Queensland’s debt levels will balloon to almost $130 billion within four years, but the Palaszczuk government maintains that will still be lower than NSW and Victoria.
Delivering his first budget, after it was delayed by the coronavirus pandemic, Treasurer Cameron Dick said COVID-19 had dealt a hammer blow, confirming the state was staring down four years of deficits.
“The budget is in deficit because it is a pro-growth and pro-business budget,” he said.
“I make it clear today that the budget will only return to balance when the economy returns to normal.”
Asked if the mounting debt would ever be repaid, Mr Dick responded: “yes, it will”.
But trade tensions between Australia and its biggest trading partner, China, remain a “substantial risk” to Queensland’s bottom line, the nudget papers revealed.
Premier Annastacia Palaszczuk confirmed she had been advised that some Queensland ships were part of the flotilla anchored off the Chinese coast and said mining companies were fearful of what could happen “in the future if those trade issues aren’t sorted out”.
“What the mining companies are saying to me, that the last thing they want to see are mines closed in Queensland – that could have an impact on Queensland jobs,” she said.
“It’s a national issue. We have national cabinet next week and I’m quite sure it’ll be raised at national cabinet.”
The 2020-21 budget has assumed trade relations with China would “normalise” in 2021-22.
“We’re working on sustaining that relationship and we’re confident that our [Queensland’s] strong, positive relationship with China will continue but there are other factors, frankly, beyond our control,” Mr Dick said.
‘No surprises’ budget
He said Tuesday’s budget delivered on all of Labor’s election commitments and contained no new or increased taxes, or “surprises for Queenslanders”.
But fees and charges will rise above the rate of inflation.
Mr Dick said revenue was set to plunge $12.3 billion lower than what was predicted at last December’s fiscal economic update.
“That includes a $4.5 billion reduction in forecast tax revenue, a $3.8 billion drop in GST revenue and a $4 billion fall in royalty revenue,” he said.
In September’s fiscal economic update for the 2020-21 financial year, the government predicted the state’s debt would reach almost $102 billion by mid-2021.
On Tuesday, Mr Dick revealed Queensland’s total gross debt was forecast to hit $122.668 billion by 2022-23, and about $130 billion by 2023-24.
But he said that figure would still only be about two-thirds of NSW’s total estimate of $190.8 billion.
“While NSW and Victoria will have total debt levels exceeding 190 per cent of revenue by 2024, Queensland’s debt figure will be 174 per cent,” he said.
Money set aside for COVID-19 response
Speaking on the same day Queensland lifted its border restrictions with both Victoria and NSW, Mr Dick said the budget set aside an extra $360.5 million in funding this financial year for the government’s COVID-19 response.
That funding will support measures such as the cost of personal protective equipment, contact tracing, fever clinics, and running quarantine.
The budget assumes – in line with the Commonwealth – that a COVID-19 vaccine will only be widely available late in 2021, and that international borders will also remain closed until at least the “latter half of 2021”.
It has not factored in a “substantial second wave” of coronavirus in Queensland into the forecasts because of the “ongoing low number of active cases”, despite the Premier acknowledging a second wave could happen at any time.
No costing details on infrastructure spend
One of the centrepieces is $56 billion earmarked for capital works and infrastructure, with Mr Dick hailing it a “record spend over the past decade”.
But the budget papers do not reveal costing detail past the allocated $14.8 billion in 2020-21.
When asked about this, Mr Dick said he would seek advice.
Other measures include a $200 million investment for “skills of the future” including $25 million over two years for pre-apprenticeship support.
The government said the budget will also “strengthen” the ranks of frontline public servants, and takes into account that it will hire 5800 nurses and midwives, 1500 doctors, and 475 paramedics.
The public sector employee bill is set to hit approximately $26 billion this financial year, and approximately $28 billion by 2023-24.
Mr Dick said the government had already “achieved” 47 per cent – or $352.2 million – of its savings target for 2020-21 “through a range of measures”.
Queensland’s unemployment rate is expected to hit 7.5 per cent in 2020-21 before falling to a forecast 6.5 per cent by 2022-23.
“Today, across our state, there are more Queenslanders working than there were before the pandemic struck,” Mr Dick said.
“But the number of Queenslanders who want to work has increased higher still.”
The state government was due to hand down the budget in April, ahead of the election, but it was deferred amid the COVID-19 crisis.
The federal government and other states have also delivered delayed budgets.