Queensland election: State has ‘fat chance of surplus anytime soon’

The chances of the Queensland budget returning to surplus over the next four years are ‘very slim’, a leading economist has claimed.

The chances of the Queensland budget returning to surplus over the next four years are “very slim” as the state economy is more ­exposed to international turbulence, a leading economist has claimed.

Griffith University economics professor Tony Makin said that economic forecasting over the next few years was extremely difficult because of the global impact of the COVID crisis, but regional Queensland, in particular, was more at risk because of the nature of its industries.

“There have been very severe impacts on tourism destinations such as the Gold Coast, the Sunshine Coast and Cairns, where the lack of overseas tourists and the closure of borders has hit hardest,” he said. “The drop-off in overseas education is biting all around Australia, but universities in places such as the Sunshine Coast and Rockhampton will feel the drop-off in student numbers. These people rent homes, they spend money in the towns. That will be a big effect.”

An economic statement from the Queensland government last month showed dim prospects for the state’s coal and gas industries, as well as tourism, and while education income from overseas students was currently stable, a big drop-off was predicted over the next six months.

The number of new student visas lodged, a leading indicator of future enrolments, had dropped by 67 per cent over the 12 months to June 30. There was a most ­optimistic outlook for agriculture, as most overseas markets were holding up, and the prospect of a wet summer courtesy of the El Nino effect meant harvests should be good.

Queensland’s total debt is set to hit $102bn by the middle of next year, but Professor Makin said while the pandemic had changed the situation dramatically, the government’s build-up in public service numbers had ­exacerbated the situation.

“I would say the prospect of a return to surplus over the next few years is very slim,” he said.

“An additional concern is that the high levels of debt may trigger a downturn in Queensland’s credit rating. On a per capita basis, Queensland’s debt level is one of the highest in the country. If that credit rating is dropped, then it could cost the state $100m more in interest payments.”

He also said GST payments would be affected, and this showed up in the federal budget on Tuesday, where the GST pool of money for distribution to the states dropped by $7.6bn.

The major parties on Wednesday clashed on how to get Queensland back in surplus. Treasurer Cameron Dick said that the failure of Opposition Leader Deb Frecklington to rule out “natural attrition” as a means of cutting public service numbers meant “every time a doctor, or a nurse, or a police officer, or a teacher, leaves the public service they won’t be replaced”.

Ms Frecklington ruled out public service redundancies.