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Fiscal State of Origin: Which State Triumphs at Budget Management
High levels of debt and tax increases are unfortunately what some of the states have in common argues a new report released by The Centre for Independent Studies (CIS) today.
In Tax, Borrow, Spend: How the States Compare, CIS Senior Fellow Robert Carling, contrasts the recent performance of the states in fiscal management, using the indicators of debt, spending and taxation. The report ranks the states on current performance (09/10) and their trends over time (three years to 09/10.)
‘Evaluating fiscal management is very important as if it goes off the rails; everything else the government does is severely compromised,’ says Robert Carling.
‘No state is a clear success story, in fact most states have chosen more debt and more spending post the global financial crisis and this is unsustainable.’
Victoria is currently winning the budget management competition, however, if they keep going the way they are they will lose this advantage. South Australia is currently in the lowest position and this is partly to do with higher taxes and very high expenditure per capita.
‘Victoria and Western Australia are now the lowest taxing states and Queensland, once considered a low tax state, now has taxes just about average.’
‘New South Wales has the highest debt burden of any state and also above average taxes, this leaves NSW at number four in 09/10 rankings.’
All states recorded jumps in the number of public sector employees per capita in the three years to June 2010. Victoria, Western Australia and Tasmania are notable as they recorded the largest increases in this category.
When looking at all the states over the last three years, the overall trend has been one of deterioration. This is due to growth in spending and losses on financial assets due to the global financial crisis.
‘While none of the states are in a poor financial condition, they can also not afford to be complacent and continue increasing their spending as rapidly as they have in the last few years.’
Robert Carling is a Senior Fellow at The Centre for Independent Studies. He is available for comment.
