Queensland budget: Debt ‘not a dirty word’ to Palaszczuk

Annastacia Palaszczuk says it would be ‘very brave’ to reopen international borders even as the Queensland budget revealed pandemic restrictions would push debt to $127bn

Queensland Treasurer Cameron Dick and Premier Annastacia Palaszczuk in Brisbane on Tuesday. Picture: Dan Peled

Annastacia Palaszczuk says it would be “very brave” to reopen Australia’s international borders even as the Queensland budget revealed pandemic restrictions would push debt to $127bn within three years and had hit the state’s tourism and international student sectors hard.

But Treasurer Cameron Dick said nation-leading economic growth in Queensland would drive the state’s emergence from the Covid-19 pandemic and deliver a surplus in three years.

Debt was no longer a “dirty word”, he told Queensland parliament, as the budget papers revealed the gross state debt would hit a record $127bn in 2024-25.

“Just as we did in the pandemic, we will make no apologies for using debt to defend the health, the jobs and the livelihoods of Queenslanders,” Mr Dick said. “And as we see the commonwealth government engaging in a borrowing spree that dwarfs anything the state might do, it is my hope that those opposite, and those in the media, finally come to grips with the fact that debt is not a dirty word.”

The state’s fiscal position has improved since December, driven mostly by booming interstate migration, reduced revenue losses, falling unemployment and increased domestic spending.

A revaluation nearly doubling the value of the state’s titles registry – transferred to the Queensland Futures Fund – to almost $8bn has also improved the books by offsetting debt.

Mr Dick acknowledged the targeted $153m surplus in 2024-25 was at the mercy of future Covid-19 outbreaks, the proposed Wellcamp quarantine facility and the state’s Olympic Games tilt – both of which remain unfunded.

 

“The four largest governments in Australia, the commonwealth government, the NSW government, the Victorian government and the Queensland government, all went into deficit to respond to Covid-19,” he said.

“Today, only one of those four governments is returning to surplus — the Palaszczuk Labor government.”

That surplus, and the entire budget, is predicated on the hope there won’t be another major Covid outbreak in Queensland.

“Heaven forbid there is (another outbreak),” Mr Dick said.

Closed borders were also expected to continue to impact Queensland’s international tourism exports and limit overseas student arrivals, while the strained relationship between Canberra and Beijing has impacted revenue from coal exports.

Consistent with the federal budget, the state budget assumed interstate borders would remain open and the international border closed until mid-2022.

“It’s going to be the federal government’s decision as to what they do with international borders,” Ms Palaszczuk said. “I think it would be a very brave federal government to go down that path until we reach a large proportion of the entire Australian population to be fully vaccinated.”

 

The Premier would not say what proportion of the population in Queensland she wanted to see vaccinated before international borders reopened. “I think we have to get the health modelling. That decision is going to be based on the federal government … I think there’s going to be a lot of worried people if those borders get opened too quickly. It has to be done when it is safe to do so.”

Ms Palaszczuk described it as a “traditional Labor budget” focusing on health, education and housing. The Premier said the Queensland economy was coming back stronger and faster than “anyone could have predicted”, off the back of her government’s health response to the pandemic.

The budget also revealed the government is abandoning its fiscal strategy – tabled in parliament as a requirement of the Financial Accountability Act – and incorporating a new set of principles in light of the pandemic.

Mr Dick’s tweaking of the six former principles – reduced to five – came after he was criticised in December for ignoring the now scrapped credo of keeping public service increases at or below the rate of population growth. “Covid has rendered our old fiscal principles no longer fit for purpose.”

Ms Palaszczuk said Olympic funding would be included in to forward estimates from next year.

Credit ratings agencies S&P Global and Moody’s said the economic recovery was ahead of schedule, while the latter warned against increasing debt levels.

“Queensland’s revenue recovery has exceeded our initial expectations, reflecting the stronger-than-anticipated domestic economic recovery despite the severe economic and revenue disruptions from the pandemic and border closures,” Moody’s vice president John Manning said.