Deficit blowout pushes Queensland’s bottom line into red

Queensland’s debt will pass $100bn next year in the face of collapsing revenues and a blowout in the state deficit.

Queensland Treasurer Cameron Dick in Brisbane on Thursday. Picture: Richard Walker

Queensland’s debt will pass $100bn next year in the face of collapsing revenues and a blowout in the state deficit.

Treasurer Cameron Dick said on Thursday that after initially predicting a slim $151m surplus for the 2019-20 financial year, the state’s bottom line would now be $5.9bn in the red. The deficit was predicted to worsen next year to $8.4bn.

Mr Dick blamed the combined collapse in revenues from state taxes and the GST and the need to spend $6bn in measures to counter the economic fallout from the COVID-19 pandemic.

“The tightening of restrictions that we have seen in Victoria and NSW in the last week is clear ­evidence that Australia is not immune from this ongoing damage,” he said.

“The forecasts released today by Federal Treasurer Josh Frydenberg show that over the 2019-20 and 2020-21 financial years, GST receipts to Queensland will be cut by up to $2.5bn compared to our (December mid-year) estimates.

“Combined with the $1bn fall in revenue from state taxes and royalties in the second half of 2019-20, the GST cuts mean that Queensland faces a fall in revenue since (December) of at least $6.5bn over 2019-20 and 2020-21.”

According to the new figures, total debt — made-up of government debt and borrowings held by state-owned corporations — will hit $100.7bn by next June.

In December, the mid-year economic review had predicted debt hitting $83.3bn by last month and $84bn by next July.

Mr Dick said the pandemic had forced the surge in borrowings, and he hoped to return the state bottom line to surplus over the four years of forward estimates. I don’t like borrowing money. I wish we weren’t in this position but COVID has made it that way,” he said.

“While our target is to return to balance over the forward estimates, putting a number on that in this volatile economic time is very problematic.’’

Mr Dick also said an already announced $5bn Future Fund would draw $1bn from the public servants’ defined benefits scheme, with the rest coming from the transfer of assets, including the Titles Registry.

Opposition treasury spokesman Tim Mander said the latest prediction of a $100bn debt bill showed the Palaszczuk government lacked economic discipline.

“That’s a $17bn blowout since December last year, increasing the interest bill for Queensland taxpayers and putting additional pressure on our credit rating,’’ he said. “It’s even more reason why we need to invest for growth and rein in wasteful spending.

“The Labor government needs to stick to its fiscal principles, which it has all but abandoned, to secure our economic future.”

The government has promised an economic statement before going to the polls on October 31.