Qld infrastructure blowout: $24bn hit to state’s bottom line

Blowouts to mega projects and a federal Bruce Highway backflip has put Qld coffers in a $24bn black hole with Treasurer David Janetzki warned he may need to break an election promise.

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• Editor’s view: Reality check for govt

The state government is scrambling to fill a deepening $24bn budget black hole caused by major project blowouts and a surprise federal government Bruce Highway backflip.

Economists have warned Treasurer David Janetzki has little choice but to break an election promise and pile the needed billions on to the state’s growing debt burden.

Mr Janetzki said it would take a long time to repair the “fiscal vandalism” of the previous Labor government.

But he again promised to lower debt while providing little detail on how this would be achieved beyond a push to “stop the blowouts, grow the economy, respect taxpayers’ money” and empowering the public service to deliver projects on time and on budget.

The total cost of project blowouts unveiled by the LNP since taking government across health, water, energy and transport has grown to $21.8bn.

Mr Janetzki must now also find $1.8bn to hold up the state government’s end of a $9bn Bruce Highway overhaul after a surprise backflip by Prime Minister Anthony Albanese to fork out more federal cash.

In total, Mr Janetzki’s budget black hole stands at $23.6bn.

The extent of the cost blowouts will be unveiled in the state government’s delayed mid-year budget update to be released this month.

Health upgrades such as Townsville University Hospital have blown out by over $9bn.

But the LNP has repeatedly promised to lower debt, not raise or introduce taxes, protect public service jobs, not sell assets and not cut any projects.

Independent economist Saul Eslake said the state government would need to fund the budget black hole across a decade or more, and it could be done through borrowing more money.

“That might well result the credit rating agencies downgrading Queensland’s rating, but they may well have done that anyway,” he said.

“Obviously, there are alternatives to just letting those cost overruns be funded by debt. Among other things they could decide to cancel some projects or slow them down.”

And while Queensland’s debt was worsening Mr Eslake said the state remained in a better fiscal position than Victoria, Tasmania, and New South Wales.

But there was no reality where debt would be lower than what the LNP inherited he said.

“You can’t start to pay down debt unless you start to run cash surpluses, and you can’t run cash surpluses unless you … raise taxes, cut spending on service, cut spending on capital expenditure, or sell assets,” Mr Eslake said.

The LNP has ruled out pulling any of those four levers.

Mr Janetzki again promised debt would always be lower under an LNP government, alongside an end to “Labor’s culture of unaccountable blowouts and overruns”.

The Somerset Dam Improvement Program has blown out by almost $1bn.

“Debt can be lower if you stop the blowouts, grow the economy, respect taxpayers’ money and increase the capacity for the public service to deliver projects on time and on budget,” he said.

“Under the former Labor government debt was on an unprecedented trajectory and it will take a long time to repair the fiscal vandalism of Steven Miles and Cameron Dick.

“In line with our commitment for a fresh start for Queensland, the tax plan the government took to the election is the tax plan for the next four years and there won’t be new taxes.”

Shadow treasurer Shannon Fentiman said the only way the Crisafulli government could keep its promise to deliver a budget surplus and lower debt was “to cut”.

“He needs to come clean and tell Queenslanders which programs and projects are on the chopping block,” she said.

Under the pre-election Bruce Highway cash splash, federal Labor has put forward $7.2bn to fund 80 per cent of a series of upgrades to get all parts of the nearly 1700km highway up to a three-star rating.

The promise has come despite the Albanese government repeatedly declaring it wouldn’t be more generous than going halves on Bruce Highway projects with the state.

Federal Opposition Leader Peter Dutton said Mr Albanese’s commitment revealed the government was panicking about losing more seats in Queensland.

The Coalition has previously promised to reinstate 80:20 funding on the Bruce Highway if they win the next federal election.

“The fact is this is an announcement which should have been made two years ago and not on the eve of the election,” Mr Dutton said.

Queensland Treasurer David Janetzki

BUDGET BLOWOUTS

Originally published as Qld infrastructure blowout: $24bn hit to state’s bottom line