Queensland’s debt level will hit more than $100 billion by the middle of next year, up $18 billion from what was expected before the coronavirus pandemic hit.
Key points:
- Debt level before COVID-19 hit expected to be $84 billion
- The budget plan is the only major economic update for Queensland ahead of the state election
- Labor has said it will unveil its full budget in November if elected
The state government’s fiscal economic update for the fiscal year 2020-21 revealed that state coffers have been hit by a combination of increased borrowing and falling revenue, pushing up debt levels projected at nearly $102 billion.
It was expected to be around $84 billion for this financial year, before the health and economic crisis hit.
State revenue is expected to fall by around $6.8 billion in fiscal years 2019/20 and ongoing.
The state’s net income will also lose its slim projected surplus of $151 million in the 2019-20 fiscal year, falling to $5.9 billion in the red.
Queensland Treasurer Cameron Dick said it was the government’s responsibility to increase borrowing, to help the state weather the economic storm of COVID-19.
“When the private sector collapses, the government must rise up,” he said.
“It is appropriate that we do this to support Queensland’s economy and jobs.
“The outlook is undeniably challenging and challenging.”
Total debt includes public enterprises.
The treasurer also admitted that the level of debt could worsen, as economic conditions change.
$11 billion COVID stimulus
The budget plan is the only major economic update the government will release ahead of the October 31 national election.
Due to economic volatility, the government said it was unable to provide a four-year financial outlook.
But Mr Dick has promised Labor will reveal a full budget in November, if he is re-elected.
He also announced an additional $4 billion in borrowing to be spent on coronavirus economic stimulus, including $500 million to build more renewable energy projects and $500 million for a fund for small businesses.
This brings the government’s total COVID economic stimulus response to $11 billion.
The treasurer said historically low interest rate levels and a debt reduction plan to repay $3 billion over the next four years would keep government borrowing at a sustainable level.
Mr Dick denied that the extra money would be used as an election campaign fund.
He also said the government could not rule out a tax increase in the future, but stressed that it had no plans to increase household spending.
“(But) I can’t rule out indefinitely what the revenue position might be.”
Queensland’s unemployment rate is also expected to hit 8.5% by mid-2021.
It was expected to peak at 9% in the December 2020 quarter.
At the same time, the public sector has continued to expand, adding around 3,000 full-time positions over the past year.
Labor ‘will tax Queenslanders’
Shadow Treasurer Tim Mander said the economic crisis was no excuse to plunge the state into record levels of debt.
“Today the treasurer did not rule out new taxes in the future,” Mr. Mander said.
“Obviously their plan for the future is what all Labor governments are doing, which is to tax Queenslanders.”
Mr Mander also promised that an LNP government would stabilize the state’s debt level, but did not reveal how he would pay for any of his stimulus promises.
“There will be no increase in the debt level of Labor,” Mr Mander said.
“One of our fiscal strategies is to stabilize this debt.”
Mr Dick said there would be no forced redundancies but a number of government agencies would be combined to reduce duplication of roles and “red tape”.
This included the abolition of the Public Safety Business Agency, with staff to be reassigned to the Queensland Police Service.
The Queensland Productivity Commission would also be incorporated into the Queensland Treasury.
