Palaszczuk Government releases economic update, announces $1b business fund to create jobs
The State Government has delivered its economic update, announcing a $1 billion investment in Queensland businesses to create jobs and an extension of the payroll tax holiday. It comes as the state’s total debt balloons to $101.9b with a projected 2020-21 deficit of $8.136b.
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The Government will spend $925 million extending a payroll tax holiday to struggling businesses and invest $1 billion directly into business to create jobs.
The announcements came as the Palaszczuk Government released its economic update today showing the massive hit to revenues and ballooning costs caused by the COVID pandemic.
Total debt, including government-owned corporations, will balloon out to $101.9 billion in 2020-21, up from the $100.7 billion predicted just two months ago largely due to the extension on payroll tax holidays and continuing to waive payroll tax on JobKeeper payments.
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The deficit for 2019-2020 is expected to be $5.898 billion compared to the surplus of $151 million forecast at MYFER in December
The deficit widens further in 2020-21 to a projected $8.136 billion, which is lower than the $8.5 billion projection provided in July.
Treasurer Cameron Dick said the update included just two years instead of the usual four due to the major upheaval being caused by COVID.
“Even then I must be honest, the challenge of forecasting is harder than ever before,” he said.
Unemployment is now forecast to reach 8.5 per cent in 2020-21, well up from the 6 per cent rate hoped for in December last year.
Mr Dick said a substantial number of initial job losses earlier this year had been clawed back and strong borders had shielded the state economy from a deeper recession.
But more than 138,000 Queenslanders had lost their jobs during the pandemic, and thousands more were threatened.
Six per cent of jobs had been lost on the Gold Coast and nearly as many in the inner city.
Queensland wide, almost four per cent of jobs had been lost. Toowoomba and Central Queensland were the least impacted regions.
Mr Dick said Queensland borrowing costs were at record lows and the government was paying less in debt repayments now than in 2014.
“There is no need to increase taxes to pay this additional debt … this is an important point,” he said.
That meant borrowing the support the Queensland economy was the right thing to do, he said.
“The outlook is undeniably difficult and challenging,” he said, adding it was not as poor as in other states or countries.
Mr Dick announced the Government would put up $1 billion to directly invest in businesses to create Queensland jobs.
That includes $500 million so that publicly-owned energy companies can invest in renewable projects to help the state create three new renewable energy zones, while another $500 million will target investments in reputable small and medium-sized Queensland businesses that require capital to grow.
“Business as usual will not cut it now,” he said.
The investments will be held by Government-owned corporations and they will deliver earnings to service that debt, meaning taxpayers would not be out of pocket, he said.
Payroll tax waivers will be extended to July and August 2020 for small business, land tax rebates will be extended and transfer duty will be abolished when eligible small business restructure.
Meanwhile, the Public Safety Business Agency, which provides services for the police and fire services will be folded back into those departments, and the Queensland Productivity Commission and Building Queensland will be integrated into Queensland Treasury.
A debt recovery program will be carried out to help the government collect an extra $488 million from those who owe it over three-and-a-half years.
Mr Dick said he intended to deliver a full budget in November if Labor was returned to power on October 31.