Queensland budget: Surprise surplus on shaky ground

Treasurer Cameron Dick has delivered an ambitious plan to get the state back in the black, but it hinges on series of precarious predictions including there being no Covid outbreaks or extreme weather events.

Treasurer Cameron Dick has set his sights on returning Queensland’s budget back to black, but a range of precarious predictions could topple his slender surplus.

Delivering his second budget in just six months, Mr Dick announced a surprise surplus of $153m for 2024-25, with this year’s deficit contracting from a predicted $8.6b to $3.8b thanks to a $12b recovery to Queensland’s finances.

But he’s been accused of employing accounting “trickery” to pay down Queensland’s still ballooning total debt, on track to hit $127b in four years.

And a range of factors – from Covid outbreaks to flooding rains – could knock his surplus on its head.

Treasurer Cameron Dick says the state’s economy would grow by more than double the national growth rate this financial year. Picture: NCA NewsWire / Dan Peled

Despite that, Mr Dick celebrated Queensland beating the Commonwealth, Victoria and NSW to surplus following rivers of red last year caused by the Covid pandemic, and said the state’s economy would now grow by 3.25 per cent this financial year – more than double the national growth rate.

“Queensland has long been called the Sunshine State. I like to think of it as the sunrise state,” he said.

Mr Dick said deficits were narrowing now “because jobs are coming back”, as he spruiked the creation of 54,900 jobs since March last year, and predicted another 200,000 would be created over the next four as unemployment falls to an incredible low of five per cent for the first time in 12 years.

The government also celebrated a doubling of the value of the state’s Title Registry – which he said last month was worth $4b, but is now worth $7.8b – and will be used to leverage the state’s debt.

Six billion dollars of the restructured entity will be contributed to the Debt Retirement Fund, set up by former treasurer Jackie Trad as a kind of “offset account” to reduce the state’s interest bill.

“By restructuring the Titles Registry, as we have done, and by recognising the full financial value of this asset, Queenslanders will reap the benefit of the state’s net debt being reduced by nearly $8b,” Mr Dick said.

Total debt will now be billions of dollars lower than the $130b projected for 2023-24 but will still hit $127b in 2024-25.

Despite a debt to revenue ratio of 121 per cent in 2024-25, Mr Dick said he wasn’t overly worried about a downgrade by ratings agencies and that “Queensland does not have a debt problem”.

But he conceded “debt may well rise again to respond to another crisis, to deal with a disaster or to build the infrastructure of our state” and declared that “debt is not a dirty word”.

LNP treasury spokesman David Janetzki accused the Treasurer of accounting “trickery” and said it was only a “big sucker” such as Mr Dick who would “pay overs of that magnitude” for the Titles Registry.

He called it a budget of “lost opportunities” to address debt and spending and pledged to dig deeper in budget papers “because this is a budget that is deep in deception”.

The budget relies on several key assumptions, including that there will be no prolonged or widespread lockdowns or severe social distancing necessary, that interstate borders will remain open and that the international border will stay closed to most travellers through to mid-2022.

Premier Annastacia Palaszczuk congratulates Cameron Dick on delivering the budget. Picture: NCA NewsWire / Dan Peled

Asked what would happen to his slender surplus should there be an outbreak, Mr Dick replied: “Heaven forbid that there is.”

“I think what you’ve seen from Queenslanders is they’re ready to rock,” he said when pressed.

“They’re ready to do what they have to do to lock down to protect themselves, their families and their communities and if there is any place in the world you want to be ready and waiting for an outbreak, it would be Queensland … because we’re the most battle-hardened people in the country.”

And as $3b in public sector savings remained on track, the Treasurer announced he was extending a one-year public service hiring freeze for at least another year following previous criticism staff numbers were growing too fast.

The government would instead focus on hiring frontline staff only to control its wages bill, which will be $27.5b next year, and keep expenses at less than revenue.

Increased payroll tax, transfer duty and boosted GST payments have improved revenues by $11.8b over four years but royalties have tanked.

Overseas exports in goods and services are now expected to decline by 15.75 per cent in 2020-21, driven by a whack to coal exports thanks to China’s import ban.

Coal royalties will deliver just $1.75b in 2020-21, compared with $4.3b two years ago before the pandemic and China’s ban hit.

Meanwhile $2b will be borrowed for new hospital building fund aimed at easing pressure on the state’s struggling health system, although the majority is not yet allocated.

And $1.9b will be spent to get 6,365 new homes built in four years, with Mr Dick saying it would be “a huge step forward” towards addressing the substantial social housing waitlist.