OPINION: Queensland mid-year fiscal review a sales pitch for privatisation THE rhetoric surrounding the state of Queensland finances has shifted markedly in the last 18 months. It is hard after all to sustain the doom and gloom hyperbole when you are forecasting a net operating result (this is basically the budget bottom line before accounting for all the billions of spending and borrowing in the GOC sector) of $1.9 billion for next (2014-15) financial year. Even on the government's preferred "fiscal balance" measure the state is heading for a surplus in 2015-16, underwritten by a combination of spending cuts, the beginnings of the LNG export boom and recovering land and transfer taxes. At this point economic growth is expected to roar to 6 per cent, also in no small part thanks to the LNG industry. Much of the budget improvement is attributable to an extraordinary turnaround in the public sector, with expenses growth reined in to levels no previous government in recent history has come close to achieving. Total expenditure growth was held to 0.2 per cent in 2012-13 in the General Government Sector against average rises of nearly nine per cent a year in the previous decade. So instead of a "power dive into the abyss" we now have a "black cloud of debt" - not to be confused with the Black Death, but apparently every bit as nasty and something that must be dealt with post haste. In this respect the Mid-Year Fiscal and Economic Review document can be seen as a sales pitch for a privatisation drive. The budget sails may have been trimmed, but now we have to get rid of the ballast, or as Treasurer Tim Nicholls put it yesterday: "the real issue that is holding Queensland back, that is preventing us from investing in infrastructure... is the burden of debt." This is true, at least in part, and bear in mind here that our "net" debt position (which takes into account all the financial assets on the state's books) has stabilised at around $40 billion, or about half the much more ominous (black cloud) $80 billion figure. Still, Nicholls has a solid case for privatisation - as did the Bligh government - given the capital hungry nature of many of the state's port and power assets. The key will be not to become overly obsessed with debt (the ratios are what is important, not a nominal figure) and divert every spare cent to repaying our bondholders. Rather the government must earmark a significant proportion to be ploughed straight back into new job-creating and economy boosting projects such as the Brisbane Underground. As former Premier Peter Beattie discovered to everyone's great cost, skimping on infrastructure spending for too long (think of the electricity network and the fast-tracked water grid) can come back to bit the balance sheet in really expensive fashion.