Treasurer David Janetzki says Queensland faces a ‘heightened risk’ of credit rating downgrade

Queensland faces a ‘heightened risk’ of a credit rating downgrade with Treasurer David Janetzki blaming the previous Labor government for overseeing ‘fiscal vandalism’.

Queensland Treasurer David Janetzki.

Queensland is facing a “heightened risk” of a credit rating downgrade, with Treasurer David Janetzki blaming the previous Labor government for overseeing “fiscal vandalism” during its decade in power and for failing to control cost blowouts on major infrastructure programs.

As the resources-rich state faces spiralling interest payments on surging borrowings, Mr Janetzki said the Treasury department had advised him that Queensland now had a “significant and growing debt burden that won’t stabilise”.

The Liberal National Party Treasurer revealed the state’s fin­ances were in a worse position than Treasury’s pre-election predictions because of billions of dollars worth of blowouts on key projects, including a $4.2bn escalation on the Borumba pumped hydro station, $1.3bn increase to hospital upgrades and a $494m lift to the Cross River Rail.

“Before I started in my ministerial role, I was clear about the challenge. I wanted to stabilise our fiscal position and ensure our current rating was secure,” he told an Australian British Chamber of Commerce lunch in Brisbane on Wednesday.

“I even said that I didn’t want to be a treasurer who has a ratings downgrade on my watch.

“However, knowing what we know now, I am in an unenviable position where that could well be the case.

“This is the unfortunate reality I have learned in the month since becoming Treasurer.”

Both Tasmania and NSW have been placed on a negative outlook by rating agencies in the past two weeks.

Queensland Labor’s June budget predicted total government debt would soar to $172bn by mid-2028, with the total interest bill expected to reach $7.73bn.

The previous government continued to borrow, despite its super-profit tax on coal companies funnelling an extra $25.9bn into state government coffers in the past two years.

The debt-to-revenue ratio of 69.6 per cent for 2023-24 – a key measure for rating agencies – will surge to 116.8 per cent by June 2028.

It compares with 20 per cent debt-to-revenue in 2007-08 and a peak of 91 per cent under the one-term LNP Newman ­government.

S&P Global Ratings confirmed the state’s AA+ rating in early September on the expectation that debt levels would peak at about 140 per cent of operating revenues and the budget would remain in cash surplus.

Deputy Opposition Leader Cameron Dick. Picture: Steve Pohlner

Deputy Opposition Leader Cameron Dick, who delivered five budgets as Queensland treasurer, refused to take responsibility for the state’s fiscal position on Wednesday.

“I take responsibility for delivering a stable AA+ credit rating for Queensland, I take responsibility for delivering the biggest single budget surplus of any state or territory in Australia history, I take responsibility for the lowest unemployment rate Queensland has ever seen.

“I take responsibility for delivering the infrastructure that the growth state of Australia needed and I do not apologise for any of those decisions.”

Mr Dick also insisted he was unaware before the election that a mega pumped hydro station at the centre of Queensland’s planned transition away from coal-fired power had blown out by more than $4bn and delayed by almost three years.

Multiple sources with knowledge of the Queensland Hydro projects told The Australian in October that Borumba was behind in its development schedule and would likely face blowouts.