Queensland budget: state cast into darkness by debt cloud

I never thought I’d write this but I actually miss Jackie Trad. She was clearly the worst state treasurer when she held that position. The real tragedy for Queensland is that her successor, Cameron Dick, doesn’t seem much better.

In budgetary terms, the Queensland government got away with blue murder over the course of this year. The decision to defer its budget this long was close to unforgivable; its failure to release any four-year spending and revenue estimates in the meantime was absolutely unforgivable.

The worst part of this year’s Queensland budget is that it comes after years of extremely ­irresponsible budgetary policy based on unsustainable increases in the size of public sector employment and burgeoning debt.

And here’s a tip for all those true believers in Keynesian pump priming — it didn’t seem to work. Notwithstanding year upon year of raking up more debt and spraying government money around, the unemployment rate in Queensland has been stubbornly high — the highest on the mainland. And that was even before COVID-19 hit.

Notwithstanding some fancy accounting footwork — raiding the public servants’ super fund, for instance — by 2019-20, total net government debt had reached $65bn, the highest figure of the states. It was a very bad starting point for this year’s budget.

Tuesday’s package had a strong deja vu feeling to the other state budgets: four years of recurrent deficits with masses of debt accumulated. By 2023-24, net debt in Queensland will be close to $140bn. And acknowledging the limits to piling more debt onto government-owned corporations, nearly $51bn of the state’s debt will be held in the general government sector.

Evidently, this dismal budget outcome is all because of COVID-19, which is estimated to have caused a $12.3bn fall in ­revenue relative to expectations.

In reality, the decline in revenue isn’t all that massive (annual revenue is $56bn in 2020-21) but it does give the Treasurer the opportunity to splurge on all sorts of ­fantasy projects as well as engaging more public sector workers — think nurses, teachers, doctors, ambos, police — even though the rate of population growth is likely to be quite subdued.

Perhaps the one sensible budget initiative is to assist small businesses, in particular, to get back on their feet. Lower taxes and repayable loans are part of the package. But there is an irony here: many of the businesses that are in the most desperate need of assistance are those harmed by the Premier’s disproportionate and ham-fisted closure of the state border to the citizens of the other states.

The Treasurer was at great pains to point out on Tuesday that Queensland will no longer have the highest debt of the states at the end of the four-year period. What he fails to mention is that the population of Queensland is just two-thirds of that of NSW and 80 per cent of Victoria’s.

Moreover, the state has already endured the ignominy of being downgraded by the ratings agencies under the premiership of Anna Bligh. The chances are there will be a further downgrade sometime in the next few years.