The ongoing demise of public sentiment in the face of generally positive circumstances has plenty of observers baffled.
Interest rates are down, incomes are up, unemployment is low and the federal government is sending money to families, but people remain stubbornly pessimistic, according to the latest consumer confidence index.
This is a concern for the property industry because without confidence, markets won’t rise.
But the best clue as to why public sentiment remains so fragile is this: Queensland had the nation’s sharpest fall in confidence levels. Queensland, with all its assets, is more pessimistic even than struggle state Tasmania.
The explanation is simple. It comes back to the actions of the state government.
The behavior of Queensland’s new LNP government since being elected in March has been extraordinary. It’s almost as if government members, after spending so long in opposition, are driven by revenge.
Their slash-and-burn policies have left the populace quite giddy. Anything set up by the previous administration apparently needs to be torn down. Tens of thousands of jobs are being slashed from the public service.
Anything that can’t be immediately measured in dollar terms – like education, cultural and environmental programs – has been axed. The state’s breast-screening service, credited with savings thousands of lives, is being dismantled. If it’s not coal mining, get rid of it.
Perhaps the members of state cabinet sat down together and watched The Iron Lady (the film about Margaret Thatcher) before deciding how to deal with things. Apparently they believe, after a landslide win at the March election, that they can’t possibly lose the next ballot no matter what.
The impact on confidence is considerable. As one government worker put it: “Everyone is waiting for the axe to fall.”
One of the oddest pronouncements was to scrap plans to expand the Abbot Point export facilities near Bowen. Abbot Point’s capacity is under great pressure because of the expansion of output from the Bowen Basin mines and the emergence of a massive new source of coal in the Galilee Basin.
Decisions about expanding export facilities do not originate from governments. They emanate from the mining companies, which generate plans as demand rises. Government’s role is to approve (or not) the plans, but government ministers are not the prime mover in these ventures.
Gladstone’s export facilities are undergoing a multibillion-dollar expansion because a number of mining companies got together to instigate it and fund it.
Why would a government step in, uninvited, to stomp on plans that would create thousands of jobs? The only plausible reason is on environmental grounds, which is the last thing this conservative mob is likely to do.
It’s as if fragile egos in the new government felt the need to show they were in charge.
So, after five months in office, Queensland politicians have not yet managed to do anything constructive to generate jobs and confidence. Quite the opposite. They’ve been decimating both.
And, just to show how extensive this collective losing of the plot is, the state government is planning to charge journalists fees for the right to cover state parliament. The amount of money this will earn, around $30,000 a year, is pathetically small, but, hey, we’re in charge now so like it or lump it.
Queensland is not alone. Similar policies have been pursued in other states. Apparently the governments in Victoria, Tasmania and New South Wales believe we’re in a recession and that austerity is the only response.
It’s estimated that 30,000 jobs have been lost in regional Victoria since Ted Baillieu’s government came to office. I wonder how many country Victorians who voted for Terrible Ted are now out of a job.
The Victoria government is intent on cutting infrastructure spending, the opposite of what’s needed, and has snuffed out the one industry that was on a serious growth path in the country areas, the construction of wind farms, by passing laws that are tantamount to banning them. Clearly the Victoria government has a vision of a dirty energy future.
Victoria will soon be known as the recession state. While the state government is spreading its austerity message, major businesses are cutting jobs and closing down enterprises. The latest quarterly survey by the Victoria Employers Chamber of Commerce and Industry found businesses believe conditions are the worst since 2009, and two-thirds expect matters to get worse.
BIS Shrapnel’s Frank Gelber has urged the state government to lift infrastructure spending to make it a driver of growth, rather than cut it back.
But the only sector Baillieu and his chums want to encourage is property development. This is ironic, because the last thing Melbourne needs is more dwellings, given the over-supply of inner-city apartments and suburban house-and-land packages.
The path of the NSW government is similar to that of Victoria: slash the public service, trim airy-fairy things like cultural or environmental programs, eradicate the wind farm industry and focus on helping friends in the mining and property industries.
The cynical among may imagine that policies are being dictated by the source of donations to the Liberal Party. Shame on you.
Whatever their motivation, they’re hurting consumer confidence.
This article first appeared on Property Observer.