Palaszczuk draws a blank on state debt
ANNASTACIA Palaszczuk has failed to recall how much debt her Government has repaid using state dividends in her first blunder of the 2017 election campaign.
The Queensland Premier dodged questions about the debt reduction figure, despite her promise to use the profits of state-owned business to pay off debt being a central plank of Labor's election manifesto three years ago.
Ms Palaszczuk refused to answer further queries about whether the state's ballooning borrowing bill, which is forecast to reach $81 billion in three years, would be a priority if re-elected.
Business groups and economists are demanding both major parties produce policies before the November 25 poll to reduce debt and reclaim the state's lost AAA credit rating, warning borrowings were adding pressure on taxes and leaving Queensland exposed to economic downturns.
When asked by The Courier-Mail how much debt had been repaid using the dividends from state-owned assets, Ms Palaszczuk responded, "I'll have to get that for you", before she shut down any further questions on the issue.
The blooper has drawn comparisons with the Premier's gaffe during the 2015 campaign when, during an FM radio interview, she could not recall the rate of the GST.
However, Ms Palaszczuk did insist Labor had succeeded in halting the debt trajectory forecast by the Newman government, saying borrowings were now $14 billion lower than predicted by the LNP.
"Of course, we are always going to do more," she said. "But let's be very clear, we have paid off $14 billion more than that was predicted by Tim Nicholls. We said that we would use the dividends from our assets to not only pay down the debt, but also to restore frontline services.
"Now what I have said very clearly is that the dividends from our energy assets will be used for making sure that our household bills will be no higher than inflation."
Ms Palaszczuk's comments sent her office scrambling for the debt repayment figure and eventually it claimed the Government had repaid $600 million by raiding additional dividends from electricity businesses. "These dividends would have gone interstate or offshore under the LNP's plan to sell assets," the Premier's spokesman said.
"This increase in the dividend payout ratio has no upward impact on electricity prices, which have been limited to rises of 1.9 per cent per annum on average over the three years."
However, at the last election, Labor promised to pay down $5.4 billion of general government sector debt over two terms.
That promise has now been abandoned, with the Government making a new commitment to redirect dividends into cutting electricity costs.
General government sector debt was reduced by $7.7 billion over the past three financial years after hitting $41.4 billion in 2013-14.
But this was achieved by raising more than $9 billion by flick passing debt on to the books of government-owned business and raiding funds left aside for public servants' long service leave.
The annual government sector interest bill has been cut from $2.3 billion to $1.7 billion as a result, but it has created new costs and will reduce future dividends.
Queensland's overall debt bill, including the borrowings of state-owned business, will hit $81 billion in three years with the Government promising to fully fund the $5.4 billion Cross River Rail.
After its "Strong Choice" policy to sell energy assets was rejected at the last election, the LNP has abandoned privatisation and is yet to indicate whether debt reduction would be a priority.
Economist Gene Tunny, principal of Adept Economics, said the state was at risk during future downturns and could face a fiscal crisis if government failed to adopt a disciplined approach to debt reduction. Debt was approaching $80 billion and needed to be below $50 billion to win back a AAA credit rating, he said.
"That's a direct saving in interest costs and that could be used to pay for education or health services or it could be used to further reduce debt."
He said there had been a loss of financial discipline since the mid-2000s that had allowed debt to balloon.
Chamber of Commerce and Industry Queensland led calls from industry for both major parties to commit to delivering ongoing surpluses, reduce debt over the next five years, cap public service growth and restore the state's AAA credit rating.
Advocacy general manager Kate Whittle said the more debt Queensland carried, the less money it had to spend on essential services like health, education, police and tax cuts.