Trad to plough Queensland deeper into red

Queensland Treasurer Jackie Trad foreshadows extra borrowing to build infrastructure.

Premier Annastacia Palaszczuk, left, and Treasurer Jackie Trad at the site of a new secondary college at Fortitude Valley. Picture: AAP

Queensland Treasurer Jackie Trad is expected to plunge the state further into debt to build infrastructure, while also preparing to rewrite a promise to keep bureaucracy expansion beneath population growth.

The state’s total debt was forecast in December to hit $83.5 billion in 2021-22, but the Deputy Premier has fore­shadowed extra borrowing in today’s budget to bankroll building works in the cash-strapped state.

“We don’t borrow for operational purposes; we borrow to build,” Ms Trad said yesterday. “We borrow to invest in economic and social infrastructure that Queenslanders need.”

In her first budget last year, Ms Trad abandoned the Labor government’s first-term “debt reduction plan” to send the state further into the red, driving home the “borrow to build” message.

Mining royalties will boost the state’s bottom line by more than $5bn this financial year, offsetting a stamp duty shortfall of $1.32bn over four years, an $800 million drop in GST revenue, and $840m owed by the federal government in disability funding. Coal exports alone are forecast to deliver an extra $800m in state taxes next year.

The budget’s reliance on mining stands in contrast to the government’s reluctance to embrace coal projects, primarily Adani’s Carmichael mine.

 

The state will also miss out on a large injection of funding for infrastructure that would have flowed had Labor won the federal election. Then leader Bill Shorten had promised $2.2bn for the Palaszczuk government’s signature infrastructure project, Brisbane’s $5.4bn Cross River Rail line. Scott Morrison has refused to tip any federal funding into the project. Ms Trad will deliver a slim net operating surplus in today’s budget. But the state’s ballooning bureaucracy is still a major cost, with public-sector employee wages and superannuation by far the largest expenses on the general government sector books.

In last year’s budget, employee expenses were predicted to rise to $23.8bn this financial year, nearly $1bn higher than previously forecast, and the wages bill is likely to increase further today. A recent report by former QUT vice-chancellor Peter Coaldrake identified an extra $1.5bn the government spent annually on contractors and consultants, a finding Ms Trad has described as a “concern”.

On Professor Coaldrake’s ­advice, Ms Trad is likely to scrap and rewrite the government’s promise to keep the rate of public service growth under population growth over the forward estimates. The government has struggled to meet its own fiscal principle ever since then treasurer Curtis Pitt introduced it in 2016.

The Coaldrake report recommended separating the spike in health and education workers from the rest of the public sector, because those industries accounted for the bulk of the growth in the bureaucracy and grew at a rate faster than, and were unconnected to, the population.

“We need to make sure we’re accurately reflecting and recording the growth in the public service,” Ms Trad said. “But what we have seen from the Coaldrake report, in some areas of government administration and service delivery, particularly in health and education, growth is happening at a much faster rate than population growth.”

The government is also expected to raise taxes in today’s budget, only promising that such hikes would not hit Queensland households. This means overseas property investors, absentee landholders, luxury car buyers and possibly the gas export industry will be hit.

Premier Annastacia Palaszczuk has already promised ­record budget spending in both health ($19.2bn, up $929m on the year before) and education ($13bn). Nearly $1.5bn will be spent building four state schools on the Sunshine and Gold coasts.