Queensland budget: $95bn in the red ‘is not a problem’

Cameron Dick has denied the Palas­zczuk government has ‘a debt problem’ as it relies on clever accounting to make claims of cutting net borrowings.

Queensland Treasurer Cameron Dick. Picture: NCA NewsWire / Dan Peled

Cameron Dick has denied the Palas­zczuk government has “a debt problem” as it faces going $127bn into the red and again relies on clever accounting to make claims of cutting net borrowings.

Releasing his second budget, the Queensland Treasurer revealed the surprise use of the state’s Title Registry – revalued at $8bn, twice what it was worth last year – as an “offset” to reduce “net debt”.

The registry will now be transferred to Queensland’s Future Fund, with the income from title searches and transfers reinvested into the company.

Mr Dick denied it was a “paper shuffle” by the Palaszczuk government, which claims to be reducing “net debt” while its total debt – which includes all borrowings, including those held by its state-owned businesses – continues to soar.

In the previous few budgets, the government has shifted $5bn of borrowings on to the books of state-owned electricity companies and raided $4bn from the ­public service superannuation scheme to pay debt.

Queensland’s total debt is now at $95.8bn this financial year and forecast to hit $106.3bn in 2021-22 and $127bn by 2024-25.

Mr Dick used his budget speech to focus on net debt, which offsets the government’s liabilities against investment and revenues.

He said the state’s forecast debt has been given a trim since the last budget, handed down in December, with $31.8bn in borrowings over the forward estimates.

Net debt is down by $9.7bn compared to the December budget, partly because of an improved economic outlook despite challenges posed by international trade issues and the wipe-out of international tourism and student markets.

“That is the single biggest reduction in net debt ever recorded by the Queensland government,” Mr Dick said. “The fiscal recovery of our state is due to the growth in population, increase in revenue and careful and prudent expenditure growth. The prudent management of the budget allows us to improve our fiscal position.”

A significant portion of the state’s improved financial position can be attributed to an increased asset valuation of the titles registry, transferred to the Queensland Future Fund, from about $4bn to $7.8bn, but Mr Dick denied it was a paper shuffle, saying the same sort of accounting methods were used to reduce debt by the NSW Generation Fund and Quebec Generations Fund.

“The titles office is moving out of general government along with its revenues and going into a company that is at arm’s length of government,” he said. “The owner­ship of that company counts as an asset for net debt purpose (and) we are really, really pleased with how the valuation of the Titles Registry has come in.

“That company has returns and all those returns are reinvested back into the fund, the fund grows in value and is counted by ratings agency as an offset against debt.

“This is new for Queensland but it is an important measure we are taking to bend that debt profile and give Queenslanders value for the assets that belong to them.”

Mr Dick defended the state’s spending spree, saying it was not as bad as NSW or Victoria.

The state has also maintained its credit rating throughout the pandemic.

“Queensland does not have a debt problem,” Mr Dick said.

Debt to revenue ratio, a key measure for rating agencies, will surge to 121.6 per cent by the next election compared with 70 per cent when the Palaszczuk government delivered its first budget in 2015.

The ratio will reach 102 per cent in Queensland this year, compared with 129.6 per cent in NSW and 162 per cent in Victoria.