Debt ‘to hit $100bn’, no budget likely

Economists are predicting that Queensland’s debt will hit $100bn within two years.

Instead of a budget, Premier Anastasia Palaszczuk is offering some form of ‘financial statement’’ of Queensland’s books this year. Pic Peter Wallis

Economists are predicting that Queensland’s debt will hit $100bn within two years, as Premier Annasta­cia Palaszczuk conceded her government was unlikely to deliver a budget to voters before the October 31 election.

Ms Palaszczuk and Treasurer Jackie Trad are instead offering only “an intention” to present some form of “financial statement’’ of the state’s books this year, as the government moves further into debt to cope with the coronavirus pandemic.

Just a week after Moody’s warned of a possible credit rating downgrade to Queensland if there was “higher-than-projected­ debt”, Ms Trad admitted she could not say how much more the cash-strapped government was borrowing during the crisis.

The Treasurer announced the budget would take a $4bn hit to its bottom line from falling revenues and to pay for its health and stimulus package, which she said would be partly covered by increasing the state’s debt — predicted last year to hit $91.8bn by 2022-23.

“We are funding our packages through a combination of savings and through debt,’’ she said.

Opposition Leader Deb Frecklington said the government was trying to “avoid scrutiny” after Ms Palaszczuk scored the lowest approva­l­ ratings among all prem­iers in the latest Newspoll.

The Premier shrugged off the poll results, saying she was only interested in the consistently low number of coronavirus infections in Queensland over the past week.

“I think we have had a few hiccups­ along the way,’’ she said, when asked about her 55 per cent approval rating, which was 34 per cent lower than her Labor counterpart Mark McGowan in Western Australia.

“I am waking every day and doing what I can for Queenslanders and that’s what they expect­ me to do.

“They (infection rates) are the only numbers I’m interested in.’’

Ms Palaszczuk, who is understood to have been pushing for an economic statement to be presented in a truncated sitting of parliament next month, said on Tuesday her government would struggle to deliver a budget with its declaration of financial outcomes this year and forecasts over the next term.

“It may be hard to deliver a full budget.’’ she said. “Our intention is to clearly present a full set of financial statements so the people of Queensland can make their judgments — it may be a mini-budget, it may be a full economic statement.’’

Several economists have told The Australian it is likely the state debt would blow out further with the pandemic.

In February, state Auditor-General Brendan Worrall warned that the government risked not being able to meet its operating costs with revenue alone, unless it increased revenue or cut spending growth, which had risen 11 per cent between 2016-17 and 2018-19.

Griffith University professor of economics Tony Makin, a former Canberra Treasury official, said a “reasonable estimate is that Queensland’s debt could hit $100bn within two years’’. ­Professor Makin said the loss in revenue from stamp duties, gambling­ and payroll tax and resource­ royalties, combined with the cost of the stimulus, would lead the state into further debt.

Ms Trad said the government was also hamstrung by the federal government delaying its budget until October, although it plans to make a statement over its finances on May 12. Queensland relies on about 47 per cent of its revenues, including the GST, from the commonwealth.