Queensland budget boost from coal and property markets

Record coal prices and stamp duties from the booming property market have propped up Queensland’s budget.

Queensland Treasurer Cameron Dick on Thursday. Picture: Dan Peled

Record coal prices and stamp duties from the booming property market have propped up Queensland’s budget after the state government went on a spending spree to counter the effect of border closures.

A doubling of Queensland‘s expected coal royalty revenue this financial year, from $2.05bn predicted in the June budget to $4.64bn, has offset a multibillion-dollar increase in government spending.

Expenses are expected to be $2.58bn more than what was forecast just six months ago, $600m of which was spent on grants for businesses affected by lockdowns and border closures.

The government also went over-budget to pay for its pandemic response, including Covid-19 compliance and quarantine services.

The public service wage bill is set to hit $29bn next year. It means by mid-2023, 40 cents from every $1 the state spends will go to paying the salaries of public servants. New figures reveal the total headcount for the Queensland Public Service at 238,583, up 4434 since last year.

Speaking at the half-yearly budget review on Thursday, Treasurer Cameron Dick said the government would move to close a land tax loophole that allows interstate investors to claim the tax-free threshold across multiple states. The change, which needs to be legislated, will affect about 10,000 land parcels and the LNP has warned the measure will trigger rent rises.

Mr Dick said Queensland was still in a better economic position than NSW and Victoria.

“Queensland has avoided the long lockdowns that have occurred in other states, and this budget update demonstrates the market improvement in our economic performance since the budget in June,” he said.

“Our deficit this year is less than a tenth of the size of deficits in NSW and Victoria, and our debt is smaller too.”

Queensland’s net debt has been slashed by $6.9bn, now totalling $35.6bn by mid-decade. This compares with predicted debt of $162.7bn in Victoria and $103bn in NSW.

Total debt, including government-owned corporations, has dropped by $701m and is expected to reach $126.68bn by 2025.

Mr Dick said Queensland remained on track to return to surplus in four years. The budget deficit in 2021-22 is projected to be $1.5bn, down from $3.8bn predicted in June, thanks to increased revenue from coal exports.

While Queensland’s exports proved resilient to China’s informal coal ban, the update flagged that Australia’s feud with the Asian superpower remained a “key risk” to the economy.

Treasury also warned that the emergence of any more severe or transmissible Covid variants could pose “significant risk” to the state’s economic outlook.