The Queensland budget verdict: It’s Victoria with coal

Queensland Treasurer Cameron Dick addresses media at the 2024 state budget lockup at Parliament House. Photo: Dan Peled / NewsWire

Queensland Treasurer Cameron Dick seems to be a bit confused these days. Rather than deliver a responsible budget for his state that uses the fortuitous flow of coal royalties to pay down debt, he thinks he has taken a job at the Ekka stuffing vote-grabbing show bags. They are full of unaffordable giveaways desperately designed to retain enough electoral support for the Labor government to remain in office.

There are massive energy rebates, 50c public transport, discounts on motor registration, discounts on residential stamp duty – the list goes on. The hope is that enough voters have a “gimme” attitude, given cost-of-living pressures, that they will think kind thoughts towards Labor. The possibility that voters may be concerned about the irresponsibility of this spending is quickly discounted.

The Queensland budget is always tricky to interpret because of the continuing number of government-owned corporations and its funding of superannuation. A lot of shuffling of debt goes on between the general government sector and the corporations. The inclusion of the assets of the public sector superannuation scheme but not the liabilities in the state’s balance sheet is actually quite bizarre.

It’s why Dick is keen to emphasise net government debt rather than gross government debt.

But even on his net debt figures, the indebtedness of the state is increasing massively over the forward estimates: from $12.2bn this financial year to $60bn in 2027-28, an astonishing increase of nearly 400 per cent.

Gross debt is expected to top $170bn, which is giving the big boy states a bit of a nudge. Queensland was the first state to have its credit rating downgraded; there is clearly no appetite to regain a higher rating. Indeed, there is a real risk that it could be further marked down.

At a time of very high commodity prices, it is expected that the 2024-25 budget will still record a net operating deficit of $2.6bn, followed by a lower one in the next year. But the fiscal balance, which includes capital spending, is deeply in the red over the entire forward estimates period, reaching close to $11bn in 2024-25.

In fiscal terms, I like to think of Queensland as Victoria with coal. The two states even use the unfortunate tag of Big Build to label their ill-considered infrastructure projects, massively over-budget and delayed.

Blessed with loads of coal and relatively new coal-fired electricity plants, the Queensland Labor government seems intent on pursuing an insane energy policy that involves ridiculously high targets for renewable energy and emissions reductions.

If one pumped hydro project were not enough, there are plans – not fully funded ones, mind you – for two pumped hydro projects: one near Gympie and one near Mackay. Obviously, the bureaucrats haven’t bothered to read the ongoing bad press about the progress, or lack thereof, of the Snowy 2.0 project or simply assume it will be easier up north. This is notwithstanding less favourable topography.

The small pumped hydro Kidston project in north Queensland has dragged on and on; it would never have been built without government funding. And then there is the dubious CopperWire project to Townsville. It will be funded by Queensland taxpayers but has been around for many years without meeting any sensible cost-benefit analysis.

The real tragedy is that these realities are being ignored by the Labor government and many billions of taxpayer dollars are being thrown at the so-called transition. In the meantime, every effort is being made to kill the golden goose (the royalty-paying resource industry) by imposing royalty surcharges, additional payroll taxes and making it extremely difficult for new projects to be approved.

For a while there, it would seem that the axiom: Queensland, beautiful one day, broke the next might have been inaccurate. But the Miles/Dick government has clearly demonstrated that spending other people’s money is their DNA: profligacy is in vogue for them, prudent budgeting is so yesterday. It also cuts across the national macroeconomic settings that are needed to tame inflation and potentially lead to lower interest rates.

The Queensland voters should at least be aware of the real financial risks that are being run on their behalf before they lap up the various goodies on offer.