Budget 2018: Queensland’s upcoming State Budget will be nothing like Scott Morrison’s

FEDERAL Treasurer Scott Morrison’s third Budget, handed down this week, is an artful example of what to do when you’re facing re-election. Just don’t expect the same from Jackie Trad when it’s Queensland’s turn in June, writes Steven Wardill.

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OVER to you, Jackie Trad.

Federal Treasurer Scott Morrison’s third Budget, handed down this week, is an artful example of what to do with a pre-election fiscal blueprint.

The centrepiece is a seven-year plan to cut taxes with immediate relief for low and middle-income earners and a promise of more to come for higher wage earners.

It ticks boxes like aged care and defence in a pain-free approach that’s come courtesy of improved commodity prices, strong jobs growth and previous spending restraint.

Yet it eschews the debt problem which we were told was an emergency just a few years ago, allowing the nation’s debt bill to balloon to almost $600 billion in the next four years.

And while the Coalition talked big about building, it will be years before funding kicks in for some of the newly promised projects.

Queensland’s current Labor government is at the start of an election cycle, so don’t expect a big spending Budget from Jackie Trad in June. Picture: AAP/Dan Peled

The contrast with the Budget that the Queensland Treasurer will bring down on June 12 will be illuminating.

For a start, the Palaszczuk Government is hiking up taxes rather than handing cash back.

Four new taxes, announced during the recent state election to fund Labor’s election promises, will come on to the Government’s books.

They include an extra impost on foreign property buyers, a new land tax sting on big property holders and extra duty on high-priced cars.

While obviously targeted at those with deeper pockets, these increases won’t see Trad swimming in cash.

Yet the fact the Government is willing to wear the odium of increasing taxes for a relatively small reward is instructive after enjoying a 13 per cent improvement in revenue last term.

In contrast to the extra money that Morrison is raking in, Labor is looking at revenue growth being just 5 per cent over the next three years.

Coal may yet deliver an extra sugar-hit with Queensland Treasury’s royalty assumptions
based on conservative prices that have been routinely exceeded by exporting miners.

However, Labor is a dead certainty to overshoot the low expense growth that Treasury has forecast for the next three years after adding $4 billion to the public service wage bill and bolting on pay increases in excess of 2.5 per cent last term.

The crunch between subdued revenue growth and inescapable expenses gives Trad little wriggle room for attractive new spending.

Yet unlike Morrison, Trad is at the start of the electoral cycle.

Rather than spending sprees and giveaways, the Queensland Treasurer’s priority will be delivering on Labor’s election promises in her first Budget while hoping to be blessed like Morrison with a cash surge before the next state election, to be held in October 2020.

However, the inflexibility of the Government’s position is laid bare by the fact it’s having to borrow again.

High commodities prices may help Labor’s fiscal position, but at the moment revenue growth remains at just 5 per cent over the next three years.

Trad is actually funding her infrastructure priority, Brisbane’s $5.4 billion Cross River Rail, rather than just talking about it.

But she’s raking up debt to do it.

Little wonder Trad was so livid that the Turnbull Government baulked at helping fund the 10.2km inner-city rail route and robbed the state of funding in other areas, such as indigenous housing.

“(The Federal Budget) ignored critical projects like Cross River Rail and the Townsville Port, failed to renew partnerships in remote indigenous housing and extended the early education partnership by only one year, providing no certainty for state governments,” she said.

“It was big on promises but scant on delivery, with important projects like M1 funding not funded for another four years.”

Trad will now be under pressure to fund some of the initiative that Morrison ignored.

And that won’t be easy in an environment where revenue and expenses are supposed to be stagnant.

Despite the rhetoric, Trad won’t actually be too upset that Morrison’s $1 billion in M1 upgrades were pushed beyond the forward estimates.

Given Canberra is demanding a 50:50 funding split on the two stretches in question, that’s $1 billion that the Queensland Treasurer also won’t have to find.

The revenue climate means the Government’s infrastructure investment over the next three years is already forecast to be down on the long-term average spend and as a share of gross state product.

And that’s despite the Palaszczuk Government spreading the majority of the cost for Cross River Rail over these years.

Unlike Jackie Trad, Scott Morrison could almost be out of time as Treasurer. Picture: Kym Smith

Unlike Trad however, Morrison is a treasurer almost out of time. A Federal Election looms early next year, if not earlier, and the Coalition has long trailed in opinion polls.

Trad, meanwhile, is at the beginning of her term and a humdrum budget wouldn’t be such a bad thing.

Get the pain out of the way early and concentrate on handing out targeted rewards at the end is a path well-trodden by governments of all persuasions.

Blessed by a good stroke of luck, Morrison has been able to deliver. And it’s got all the pundits predicting that the Budget has the beleaguered Turnbull Government back in the game.

Trad might not like her counterpart’s policies. But over the next three years, the politics she’ll play may be much the same.

Steven Wardill is The Courier-Mail’s state affairs editor