ECONOMIC management will take centre stage in this month’s State election as health and education play second fiddle to job concerns and a poor credit rating for Queensland.
UQ Professor Tim Brailsford (pictured) says whoever wins the election will need to address the job market, not only for social reasons, but to improve a budget that has taken a big hit from the economic downturn.
“As unemployment increases payroll cash collections fall. So it’s not only difficult because of social problems, but it will also take a hit to the budget, and the government just does not have a lot of money to play with,” says Brailsford.
He calls the downgraded credit rating a ‘political hot potato’ that Labor will need to explain along with a $1.6 billion budget deficit, but in the context of the global economy it should come as no surprise, and other states could likely find themselves in a similar position.
“There will be a significantly higher cost for funds borrowed, but this can’t be compared to other states yet. But I suspect that when they are assessed we will see credit downgrades across the states,” he says.
The executive dean from the faculty of business, economics and law says the ALP will go into the election on growth, jobs and infrastructure spending, whereas the LNP campaign will be based around the concerns of local businesses and cutting red tape.
“In the early stage the LNP seems to be more in tune with the concerns of local business, and appear to be embarking on a position that is positively geared around lessening red tape, and they’ve announced payroll tax exemption,” explains Brailsford.
“But they’ve got the problem that they’ve got no track record because Labor has been in power so long.”
He speculates that Labor on the other hand will likely explain itself by saying the current economic conditions are beyond their control and to a large extent this is true as no one could have predicted the depth of the downturn.
But regardless of who wins, the days of relying on the property market to boost government coffers are well in the past, and mining royalties are drying up, which will cause headaches for future parties in power.
“There’s been two big hits — one is the downgrade in property levies and taxes, and secondly there’s the relative illiquidity in the market,” he says.
With the mining industry we are in a position where demand has declined and we’re yet to see the outcome of global commodity contracts, which will likely fall when they are reviewed in April.
“We in Queensland, like in Western Australia, are suffering a price and volume decline, which will have a significant effect on capital expenditure and investment expenditure.”
History has shown that in troubled economic times sectoral issues like health and education play a lesser role in people’s voting behaviour and while these sectors pose great challenges, job creation is likely to be the main economic indicator that will influence the upcoming election.
A pre-election survey by the Chamber of Commerce & Industry Queensland (CCIQ) has found the next State Government will need to deliver a genuine vision and policies focusing on a strong economy if they want support from business owners.
President Beatrice Booth says the government needs a program that prioritises growth, responsible management, and an enhanced operating business environment, which will help the community as well.
“The single greatest thing a business can do to enhance the wellbeing of the state’s community is to provide secure ongoing employment,” she says.
“We must be highly active in bringing down the barriers for this to occur. CCIQ will be placing the management of the economy at the front and centre of its agenda for the next State Government.”
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