A blatant and cynical vote-buying budget

Vote-buying measures before difficult elections are hardly without precedent, but the Queensland state government’s drip-feed campaign over recent weeks is more blatant and cynical than any this budget watcher can recall.

This Tuesday’s budget added a few more measures and took stock, but there is undoubtedly more to come from a desperate government in the four months remaining before a state election the polls say it will lose.

The politics turned bizarre with an unprecedented statement from the leader of the LNP opposition last week that if the party wins the election it will leave in place everything that is in this budget — without at that time knowing its contents. He has since ’clarified’ what he meant, but the impression remains that the opposition is determined to present the most microscopic of small targets.

In the process, the opposition is abandoning its role and responsibility, letting the government off the hook and potentially boxing itself in as a new government with no room to maneuver or leaving itself open to the charge of broken promises.

The fiscal outlook was already deteriorating before the giveaways of recent weeks, which have just made the outlook a bit worse.

The key to the background is that the government has enjoyed a three-year revenue bonanza from mining royalties, driven by exceptionally high coal export prices and supercharged by a massive increase in coal royalty rates in 2022 structured to make the most of temporarily elevated prices.

That windfall is now ending, ripping the band-aid off the fundamental weaknesses that were there all along — particularly the rapid growth of public sector employment and recurrent expenditure. Add in the giveaways and large dollops of infrastructure spending, and the outlook is troubling for a state that once prided itself on fiscal responsibility.

In fact, Queensland fits into a mosaic of fiscal management in Australia that points to diminishing standards of restraint, discipline and responsibility across the board.

The high standards that applied for an extended period beginning around the mid-1990s both federally and in most states and territories have been watered down or abandoned at different points, most starkly in Victoria. And it is not clear that voters comprehend what is happening any longer — or care.

Queensland is no exception to the swing of the fiscal pendulum towards permissiveness.

Critiquing this budget from a perspective of expenditure restraint, balanced budgets and low debt, it is a turkey shoot.

There are a few small but capricious tax measures as well as expenditure measures that represent a waste of public money. The vote buying is so blatant it is hard to know where to start the critique.

Is it the $1000 lump-sum gift to every household marketed as a ‘cost of living rebate’ or the 50-cent bus and train rides for a trial period that just happens to straddle the election?

Such measures reek of cynicism and cost $3.7 billion in 2024-25 but they are at least one-off costs. Despite that, the budget projections are anything but reassuring.

The net operating balance plunges back into deficit in 2024-25 before a surplus re-emerges in 2026-27, but only because growth of expenses is assumed to moderate sharply from the past reality of rapid growth. The total fiscal balance (after capital expenditures) remains in deep deficits totalling $31.7 billion over the next four years.

As a result, debt is on a steep growth path. The royalty windfall enabled Queensland to hold down its debt in recent years but that is about to change.

Queensland will catch up with other states and territories over the next four years as its debt grows more rapidly. Over that horizon, it will far exceed Western Australia’s debt ratios and narrow the favourable gap it currently enjoys relative to other states and territories, although Victoria will remain by far the one most weighed down by debt.

It remains to be seen what Queensland voters make of all this.

It is fair to say that most voters are not fixated on fiscal indicators, but they do absorb enough information to sense when a government is mismanaging. Whether they no longer care — or simply attach more importance to other issues — is another matter. Their votes are less likely to swing against the government on fiscal management if they don’t know what the opposition would do differently in government.

As for the current government’s vote buying campaign, we will never know how many votes it shifts, but if it appears to have succeeded in keeping the government in office after the October election this will be another worrying pointer to how much Australians have become dependent on government.

Robert Carling is a Senior Fellow at the Centre for Independent Studies and a former IMF, World Bank, and federal and state Treasury economist. 

Photo by Edmond Dantès.