George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Hansard source

It is a disgrace, Senator Williams. Compare it with this: when the Howard government was elected in 1996, the Howard government inherited a $96 billion deficit. But that $96 billion deficit was a deficit for the entire Commonwealth of Australia. It was the equivalent of a debt of $4½ thousand per Australian. The Queensland deficit today is about 80 per cent of what the entire national deficit was 13 years ago. It is, per capita, four times as great as the debt that the Howard government inherited from the previous Labor government. That is not the whole story. The $74 billion figure is revealed if you drill down into the Economic and fiscal update published by the state Treasurer, Mr Fraser, five weeks ago on 20 February. This is what the state government’s own document says:

Given an update of the Public Non-financial Corporations Sector has not been undertaken—

in other words, the government owned corporations—

it is not possible to determine a borrowing for the State as a whole. However, assuming no change in the Public Non-financial Corporations Sector, Table 7 provides an indicative view of borrowing as a result of the latest General Government estimates.

That $74 billion figure itself vastly understates the aggregate debt position, because it leaves entirely out of account the possibility of any increase in the indebtedness of the government owned corporations sector—which, as we all know, has tracked the general government sector in expanding its liability. The state of Queensland itself cannot tell the people how great the public debt is today. In the words of Mr Fraser’s document, ‘it is not possible to determine a borrowing for the state as a whole’, but we know it is projected to be substantially in excess of $74 billion.

It is quite extraordinary that debt could have been racked up to such an extent in the good times, because until the global financial crisis—taking effect in Australia these days as the Rudd recession—first emerged in the second half of last year, Queensland had enjoyed nothing but good times. The 2007-08 and the 2008-09 Queensland state budgets brim with optimistic predictions of continued prosperity. The Bligh government and, before it, the Beattie government rode the economic prosperity of the minerals boom. How do you do that? How is it that you reduce the state’s finances to such a shambolic position in the good times? Senator Sherry, whom I see in the chamber, is very fond of lecturing the Senate about how in bad times it is necessary for governments to go into debt. That may or may not be true, but what is plainly true is that in good times you make provision. In good times you do not accumulate debt; you reduce debt. In good times you pay off debt and accumulate surpluses, as the Howard and Costello government did, but the state Labor government in Queensland did the opposite; and, as a result, it brought the state’s finances to ruination.

In every year, in every budget for which the Beattie and then the Bligh governments were responsible, the level of state debt increased. In the 1999-2000 year, the first full fiscal year for which the Labor Party was responsible, the state debt was $10.123 billion. It increased the following year, 2000-01. It increased again in 2001-02. It increased again in 2002-03. It increased again in 2003-04. By 2004-05, it was up to $19.446 billion. The following year, 2005-06, it was up to $23.24 billion. In 2006-07, it had increased again to $26.68 billion. Now it is projected in the government’s own document to rise from $41.58 billion in 2008-09 to $56.65 billion in 2009-10, $66.452 billion in 2010-11 and $74 billion in 2011-12—and that excludes, as I said before, the debt of the government owned corporations. How do you do that in boom times?

As a result, the Queensland Treasurer, Mr Fraser, was on 20 February forced to bring down a minibudget. In that minibudget, he announced that there would be a budget deficit of $1.6 billion for that financial year. As a result of the accumulation of debt by the Beattie and Bligh Labor governments, the public debt interest paid by Queenslanders was at the start of this year approximately $2.4 billion per annum on that $74 billion figure.

But the news got worse, because, when Mr Fraser brought down the minibudget and placed on the public record the public debt projections of $74 billion, Moody’s, the credit-rating agency, slashed Queensland’s credit rating. Queensland was put on Moody’s watch list, and its credit rating was downgraded from AAA—the rating that any prosperous sovereign debtor ought to enjoy—to AA+. Imagine: Queensland, one of the two states, along with Western Australia, that has been propelled by a mining boom the likes of which Australia has never seen, has been put on the credit-rating agency’s watch list as a bad credit risk, and its credit rating has been downgraded from AAA status. What happened then? What happened as a result of the downgrading on 27 February of the Queensland credit rating is that, under the terms of the government bonds that had been issued, the interest rate went up by 0.4 per cent. In one stroke of a pen, Queensland is now paying about another $300 million a year in public debt interest. It is now paying about $2.7 billion a year in public debt interest.

How does that compare with what Queensland spends on other things? Well, Queensland spends about $600 million a year on child safety. We spend 4½ times as much on interest as we do on child safety. Queensland spends, in the current year, $8.3 billion on education. The public debt interest bill is fully one-third as much of every dollar the Queensland government spends on the entire Queensland education system. We spend about $941 million a year on emergency services. You will remember, Mr Acting Deputy President, Senator Ian Macdonald asking some very pertinent questions in question time today about how the response to the oil spill emergency in Queensland has been so badly handled. Could that have something to do with the fact that we spend three times as much on public debt interest as we do on our emergency services? We spend $8.6 billion on the Queensland hospital system. We spend fully a third as much on debt interest as we do on the entire health system of a state of 4.2 million people. What a disgrace! Finally, we spend about $1.57 billion on the police. We spend twice as much on debt interest as we spend on the Queensland police.

The fact is that tolerance of debt, willingness to go into debt, is encoded in the Labor Party’s DNA. Only if you were so negligent, so casual, in your attitude to debt, would it be possible to accumulate $74 billion of debt—$18,000 per man, woman and child—in a prosperous state like Queensland in the course of a mining boom. That was nowhere better illustrated than last week when the two former female Labor premiers of other Australian states, Ms Kirner and Professor Lawrence, issued a statement supporting Anna Bligh’s re-election as Premier. This is what Joan Kirner, the person who drove the Victorian economy into ruin, had to say about Anna Bligh’s fiscal management:

The other thing in Ms Bligh’s favour was that people now are more accepting of debt, she said.

Referring to her own experience in Victoria, she says:

People thought debt was a very bad thing back then, but everyone now is saying that you have to go into debt …

We know what the policies of Joan Kirner did for the Victorian economy with the attitude that in the bad old days people thought debt was a bad thing. Well, do you know what, Mr Acting Deputy President? Today, in 2009, there are still some people who think that debt is a bad thing. There are still some people who are not relaxed or casual or scoffing at the thought that it does not matter that you have run up a public debt in the most prosperous economy in the land of $74 billion in the middle of a mining boom. Those people sit on the Liberal and National party benches in the state parliament. (Time expired)