Sunday, June 17, 2012

Audit Commission Report

The Queensland Audit Commission report attracted the expected media headlines but so far not much analytical comment. There are a couple of comments at Queensland Economy Watch and also this commentary with an incisive opening paragraph:
"The case for fiscal consolidation in Queensland was already strong, but the Commission of Audit just couldn't resist overstating it."
....... and concludes with:
"As such, the historical trends scenario was no more than a rhetorical flourish.
But it was a flourish that made it absolutely clear that the report, which called for tight control of public sector wage costs and sales of public assets to pay off debt, was above all a political document.
And that's a shame, because the flames of concern over Queensland's financial situation could have been fanned perfectly well with a bland recitation of the facts."
Much in the roport was to be expected particularly on public sector wage costs which  have also been a focus in NSW and Victoria. Also something noted here previously with regard to the Council budget which was similarly identified in a QTC report. There were a few interesting things on the revenue side, first up being a recommendation for a levy on all rateable properties.
The Commission recommends that the Government consider a general contribution
to the deficit reduction task from the broad section of the community who are owners
of either residential or commercial property.
A temporary deficit reduction levy applied to all rateable properties would raise
approximately $200 million per annum for every $100 of levy.
By applying to all ratepayers, the amount of the levy would be minimised.
While the levy would apply at the same rate across all properties, irrespective of
value, it will be progressive in that multiple property owners will pay the levy multiple
times.
The cheapest bedsitter unit paying the same as the grandest mansion would seem to challenge the concept of progressive taxation. However, I don't want to be accused of starting a class war on Frank Lowy! It's also only temporary which doesn't seem totally consistent with structural fiscal reform.

Perhaps Costello had his eye on the subsequent recommendation for broader land taxes? Land taxes were a key part of the Henry tax review. Mind you, wouldn't be doing myself any favours here with my own position to support a land tax if it was applied to a principal residence, but that also relates to the problem that the land valuation system is not as theoretically robust as Ken Henry may have imagined.

Update: Courtesy of a Possum Comitatus tweet a link to this blog on Queensland's finances apparently from a former senior bureaucrat.



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