The pain of being like Spain

Premier Campbell Newman made headlines when he declared that Queensland’s economic position is similar to that of Spain. His remarks reminded some commentators of Paul Keating’s famous forecast that Australia could become a banana republic, a comment that caused him to suffer a fair bit of flak for years afterwards.

Of course, Newman knows, as we do, that Queensland’s position is nothing like that of Spain. His State has the backing of a strong Australian dollar, while Spain is tied to the Euro which is well on its way to being a terminal currency. Spain has 25 per cent of its population unemployed, whereas Queensland’s percentage is one quarter of that. Additionally, Queensland’s debt, and that of Australia, is miniscule compared with Spain’s.

So, why did Campbell Newman make such a dramatic statement?

I reckon that he used Spain as a symbol to emphasise, in unforgettable fashion, just what a precarious financial position he believes that he inherited when he became Premier.

In truth, it is worse that most of us imagined. Nevertheless, he is making a commendably strong attempt to do something about it, and is copping some high profile abuse for carrying out the strategy that he committed himself to do in his election campaign. Time will tell how effective these measures are in improving the State’s credit rating.

The task that confronts him is similar to the serious issues that all State Premiers face — they have limited taxing powers, and the taxes that they can apply are those that voters most resent, ie, taxes that discriminate against sections of the population rather than being borne by the whole, and doing so in a manner that curbs initiative. States also have limited powers to develop or rejuvenate industries, particularly when those industries are subject to policies that are made in Canberra, over which the States have little control.

For example, Tourism can be promoted effectively only on a national basis, as most tourists don’t have a clue what State they are in, nor do they care. Similarly, economic incentives for tourists and tourism investors can be realistic only if administered nationally. This means that no matter what Newman or Barnett or Bailleau or others do, it will provide only a short-term fix. These and other facts of life prove to us State Governments have no long-term future. Eventually, Canberra will be required to assume responsibility for their debts and allocate their administrative work to regional governments.

In the final analysis, we are all Australians. I happen to have been born in Queensland, but I make no claim to be a Queenslander. In fact, I am embarrassed to be called that. I am an Aussie.

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