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A Labor treasurer who knew how to say no: We may never see his like again

Insights

Keith De Lacy, who died last week, was that rarest of things – a Labor treasurer who could say no, writes Robert MacDonald

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When Wayne Goss led the Labor Party to victory at the 1989 state election, he immediately faced a huge problem – how to win the confidence of a wary Queensland business community.

Joh Bjelke-Petersen had spent decades demonising Labor as evil, big-spending socialists.

Labor governments in Victoria, South Australia and Western Australia had also recently suffered financial crises and scandals, thanks to the buccaneering behaviour of state-owned financial institutions.

Goss urgently needed to convince Queensland industry his new administration would be fiscally responsible and pro-business.

Enter Keith De Lacy, the one-time underground miner, tobacco farmer and newsagent, who died last week and who served as treasurer for the full six years of the two Goss governments.

De Lacy quickly revealed himself to be a rare creature – a parsimonious Labor treasurer who could say no – not just to newly-in-government backbenchers champing at the bit to spend, but also to businesses looking for a hand-out.

“Our commitment to financial responsibility is unshakeable,” he declared in his first budget speech in September 1990.

“Financial responsibility means that we must live within our means, and not resort to the easy option of tax increases when things are tough.

“Through unprecedented discipline on our outlays, the Labor Government has stayed out of the pockets of Queensland families and Queensland business,” he said nine months into the Government’s first term.

De Lacy maintained the financial discipline in the years to follow.

By the time of his last budget speech in 1995 he said this:

“The 1995-96 State Budget is the sixth budget delivered by the Goss Government, and it reaps the rewards of six years of hard work and commitment to fiscal discipline.”

Queensland had achieved zero net debt.

“This effectively means we have paid off the family home,” De Lacy said, just in time for a self-declared “big spending” pre-election budget.

Even the new Rob Borbidge-led Liberal/National Party administration grudgingly acknowledged De Lacy’s financial management after it won the 1996 election.

“Queensland’s strong asset position was not achieved overnight,” new Treasurer Joan Sheldon said in her first Budget speech in 1996.

“It has its origins in the 1970s and 1980s and developed over many years, from a basic formula pioneered by previous National and Liberal Party governments in this state.

“To give credit where credit is due, the previous Queensland Government played its part, but simply ran off the rails in its last twelve months in office.”

I saw De Lacy’s tight-fisted approach up close.

For most of De Lacy’s time as Treasurer I was working in Wayne Goss’s office, with the fancy title of “Business Policy Advisor”.

I’d been hired out of financial journalism to help bridge the gap between the new Goss Government and a suspicious local business community.

I quickly discovered that many in the private sector, whatever their anti-socialist sentiments might have been, were always on the lookout for a leg up from government.

I also quickly discovered that De Lacy’s inclination, and Goss’s, was to say no. Neither was a soft touch.

Treasury would only hand out money if its models said it would get the money back in time by way of higher payroll taxes, increased local spending or the like.

De Lacy offered his business-development philosophy in his first budget speech in 1990:

“In general, the Government believes that Queensland business is not looking for special assistance programs from Government with hordes of bureaucrats picking winners.”

The big-spending Palaszczuk Government could do with a De Lacy right now.

It signalled its expansionist, big-government approach from the start when it appointed Jackie Trad as Treasurer – a social reformer in charge of the money.

Public service numbers and public debt have soared, necessarily so says the Government, to restore services slashed by the Newman administration and to recover from the pandemic.

Even if you accept these arguments, it still doesn’t explain away the Palaszczuk administration’s sharply different approach to industry development.

The Goss/De Lacy strategy was to create the right business environment by keeping taxes low and government spending under control.

Its direct industry assistance, as noted above, was limited.

The Palaszczuk Government, by comparison, has handed out hundreds of millions of dollars in grants and other support to encourage business development.

It has launched seemingly dozens of economic and industry support programs, from its $750 million Advance Queensland initiative to a hydrogen industry development scheme.

This all might work out for the good in the end and show that an interventionist government directly investing in companies was exactly what these times called for.

But the basic rules remain. When governments spend money they have to find it somewhere, through taxes or savings or borrowings.

And if they’re investing directly in private sector projects, they’re putting public money at risk.

The current Queensland Government could definitely learn something from the De Lacy era and not just how to be careful with money.

One of the few times De Lacy dropped his guard was when he agreed to use $8 million or so of public money to relaunch struggling, low-cost local airline, Compass.

The state was recovering from a recession at the time and according to De Lacy, “we believed that it was worth a go to stimulate the economy and our tourism industry”.

It might have seemed like a good idea at the time but it didn’t work. The company soon collapsed. The money was lost and De Lacy returned to his parsimonious ways.

 

 

 

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