Big business hit as Queensland goes further into the red

Queensland’s cash splash boosts regional areas, plunges the state further into debt and slugs big business.

Queensland Treasurer Jackie Trad’s big-spending budget plunges the state further into debt. Picture: Glenn Hunt/AAP

Queensland’s top end of town will be slugged with higher taxes, as the Palaszczuk government continues to plunge the state further into the red and struggles to contain rampant spending.

Delivering the state budget today, Deputy Premier and Treasurer Jackie Trad confirmed the state would rake more than $500m by hitting 6000 big businesses with payroll tax rises, raise $476m over four years by hiking petroleum export royalties, and increase land tax for companies.

And Queensland’s bureaucracy will continue to balloon, with the public service wage bill expected to jump by $1.3bn to $25.4bn in 2019-20, 5.4 per cent higher than last year.

But the state will plunge further into debt, with total borrowings forecast to increase every year in the forward estimates, to hit at least $82.9bn in 2022-23. A new accounting principle has allowed the state to say the total borrowings will reach $82.9bn, but the true figure is higher.

Total government debt is actually forecast to hit $90.7bn in 2022-23.

There is no debt reduction contained in the budget.

Ms Trad insisted the government still had a debt reduction strategy, but said it was focused on growing the economy and increasing revenue rather than actually paying down debt.

“The current levels of debt within the state of Queensland are both manageable and they are stable,” Ms Trad told reporters at a press conference today.

Delivering her budget speech to parliament, Ms Trad said the government would spend $49.5bn on infrastructure investment over four years, with a big focus on spending in Queensland’s regions.

“This is a budget for regional Queensland,” she said.

State Labor is keen to shore up its marginal seats in regional Queensland, after federal Labor’s drubbing in the state at the May 18 election. Queenslanders next go to the polls in October 2020.

Ms Trad used her budget speech to slam the federal government interfering in Queensland’s GST share, claiming it had been “slashed by $866m as a direct result of interference by Canberra”.

And she blamed Canberra for the increased land taxes in the budget, which Ms Trad said were made “reluctantly”.

“As a result of Canberra’s cuts, there will be an increase in land tax rates for companies and trusts of 0.25 per cent,” she told parliament.

“This change is forecast to raise $238m over the forward estimates and apply only to land holdings over the value of $5m.”

Ms Trad said if Canberra “fixes the current bias in their GST calculations and returns what we are owed, we will repeal these land tax measures”.

Search for cuts

A new unit will be set up in the Queensland Premier’s office to find $200m in government cuts in 2019-20, and $500m annually from 2020-21 — but there will be no forced redundancies of public servants to meet the targets.

The budget will deliver an operating surplus of $841m in 2018-19, largely on the back of increased mining royalties.

Queensland’s economic growth is expected to slow to 2.75 per cent in 2018-19, but strengthen a little to three per cent in 2019-20. But growth will be constrained by a further decline in the property market.

The budget contains payroll tax concessions for small and medium businesses, particularly those in regional Queensland, with the payroll tax exemption threshold rising, to benefit employers with annual wages below $6.5m. And there will be a regional payroll tax discount. From July, businesses with 85 per cent of their employees outside south-east Queensland will receive a 1 per cent payroll tax discount.

Premier Annastacia Palaszczuk has already promised ­record budget spending in both health ($19.2bn, up $929m on the year before) and education ($13bn). Nearly $1.5bn will be spent building four state schools on the Sunshine and Gold coasts.

Government expenses continue to grow, with the budget papers showing expenses are forecast to jump from $59.2bn in 2018-19 to $64.7bn in 2022-23.

Overseas exports hit a record $85.2bn in the 12 months to April 2019, up $12bn over the previous 12 months. The rise is largely due to higher prices and increased volumes of LNG and metallurgical coal exports.