Birth, marriage and debt: Bankrupcty in Australia

If you are a man, in your early forties and single, then  chances are you are more likely to be bankrupt. That’s the finding of the Profile of Debtors 2011 a new report released by Insolvency and Trustee Service Australia.  This Government agency would know as anyone who becomes bankrupt must lodge a statement of affairs with ITSA. 

The law covers this off under the Bankruptcy Act 1966 which allows for trustees to distribute property fairly among creditors and prosecute dishonest debtors.  Bankruptcy lasts three years but can be extended. Since 2003 several patterns among bankrupts have been noticeable: they are mostly male (55:45), they are getting older, and they have less children than before. The primary causes are unemployment and economic conditions affecting their industry (particularly since 2009). The majority of bankrupts earn $30,000 or less and the size of their unsecured debt is increasing.
Despite their low incomes, almost half of them have unsecured debt of more than $50,000 and over a quarter per cent have unsecured debt of more than $100,000.

Over 23,000 Australians went bankrupt in 2011 and ISA constructed a profile of the average bankrupt last year. He was male aged between 35 and 54 years and single without dependants. It was his first time bankrupt. He earned less than $30,000 in the 12 months prior to bankruptcy (well below the $48,000 national average) and owed more than $20,000 mostly to the banks. He had no assets like property that could be used to repay creditors.  Tasmania and Queensland had the highest percentage of bankrupts and NT had the lowest. Three percent of bankrupts identified as Indigenous (who comprised  2.5% of the population). 

Nearly half of the liabilities is unidentified by the research with the “other” category responsible for 47% of all debt. Of the identified debt, credit cards were highest, responsible for 21 percent of unsecured debt followed by personal loans and house mortgage both on 12 percent. Credit cards also accounted for 18% of personal insolvency agreement debtors’ debt and a record 58% of debt agreement debtors’ unsecured debt.

 

According to ASIC, Australians have over $36 billion owing on credit cards, an average of $4,700 per card holder. MoneySmart’s Delia Rickard said paying off their credit card debt should be a top priority for millions of Australians.  ‘If you have $4,700 credit card debt (the national average) and only make the minimum repayments, it will take 49 years to pay it off and cost you around $14,600 in interest,” Rickard said. “But if you are able to pay off $250 each month, you’d pay off your debt in two years and save $13,700 in interest.”

Despite the RBA keeping interest rates at historical lows, banks still charge astronomical rates for their credit cards. Paul Clitheroe said the average card rate is around 17 per cent but many charge 20 per cent or more. “Monthly interest charges continue to eat away at household budgets making it hard to get ahead with card debt,” he said. “If you're serious about clearing card debt, one solution is to use a personal loan to pay off the balance.” Clitheroe said this would increase monthly repayments but the debt would  be paid off in three to five years depending on the loan term.

There are new rules in place since July 1 which will allow people be better informed against the scams the credit card companies use to fleece their customers. The company must now refrain from offering limit increases on cards, unless agreed, provide monthly statements that show how long it will take to repay the entire balance if you only make minimum repayments and provide clearer details on interest-free periods. All new credit cards must include: facts sheets to make it easier to compare offers, the capacity for consumers to nominate the credit limit, a ban on over-limit fees, notifications if you exceed your credit limit and repayments to the most costly aspect of your credit card debt first (such as cash advances) to reduce debt faster.

Home ground advantage: commerce and e-commerce

I was at a local chamber of commerce meeting tonight where the guest speakers from one of the major banks gave us a macro-economic view of exchange and interest rates. The conversation about the health of the economy suddenly got round to the internet and its effect on the shopping experience. One of the speakers wondered at what point “home ground advantage” was lost and people did their shopping online because it was cheaper. (photo: transcyberiano)

The tale was told of shops who charged their customers $50 just to try on the footwear. Many people were getting fitted out while getting expert advice then buying exactly the same gear for a fraction of the price online. The owners had a right to be miffed by a time investment not matched at the till, but their defensive measures in response was also short-sighted, the speaker argued. The internet is coming whether the skishop owner likes it or not.

A few minutes later, there was a worried question from the floor asking what this meant for commercial operations in Roma. The speaker reiterated the earlier point: it becomes a question of when home ground advantage is conceded. As another voice from the floor put it, “I like shopping”. The Internet will never fully replace the visceral appeal of commerce in real life.

Nevertheless it is pointless to ignore the truth. Cheaper online overheads and the convenience of clicking will eat seriously into the profits of the shops. People are spending a lot more time online too. A Nielsen Australian Online Computer Report released yesterday showed average internet usage has increased in 12 months from 17 hours 36 minutes in 2009 to 21 hours and 42 minutes in 2010. Usage has tripled in the last decade and with the prospect of high-speed broadband ahead, it is likely this trend has not yet reached saturation point. Australians will sooner or later spend a full day a week online.

Much of this usage is spent watching TV programs or surfing, but shopping online is also on the increase, though not as sharply. In 2008-09, 64 per cent of Internet users (pdf) aged 15 and over made online purchases, up 3 percent on 2006-07. This behaviour is concentrated in the young, which suggests it will increase. Three-quarters of people aged 25-34 bought over the Internet while less than half aged 65 and over made online purchases.

Businesses are going to lose business to the Net whether they like it or not. Rather than resisting change by charging $50 for the right to try things on, the bricks and mortar operations need to engage with the competition. That doesn’t just mean having a website to sell their wares. They also need to maximise other home ground advantages. While issues of security and shopping in person were important factors the most commonly reported reason for not making online purchases in 2008-09 was “a lack of need”. People shop in the real world when they don’t need to do it online. Understanding how to tap into this lack of need should be a holy grail for 21st century business.

Traders cannot rely on the GST loophole argument to equalise prices. There is a threshold below which it is too costly to collect taxes on goods privately imported. Keeping retail price below the cost of imports plus delivery is unlikely so shops should look to value added services to keep the tills ringing. Intangibles like goodwill, trust, a social media presence, an identification with their geography, and an honesty when dealing with customers may end up being decisive factors. If customers think there is a need to for online services - and they will – then they will find them. It’s up to business to find an ecological niche to avoid extinction. (photo seen outside a closing Borders store in the US)

Walker gets closer to pushing his anti-labour laws through in Wisconsin

US capital has won a major battle in the war against labour in the state of Wisconsin. A bill to bust the power of the state’s public workers unions was set for approval on Thursday US time after Republicans lawmakers pulled a fast one. With Democrats deliberately out of the state, the Republican could not get a quorum to pass a budget bill. So what they have done is strip references to the budget from the bill, which allowed it to pass without the legislative quorum required for fiscal measures. The State’s Republican Governor Scott Walker said passing the bill will give them the tools to reward productive workers and improve their operations. Unions disagree and have maintained large protests in the capital for three and a half weeks. (Photo of rally at Wisconsin Capitol by WxMom)

Wisconsin is not unlike many government agencies across the world running at a loss, enduring a $3.6 billion budget shortfall for 2011. Walker wants to solve the problem by getting public sector workers to reduce their salary and give away their collective bargaining rights through legislation. NBC’s John Bailey is expecting to blow out to $1.3 billion by 2013 blaming falling tax revenues for the blowout allied to rising unemployment putting pressure on the public purse. Tax cuts since 2003 have accumulated to $3.7 billion in lost income, though it is harder to estimate whether they have had positive effect. Walker was keener to balance the books with cuts rather than taxes. He claimed the alternative was worse: laying off 6,000 state workers, and taking away Medicaid coverage for hundreds of thousands of children.

The unions responded by agreeing to the pay cuts but refusing to give away their rights. Walker said that wouldn’t work for the organisations that get their funding from the state. Collective bargaining, he said, stood in the way of local governments and school districts being able to balance their budget. "My goal all along has been to give these folks tools to control their own budgets. You've got to give them some flexibility."

Wisconsin is normally a safe pro-labour state that has voted Democrat in the last six presidential elections. But it swung viciously to the Republicans in the 2010 midterms as the recession shattered consumer confidence. The GOP won a Senate seat and control of the House of Reps. They also gained the governorship as Scott Walker ended a Democrat eight year reign after Governor Jim Doyle retired.

Doyle’s replacement is a typical fiscal conservative Republican who is pro-life, anti-big-government, tough-on-crime, and pro welfare reform. During his election, Walker campaigned on business tax cuts to promote growth. He said he would pay for this by cutting public sector pay. His opponent Milwaukee Mayor Tom Barrett attempted to portray Walker as an extremist due to his moral positions but the electorate were in a mood to punish the Democrats with Walker winning 52-48. Walker took office on new year’s day and immediately got to work on his plan. He approved new tax cuts in January which he called “a bold statement that Wisconsin is a more welcoming place for businesses.”

On Valentine’s Day, Walker made another bold statement when he romanced the Committee on Senate organisation to introduce a budget repair bill known as Senate Bill 11. The bill requires state workers pay additional direct pension and health insurance contributions and removes collective bargaining rights except for wages, which is limited to CPI.

The budget repair bill also included provisions to empower the state to sell government infrastructure on a no-bid basis without Public Service Commission oversight. Koch Industries, a major contributor to Walker’s election campaign are the likely beneficiaries of this looser arrangement and could potentially snap up Wisconsin power plants at bargain basement prices.

Union leaders began pressing lawmakers to reject the idea. This was personal – Wisconsin was the first state to provide collective bargaining rights to public employees over 50 years ago in 1959. Rallies started in the state capital Madison on the same day the legislated was released, 14 February. Within three days, they were getting 70,000 and visits from Jesse Jackson. There was serious talk the protests would energise the Democrat base. On 20 February they occupied the Capitol. By 3 March police were opening fire outside the building.

Walker threatened to get the National Guard out to “handle state duties”. However other state duties are proving less important with the Governor also saying he would also dismiss 1,500 workers this week if the billed is not passed soon. Democrats have taken evasive action to delay it. Minority leader Mark Miller and his colleagues crossed into Illinois to avoid taking part in a vote. Until they return, there is no quorum and the measure cannot be passed.

In revenge, the Republicans suspended direct debit payments forcing them to pick up pay cheques in person. They have been docked $100 for every day they stay away, their parking spaces have been seized and their secretaries fired. A blogger named Buffalo Beast pretending to be David Koch caught Walker out into admitted he was ratcheting up his actions every day.

While Walker made his demands, unions protested in ever larger numbers in a direct echo of events in North Africa - echoes of “Mubarak of the West” played down in American media but not in the Guardian or Herald Scotland. Meanwhile Michael Moore has urged others to join in saying it was a lie to saying Wisconsin is broke. “The truth is, there's lots of money to go around,” Moore said. “It's just that those in charge have diverted that wealth into a deep well that sits on their well-guarded estates.”

Ireland's difficulty is Enda's opportunity

Incoming Irish Taoiseach Enda Kenny might be forgiven a bit of hyperbole when he described the election result as a “democratic revolution”. It was nothing on the bloody scale of what has gone on in the Arab world. Yet Kenny wasn’t too far off the mark either. The scale of the weekend’s defeat of the ruling government is rare in western democracies and unheard of in Ireland where Fianna Fail has been a dominant national institution for 80 years. Everyone expected them to lose this election after the 10-year property bubble burst causing the collapse of Ireland’s banking system and national finances. But no one was game to predict how much the fury of the voters would turn defeat into annihilation. The word landslide barely does justice to what happened. (AP Photo of Enda Kenny by Peter Morrison)

In a time of major economic crisis in Ireland, incumbency stunk to high heaven. Thanks to cronyism and incompetence, Fianna Fail has dropped from 78 seats to a likely 21. Minor governing partners the Greens have been wiped off the map losing all six seats showing what happens when an environmental movement becomes just another political party. FF have plummeted from the biggest party in the land, to a precarious rural rump. They may not even be the official opposition, if the large batch of newly elected left-wing independents manage to cobble together some sort of coalition.

The disaster was most remarkable in Dublin where FF was almost completely wiped out. Outgoing Minister for Finance Brian Lenihan clung on to his seat but he was the only successful candidate as a dozen others fell. FG did well as expected but not as well as Labour and the independents; it was as the Irish Examiner said “a sharp turn to the left in the capital”.

My home town of Waterford was a microcosm of the sea change that infected Irish politics. Mostly working class Waterford would usually elect 2 FF, 1 FG and 1 Labour in a stable and predictable 4-seat constituency that covers the city and county. Seeing the way the wind was blowing, FF only put forward one candidate this time round, experienced TD Brendan Kenneally. Most people, myself included, expected Waterford to end up electing 2 FG, 1 FF and 1 Labour. But FF’s 2007 vote of 46.5 percent in 2007 collapsed to 13.9 percent in 2011. Left wing independent John Halligan (a popular former Mayor) polled 10.3 percent but overcame Kenneally on the 11th count with the help of preferences to join 2 FG and 1 Labour member. For the first time in the history of the party, FF does not have anyone in Dail Eireann from Waterford.

But if FF is receiving last rites, the result is not the death knell of Irish nationalist politics. Sinn Fein may win as many as 10 seats doubling their representation including the election of party leader Gerry Adams who topped the poll in Louth. Their successes were in the northern republican strongholds of Louth, Donegal and Cavan though they also advanced in working class areas of Dublin.

The new government is almost certainly going to be a coalition of Enda Kenny’s Fine Gael and Eamon Gilmore’s Labour Party. As J.G. Byrne put it on Twitter at the weekend, “saying bye-bye FF and hello FG bit like beating cancer only to be told you now have incurable syphilis”. Immense financial and economic issues await the incoming administration. The debt crisis is escalating out of control with the bailout of the Anglo Irish bank expected to cost €34 billion. The strings attached to the €84 billion IMF and EU bailout are severe with government spending to cut by a fifth by 2014 and taxes to rise substantially. FG and Labour have differing views how best this can be achieved though neither suggest defaulting on the debt.

Writer Ruth Dudley Edwards is pessimistic the new coalition will be much better at managing the budget than the regime it replaced. Fine Gael, she said, was no more ideological than Fianna Fail, and is similarly awash with teachers and lawyers with almost no experience of government. Labour, she said, was led and dominated by the trade unions resisting change or cuts in the bloated, secretive and inefficient public services. “It is doubtful if a look at the books will turn its leader into Nick Clegg,” she wrote for her British audience.

A likely trajectory of this government is four years of hardship, bending over to receive its punishment as bankers in Brussels and Frankfurt spank Ireland for its profligacy in the good years. Perhaps the change will act as a placebo and install a badly needed sense of confidence. If that doesn’t work, the electorate will turn on Fine Gael with the same savagery it meted out to Fianna Fail. If the nationalist or socialist parties (or perhaps a nationalist socialist party) ever get hold of the levers of power then there really will be a democratic revolution.

Ireland faces eviction

There is an image of Ireland doing the rounds which has gone viral. The image is in the format of a classified advertisement. The item for sale is Ireland itself offering “76,000 km2 of floor space” to the buyer. The “vendors” are prepared to sell for 900 billion Euros or roughly $1.23 trillion.

All joking aside, Ireland is no longer worth that kind of money. The pretend asking price is exactly ten times Ireland’s debt which currently stands at $123 billion and continues to grow. It is now equivalent to one third of Ireland’s GDP. With Ireland still seen as a risky proposition and the bucket of money fast running out, the situation is about to get a lot worse for the Irish taxpayers. They may have to bail out their banks to the tune of $95 billion and will pay the price through a series of austerity budgets and the return of emigration. The bad times are back with a vengeance.

Poverty has been the normal situation for Ireland for much of its existence. Founded out of the barrel of a gun in 1921, the Irish State was the desperately poor relation of northern Europe. Its protracted independence battle from Britain left it penniless, its war neutrality cost it a place in the Marshall Plan and the economic illiteracy and conservative social attitudes of Ireland’s towering statesman Eamon de Valera encouraged mediocrity. In an infamous St Patrick’s Day speech to the nation de Valera’s vision of Irish life was “the romping of sturdy children, the contests of athletic youths and the laughter of comely maidens.”

But as the sturdy children, athletic youths and comely maidens grew into adulthood, they found an Ireland that had no place for them. Until the 1960s emigration was the only solution for most if they wanted a secure a financial future. Emigration was also an escape from a stultifying environment. An island off the coast of an island off the coast of Europe, Ireland was isolated culturally and financial from much of the European post-war boom in industry and ideas.

The Irish Catholic Church had enormous power and privilege in de Valera’s young state to the point where he allowed the archbishops to co-write the 1937 constitution. The Church’s conservative hierarchy held onto its power by ensuring new ideas were suppressed through censorship and criticism from the pulpit. Efforts to change the constitution in the 1980s mostly failed but the battles severely bruised the Church.

Europe would eventually come calling and change everything. Entry in the then-EEC in 1973 had a profound effect on Ireland coming as it did at the same time as the arrival of British satellite television across the country. Informed by overseas events and subsidised by European money the country rocked through waves of social revolution in the 1980s that bitterly divided populations. The constitutional referenda were mostly over sexual matters which had long been the preserve of the Catholic Church.

By the 1990s the Church's power was crumbling fast. Clerical scandals robbed them of their ability to preach down to the flock while the encroaching cultural influence of Britain and the US throughout the 1980s robbed them of respect in the young. Meanwhile an increasingly monied society was finding it no longer had the time nor need for spiritual aid.

The effect was revolutionary. A population of three million used to accepting power from the belt of a crosier suddenly found organised religion surplus to their requirements. As in many post-religious societies, mass materialism quickly rushed in to fill the void. Moral worth was now judged by the car people drove and the house they owned. Like the other PIIGS, all of whom emerged from strict Catholic or Orthodox societies, the Irish put their noses in the trough for 15 years of good times. As the economy improved through a series of one-off reforms, the nation went on a consumerist spending spree stimulating the economy even further. Long a net exporter of people, Ireland suddenly found itself an attractive destination for refugees desperate to get a job in this humming hive. The immigrants brought with them new ways and new ideas and further shook up a tightly homogenous society.

The original Irish boom was based on the take-off of low taxing hi-tech IT and pharmaceutical companies. But by 2000 those industries had plateaued. The boom was running on its own fuel. Construction became Ireland’s biggest industry. Ireland’s lax planning laws led to a building frenzy. The big profits available in property encouraged existing homeowners to gamble with their equity in what seemed like no-brainer easy money. The move to the euro made access easy to European markets. The Irish plunged into property in southern Europe and along with the equally cashed-up Russians and British became primary investors in places as diverse as Montenegro and the Canaries.

A few Cassandras such as Morgan Kelly (Professor of Economics at University College Dublin) predicted what would happen when the boom ended and the constructed house of cards collapsed. It wasn’t just private investors who were playing for high stakes. The Irish banks had made astronomical profits in the boom but got themselves in deep to foreign investors in the process. When the Global Financial Crisis hit, the cheap money those banks relied on dried up. With confidence killed at a stroke, businesses began to contract. The toxicity of many of the loans left the banks deep in debt with no new income to replenish them.

Desperate to avoid the loss of face of its major financial institutions going under, the Irish Government issued a bank guarantee as Governments did in US, Britain, and Australia. But unlike the other three English speaking counties, the Irish guarantee would lead to national insolvency. Three Irish banks (Anglo Irish, Allied Irish and Bank of Ireland) had hidden the extent of their bad debts from the Government at the time. Now the Government’s open-ended commitment to cover the bank losses far exceeds the fiscal capacity of the Irish State to pay.

The turning point in the crisis came in September when bank loans worth $75 billion due to the UK, German, and French banks matured. Despite being lied to by the banks, the Irish Government agreed to pay off the loans. It was accomplished with another loan, this time from the European Central Bank. Now Kelly is saying the next crisis will be mass home mortgage default. Like the “for sale ad”, Kelly goes for gallows humour. "After a sudden worsening in her condition, the Irish Patient has been moved into intensive care and put on artificial ventilation," he said. "While a hospital spokesman, Jean-Claude Trichet, tried to sound upbeat, there is no prospect that the Patient will recover."

The "hospital spokesman" Trichet is the French civil servant who currently heads up the ECB. The ease of access the euro provided was now the noose that threatened to leave the Irish economy to hang. Trichet would normally turn his Gallic nose up at the gauche goings-on of the Irish. But he has too has much to lose from the burgeoning debt situation. Ireland still owes a lot of money to French banks.

And like fellow terminally-ill patient Greece, the death of Ireland would put the health of the wider integrated European economy at risk if the crisis of confidence spread up the line to the larger economies. Ireland is relying on Trichet’s riches to pay for decades of crony capitalism. But the kindness of strangers will have a price. If mortgagees start to default on a widespread, Ireland could be ruled within five years by what Kelly calls “a hard right, anti-Europe, anti-Traveller party that will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums."

Squirming all the way to the bank

The last two of the major four Australian banks to act on the Reserve Bank rate rise have passed on substantial rises to their beleaguered customers. While the RBA announced a quarter of a percent interest rate rise on Melbourne Cup Day last week, today the National Australia Bank lifted its standard variable rate 43 points to 7.67 percent while Westpac added 35 points taking their standard variable loan to 7.86 percent. ANZ announced a similar hike yesterday.

All three were slow to act after Commonwealth’s early response of 20 points above the RBA addition unleased a week and a half of frenzied attacks against the banks. Both media and politicians had their reasons for lashing the banks and with the CBA and its CEO Ralph Norris taking most of the heat Westpac, ANZ and NAB scurried off to the bunkers to contemplate how to sell their response.

It was never in much doubt they too would pass on inflated rises. Like the Commonwealth, all three acted in the best interests of their board not their customers. While all four expected some adverse consumer reaction, the four majors could rely on the vast majority of their customers to grudgingly accept the rises rather than go through the hassle of changing over to cheaper options provided by loan operators, credit unions and building societies. Between them the Big Four control over 86 per cent of the Australian mortgage lending market.

The media release NAB sent out today to announce the rise is a masterpiece in sleight of hand. In the same first breath as it announced the size of the raise, it maintained it was still “highly competitive” against the other banks. It is true they remain the cheapest of the big four by 13 points. But they are not highly competitive when measured against Wizard/Aussie or RAMS. Building societies such as ABS and Heritage are also between 10 and 20 basis points cheaper than NAB. Credit unions have cheaper loans still with Credit Union Australia offer a (pre rate rise) standard variable of 6.87 percent, almost a full 100 points cheaper than Westpac.

The trigger for the bank’s money grab was the initial decision by the RBA as everyone in Australia was tucking into chicken and champagne ahead of the Melbourne Cup. RBA Governor Glenn Stevens began with apparent good news. The economy was purring along in good shape. Confidence is returning, he said, employment is firming and business is being stimulated by global growth and high commodity prices. Trouble was these conditions generally brought increased inflation with them. “Inflation is likely to rise over the next few years,” said Stevens. “This outlook, which is largely unchanged from the Bank's earlier forecasts, assumes some tightening in monetary policy.”

The RBA "tightened" monetary policy by 0.25 percent. While Melbourne Cup was ending, the Commonwealth was first out of the blocks. The additional 25 points was not tight enough for them. The Commonwealth raised their home loan variable interest rate from 7.36 per cent to 7.81 per cent a year, a jump of 45 points. Group Executive, Retail Banking Services Ross McEwan blamed the additional 20 point rise on the “sustained increase in the Retail Bank’s wholesale funding and retail deposit costs”. McEwan said money was more expensive since the GFC and as older and cheaper funding arrangements expire they had to be replaced with more expensive funding. Commonwealth said consumer deposits which formed 60 percent of their home loan funding were now more expensive because of “increased competition".

After nine days of silence from the other majors, ANZ came out with their plan yesterday. They bumped their rates up 39 points to 7.80 percent and blamed “the sustained rise in the cost of funds in recent months”. ANZ CEO Australia Philip Chronican dressed the decision up as taking “the lead in doing more to give customers’ choice and to help them manage their finances in this uncertain interest rate environment.”

Like the NAB, Westpac waited until today to tell us their news. They added 35 points taking their standard variable loan to 7.86 percent, the highest of the four majors. Group Executive, Westpac Retail & Business Banking Rob Coombe was wheeled out to deliver the bad news. “This was a very difficult decision brought upon us by average funding costs that continue to rise, and was only made after the most careful consideration.”

NAB didn’t bother disguising their news as “careful consideration”. Instead they asked consumers to look at positives. As well as their fabled competitiveness, they were reducing their greenhouse gas emissions (no doubt causing jubilation among green mortgage holders) while asking for sympathy while they continue to absorb "a significant portion" of its increased average funding costs. The problem with these arguments are the banks recent profit statements. In 2010 NAB cash earnings increased almost a fifth to $4.6 billion. Commonwealth did better still with a similar percentage increase to $5.7 billion. Westpac were on the same path with cash earnings of $3 billion for the first half of the year, as were ANZ with $2.3 billion.

Part of the reason for these high profits are Australia’s high interest rates compared to most other developed other countries. The US, Canada, UK, Japan, the Euro Zone and Switzerland all have official rates of 1 percent or under. Only the steamrolling economies of China, India and Brazil have higher rates than Australia. But there is a second reason that enables bank customers as taxpayers to feel angry. The huge profits are a reflection of the privileged position enjoyed by the banks resulting from the Australian Government’s bank deposit guarantee.

The guarantee was withdrawn at the end of March but kept Australia stable in the post Lehman Bros collapse era. The State acted as guarantor to $32 billion worth of bank borrowing from international credit markets. On behalf of those unhappy taxpayers (and with his own job on the line) Treasurer Wayne Swan led the charge against the banks. “What we've seen in terms of the profitability of our banks which have been restored to pre global financial crisis levels,” he said, “means that any increase over and above the Reserve Bank increase is simply not justified.” Swan has an undoubted political agenda but the management double-speak used by the banks to justify the inflated rises would appear to bear him out.

Australia will pay the price of Queensland's asset sales

The Queensland Government furniture firesale continues as they soften the market for the crashlanding of QR National. In one of the first major share offerings since the GFC, the rail freight business is being pitched as a “growth story” for which they hope to get somewhere between 6.6 and 7.8 billion dollars. Bligh acknowledges dividends will be low and investors will not make a quick killing. What she does not acknowledge is that this slow long-term growth behaviour makes it ideal to remain in government hands.

There is another reason the sale is bad. Privatisation of any enterprise costs money and the cost is deducted from the sale price, effectively meaning the vendor pays for the transition. Australian and Queensland tax payers will also lose tens of billions in long term revenues.

In the case of QR National, the "book value" of the company is $7.4 billion which puts it in the ballpark of a fair price. But the book value does not measure other aspects of the company value including future earnings, goodwill and the power that comes from being the leading producing of freight services in Australia. It too must be in the billions of dollars.

QR National is the biggest of five assets to be disposed as Queensland buckles under financial penalties caused by its AA credit rating. With $52b of debt to service, international credit demanded these tasty morsels be released in downpayment. The unfolding financial disaster left Bligh was in a no win situation after her election. The only people that wanted these assets privatised would never vote for her. Her base detested the move and her credibility was shot to pieces after she introduced the sale without a mandate in the 2009 election.

These are not trivial items. QR National is huge. They are the largest rail freight haulage business in Australia by tonnes hauled and are particularly strong in coal haulage which has doubled in ten years. QRN operate 2,300 of dedicated railway lines across five states. Their future outlook is strong having invested $3.4 billion in three years keeping its rolling stock up-to-date while expanding its network. Another $3.8b is earmarked in expansion programs in the next two years.

QR National may be the jewel in the crown but the other four assets are also sparkly. Queensland’s largest cargo port, the Port of Brisbane could fetch up to $2 billion. Queensland Motorways operates the tolling franchise on the Gateway and Logan motorways and is worth about $4.5 billion. But as Professor Ross Guest told RACQ a likely sale price of $3 to $4b “would therefore transfer net worth from Queensland taxpayers”.

The fourth item up for grabs is Australia’s most northerly coal port: Abbott Point Coal Terminal. Abbott Point is 25km north of Bowen and is the quickest coal route to China. The port is also valuable because there are few other locations along Queensland's eastern seaboard where very deep water is so close in-shore. Whitsunday Regional Council Mayor Mike Brunker said the terminal might go for half its $3 billion asking price because of crucial missing links in the railways that provide coal to the port.

The fifth asset is a 99-year licence for Forestry Plantations Queensland and it is already lost to the state. The smallest of the five, it was the ideal candidate to be first cab off the privatisation rank. The licence to manage, harvest and re-grow plantation timber on over 200,000 hectares of plantation lands was sold for $603 million at the end of June to American company Hancock Timber Resource Group. The price shows exactly how much privatisation costs.

Professor Gary Bacon, adjunct professor with Griffith University's Environmental Futures Centre, said the state's forestry assets appeared to be going at bargain basement prices. He said if the land remained in government hands, the right to grow and harvest trees on it would be worth an estimated $1370 million. This higher figure came from parliamentary research commissioned by Bruce Flegg and while it is politically motivated, it shows a loss of $767m on unrealised earnings for the state. There are also environmental concerns. Hancock Timber Resource Group are the target of Greens' ire over their Victorian operation which will clearfell much of the Strzelecki Ranges.

The QR National sale is likely to dwarf the Forestries sale in scale, impact and likely money lost forever to the state. In parliament on 7 October, Queensland Treasurer Andrew Fraser called the QR National share offer a “historic moment for QR, for Queensland and indeed for the nation.” Apart from failing to recognise the impact of the GFC, it was this curious phrase “indeed the nation” that made it suggest Australian interest was an afterthought with the sale.

This is a major blunder given QR National’s size and reach into the important NSW market, a state which will recover its crippled mojo when the hopelessly compromised Labor administration is turfed out of power in 2012. The Queensland Government is expecting to receive something between about $3.6 billion and $5 billion in proceeds from the float, but once again the true value of future earnings is not included. Bligh is aware of all of this but has no option but to press on. Her fear of bankers appears worse than her fear of voters who don’t want the sales to go ahead. This death wish suggests she has little choice in the manoeuvre.

The coded message for help in the Queensland Government’s spiel appears in the very name of the new entity “QR National”. Its sale means billions of dollars will be lost to Australia. If Bligh is unable to act in a notional national interest, then Prime Minister Julia Gillard ought to. She could buy the remaining assets for the cost of about a tenth of a stimulus package.

Tens of billions are leaving the Queensland economy which will not be compensated by the benefits of privatisation. Stephen Bartolemeusz in Business Spectator gives the game away when he says the value of QRN is in the privatisation alone. Given the company’s strong set of businesses with dominant market positions it ought to release considerable value. But “against that” he outlines reasons why investors won’t pay premium prices: The grandfathering arrangements to protect jobs, the retention of 25-40 percent Government ownership and a 15pc ceiling on individual shareholding.

It is these political risk management strategies that drives the increase of buying cost, a factor the Federal Government would not have to worry about. What the Feds would have to worry about is being locked out of the “growth story” Bligh is now telling because they will have to deal with the consequences of private ownership decisions on the management of the Australian economy and environment.

Queensland’s troubles is another example why federalism is a mess and is economically unsustainable. If there really is a new paradigm in Canberra, it should send a message to show how our state-based power structure is crippling Australia. In the “future directions for rural industries and rural communities” session in the 2020 summit two years ago, session chair Tim Fischer admitted their solutions saw them “almost demolishing the states”. It's a worthy vision for 2020 - the quicker it happens the better.

British banks complicit in Nigerian corruption

A new report from a British non-government corporate watchdog has exposed how British banks have accepted millions of dollars in bribes from corrupt Nigerian politicians. The report called “International Thief Thief: How British Banks are complicit in Nigerian corruption”(PDF) has exposed rotten practices in the banking industry. Global Witness named five major banks Barclays, NatWest, Royal Bank of Scotland, HSBC and Switzerland's UBS in the 40-page report it said have failed to adequately investigate the source of tens of millions of dollars taken from two Nigerian governors accused of corruption.

Robert Palmer, a campaigner at Global Witness said banks were are quick to penalise ordinary customers for minor infractions but seem to be less concerned about dirty money passing through their accounts. "Large scale corruption is simply not possible without a bank willing to process payments from dodgy sources, or hold accounts for corrupt politicians,” he said.

Global Witness admitted the five banks might not have broken the law but said British banking regulator the Financial Services Authority must do more to close loopholes to prevent money laundering through British banks. "The FSA needs to do much more to prevent banks from facilitating corruption,” the report said. “As yet, no British bank has been publicly fined or even named by the regulators for taking corrupt funds, whether willingly or through negligence... in stark contrast to the United States, where banks have been fined hundreds of millions of dollars for handling dirty money." While HSBC claimed it had "rigorous and robust" measures in place to stop such abuses, a spokesman refused to talk about individual customers hiding behind the bank's confidentiality policies.

Global Witness’s findings were based on court documents from successful cases the Nigerian government brought in London against two former state governors Diepreye Alamieyeseigha of Bayelsa state and Joshua Dariye of Plateau state. Alamieyeseigha was jailed in Nigeria after pleading guilty to embezzlement and money laundering charges after being caught with $1.6m in cash at his London home. Dariye was arrested in 2004 in London after buying properties worth millions of dollars though he was on $63,500 a year salary.

Global Witness found that Barclays, HSBC, RBS, NatWest and UBS held accounts for both men. They said they “funnelled dirty money into the UK, spending their ill-gotten gains on sustaining a luxury lifestyle, in stark contrast to the poverty of ordinary Nigerians.” Global Witness said banks which were propped up by taxpayer’s money were getting away with practices that undermine aid programs. “This is not just illogical, it is immoral,” they said. “Our financial system is morally complicit in Nigerian corruption.” The banks have form: nearly all of them had previously fallen foul of the FSA in 2001 by reportedly helping the former Nigerian dictator Sani Abacha funnel nearly a billion pounds through the UK.

Nigeria ranks 130 out of 180 nations in Transparency International's list of countries perceived as most transparent in 2009. It has a population of 150 million people many of whom survive on $2 a day yet the country is one of the world's top champagne importers and its wealthiest residents are among the continent's richest. Al Jazeera quoted Nuhu Ribadu, the former head of Nigeria's anti-corruption agency who estimated that corruption and mismanagement swallows up about 40 per cent of the country's annual oil income. "Without access to the international financial system, it would be much harder for corrupt politicians from the developing world to loot their treasuries or accept bribes," Global Witness said in its report.

Awaiting election time CPI data with interest

The Australian Bureau of Statistics would seem like an unlikely election game changer, yet their release of the usually fairly innocuous quarterly Consumer Price Index next Wednesday could have profound impact on the weeks to follow. In the minutes of the monetary policy meeting for 6 July released today, the Reserve Bank Board said the deciding factor on a rate rise next month would be the July CPI figure. The Board meets again on Tuesday 3 August and a high CPI number followed by a rate rise could give the Opposition a major impetus in the last 18 days of the election campaign.

The signs are there, that a rate rise is on the way. In the March quarter the headline rate was 2.9 percent with the all groups CPI rising 0.9 percent following a 0.5 percent rise the previous quarter. Hikes in the price of pharmaceuticals, vegetables, electricity and fuel were the main reasons for the March quarter increase. The Board said CPI inflation was expected to rise to a little above 3 per cent in the June quarter figures partly due to the effects of higher taxes on tobacco. “The important question for the Board at its next meeting would be whether the new information materially changed the medium-term outlook for inflation,” they said.

Higher taxing cigarettes or not, several senior Government will be anxious smoking a few coffin nails which waiting for the CPI headline figure on Wednesday. The RBA have held interest rates at 4.5 percent for the last two months – still very low by Australian standards, but even a 0.25 percent rise is a bad look in the middle of a tight election campaign. In doorstops Opposition leader Tony Abbott has been hammering home the point of “upward pressure on interest rates” and while he blames government borrowing rather than new excises, an August rate rise would play into his campaign themes.

The cash rate has gone up seven times in the past year but this was after a historical low of 3.0 percent during the height of the Global Financial Crisis in 2009. However rates are still 2 percent lower than when Labor took office in November 2007 and also slightly lower than most of the period between 2001-2005 when the Howard Government dined out on the “low interest rates” they said their policies were responsible for.

Their promises were finally exposed as fiction as rates rose prior to the last election and they continued to do so when Labor took power. Playing politics with interest rates ignores the fact that the Reserve Bank Board is an entity independent of Government control. At a luncheon in Sydney today Glenn Stevens reminded the audience about that fact when the Board decision would not be swayed by the election campaign. He also said the CPI figure would not be the only decision factor. As today’s RBB minutes noted, the health of the European banking sector has a significant impact on financial markets and global confidence which could lead to an “updated reading on domestic prices”.

Neither major party likes to draw attention to this fact because it shows how little control Governments have over the wider economy. Ken Henry (himself an RBA board member) and the Treasury did a terrific job to keep Australia out of recession during the GFC but the economy and the interest rate was not immune from its devastating impacts. Rising interest rates means the economy is in good shape. Politicians and their media cohorts should be reminded of that fact whenever they play games with rate rises. Lower interest rates means either the China boom has ended or the European sovereign debt crisis has spiralled out of control. Either way, a $40 a month saving on the monthly mortgage won’t mean much if there is no job to pay for it. The media needs to tell this story fully instead of falling for phony political lines about "upward pressure".

Prime Television beancounters lose faith in regional Australia

In the same week as the smaller New South Wales cities launched a campaign to lure Sydneysiders out of the Big Smoke, one of the big television stations has kicked the regions in the teeth by closing studios in two of its major towns. The three-year $2 million Evocities campaign which kicks off next month was created by the cities of Albury, Armidale, Bathurst, Dubbo, Orange, Tamworth and Wagga Wagga, with the aim of promoting life in regional NSW. But two of those towns, Orange and Wagga, have just lost one of their main channels of information with the local news studio shutting down facilities to avoid the cost of digital conversion.

The guilty party is Prime Television, which is an affiliate of Channel Seven. They said the closure is happening because they cannot afford any upgrades after the News services move to Canberra. This seems like a spurious reason given that it only cost them $100,000 to upgrade their Albury studio to digital. The move is part of a growing trend to ignore the public affairs interests of regional areas in favour of cost cutting to meet bottom lines in an increasingly aggressive media marketplace. Prime’s studio facility in Tamworth which produces two news bulletins for North West and North Coast will also close in 2011. Little of the $240m bribe (disguised as a “rebate”) Stephen Conroy handed the industry in February seems to be making its way to country areas.

The two closing stations have almost 50 years of association with their towns. The Orange-based station is the former base of CBN8 which began in 1962 as one of the first regional stations in NSW. The Wagga studio is the former regional station RVN2 which began broadcasting two years later. RVN and CBN produced hours of local programming including quiz shows, children's programs and news until satellite and microwave links made networking possible in the early 1970s. Both were incorporated into the Prime Television network in the 1980s in the lead-up to aggregation, the process used to expand choice to regional viewers in the eastern states. Local services were reduced to a half-hourly news bulletin. Some of the big players now have an interest in Prime. Seven’s owner Kerry Stokes paid $20m in 2009 to take a 11.4 percent stake which Lachlan Murdoch’s Illyria also bought 8.9 percent last year. These men do not give a flying fig about local content rules and care only for the bottom line.

In March Prime announced services originating from Orange and Wagga would end in July to be replaced by a Canberra bulletin. Reporters will still be based in each local area but the half-hour bulletins will be compiled from the national capital. At least one full-time position will disappear from each centre. As Talking Television points out, Prime’s move will effectively mark the end of local television production as rival operators such as NBN, WIN and Southern Cross Ten already have centralised facilities for the provision of local news.

According to ACMA, new rules were introduced in January 2008 to cover local content on regional commercial television broadcasters. The licence requires broadcasters to show at least 1.5 hours of local content in any given week and a minimum of 12 hours over six weeks. Local content is defined as “material of local significance” which can relate to either “a local area, or to the licensee’s licence area.” There seems little doubt licensees will cling to the latter definition as they strip local towns of their ability to produce news.

According to its latest annual report, Prime made a profit of $175 million in the year 2008-2009. The document noted that while the changeover to digital transmission brings new growth opportunities they lost $5 million a year when the Government’s Regional Equalisation Plan rebates ended. The REP was the 2000 brainchild of the Howard Government to defray half the cost of digital conversion for the regional broadcasters. At the time it was thought Australia would be fully digital by 2004 but now it won’t happen until 2013. But Labor ended the rebate this year.

These are tough times for television. Prime wrote off the Orange and Wagga stations as “dinosaurs of the digital age”. But it wouldn’t have cost too much to transform them to survive the digital comet and it would have been a great act of faith in regional Australia. Sky News boss Angelos Frangopoulos, who cut his teeth at Prime in Orange, predicted what will happen in their absence. "The reality is that era of proper locally produced regional television pretty much ended a long time ago," he said."It's important that regional TV doesn't perpetuate the mistakes made by regional radio stations and remove so much localism that it has just become a network feed with 1800 numbers and weather inserts attached."

The Loans Affair 35 years on: lessons in history

As the Government clings to clumsy populism to avoid defeat that seemed unlikely six months ago, it’s worth remembering a pivotal anniversary in another Labor downfall after just three years in office.

35 years ago today the famous Overseas Loans Affair was debated in Federal Australian parliament. The debate was one of just two times outside witnesses have been called to the bar of the Senate. The first time was at the height of the great depression in 1931 when Sir Robert Gibson, Chairman of the Commonwealth Bank Board, was called in to help the Senate “secure the utmost information possible to guide them wisely in dealing with the difficulties with which Australia is confronted.”

But in 1975 not just one, but many esteemed senior public servants were summoned to the bar. They were all there to say what they knew about the overseas loans negotiations. A year earlier a hard-up Labor Government attempted to raise $4 billion via unorthodox means. $4 billion was a lot of money in 1975 and Labor wanted to kickstart a sluggish post Oil Crisis economy with a massive number of resource and energy and infrastructure initiatives. They were going to electrify railways, build natural gas pipelines and enrich uranium for nuclear power.

The Minister for Minerals and Energy Rex Connor was authorised to bypass normal Treasury channels and seek access to Gulf Petrodollars that were floating around in enormous numbers after OPEC flexed its muscles. The problem was that no organised money market existed for directly investing the growing pool of money.

The Government were trying to get access to it but had no connections in the Gulf they could deal with directly. Neither did Adelaide builder Gerasimos “Gerry” Keridis but he had good indirect connections in the finance industry. In 1974 Keridis had heard from a friend about someone who had $200 million burning a hole in his pocket waiting to invest in something. The friend asked Keridis if he could help. Keridis traced the request to local jeweller and opal dealer, Tibor Shelley. Keridis then rang Clyde Cameron, another friend who also happened to be Gough Whitlam's minister for labour. Keridis asked Cameron whether he knew of anyone wanting some serious investment. Cameron was intrigued and began to work the phones.

The next day Keridis was invited to Canberra to meet Connor who was already plotting to get his $4 billion. The two men got along and Keridis left the meeting to find out the bona fides of the $200 million loan story. Keridis traced the money to Hong Kong but the trail ran cold there. He went back to Shelley who gave him the name of another finance broker who in turn gave him the name Tirath Khemlani.

The Pakistani-born Khemlani had credibility through his employers Dalamal and Sons in London. Britain’s Scotland Yard told the Australian Government Dalamal was a respectable commodities firm. Khemlani had heard about the Australian interest in getting Gulf money through a Hong Kong connection of Shelley’s. Though he had little experience in high finance he wanted to broker the deal himself.

He flew to Australia and met Connor and Keridis. Connor told him about the $200 million. Khemlani said that was chickenfeed and he urged Connor to go for $2 billion. Connor didn’t tell him the exact amount he needed but he described his visions such as the east-to-west coast railway, a national power grid and control of the North-West shelf's energy stocks. Connor and Keridis saw Khemlani as the messenger. They expected Dalamal and Sons to broker the deal.

Khemlani flew back to London to begin looking for the money. He reported regularly back to Keridis who in turn briefed Connor. Keridis continued to explore other avenues to get the money, hoping for a fat commission of up the $7 million on a $4 billion deal.

On 13 December 1974 the Government inner council authorised Connor to raise the money as a 20-year loan "for temporary purposes". This sleight of hand avoided the oversight of the Australian Loans Council to coordinate borrowing by Federal and State governments. The Loans Council was then governed by a “gentleman’s agreement” to impose borrowing limits on the Commonwealth and State semi-governmental and local authorities which was honoured more in the breach.

By avoiding the Loans Council, the Government kept the Liberal State Governments out of the loop and had the benefit of keeping their own side of parliament in the dark. The deal also insisted that the Government pay no commissions so Keridis was out of pocket. Six months of hard work with Khemlani had come to nothing. Each time the Dalamal broker rang in, there was a new reason why he had yet to engage the moneymen. A week after the secret deal was signed, officials convinced Treasurer Jim Cairns, Khemlani was a dud and he got Connor to terminate the arrangement.

There the matter might have rested except Khemlani was not inclined to take no for an answer. Though no longer employed by the Australian Government, he kept looking for the money and Connor kept talking to him unofficially. Connor later told the Enquiry he dropped Khemlani after his loan authority was revoked on 20 May 1975 but Khemlani would later tell the media they were still talking later than that. The middle man Keridis remained a fan of the Pakistani until he began to make blackmail threats. That happened when Khemlani arrived back in Australia in October 1975, a month before the Dismissal, with a bag of secret documents about the affair he wanted to sell to the highest bidder.

By then most of the political damage had been done. In May, the Government had gotten cold feet about petrodollars and instead went to an American investment house, whose name was never revealed (a fact forgotten in the furore). The Americans insisted they be the sole authorisers and Whitlam revoked the loan authorisation.

Information had started to leak and by July an outraged opposition demanded the Government to tell all about the affair. On 9 July, Whitlam played his cards, tabling all the documents in parliament confident that they had done nothing wrong and determined to show they were a Government with vision. His gamble came unstuck. The media ignored the reasons why the money was needed and came down hard on its secrecy and haplessness. The “Loans Affair” became a term loaded with negativity and ignominy, despite the fact no money ever changed hands.

Already beset by economic difficulties, the affair made the Government look like amateurs. Whitlam was forced to sack his Treasurer Cairns and then saw Labor suffer a shock loss in a Tasmanian by-election. The 15 percent swing was enough to give Opposition leader Malcolm Fraser the confidence to use his upper house majority (thanks to Joh Bjelke-Petersen’s night of the long prawns) to block supply of the Budget. The rest was history.

It is well to remember that history 35 years later. New Prime Minister Julia Gillard’s catastrophic blunder over East Timor in an effort to look tough allied to a stupid pretence it never happened, could yet end Labor up in Loans Affair-like election trouble again.

Queensland Budget 2010

“Twelve months ago, this Government took the decision to fight for jobs, above all else.” These were the words Queensland Treasurer Andrew Fraser began his 2010 budget address with. Fraser is a hard-working and earnest young man but I wonder if it crossed his mind that others might wonder if the jobs they fought hardest for were their own. The Anna Bligh government has been on the nose for twelve months or more and the latest Galaxy poll in the Courier-Mail on Monday showed a 55-45 lead to the LNP on a 2PP basis.

On Monday Fraser claimed he would not be distracted by the poll and in his budget speech he recommitted the Government to what he called its “true task, providing Queenslanders with a chance at the dignity of work.” Given that the unemployment rate in Queensland is 5.6 percent, Fraser may be taking a gamble in his “first commitment” which does not address the other 94.4 percent of adult Queenslanders who either have jobs or who are not registered with Centrelink.

But Fraser did have good economic data to report. He spoke of a better than expected growth rate of 3 percent which was still “below trend” but was better than the national 2 percent rate. The recession-busting construction spree represented 7 percent of the State economy and 120,000 jobs with a predicted 2.75 percent increase in 2010-11. They will continue to pour money into infrastructure promising $17.1 billion this financial year though disappointingly, roads still get the lion’s share of the funds.

The State deficit has been reduced to $287 million which is well down on the $2.3 billion Mid Year forecast and a measure of how the resources boom has contributed to state coffers. Fraser said they are on target to deliver “a solid surplus” by 2015-2016 but the revised estimates suggest it will be happen a lot sooner than that.

Despite his money worries, Fraser still has the ability to dish it out to various constituencies. Pensioners do well as usual, a form of largesse that governments may need to reconsider as the country gets older over the next 20-30 years. Fraser gave them another $90 million 50 percent concession on Compulsory Third Party insurance and an increased electricity rebate worth $50 million. As worthy as these sound, I wish governments became more creative with their grants by either supporting a move towards the consumption of renewable energies and providing incentives to use more public transport instead of subsiding private vehicle use.

There are some sops to environmental concerns. There is $60 million for the popular Solar Bonus Scheme (which 22,000 people have signed up to already) $35 million for the Kogan Creek solar boost project (matching a similar amount from the Federal Government) to install a solar thermal addition to increase its capacity by 44 megawatts at peak solar conditions and improve plant efficiency.

The budget also has $300 million for education and training including funding for up to 316 new teachers and teacher aides and five new schools and 40 kindergartens. There is also $10 million for training in the booming Coal Seam Gas and Liquefied Natural Gas industries. There is an additional $72 million to provide disability support with good programs including autism services in regional areas, helping people with spinal cord injuries and transitioning disabled young people out of school. He also announced a new tax measure by excluding homes purchased through a disability trust from stamp duty. In Health the budget has increased from $5.35 billion to $10 billion in five years. The government will add 1,200 doctors, nurses and health professionals as well as building or upgrading 22 hospitals.

The government estimates that 100,000 people will move to Queensland in the next 12 months. That's a lot of people and Fraser said “we have to cater for that growth”. He announced a new Regional First Home Owner Boost, an extra $4,000 on top of the existing state funded $7,000 First Home Owner Grant to encourage people to move out of the South East. He also announced a $450 million new police academy as well as over 200 new police officers and spent $240 billion on yet another backwards looking project - the Gateway motorway upgrade south extension. Other roads to do well in the cash grab were the Port of Brisbane with $330 million, the Ted Smout Bridge to Redcliffe $315 million, the Forgan Smith Bridge in Mackay $148 million and the $190 million Port Access Road in Townsville.

Queensland’s 150th budget is much like the 149th that came before it. It is a carefully crafted grab-bag of token initiatives, old solutions and outright bribes that paper over the economic cracks but do little to address the State’s longer term needs: how to move to a 21st century economy as the population grows daily older. It will take a government with a lot more vision than the cautious Anna Bligh/Andrew Fraser administration to deliver on that promise. Such a government is nowhere in waiting in Queensland, however.