Crisafulli government accused of inflating state debt projections

Rating agency S & P Global has accused the Queensland government of exaggerating the state’s debt position for political point scoring.

Treasurer David Janetzki and Finance Minister Ros Bates unveil the Mid-Year Fiscal and Economic Review. Picture: John Gass

Rating agency S & P Global has accused the Queensland government of exaggerating the state’s debt position for political point scoring.

The agency is yet to make a call on the state’s credit rating following last month’s Mid-Year Financial and Economic Review, which projected debt would balloon $45.84bn to $217.83bn by mid-2028.

Treasurer David Janetzki accused the former Miles government of painting a “deceitful” picture of the state’s finances before the October state election, labelling the economic review “Labor’s final budget”.

But, S & P analyst Anthony Walker said the “eye-opening” figure was likely too high, with the agency still trying to figure out the true figure under the “political narrative”. He believes the final debt figure will not rise above $200bn.

“We now are going through mid-year update to try and figure out what that document means and how much of that is real versus how much of that was political and when we get an answer to that, we’ll update the rating,” Mr Walker told ABC Radio.

“Those numbers were quite eye-opening when you saw them at a high level, significantly worse than anything we actually thought Queensland would deliver.

“If you look at the media release attached to that (MYFER), it was all about Labor’s last budget deficits and lies, so we know there is a political narrative within that document.

“We think it (the $218bn debt forecast) is too high. We don’t think that Queensland will deliver that.”

S & P Global Ratings is likely to wait until the June budget to make a call on whether it will downgrade Queensland’s AA+ credit rating, although Mr Walker said there was “downward pressure” following the mid-year review.

“Queensland is no different any other state,” Mr Walker said.

“This is a spending story. Governments have found it much easier, and Queensland was a prime example during the election campaign, where there was very little, if any, fiscal discipline being shown.

“Governments were just offering more and more to voters to try and get elected or re-elected and this behaviour has sparked a deterioration of fiscal outcomes.

“Where we get concerned is when it comes to things like cost blowouts of infrastructure, or when it comes out to ongoing spending, which is your interest costs, your handouts, your rebates for energy, your free public transport. We like to think things are free, but nothing is free, it’s either coming from taxes or it’s coming from the capital markets, through borrowings.”

In September, the agency confirmed Queensland’s AA+ rating on the expectation that debt levels would peak at about 140 per cent of operating revenues and that the budget would remain in cash surplus.