John Quiggin predicts Queensland public service would need to lose similar amount to 14,000 jobs Campbell Newman cut to cover promises

This article is more than 2 years old

This article is more than 2 years old

A reprise of the unheralded mass cuts to the Queensland public service of the Campbell Newman era is the only way the Liberal National party can pay for its 2017 election promises, according to a prominent economist.

John Quiggin, an Australian laureate fellow in economics at the University of Queensland, said “simple arithmetic” showed the LNP’s program of creating 500,000 jobs while cutting taxes, lifting spending and improving the budget balance “can’t be achieved all at once”.

“The promises made by the LNP can be delivered only through large, unannounced cuts in general government expenditure,” Quiggin said in a blog post on Tuesday.

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This was “consistent with the strategy adopted by the Abbott government in 2013” and a year earlier by Newman, who campaigned for election on limiting public service wage growth to 3% but ended up sacking 14,000 workers.

Another analysis by the public sector union Together shows that the LNP would have to find savings of more than $2bn a year until 2020-21 to reach a budget surplus on its preferred “fiscal balance” measure.

This is the equivalent of 22,000 public sector salaries of $110,000 a year, Together says.

The Newman government’s public service job cuts, including some that were reportedly weighed up with a “pain threshold ranking” in cabinet briefing papers, were a key trigger for an electoral backlash that threw the LNP from power in 2015.

The LNP shadow treasurer and campaign spokesman, Scott Emerson, responded on Wednesday by pointing to the party’s “public service of excellence” policy and “a commitment of no forced redundancies”.

Nicholls, who as treasurer under Newman oversaw the public service cuts and an ill-fated pitch to privatise state energy and port assets, maintained neither policies are on the card this time.

He said an LNP government would save money by cutting advertising and some unnamed programs.

But Nicholls would not detail how the LNP would pay for $2bn-plus in campaign promises until the party releases its costings two days before polling day on 25 November.

Quiggin said the LNP’s promise of 500,000 jobs “turns out to be a simple statistical trick” as it “shifted the goalposts” from the conventional three-year term to 10 years. An annual rate of 50,000 jobs was “only marginally greater” than job growth achieved under the Palaszczuk government.

Quiggin said the LNP plan would lower revenue by lifting the payroll tax threshold, freezing car registration fees, and lowering dividends from state-owned power assets.

At the same time it would increase infrastructure spending by up to $3bn a year, including $1.3bn for water projects, $500m in mining royalties for regional Queensland, a Gold Coast highway duplication that could cost $2.4bn and an uncosted new coal-fired power station in the state’s north.

But the LNP had announced no cuts to spending apart from “symbolic targets” such as the Safe Schools program and energy business executive bonuses that would yield minimal savings.

And it plans to run a surplus not on a “net operating balance” but a “fiscal balance”, which takes in up to $4bn a year of net capital investment.

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Increasing infrastructure spending would make this an even taller order, Quiggin said.

Labor’s campaign spokesman Cameron Dick seized on Quiggin’s analysis as a warning that “Queenslanders should be deeply concerned by the prospect of a Tim Nicholls-led LNP government”.

“In the past 24 hours Tim Nicholls has once again tried to dodge legitimate questions about how he will pay for his promises,” Dick said.

“That’s because Queenslanders know the only way Tim Nicholls can fund his $20bn in election promises is by selling public assets, cutting workers and slashing services across the state.

“We won’t be tricked by his glossy promises in an election campaign. We only need to look at his record.”