less than elsewhere.

The underlying cause of Queensland's financial crisis has not just been the global world economic situation, though an important contributing cause.

Rather, the real culprit has been the excessive growth of the public service caused by weak supervision and poor policy settings by successive Queensland governments during the past decade.

Between 2000 and 2008, while other state public services grew at a faster rate, the actual number of new public servants in Queensland increased by 45,000 - just behind the much larger states of New South Wales with 54,000 and Victoria, 60,000. The real problem was that during the 1990s, when other states were introducing reforms such as privatisation which reduced public service numbers, Queensland rejected such changes.

Consequently, Queensland was the only state during this period in which public servant numbers increased.