State budget: QLD to post $3bn deficit amid housing, health spend

Housing and health spending will contribute to a $3bn deficit to be revealed in the upcoming state Budget.

The state government will spend billions more than it can earn in the coming financial year, with Treasurer Cameron Dick revealing a $3bn deficit in the upcoming budget.

Cost of living relief outside handing out $1000 discounts to every Queenslander on their energy bill on top of housing and health spending are the cause of the whopping deficit, according to Mr Dick.

The latest forecasts reverse the state government’s earlier hopes of razor thin budget surpluses of $122m in 2024/25 and $91m 2025/26, propped up largely by coal royalties which have started to taper off.

Instead taxpayers can expect to see a budget deficit of $3bn in 2024/25 followed by a deficit of less than $1bn in 2025/26.

Treasurer Cameron Dick says the state government will borrow money if necessary to provide cost-of-living relief to Queenslanders. Picture: Steve Pohlner

Mr Dick said the state government would “borrow to deliver our cost-of-living measures” if that is what needed to be done — in a statement likely to spark concerns among economists.

“While our Government would like to see a surplus in the next two financial years, that will not come at the cost of Queensland families running deficits on their household budgets,” he said.

“If we have to borrow to deliver our cost-of-living measures then that is what we will do, but we will do so in a way that keeps inflation as low as possible.”

This comes just a month after Mr Dick revealed Queensland’s debt bomb would swell to a whopping $188bn in just four years, as dwindling coal rivers of gold and tough economic headwinds hit the state’s finances.

The figures prompted Mr Dick to concede the next state budget would “be difficult” as he warned the upcoming state election cannot be an “unsustainable spending spree”.

He also promised a record cost-of-living relief package in the budget.

But the $2.5bn power bill relief package is not factored into the upcoming deficit as the government has moved to make it extra spending in 2023/24. The spending sparking the deficit will likely only be known in June when the budget is released.

Independent economist Saul Eslake last month, prior to the energy rebate being announced, warned the state government to carefully consider its cost-of-living measures, noting power bills were not slated to increase significantly in the coming year.

“Supposedly the budget was going to return to an operating surplus by 2025/26, my guess is he’ll have to say ‘actually no we’re not going to’ and that ought to argue for being very cautious about splashing a whole lot of money around,” he said.

Net debt will hit $73bn by 2027/2028, five times higher than the $14.6bn it is set to be by mid-2024, according to the preliminary forecasts.

Government borrowing is also expected to increase to help pay for the state’s existing $96bn infrastructure pipeline, increasing overall general government debt to $128bn by 2027/28.

Total debt — which includes government owned corporations — will rise to $188bn by 2027/28, up from $109.8bn in 2023/24.