Liquidity crunch to deepen state’s $92bn budget black hole

The cash-strapped Queensland government will likely be forced to increase its heavy debt burden to pay for its response to the crisis.

Queensland Treasurer Jackie Trad has promised a $4bn economic stimulus package. Picture: Annette Dew

The cash-strapped Queensland government will likely be forced to increase its heavy debt burden to pay for its response to the coronavirus crisis.

The state’s government debt was already forecast to hit $91.8bn by 2022-23, before the pandemic struck, threatening to nearly double unemployment and slash billions from the budget bottom line.

Treasurer Jackie Trad has promised a $4bn economic stimulus package, including a $400m land tax relief package for property owners, $500m in workers’ ­assistance measures and $300m for discounted household utility bills.

The state parliament is expected to back an urgent appropriations bill legislating the support in a special one-day sitting on Wednesday, but it is not clear how the government will pay for the measures.

The Australian understands the Queensland Treasury Corporation holds $16bn in cash for emergencies such as natural disasters, and is now seeking to borrow extra liquidity to cover the cost of the COVID-19 crisis.

Ms Trad is unlikely to deliver a full budget ahead of the state election on October 31, but last week promised to update the public with a mini-budget or the release of ­financial accounts before the poll. The scheduled April 28 budget was cancelled due to the pandemic.

The Treasurer did not respond to questions about whether the state would require emergency borrowings.

Victorian Treasurer Tim Pallas last week announced the state would borrow up to $24.5bn to ­address the economic crisis wrought by the virus.

The most severe economic ­impact is expected to hit Queensland between June and ­September. Opposition deputy leader Tim Mander said the Palaszczuk government was already struggling before the coronavirus outbreak.

“Labor’s mismanagement has left the Queensland budget susceptible to external shocks,” Mr Mander said.

“Before coronavirus struck, the Auditor-General had already publicly warned of the ­government’s looming structural deficit.

“Jackie Trad needs to advise taxpayers how much debt the Queensland government has to borrow to meet day-to-day ­expenses.”

Annastacia Palaszczuk warned the state’s relative success in containing the virus spread did not mean tough restrictions would be lifted soon.

“You don’t want to lift anything too quickly and see those spikes (and) ICU wards inundated,” the Premier said.

“We need to tread very carefully … if we get this wrong, it could go horribly wrong.”