Qld faces $188bn debt bomb within four years
Queensland’s debt bomb will swell to a whopping $188bn in just four years, Treasurer Cameron Dick has revealed.
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Queensland’s debt bomb will swell to a whopping $188bn in just four years, Treasurer Cameron Dick has revealed, as dwindling coal royalties and tough economic headwinds hit the state’s finances.
Major new Treasury forecasts in the lead up to the June state budget have revealed government borrowings are set to double to $128bn between now and 2027-28, as net debt quintuples to $73bn.
The new preliminary figures have prompted Mr Dick to concede the next state budget will be difficult.
And he’s warned the upcoming state election cannot be an unsustainable spending spree, signalling the campaign will need to have few big-ticket promises on both sides to keep spending in line.
Despite the belt tightening Mr Dick affirmed the state government was committed to providing cost-of-living relief for Queenslanders as promised.
Net debt will hit $73bn by 2027-28, 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.
“We will be working hard in the coming months to make the debt numbers as low as possible,” Mr Dick said.
Mr Dick urged Queenslanders not to be afraid of the level of debt.
“These preliminary forecasts are consistent with debt levels we were forecasting in 2020, on a proportional basis, with total debt equalling about a third of the size of the economy at its maximum,” he said.
“We are determined to (provide cost-of-living relief), even as our budget faces economic headwinds.”
Mr Dick blamed a decrease in Queensland’s share of GST and a 25 per cent drop in the price of metallurgical coal in the last year — which impacts how much the state rakes in from royalties.
The introduction of three new coal royalty tiers in 2022 amid soaring worldwide prices helped rake in a $15.3bn windfall in 2022-23 and delivered the government the largest surplus of any Australian state or territory in history.
But the coal royalties were due to taper over time, with at least $9.2bn to be added to Queensland’s revenue haul in 2023-24 as of the mid-year budget update.
Queensland Auditor-General Brendan Worrall, in the report, warned net debt was expected to increased as revenue from royalties fell and debt was used to fund government initiatives.
“As I said in 2020, debt is not a dirty word,” Mr Dick said.
“It is not a policy mistake to increase debt as the size of the economy and our revenues increase.
“Our state is growing, so we need to grow debt so we can continue to deliver the infrastructure and services Queenslanders deserve, in full confidence that our ability to service debt is also growing.”
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Originally published as Qld faces $188bn debt bomb within four years
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