It seems like the global economy is heading for uncertain times gives the Brexit situation and the question I asked is “are we on a super slippery slide economically”? If you are reading this and don’t know what ‘Brexit’ means just turn on your television and within minutes you will be a Brexit expert.
While all the negotiations for Great Britain to exit the European Union are underway how stable will the economy be in Australia and how will it impact our local economy? The landscape is unknown and in the days ahead the Australian government may have to negotiate a minefield of issues. Do we have to panic? No! Do we have to be worried? No! Panicking and worrying won’t change the situation. I learnt a little saying early in life and I repeat it often at times like this – “Worry is like a rocking chair; it keeps you busy but doesn’t get you anywhere”. So true. We can be mindful of the global circumstances and attend to our personal and business financial situation, but worrying about the global situation won’t help or change anything.
At times like this I am a great supporter of the Australian Federal and Queensland State Government paying down debt. Unlike New South Wales State Government, who are predicting a $3.7bn surplus in the 2016/17 financial year, Queensland is dipping into public service superannuation and taking out $4bn from the $34bn defined benefits scheme fund. At this time the fund has a surplus of $10bn and the money will be used to pay down debt and for infrastructure.
This seems like desperate times for a government and one that could potentially set them and us on track to ride a super slippery slide into further debt. In an unstable global economy is this the right time to be raiding the QSuper piggy bank? It is a little like parents raiding their child’s moneybox or bank account when things get tough financially. Usually, the money never gets repaid – sorry kids!
Surely, such a step of raiding a superannuation fund is not the answer to a ‘blackhole’ in the budget? To understand how we are likely to feel with an ever increasing budget ‘blackhole’ in Queensland we need to look no further than Wet’n’Wild, Gold Coast. The ‘blackhole’ water slide has the full experience. It will send you “into an adrenaline pumping pitch black spiral of darkness”. If that doesn’t convince you then try the ‘tornado’ which will take you on a wild ride “right into the eye of the storm” before “hurtling through the eye of the storm to the calm waters below”. At least that is my hope that Queensland, the state where I was born and the state where I am now retired, will manage the eye of the storm and move us all into safer waters.
However, right now we are still in the “eye of the storm” and I have to ask a “what if” question – what if the $4bn taken out of QSuper can’t be repaid? What if the Queensland government plummets into further debt? And what if the economy becomes more volatile and the QSuper fund loses money given the current and future global financial situation?
One ‘blackhole’ that is a ravenous consumer of $’s in Queensland is the public service payroll. As at June 2014 there were 195,724 Full Time Equivalent (FTE’s) staff in the state. The number of Queensland employees as of December 2015 FTE was 205,529. There was an increase of 312 staff for the September 2015 quarter (0.15% increase). The government today is on a trajectory to spend its way into further debt through increasing the number of public servants which in 2015/16 was more than double the government’s budget projection. When I retired from the Queensland public sector in 2013 staff were being paid from borrowed money and yet the FTE numbers continue to increase. Does anyone have any idea of the rationale behind this type of economic management?
In 2009 Queensland lost its AAA credit rating. In January 2015, from my then local Landsborough Railway Station, the Premier Campbell Newman spoke to locals on the platform and told them he was working towards Queensland getting back its AAA credit rating in three years. Mr Newman did not get the opportunity to restore Queenland’s AAA credit rating as the following month Queenslanders voted in the Labor Party. Since that time the state continues to ride the super slippery slide into more debt. Now with the Brexit situation Great Britain is feeling the full force of leaving the European Union as they lose their AAA credit rating. Where will it all end? Politicians can’t continue to please “all the people, all the time” and hand out money that we don’t have. But then it seems that Queenslanders are not willing to put up with tough times while the state addresses the budget ‘blackhole’ and overspending of the past. I am not promoting a particular political party. What I am promoting is good economic management. Can we have our cake and eat it too – I don’t think so.