Queensland Auditor-General issues scathing report into state’s finances

The Auditor-General has delivered a dire assessment of the state’s finances, warning government spending is outstripping revenue.

Queensland Premier Annastacia Palaszczuk. Picture: AAP

Queensland’s Auditor-General has delivered a grim assessment of the state’s finances, warning government spending is outstripping revenue.

In a report tabled in state parliament, Brendan Worrall says the government’s financial performance has reduced over the past two financial years, with “expenses incurred increasing at a greater rate than revenue”.

Debt is also expected to rise as the government increases spending on major capital works, including its largest infrastructure project, Brisbane’s $5.4bn Cross River Rail public transport project.

Mr Worrall said the increase debt, on current forecasts, was sustainable but needed to be managed.

The mid-year fiscal and economy review, delivered by Queensland Treasurer Jackie Trad in December, said debt would hit $91.8bn by 2022-23. At that update, revenue in 2019-20 was estimated to be $60bn, $473m less than forecast at the 2019-20 budget handed down in June.

The drop in revenue was driven by lower coal prices and downward revisions to other projected mining royalties, as well as lower land tax and GST revenue.

Mr Worrall said the growth in revenue was hit by a reduction in the GST grant funding from the federal government, cut by about $800m in 2018-19.

“The funding Queensland receives from GST grants is expected to decline further in the future, although the methodology for allocating funding between states is currently being reviewed,” he said.

The public sector continues to grow, contributing to a $1.5bn (or 6.2 per cent) surge in employee expenses in 2018-19.

Since 2016-17, the Queensland government’s expenses have increased by $7.3bn (11 per cent) but total revenue has only increased by $4bn (six per cent), driven by the increase in employee expenses, other operating expenses and grant expenses.

“Unless the Queensland government can increase its revenue or constrain the recent growth in its expenses, it risks not being able to meet the costs of its activities from the revenue it earns going forward,” Mr Worrall reported.

“As identified in this report, the Queensland government faces several uncertainties around its future revenue including the level of grant funding provided by the Australian government.”

Ms Trad has brought forward the state budget to April, instead of its usual date in June, ahead of the next state election scheduled for October 31.