Budget 2018: Car registration cost could be cut for same price of interest on Queensland debt

VEHICLE registration fees could be eradicated in Queensland for the same price the State Government is paying to cover interest on debt.

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VEHICLE registration fees could be eradicated in Queensland for the same price the State Government is paying to cover interest on debt.

The Government could also bankroll Cross River Rail over four years, for less than the price of its interest payments, meaning it would not be forced to delay other infrastructure, increase taxes and borrow to build the $5.4 billion project.

The Government’s burgeoning borrowing bill is costing every Queenslander more than $300 a year in extra taxes just to cover the interest costs.

But there is little political appetite to reduce the debt burden, with neither Labor nor the LNP focused on the issue during last year’s state election.

Treasurer Jackie Trad will hand down her first budget on Tuesday. Picture: Liam Kidston

Just days before Treasurer Jackie Trad’s first budget next Tuesday, econo­mists and interest groups have warned the situation could get worse and urged action on debt.

Analysis shows Labor forked out $5.6 billion for interest last term and will pay a further $5.1 billion over the next three years.

While the Government curbed the debt trajectory by flicking borrowings on to the books of state businesses, cutting infrastructure spending and raiding reserves, debt is on its way back up.

Total debt is expected to break through $80 billion in 2020, while recent gains in the government sector, which excludes the books of state businesses, will be wiped out by new borrowing to pay for the Government’s infrastructure promises.

At more than $14,000, Queensland’s debt per capita is second only to Western Australia among Australian states and significantly worse than NSW ($7000) and Victoria ($6500).

The interest bill is costing Queenslanders $1.7 billion a year, the same amount the Government raises annually in registration fees.

Some of the projects Queensland could fund if it wasn't paying down huge debt.

Rather than lowering debt and reducing the impact on households, the Government has squeezed more out of imposts such as registration to raise revenue.

Registration hikes have been almost double the rate of inflation for three years, making Queensland the most expensive state to own six and eight-cylinder cars, and the second most expensive for four-cylinder vehicles.

Economist Gene Tunny said Queensland once had a reputation as a state that could cover its costs and capital commitments without burdening the budget with borrowing.

“Since the mid-2000s we have lost that and we haven’t been able to get back to that situation that we were at before,” he said.

Mr Tunny, who is currently penning a book Beautiful One Day, Broke the Next, said the debt bill was costing every Queenslander and the situation could get worse.

“It’s an extra $300 for every Queenslander each year because of interest payments,” he said.

“What that means is we could get rid of car registration.”

Economist Gene Tunny is currently penning a book Beautiful One Day, Broke the Next about Queensland’s economy.

Mr Tunny said governments that failed to address debt risked being forced to borrow to pay their interest.

“We are not in a situation where it is going to be explosive because our economy is growing at a reasonable rate, so that is keeping the debt-to-GDP rate under control. But we need to get the debt down to provide a buffer and for the government priorities.”

Chamber of Commerce and Industry Queensland’s Kate Whittle warned that as debt grew, so would the tax burden.

“The more the Government spends on the interest bill, the less money there is available for essential services such as health, education and police, or giving the money back to Queenslanders through tax cuts,” she said.

“The debt hole also means there is less funding available to fight off future economic downturns.”

THE BUDGET: WHAT WE KNOW

■ $897m for Pacific Motorway upgrade

■ Extra $200m to pool of State Government concessions

■ $8m for new Rockhampton Art Gallery

■ $3.3m to continue safe night precinct program

■ $2.1m to build new fire and rescue station at Gracemere

■ $11m to help North Stradbroke Island economy transition from sand mining

Originally published as Budget 2018: Car registration cost could be cut for same price of interest on Queensland debt