Queensland total debt tipped to soar above $120bn
Queensland’s Opposition and some economists are predicting the state’s total debt will soar beyond $120bn for the first time in Tuesday’s budget.
Queensland’s Opposition and some economists are predicting the state’s total debt will soar beyond $120bn for the first time in Tuesday’s budget, with Treasurer Cameron Dick borrowing to fund election commitments and operating expenses.
Mr Dick has warned he has no choice but to hike debt in his first full budget to help the economy recover from the COVID-19 pandemic and to fund at least four years of deficits, insisting that while borrowings would rise they would be “prudent and responsible”.
But LNP finance spokesman Jarrod Bleijie said the public was being “softened up” for a “very scary, bad budget” that would lock in more than $120bn in total debt not flagged before the October 31 election.
Mr Bleijie said Mr Dick had only told Queenslanders about borrowing $4bn to pay for election commitments, and had not mentioned extra debt to fund deficits or operating expenses before the poll, describing it as the first “broken promise” of the re-elected Palaszczuk government. But a spokesman for the Treasurer pointed out several instances during the campaign when Mr Dick said he would need to borrow more to fund deficits.
On October 13, Mr Dick told ABC Radio that there would be deficits for the next four to five years “and we’ll need to borrow to do that”. And at his costings announcement days before the election, he said: “If we are running deficits … it’s axiomatic from that we have to fund the deficit.”
Mr Dick has said Queensland’s borrowings would be “significant” but would be eclipsed by the “eye-watering” debt in the recent NSW and Victoria budgets. NSW forecast $191bn total debt by 2023-24, and Victoria’s total debt is estimated to hit $192bn by then.
Queensland’s position will be revealed at Tuesday’s budget. At a September fiscal update, Mr Dick announced the $4bn in extra borrowings, separate to a forecast $102bn in total government debt by mid-2021.
Former commonwealth Treasury economist Gene Tunny, director of Adept Economics, said it was likely the total debt would exceed $120bn, if the $4bn in extra borrowings announced in September were not included in that update’s $102bn forecast.
Mr Tunny said he would be keeping a close eye on interest payments on the debt, which had been estimated to rise to nearly $1.7bn in 2020-21 on general government sector borrowings.
“The interest payments are how debt immediately impacts on the budget, it’s a drain and governments can’t spend (that money) on health and education,” Mr Tunny said.
“They are going to have to borrow a lot of money this year and next year. I would not recommend austerity … but we have to keep an eye on what that cost to the budget is.”
“You don’t want to show reckless abandon. I’ll be looking for when the government thinks it can start stabilising and trying to reduce (debt) as a share of Gross State Product, and as compared to revenue.”
Mr Dick has said interest rates are at historic lows, and the state was following Reserve Bank advice to borrow more to stimulate the economy.
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