Queensland Treasurer Tim Nicholls has just brought down his first budget, following the announcement by Premier Campbell Newman of massive public service job cuts justified by apocalyptic rhetoric. Yet apart from those job cuts, the budget (in combination with measures announced previously) doesn’t show much in the way of fiscal discipline. Among the most glaring examples
* An $80 handout to all households, with no targeting, nominally to offset water bills
* A previously announced freeze on electricity prices for households, paid for out of general revenue
* The replacement of the $7000 first home buyers grant with a $15 000 grant for buyers of new homes
* Handouts to tourism, racing and other sectors
Measures like this are par for the course for state budgets, but not what you’d expect from a government faced with a fiscal crisis, comparable to Greece or Spain.
The government has fiddled at the edges on revenue, but is doing nothing (or even adding to the distortionary concessions) on payroll tax and land tax.
In essence, the government is relying almost entirely on cuts to the public service, focused on the health sector. This is a high-risk strategy to put it mildly. It may well be that the health bureaucracy is bloated and inefficient, but that doesn’t mean that creating a new layer of regional management is going to improve things, especially when their first task is to implement arbitary cuts in the number of nurses and other employees. Campbell Newman says his promise that “frontline jobs are safe” now means “frontline services won’t be affected by job cuts” but this is just wishful thinking. There hasn’t been any analysis of how to improve efficiency, just an edict that numbers need to be cut.
In these circumstances, it’s virtually inevitable that waiting lists will blow out. And inevitably, when you have long waiting lists, people will die waiting. At that point, the question will be whether the government can hold its nerve and admit that it was lying about the frontline services, or whether we’ll see expensive panic measures to fix the problem.