Queensland Treasurer Andrew Fraser released his first budget today that showed a disappointing lack of vision for the future. With Labor well ahead in the state polls, Fraser and his boss Anna Bligh could have used the $36 billion budget as a blueprint for change. Instead, their package pandered to the usual vested fossil fuel interests, perpetuated the subsidisation of car drivers, and contained substantial smatterings of politically conscious middle class welfare.
Introducing the budget this morning, Fraser boasted that the budget delivered “massive injections of funding” to public hospitals and healthcare system and would fund “the biggest capital works program in the State's history”. But with the state’s net worth of $123 billion and a forecast of an $800 million operating surplus for the 2008-2009 financial year, Fraser did little for the environment or the promotion of alternative energy use. Instead, he dispensed his largesse on motorists, the coal industry and wealthier first time home buyers.
A whopping 40 percent of $17 billion capital works will be frittered away on an expanded road network. This includes the duplication of the Centenary Highway between Darra and Springfield (an area poorly serviced by public transport), a new highway bridge between Brighton and Redcliffe (while the long promised Redcliffe rail link plan gathers dust), the Gateway bridge duplication, the Airport link tunnel (while the perfectly good railway is underused and overpriced). Meanwhile the Government “Travelsmart” plan pays lip service to the idea of “successfully balancing growth with a quality of life and a healthy environment” with expansions to the northern busway and $700 million towards new rolling stock in Queensland Rail’s Brisbane network.
Fraser wasted $870 million on the continued bribery of the 8.354 cents fuel subsidy. Intriguingly however, he is introducing a new scheme whereby drivers can apparently have the discount applied at point-of-sale by presenting a driver’s licence “with a new barcode attached”. Presented as a scheme to ensure the bribe is paid “straight into motorists’ pockets”, it is not immediately apparent how this scheme will operate. Premier Anna Bligh said the government would consult with industry figures and other motoring bodies to ensure the proposal went ahead smoothly. In any case, this scheme is an unwarranted subsidisation of car drivers at the taxpayer’s expense and needs to be scrapped.
It was obvious in other ways this budget was made with more than an eye to the next state election. Queensland Labor were keen not to repeat the mistakes of its federal counterparts with a big blurb about “looking after seniors” on the first page of the budget highlights paper. The government increased the electricity rebate scheme from $145 to $165 a year and started a new reticulated natural gas scheme which will give a $60 a year discount to 50,000 pensioners and concession card holders. Pensioners will also be given a subsidy to protect them from the big hikes expected in water charges in South East Queensland.
Wealthier first time home buyers did well out of the budget. Fraser announced an increase in the first home buyer transfer duty exemption threshold from the current level of $320,000 to $350,000 from 1 July 2008, with a further increase to half a million dollars from 1 September 2008. This will take the threshold well beyond the median Queensland house price which to June 2007 varied from $370,000 in Brisbane to $420,000 on the Gold Coast and $450,000 in Noosa. This will bring 90 per cent of all first time home buyers into the scheme. While in theory it is laudable to support those starting out with a mortgage, it seems over the top that governments should be subsiding wealthier entrants to the tune of $10,000.
The “at a glance” graphs released by the government reveal how they can pay for all this pork barrelling. Queensland has the strongest balance sheet of all the states and the state economy is predicted to grow 4 percent in the next year despite the world downturn. Tax rates are $275 lower than the average for other states and territories. But Queensland success is tainted in that it is driven off fossil fuels. The state is effectively living off the back of its massive coal exports.
And despite Australia now signing up for Kyoto, Queensland shows no sign of winding down the coal industry. On the contrary, the budget has promised $575 million for additional track works on the coal network in Central Queensland, $70 million to increase the capacity of Abbot Point Coal Terminal near Bowen, $45 million to improve road networks in the Bowen Basin region and another $23 million for infrastructure works in the Gladstone area at Tanna in and Wiggan Island coal terminals.
One of the few good things that came out of the budget was the royalty tax rise on North West Shelf and Queensland coal miners. The previous 7 per cent Queensland royalty has risen to 10 per cent for all coal sold at more than $100 a tonne. The increase will add an additional $1.1 billion to state coffers. This list compiled by Stephen Mayne tracks the ownership and tax arrangements for Australia’s biggest resource projects and it shows that most states under-tax the multi-national companies that quarry the nation. So while Queensland should be applauded for keeping at least some of the resource boom profits in public hands, it desperately needs to consider the significant environmental challenges ahead. With the most recent Newspoll showing a 20 point lead to Labor over the disunited coalition, the Queensland Government can easily afford to look beyond next electoral cycle. Queensland deserves nothing less.