TWO separate reviews of the audit of Queensland state finances led by former federal treasurer Peter Costello have concluded the report was neither independent nor an "audit" as such.

An examination of the Costello document by University of Sydney's Professor Bob Walker argues that it simply follows a very familiar and politicised theme: "The incoming government had inherited a financial crisis. The financial cupboard was bare. There was a high level of debt. There was a need to cut a range of programs and reduce the size of the public sector."

The Walker analysis, funded by the Queensland Council of Unions, is backed up by University of Queensland economist John Quiggin, who will today publish his own independent critique of the document.

Both analyses conclude that the Costello report focuses almost exclusively on the liabilities side of the Queensland balance sheet while understating assets, at the same time as shifting the goalposts when it comes to accounting standards to inflate the size of the problem.

Professor Walker's report to be handed down by QCU president John Battams this morning says "for the purpose of presenting alarming figures about debt", the audit report disregards the $28 billion in assets held by Queensland Treasury Corporation.

Both Prof Walker and Prof Quiggin also try to debunk some of the claims made about the rise of employee expenditure.



As Prof Walker notes: "In fact employee expenses have remained fairly stable over an 11-year period if expressed as a percentage of total expenses in the range of 34 to 38 per cent, peaking at 38 per cent in 2005-06 and falling to 35 per cent in 2010-11."

The Walker document also challenges estimates of debt and infrastructure spending, stressing that borrowings have been used for hard assets, not for operating expenses.

Prof Quiggin said, as well as shifting the accounting goalposts, the Costello audit actually relies for a large part on the Newman Government's own estimates which it attacks as being optimistic.

He and Prof Walker contend the Costello view of revenue outcomes is based on a never-ending financial crisis rather than a gradual recovery as the Queensland Treasury projects.

Originally published as State's Costello 'audit' trashed by experts