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Volume 3 Number 1
Balancing act key to Queensland's infrastructure investment
Costello describing the task of returning Queensland's
economy to a position of strength as 'enormous', and
recommending a two-staged approach -- stabilising
the growth in debt and returning the budget to a scal
surplus by 2014--15; then restoring the state's AAA
credit rating by 2017--18.
In particular, the report notes the impact that
government-owned corporations (GOCs) are having
on the state's budget, with the 12 GOCs having a
projected debt of $19.8 billion as at 30 June 2012,
representing 32 per cent of total state-sector debt.
The response from the government has been swift.
In July, Emerson released the results of a
government review into Queensland Rail, urging
the GOC to refocus its attention on the delivery of
front-line services and identify savings within the
The review found that QR had been a substantial
drain on the state's nances, with head of ce staf ng
levels increasing 68 per cent since 2010 in the
communication, stakeholder and marketing areas;
122 per cent in the nance division; and 66 per cent
in strategy and corporate services.
'There is $4.53 million being paid to 12 senior
executives, each paid above the CEO level for
government departments,' Emerson says.
comparison, the Department of Transport and Main
Roads has only two senior executives paid at CEO
level for an organisation of similar size.'
Costello's Commission of Audit found that QR
poses 'a signi cant funding risk to the state' and
that in the absence of competitive market pressures,
'it is important to ensure that there are appropriate
incentives for QR to contain costs and manage its
business appropriately in order to limit the state's
Further reform was announced in the bulk water
sector in South East Queensland, with Seqwater,
LinkWater and the SEQ Water Grid Manager to be
merged into a new single supply authority, and the
Queensland Water Commission to be abolished.
While Costello's report states that privatisation is
a logical way to rein in state debt, State Treasurer Tim
Nicholls remains adamant that there will be no more
asset sales without an election mandate.
Responding to the Commission's interim ndings,
the government outlined a commitment to achieve
$4 billion in savings over three years -- $1 billion
more than was recommended by Costello's report.
The enlarged savings target follows a $1.66 billion
downward revision in the government's outlook over
the forward estimates, including an $812 million
downward revision to transfer duty revenue over the
next four years.
Measures recommended by the interim Commission of Audit into
Queensland's nances include:
• broadening the land tax base by removing or reducing exemptions
and concessions or an increase in mining royalties
• addressing the cost of recurrent expenditure by linking the previously
announced three per cent cap on growth in employee expenses in
• prioritising capital expenditure over the forward estimates, ensuring
that only the highest priority projects receive funding. Business cases
should include not only realistic estimates of capital costs, but also
whole-of-life costs such as operating and maintenance costs over a
period of 20 years
• undertaking a review of the government's holding of physical
and commercial assets and implementing measures to maximise a
return on those assets. The Audit states there is 'no justi cation' for the
government continuing to operate commercial business operations in
direct competition with private businesses, including Q-Fleet, Q-Build,
Goprint, CITEC and Queensland Shared Services. The Audit urges further
examination of avenues for private sector management of government
assets and delivery of business services to government.
ABOVE: Scott Emerson
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