Queensland has long had a debt problem, but Cameron Dick is the Treasurer who has turned debt from a four-letter word into a political weapon.
Under the guise of the COVID-19 pandemic, Dick has insisted that dramatically hiking the state’s borrowings is not just acceptable, but the fiscally responsible strategy to rescue a budget in chaos.
With a level gaze, Dick on Tuesday announced Queensland’s total debt would hit a staggering $130bn by 2023-24. That’s $28bn more than the $102bn by mid-2021 forecast in September.
Under normal circumstances, such an enormous blowout in borrowings would be scandalous.
But the times are anything but normal, and Dick is able to say the Commonwealth, NSW and VIC did it first, and bigger.
In NSW, total debt will reach $190bn, while in VIC, it’ll soar to $192bn. Queensland is no longer the nation-leader in that particular metric.
During the election campaign, Dick poured scorn on the LNP Opposition for suggesting it would stabilise debt if it won government, and return the budget to surplus within four years.
Labor’s decisive election victory on October 31 cements Dick’s approach, and takes the political charge out of Queensland’s debt problem.
His predecessors, Curtis Pitt and Jackie Trad, came up with various methods to reduce debt, with mostly cosmetic results, shifting borrowings onto the government-owned corporations or raiding the surplus of the public servants’ defined benefit superannuation fund.
Dick is sticking with Trad’s legacy – a $5.6bn Queensland Future Fund – to which assets will be shifted to generate interest which will be used to offset the debt.
But returns are estimated to be about $400m a year, which won’t even cover Queensland’s general government sector interest repayments, which will reach nearly $2bn a year in 2023-24.
Economists, such as former Commonwealth Treasury official Gene Tunny, have warned the government against borrowing with “reckless abandon” and using the debt to build productive infrastructure.
But Dick is not only borrowing to build, he’s borrowing to fund the next four years of operating deficits.
The Treasurer has promised his borrowing will be “prudent and responsible”. He has another four budgets before the next election to put his money where his mouth is.
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