Tax changes and higher debt in Queensland budget

Queenslanders are being asked to accept higher levels of debt to ensure more jobs are created and services like hospitals are maintained.

Treasurer Jackie Trad has told Queenslanders they’ll have to swallow rising debt if they want more jobs and better hospitals.

Ms Trad delivered her second budget on Tuesday, announcing a surplus for 2019/20 but with a sting: mounting state debt.

It’s a $7.3 billion debt increase Queenslanders have to accept.

But Ms Trad says the rise in debt is manageable and necessary to keep people employed, help create more jobs and the state’s $350 billion economy turning over.

“We know how critical it is that government spends in regional economies,” she said.

“We need to be doing that and we are unapologetic about it.” Premier Annastacia Palaszczuk says the government must deliver services no matter where people live.

“We will continue to invest in everything that’s needed across Queensland,” she said.

“In terms of the ‘why’, (at the) last election we (talked) about putting people first and this is fundamentally about putting people first.” But it comes at a cost.

Total government debt is expected to grow from $71.4 billion in 2018/19 to $78.7 in 2019/20, and peaking at $90.7 billion in 2022/23.

The government has forecast a $189 million net operating surplus for 2019/20, and a $313 million surplus the following year.

But it has beaten its expectation for the current 2018/19 year, with a surplus of $841 million pencilled in, on the back of higher coal royalties. A $866 million cut to the state’s share of the commonwealth GST, a $1.3 billion bill from a spate of natural disasters and a drop in stamp duty revenue has created some problems.

Queensland Premier Annastacia Palaszczuk (left) and Treasurer Jackie Trad speak during the state government's 2019-20 Queensland budget media briefing in Brisbane. Picture: Glenn Hunt/AAP.

It will be countered by tax revenue, which is expected to increase by $1.159 billion in the next financial year and a boom in exports, which reached a combined $85.2 billion in the year to April.

Ms Trad has spared the coal industry from royalty changes but will take more from petroleum, along with land and payroll tax changes to make up for revenue losses.

Companies and trustees with holdings over $5 million will pay 0.25 per cent more in land tax, and the absentee land tax surcharge has been lifted from 1.5 to two per cent.

Foreign companies and trustees of foreign trusts will be hit with a new two per cent foreign land tax fee, while Australians and permanent residents will become exempt from absentee land taxes.

Petroleum royalties will be hiked from 10 per cent to 12.5 per cent from 2019/20 to raise an extra $476 million over the next four years, while payroll tax changes will rake in an estimated $341 million over the same period.

Originally published as Tax changes and higher debt in Queensland budget