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Debt paid Labor's bills: audit

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Heads should have rolled over health pay

An inquiry into Labor's election whitewash is told there should have been a ministerial scalp over the health pay fiasco and that asset sales "destroyed the base of the Labor party".

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The former Labor government's capital expenditure program in 2011-12 was funded almost entirely from debt, according to the independent commission of audit to be handed down this morning.

Commissioners Peter Costello, Doug McTaggart and Sandra Harding will report that the previous state government's capital expenditure had reached a point where 96 per cent of the 2011-12 program was paid for with borrowed funds.

The proportion of capital spending in Queensland - on assets and long-term projects - funded by debt had risen from 34 per cent in 2005-06 to 96 per cent in 2011-12, according to the audit.

Labor's debt increased substantially after 2005.

Labor's debt increased substantially after 2005.

Between 2006-07 and 2010-11 - while government expenses grew at an average of 10.5 per cent - government revenue grew by 6.9 per cent, the audit will reveal.

Treasurer Tim Nicholls said the figures showed the previous Labor government's spending program was unsustainable.

"The report is sober reading and reveals the state had been living beyond its means prior to the global financial crisis and the 2011 natural disasters," he said.

Peter Costello's appraisal of the former Labor government's books paints a damning picture.

Peter Costello's appraisal of the former Labor government's books paints a damning picture. Photo: Paul Rovere

In its 2011-12 Mid-Year Economic Review released in January, Labor showed capital purchases of non-financial assets of $25.34 billion over three years from 2011-12.

Borrowings over the four -year forward estimates from 2011-12 would increase by $25.534 billion, Labor's Mid-Year Review document shows.

Labor said this spending allowed it to maintain employment levels in the global financial crisis.

Premier Campbell Newman has called an emergency cabinet meeting this morning to brief MPs before the audit is handed down by former federal treasurer Mr Costello and Mr Nicholls at 10.45am.

After the LNP won the March state election , it commissioned the audit to fast-track debt reduction so the new government could regain Queensland's AAA credit rating.

However in January, Labor predicted a $60 million surplus in the 2014-15 financial year - 12 months ahead of previous estimates.

It then predicted net savings of $737 million over the four-year estimates, based on a series of budget steps.

They included saving $506.5 million by deferring the Queensland Police Academy at Wacol and saving $150 million a year from 2013-14 by extending the Voluntary Separation Program to reduce the public service.

The LNP during the 2012 election campaign also said it would bring the Queensland budget back to surplus by 2014-15.

Mr Nicholls said he believed the economic recovery task was tougher than predicted.

"The magnitude of the task is substantially larger than Labor let on," he said.

After yesterday outlining where $186.5 million in cuts had been found since the LNP won office in March, Mr Nicholls declined to indicate whether asset sales or asset leasebacks may be considered by a future LNP government, as has happened in other Australian states.

"I anticipate it will raise a number of issues for the government and for the broader community to consider in terms of the choices that have to be made if we are to undertake a fiscal review task," he said.

A further mid-year budget update is expected to be held between today's audit funding at the September budget, Mr Nicholls said.

70 comments so far

  • looks like when you sell your assets you no longer have an income

    Commenter
    max
    Date and time
    June 15, 2012, 5:58AM
    • Newman has already said he is going to sell assets in CBD Brisbane, so he can rent a new castle.... AND ha has decreased revenue by firing everyone except his mates. Do you think that they may make it worse?

      Commenter
      Phorse
      Location
      Rosewood
      Date and time
      June 15, 2012, 6:55AM
    • The assets you are referring to are land assets, which only appreciate in value, they do not actively generate an income for the government. They are working from the same playbook as a company that is struggling with it's debt load – disposing of non-profit making assets including pieces of it's land portfolio. It's a tried and true strategy that works.

      Commenter
      Lollerskates
      Location
      Brisbane
      Date and time
      June 15, 2012, 8:11AM
    • If Newman would like to sell / lease the land at the start of George Street I will put together a consortium and demolish what is there and put up three 70 story towers with park land opposite, with a chamber able to seat 89 with room to expand , auditorium, media rooms, 450 bed hotel and reserved serviced rooms for a minimum of 89 with room to expand.

      There will be a shopping centre with free 5 minute parking a heliport & Police beat.

      It will be a gated community with 24 hour patrolled & armed guard towers with infra red detection.

      The lease will run for 75 years after which the Lease holder relinquishes all rights and repairs to the Crown.

      Readers of Bristimes get behind me and help push for this because it is a very good deal for me.

      Commenter
      J. Fraser
      Location
      Queensland
      Date and time
      June 15, 2012, 9:41AM
    • @Lollerskates - land generates an income, either through rent or through saved rent. Capital value is only part of it. You sell land, you either lose the income from that land or you need to pay rent whereas you didn't need to previously.

      Commenter
      James from Brisbane
      Date and time
      June 15, 2012, 11:07AM
  • Andrew Fraser always reminded me of a kid on work experience. But Beattie started the rot when he nearly bled Energex dry. To get out of jail he resorted to "world's worst practice" by copying the now disgraced Enron retail model, which has proven to be a monumental disaster.
    Beattie's actions stripped Energex of its ability to maintain the network which is now coming home to roost after years of neglect.
    The Labour government was an ass from the get go. It remains to be seen if power corrupts the LNP to the same degree.

    Commenter
    Ron
    Location
    Paddington
    Date and time
    June 15, 2012, 6:05AM
    • Doesn't matter how cynical or clued up the public are to the 'budget black hole' trick, new governments will routinely pull it out.

      Commenter
      berihebi
      Date and time
      June 15, 2012, 6:21AM
      • Queenslanders will be delighted to learn the bill for Me-n-Four-Twenty Hired Guns to deliver Pancho's Great Big Prediction is an adjusted for flatulence $700 thousand Queensland Taxpayer Dollars.
        For maintenance, repairs or parts, call us on 24/7 French Rivera. Immediate Service, Satisfaction Guaranteed.

        Commenter
        Geronimo
        Location
        Yippee Yi Yo
        Date and time
        June 15, 2012, 6:23AM
        • Perhaps we could have got Fraser or Bligh to do it for 10% of that number. They could startle us all by declaring "there's nothing to see here, move along!"

          Commenter
          Tony
          Location
          TBar
          Date and time
          June 15, 2012, 7:41AM
        • I have to say $700k doesnt sound like much considering the amount that Mr Beatie and Ms Bligh did as damage. I would like to see them held accountable instead of collecting even more tax payers dollars. I hope they are both ashamed of themselves.

          Commenter
          wesone
          Location
          Ashgrove
          Date and time
          June 15, 2012, 9:06AM

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