The elimination of the fuel subsidy announced in Tuesday’s State Budget was an economically correct decision, according to UQ Economists.
UQ’s School of Economics hosted a Post-State Budget on Wednesday June 17, with three of Queensland’s leading economists offering their views on the announcements.
The guest speakers were Mr Euan Morton, Principal of Synergies Economic Consulting, Australian Research Council Federation Fellow Professor John Quiggin, and Economics Professor and Associate Dean of Research John Mangan.
Head of School Professor Flavio Menezes said the State Budget, and also the recent Federal Budget, reflected that Australia had been affected fairly modestly by the global financial crisis.
“While in Queensland we’ve managed to avoid the horror budgets seen recently in Europe, our panel of experts made several important observations about Tuesday’s state budget,” he said.
With regards to public sector reform, some members of the panel felt the State Government had shied away from efficiency reforms in the public sector to increase productivity.
“There needed to be a reduction of tasks which were not core business and the Queensland Government had little potential to influence – such as global warming – and a concentration on managing resources effectively for the benefit of the Queensland people,” Professor Menezes said.
When it came to discussing the sale of public assets such as Queensland Motorways, Queensland Rail and the Port of Brisbane, views differed over whether such a sale would deliver benefits to Queenslanders.
“We came to the conclusion that, although there are potentially large benefits from the sale of QR, the complexities associated suggest that a badly orchestrated sale might result in negative outcomes,” Professor Menezes said.
The panel overwhelming agreed that eliminating the fuel subsidy was a sound economic decision.
“Originally introduced to partly offset the taxation of fuel by the Federal Government, the subsidy was poorly targeted with a fraction of the $500 million ending up in the coffers of oil companies and not a good use of scarce public resources,” Professor Menezes said.
He said many other areas of the budget were discussed – such as unemployment predominantly affecting youth and those over 55 - and further information could be found on the School of Economics website.
Media: Professor Flavio Menezes (07 3365 6242, 0409 154 656, f.menezes@uq.edu.au)
