Home > Economic policy > Horses vs Nurses

Horses vs Nurses

August 4th, 2012

Among the many cuts introduced by the LNP government (which promised, pre-election to improve services), some of the sharpest are in the area of hospitals. According to this report[1], Royal Brisbane&Womens and Metro North face cuts of $130 million a year between them, with much more to come elsewhere. But, according to the Premier, we are on the verge of the abyss, and everyone must make sacrifices.

Well, not quite everyone. Despite the emergency situation, Campbell Newman has managed to find $110 million to upgrade the racing industry statewide, including more than $30 million for the Gold Coast turf club, to build “a slick new bar and upgraded foyer and lobby entry”. I’m sure that if RBWH had an extra $33 million to spend, they could find a better use for it than a slick new bar and foyer.

(Hat tip @BigBadWolf1950 on Twitter)

Massive state subsidies for the racing industry are the kind of historical anomaly that would be up for abolition if the government and its Commission of Audit were serious. Historically, they derive from a period when the only legal form of gambling (apart from the Casket) was on-course race betting. When the TAB was established, decades ago, the racing industry demanded and got, a share of the take. But those days are long gone, and now we can bet on just about anything. If the racing industry needs money, it should get it from gate takings or broadcast rights, just like other sports.

fn1. News Limited, but likely to be accurate on a topic like this.

Categories: Economic policy Tags:
  1. Ikonoclast
    August 4th, 2012 at 11:34 | #1

    Various “industry” subsidies should be removed, particularly those for horse racing, car racing and tourism. I use the term “industry” loosely here as neither horse racing nor car racing are industries in any proper sense. They don’t make anything substantial and the entertainment “service” they provide (watching and gambling) is, on balonce, of negative economic and social value compared to the various negative externalities involved. Tourism may be of regional benefit but on any global reckoning, tourism is a negative activity as it damages what should be left untouched and preserved.

    Given that the above negative socio-economic value of these “industries” is the incontrovertible case, then it would make sense (without even being socialist about it or introducing pigovian taxes) to simply do the following. We should withdraw all government subsidies and allow these private entertainment “industries” to stand or fall on their own merits as businesses in the market place competing for the discretionary entertainment spending of the population.

  2. Mike Nolan
    August 4th, 2012 at 11:35 | #2

    Of course this would have nothing to do with some Government Ministers accepting free membership to Tattersalls as reported in the Courier-Mail on July 30.

  3. Julian Q
    August 4th, 2012 at 11:52 | #3

    I think about this every time I think of NDIS, which affects me personally, and the words come to mind “they shoot horses, dont they?”

  4. TerjeP
    August 4th, 2012 at 14:18 | #4

    I don’t regard tourism as a negative activity. If I did then I wouldn’t engage in it. But I love travelling and seeing new places. And slick bars and foyers are not without some appeal.

    I agree the government shouldn’t be funding the racing industry. Not that I’m that big on them funding (as opposed to financing) hospital services either.

  5. may
    August 4th, 2012 at 14:25 | #5

    was this on the list of policies put before the Queensland people at the last state election?

    yes?

    no?

  6. conrad
    August 4th, 2012 at 15:51 | #6

    “Massive state subsidies for the racing industry are the kind of historical anomaly that would be up for abolition if the government and its Commission of Audit were serious”

    Actually, in the long term, if they can encourage more gambling, it may well increase their revenue (not that racing is a particularly good source of it, but perhaps they’re just trying a bit harder) — QLD is far down in the amount it collects compared to other states. Many people may think that’s a good thing (probably most), but I doubt pollies do given what happened to the pokies at the federal level and given the limited source of revenue streams most state governments are willing to use.

  7. Ikonoclast
    August 4th, 2012 at 16:20 | #7

    @TerjeP

    Without needing to agree that tourism is a negative activity, you could agree, I think, that tourism along with horse racing and car racing should not receive public funding subsidies (corporate welfare in effect).

    As a first step to getting some agreement between a democratic socialist viewpoint (mine) and a libertarian viewpoint (TerjeP’s), I think we could divide public funding into two broad areas. These areas would be health, welfare and “social wage” on the one hand and private enterprise subsidies on the other. We shall call them A (health, welfare, “social wage”) and B (private enterprise subsidies) respectively.

    A democratic socialist wants A but not B.
    A libertarian want neither A nor B.

    Therefore they can agree on removing B.

    However, the libertarian might now want a quid pro quo on payroll tax if all private enterprise subsidies are to be removed. This would seem fair enough to a democratic socialist like me who disagrees with anti-pigovian taxes (like a tax on employment) on principle.

    Thus again we could agree, now removing business subsidies and payroll taxes. Next we could investigate if the result is revenue neutral or leaves a shortfall in revenue. The latter seems likely. In that case, the logical thing to do is investigate the scope for further pigovian taxes expecially those that would properly tax negative externalities. It seems to me that a democratic socialist and a libertarian would both agree that causing damage to someone else’s life, person, amenity or property (which is what a negative externality does) should not come without cost the damaging party and compensation to the injured party.

    This all illustrates that there is plenty of practical room for compromise between democratic socialism and libertarianism on certain matters. Of course, on other matters they will have to agree to differ and seek to win their point of view in the non-violent competition of ideas.

  8. TerjeP
    August 4th, 2012 at 16:49 | #8

    Amazingly simple isn’t it. I really don’t know why social democrats spend so much time pushing libertarians into the arms of conservatives when if they actually tried they could emphasise a set of reforms as detailed above that would readily win them over if pitched in a credible way. There is so much scope for social democrats to shrink the state in meaningful ways but they seem to just give up the whole notion without thinking about it. Thankyou for offering a refreshing alternative.

    Just a minor detail. When it comes to health, welfare and social wages the gap there also need not be so large. Free up the labour market pricing system in exchange for a modest universal social wage. Take the public beaurocracy out of health but keep the public financing and you would also have libertarians on side. At some point the libertarians would want more but in the interim you’d keep them on side and the conservatives could go suck eggs. The libertarians would still be critics but they would vote for you at least.

  9. Katz
    August 4th, 2012 at 17:39 | #9

    Libertarians would find many of Whitlam’s and Hawke/Keating’s major reforms congenial — Family Law Act, floating the dollar, ending institutionalised racism and sexism, abolishing conscription, weakening censorship.

    The ALP began to turn its back on left libertarianism when Howard ensnared the ALP into an electoral bidding war for “Howard’s Battlers”. This resulted in a rise of the nanny state, pandering to an unfortunate assortment of moral panics and adoption of heavy-handed, coercive administrative fixes, the most notorious of which is the deplorable, racist Intervention into Aboriginal communities. By gutlessness and a lack of insight the ALP is now playing Howard’s divisive, retrogressive and counterproductive game.

    If Labor listened more carefully to libertarians they might rediscover the roots of their post-1960s success.

  10. Ikonoclast
    August 4th, 2012 at 21:10 | #10

    @TerjeP

    I don’t want to “shrink the state” as dramatically TerjeP does but I am happy to shrink some unnecessary aspects of it. Again, these are aspects which I think the democratic socialist and the libertarian can agree on. It is particularly important to get the state (particularly federal govt in this case) out of churning activities. My definition of “churning” is the state taking and then giving back to substantially the same demographic. Churning is not re-distributive, it is just… well, churning. It imposes an administrative overburden of cost for no effective net result.

    A good example is middle class welfare. It has always seemed absurd to me that my wife and I pay taxes of x dollars per annum and then get y dollars back as family payments and various other kinds of middle class assistance. In addition there are various other tax deductions on the tax side of this shambles (there is no other word for it). It is abused by politicians of all colours to conspicuously curry favour with voters and thus buy votes, with the voters’ own money in most cases. This entire system of middle class tax deductions and middle class welfare needs to be rationalised and simplified with the express goal of eliminating churning whilst being as neutral as possible across the social spectrum in equity terms. (Redistribution is a separate issue and it will not do any good to conflate the elimination of churning with redistribution issues.)

    I suspect that in a lot of these cases, of state inefficiency and state activities that are at cross-purposes, the key political issues are these. A majority of people (not necessarily the “samely constituted” majority in each case) are in each single one of these cases against the irrational and inefficient nature of said case policy. However, for each particular case there is a minority special interest group which by special pleading, insider access, lobbying or political donations gets its way over the majority. And it always gets its way to the detriment of each majority which is separate to the minority who are for the special case in question.

    The political problem then is to mobilise the separate majorities in each case. This is difficult as people tend to feel strongly about what they want but only weakly and diffusely about what they don’t want, especially when the funding competition between the wanted and the not wanted is tenuous and indirect to perception.

    To quote Anthony Eden; “Everyone is always in favor of general economy and particular expenditure.” Eden used this expression to mock his Ministers’ advocacy for their portfolios but it can be applied in another sense to characterise the attitudes of voters. Their call for “general economy” is not politically effective enough precisely because it is not specific and comprehensive enough.

    Katz’s diagnosis of Labor turning its back on left libertarianism is spot on too, I think.

  11. August 5th, 2012 at 08:31 | #11

    One would have thought the Gold Coast turf club can cook for itself. Horse racing comes even lower down my scale than does football. I struggle with why any government would give money to a club (of any sort). There’d better be one helluva payoff, in the form of luring interstate money into Qld or something. (That is, if one considers the Gold Coast to be part of Qld – but that is another topic).

    Tourism funding, I’ll disagree with ikoclasty on that. There is a direct & beneficial outcome in promoting tourism. Domestic dollars get spent here, interstate & overseas money is attracted.

    For evidence by anecdote: Dropping one flight a week from Japan to Cairns led to boarded up shopfronts, closed businesses, redundant staff having to hump bluey to distant parts, etc etc.

    Properly directed, tourism promotion is most effective.

  12. August 5th, 2012 at 08:39 | #12

    Cutting hospital funding? Said fast one could almost assume that it means less doctors & nurses.

    Alas, due to Labor party incompetence (on one helluva grand scale) the Qld health system is having tonnes of money spent on it, yet isn’t half as good as when Sir Johannes Bjelke-Petersen ran the state.

    The erstwhile govt. was loading hay bales of cash into the health system. What did we get for it? People dying on hospital ramps.

    This is not a good look for the ALP (Goss/Beattie/Bligh) They deserve their ignominy.

  13. Hal9000
    August 5th, 2012 at 08:54 | #13

    @TerjeP
    The former government did just that, Terje, a decade ago. No more taxpayer funds for racing. This decision to turn the taps back on is an initiative of the Newman administration.

  14. August 5th, 2012 at 08:59 | #14

    Now some people might say that the state government shouldn’t take money away from hospitals and give it to the racing industry, but the racing industry needs money too. After all, the Gold Coast Turf Club needs a slick new bar and foyer and cheap tat doesn’t come cheap. I think there’s room for compromise on this and the obvious solution is to have horses perform surgery.

  15. Hal9000
    August 5th, 2012 at 09:00 | #15

    @Steve at the Pub
    The Queensland health system back in the good old days, SATP, had dying patients on verandahs being bitten by insects (Royal Brisbane), women in labour having their legs tied together until the doctor could arrive (Rockhampton), and s*xual abuse of mental patients (Townsville). Twice as good, you say? I say you haven’t got a clue what you’re talking about.

  16. rog
    August 5th, 2012 at 09:09 | #16

    @Steve at the Pub You are confusing cause with effect, the Japanese economy took another hit after Fukushima leading to shrinking of tourism ex Japan.

    Cairns has real problems, it was geared up when the Yen was high and Japanese were everywhere. Now that their economy has contracted and the $AU has doubled in value tourists are staying away in droves.

  17. August 5th, 2012 at 09:34 | #17

    @ Rog. I’m well aware of many other issues in Cairns. I was presenting an anecdote, not a comprehensive empirical study. Btw, as you will be aware, the Fukushima nuclear reactor event was in 2011, long after the event I was referring to.

    Back to the anecdote:
    The cause of the particular flight ceasing are another matter, the effect was not immediately noticeable in Cairns. That is my point.

    …. and not all of Cairns’ tourism problems are externally inflicted. (Again, this is another matter).

  18. August 5th, 2012 at 09:36 | #18

    “… was immediately noticeable…”

    Preview is my firend!

  19. TerjeP
    August 5th, 2012 at 09:48 | #19

    Ikonoclast – Careful, if you keep this up and people will accuse you of being my sock puppet.

  20. billie
    August 5th, 2012 at 11:36 | #20

    The Liberals have no shame. Putting race horses ahead of humans. Favouring the gaming industry over health and education. Well we know what their priorities are!

  21. August 5th, 2012 at 12:48 | #21

    Health & education have not exactly been known for their superior results under Labor. The liberals aiming for lotsa revenue from gambling taxes ain’t exactly a departure from Labor policy.

    There isn’t a discernable difference between the two parties on policy here, merely on the tactics used.

    Oh…. and on the face of it the liberals are less likely to squander money. But that will remain to be seen. However it shouldn’t be difficult, Labor’s left quite a low benchmark!

  22. Katz
    August 5th, 2012 at 13:18 | #22

    Why not square the circle and for a fee license gambling on mortality rate futures?

    It’s a win/win situation.

  23. TerjeP
    August 5th, 2012 at 17:03 | #23

    May – It looks like this was part of a policy announced just before the election.

    http://lnp.org.au/policies/grow-a-four-pillar-economy/rejuvenating-queensland-racing

  24. Ikonoclast
    August 5th, 2012 at 17:04 | #24

    @Steve at the Pub

    “Properly directed, tourism promotion is most effective.” – SATP.

    OK fine, but why cannot the tourist industry form a private association and fund tourist promotion itself? Why should the government do it?

  25. Fran Barlow
    August 5th, 2012 at 17:17 | #25

    @Ikonoclast

    More to the point, why should there be tourism at all? Isn’t it ecologically costly?

    OK, you probably can’t stop tourism, and the costs of trying would be high, but ought we not to withdraw all public support for it?

    That’s really the case for entirely privatising the tourism business.

  26. Ikonoclast
    August 5th, 2012 at 17:26 | #26

    TerjeP :
    Ikonoclast – Careful, if you keep this up and people will accuse you of being my sock puppet.

    There is little danger of that. I will never agree with low taxes, minimalist government nor retrenchment of the proper welfare state while market failure remains a persistent feature of our economy. I will always favour a mixed economy and sound regulation of finances and the free market. The model for me must always be of “freedom within bounds”. Individual freedom and market freedom can only be properly understood and implemented as “freedoms within bounds”. This is the only model that makes philosophical and empirical sense. Total individual freedom if fully exercised will always impinge on the freedom of others. Responsible freedom within society can never mean just doing whatever one likes.

    However, it is true that there are still many areas where democratic socialists with left libertarian tendencies and right libertarians can agree as I outlined above.

    In Australia, the greater problem with welfare actually exists with corporate welfare and welfare for the rich and middle classes. I agree 100% with winding this unnecessary federal expenditure back. If the quid pro quo is removing some of the taxes and costs that business finds irksome (like payroll tax) this would be fine. As a further example, I would want to see negative gearing removed but I would be happy to see the tax raising compliance costs of business (for example the costs of raising the GST for government) fully reimbursed at 100%.

  27. rog
    August 5th, 2012 at 17:36 | #27

    @Steve at the Pub

    Btw, as you will be aware, the Fukushima nuclear reactor event was in 2011, long after the event I was referring to.”

    tpThis is fast becoming one of those nonsense arguments in which the most proficient in nonsense wins.

  28. rog
    August 5th, 2012 at 17:45 | #28

    And I did mean to say – you win!

    Your website is a last of minor winged, are you able to rise above the petty point scoring?

  29. rog
    August 5th, 2012 at 17:46 | #29

    Winged = whinges

  30. Happy Heyoka
    August 5th, 2012 at 17:55 | #30

    It could be argued that the Queensland government has shrunk considerably over the years given none of the members have half the portfolios or the stature of Big Russ… but… $30 million for a bar!?! I’d be checking out who has brother-in-law in the construction business.

  31. John Quiggin
    August 5th, 2012 at 19:11 | #31

    @TerjeP
    “A policy announced just before the election” Like improving frontline services, and “public servants have nothing to fear”

  32. August 5th, 2012 at 19:16 | #32

    @ Happy Heyoka. You’re not wrong, at that it’ll come in at more than one of Gillard’s school sheds!

  33. TerjeP
    August 5th, 2012 at 21:50 | #33

    John – I’m not defending it. Just putting it on the table.

  34. TerjeP
    August 5th, 2012 at 21:53 | #34

    Ikonoclast – Interesting comment. Whilst you are on a roll what does the phrase “limited government” mean to you.

  35. Ikonoclast
    August 5th, 2012 at 23:06 | #35

    TerjeP :
    Ikonoclast – Interesting comment. Whilst you are on a roll what does the phrase “limited government” mean to you.

    It’s a vague term which can mean quite a few different things depending on context. It could mean anything from minimalist libertarian government to Australian Constitutional Government under the Westminster System and related conventions with an independent judiciary and oversight of a free press. (Okay, please don’t laugh at the free press bit. Not sure that happens anymore under the Murdochracy.)

    Sure, I prefer limited government of the form of Australian Constitutional Government to the unlimited government of a despot or a totalitarian regime. I just don’t like government to be excessively limited so that other forms of power, like that of corporate capital, begin to implement their own form of despotism.

  36. John Gardner
    August 5th, 2012 at 23:53 | #36

    SATP@30

    You’re not wrong, at that it’ll come in at more than one of Gillard’s school sheds!

    see these links for some comments re this nonsense:

    http://www.thepoliticalsword.com/post/2012/03/14/Nonsense-of-$8bn-BER-‘waste’-claims-exposed.aspx
    http://www.thepoliticalsword.com/post/2012/03/21/More-falsehoods-of-the-$8bn-BER-%e2%80%98waste%e2%80%99-claims.aspx

  37. Bring back Birdy at Catallaxy
    August 6th, 2012 at 06:34 | #37

    Billie @20, the LNP aren’t so much “putting race horses ahead of humans” as putting public inebriation ahead of public health.

  38. rog
    August 6th, 2012 at 08:15 | #38

    Racing is the ongoing celebration of the individual who against all odds becomes a winner. Winners are grinners with losers usually ending up as pet food. Public health is about giving everybody an equal chance whereas LNP appear to be focused on servicing the small group of winners.

  39. Jill Rush
    August 6th, 2012 at 12:11 | #39

    There is no money in Queensland to support people with disabilities or their families trial a National Disability Scheme but there is money for those who love to drink after a horse race. Can Do Campbell Can’t do things if they are for people who are women, the sick or have disabilities or engage in literature or Aboriginal it seems. It would be interesting to know why a state which is too broke to help the disabled in its own community can suddenly find this level of funding for those wealthy enough to run race horses.

  40. August 9th, 2012 at 20:30 | #40

    Campbell Newman’s claimed economic foundationsCampbell Newman’s claimed economic mfoundations

    12 by Greg Wood

    Economically moronic or grossly ideological? Which description best fits the Cando Newan government’s excuse for massive and cruel job losses and public service cuts? Here is an expose of Queensland Treasury’s base and baseless rationale for austerity.

    Melodramatic economic rhetoric frankly misleading

    The Qld Treasurer, Mark McArdle, appeared on ABC local radio today. He used the opportunity to re-iterate the litany of abysmal financial debt left to ‘Queenslanders’ by the previous ALP Govt. and the attendant need for austere severity by the new Government. In describing this dark legacy he included the debt held by Government Owned Corporations (GOC’s).

    Shortly afterward a caller to the station correctly identified the Treasurer’s description as incorrect and misleading. GOC’s hold debt within their balance sheets as a normal part of their commercial operations, as do all private corporations. Such debt levels are kept transparently and within thresholds deemed to be commercially sound and viable.

    Government corporation debts generate net income for Government

    Importantly, the interest on this debt is fully serviced by the commercial operation of the GOC. It does not bear upon the public purse. Moreover, the financial operations of the GOC that pay the interest bill also, in most cases, generate dividends into Consolidated Revenue. So this sector of the supposed ‘problem’ is in fact a net income to the Govt, and not a liability.

    What proportion does GOC debt comprise within the entire black mass of it that the Newman Government is ululating as the harbinger of impending State doom and a just cause for wholesale exorcism of public sector jobs and services?

    If the GOC debt is a substantial proportion of the whole, then the Newman Govt is being either economically moronic or grotesquely and deceitfully ideological. However, is it any better for people to lose their jobs and essential services to gross stupidity rather than to socio-economic eugenics?

  41. August 9th, 2012 at 20:37 | #41

    (Please remove previous draft, in which 2nd copy of single URL was accidentally included, Professor Quiggin.)

    Campbell Newman’s claimed economic foundations

    of 9 August by Greg Wood

    Economically moronic or grossly ideological? Which description best fits the Cando Newan government’s excuse for massive and cruel job losses and public service cuts? Here is an expose of Queensland Treasury’s base and baseless rationale for austerity.

    Melodramatic economic rhetoric frankly misleading

    The Qld Treasurer, Mark McArdle, appeared on ABC local radio today. He used the opportunity to re-iterate the litany of abysmal financial debt left to ‘Queenslanders’ by the previous ALP Govt. and the attendant need for austere severity by the new Government. In describing this dark legacy he included the debt held by Government Owned Corporations (GOC’s).

    Shortly afterward a caller to the station correctly identified the Treasurer’s description as incorrect and misleading. GOC’s hold debt within their balance sheets as a normal part of their commercial operations, as do all private corporations. Such debt levels are kept transparently and within thresholds deemed to be commercially sound and viable.

    Government corporation debts generate net income for Government

    Importantly, the interest on this debt is fully serviced by the commercial operation of the GOC. It does not bear upon the public purse. Moreover, the financial operations of the GOC that pay the interest bill also, in most cases, generate dividends into Consolidated Revenue. So this sector of the supposed ‘problem’ is in fact a net income to the Govt, and not a liability.

    What proportion does GOC debt comprise within the entire black mass of it that the Newman Government is ululating as the harbinger of impending State doom and a just cause for wholesale exorcism of public sector jobs and services?

    If the GOC debt is a substantial proportion of the whole, then the Newman Govt is being either economically moronic or grotesquely and deceitfully ideological. However, is it any better for people to lose their jobs and essential services to gross stupidity rather than to socio-economic eugenics?

  42. John G
    August 10th, 2012 at 10:15 | #42

    JQ. Earlier I posted some comments in response to SATP@30. As they haven’t appeared, I suspect they went into moderation due to an invalid email address. I have now corrected this and, hopefully, all will be well.

Comments are closed.