Spending cuts and debt to plug a $7bn hole in Queensland

Queensland Treasurer Cameron Dick will be forced to hike state debt to fill a $7bn budget black hole, after coronavirus slashed at least $1bn from state revenue.

Queensland Treasurer Cameron Dick. Picture: NCA NewsWire / David Kapernick

Queensland Treasurer Cameron Dick will increase debt and slash public service spending to fill a $7bn black hole punched in Queensland’s budget by the coronavirus pandemic.

Treasury officials have already written down $1bn in lost revenue from state taxes and resources royalties in just six months, and the government has promised a $6bn stimulus package.

But Mr Dick warned there would be more pain to come, foreshadowing cuts to GST revenue flowing from the commonwealth, which accounts for about half of the state’s income.

Ahead of delivering a mini-budget in September, Mr Dick said on Thursday he was being forced to borrow more to avoid Campbell Newman-style austerity measures of cuts to jobs and services.

“Do I want to borrow more money? No. Is it my first choice? No. But when the alternative is austerity, borrowing is the only sensible decision,” Mr Dick said.

Before the COVID-19 crisis, the state’s government debt was already forecast to soar to $92bn by 2022-23. Mr Dick said it was impossible now to forecast what the state’s debt and deficit would be for this financial year, because the Victorian outbreak meant there were “shifting sands to our economy”.

“All governments will have to borrow and will have to run deficits in the short term … that’s why we have a savings plan that runs over the forward estimates, to get us back into balance as quickly as possible.”

Mr Dick has promised to find $3bn in savings over four years. This will include the $1.5bn in cuts that his predecessor Jackie Trad’s public service razor gang was due to find over the same period.

Spending on consultants and contractors will be reduced, and there will be an effective hiring freeze on non-frontline public servants. Some senior executive bureaucrats will not be replaced when they retire.

The government will not pay for non-essential marketing and social media accounts with “little traction or small audiences” will be axed and the bureaucrats who run them redirected. Annual reports will have “less pictures” and “glossy” government publications will be minimised.

But the new Treasurer was unable to confirm several details of his plan on Thursday.

Mr Dick couldn’t say how much money would be used to ­establish the debt-reducing Queensland Future Fund, or how much debt it would pay down. He could not say how many public servants the government currently employed, or how many contractors and consultants could expect to lose their jobs.

The most up-to-date figures, he said, were from a year ago, when the government had 210,134 full-time equivalent workers. About 20,000 of those were non-frontline staff.

He also could not say how much Ms Trad’s razor gang had saved, even though he told parliament it had identified savings of $715m last financial year.

Mr Dick also appeared to contradict himself when asked whether the $500m public service wage freeze — which will be withheld this year but paid the following financial year — was included in the $3bn savings measure.

Opposition deputy leader Tim Mander said Mr Dick had “no numbers and no details”, and ­criticised him for not delivering a full budget before the October 31 state election.

“It’s absolutely laughable when you’re talking about getting $3bn worth of savings and your examples are deleting social media accounts. This is a Treasurer who … gives us no confidence that he’ll be able to steer us out of the crisis,” Mr Mander said.