Queensland Labor has $4bn war chest to splash cash

The Queensland Labor government will fight the October 31 election armed with a $4bn debt-funded war chest to splash cash.

Queensland Premier Annastacia Palaszczuk. Picture: Peter Wallis

The Queensland Labor government will fight the October 31 election armed with a $4bn debt-funded war chest to splash cash across the state and insisting its closed borders have strengthened the struggling economy.

Treasurer Cameron Dick on Monday confirmed the Queensland government’s total debt would hit nearly $102bn by the middle of next year, $18bn higher than forecast in December before the COVID-19 pandemic.

General government sector debt has surged more than $1.5bn in just six weeks.

Delivering a fiscal update after cancelling the budget, Mr Dick defended the state’s hard border closure, releasing a Treasury analysis that estimated a ­“Victorian-style” stage-four lockdown in Queensland would cost the economy a further $3.1bn a month.

“Keeping the borders strong has had a good impact on our economy — yes, there’s a long way to go … unemployment will still be 8 per cent in the June quarter of next year,” Mr Dick said.

Queensland’s economy is still in a parlous state, driven by diving revenue and the cost of combating the COVID-19 health and economic crises. A surplus of $151m for 2019-20 forecast in December has become a $5.9bn deficit, which will plunge to $8.1bn in the 2020-21 financial year.

Revenue is down more than $6.7bn compared to the December forecast, thanks to lower coal export volumes and prices, falling GST receipts and lower returns from stamp duty. Coal royalties this financial year are forecast to be $2.1bn, down $1.3bn on previous predictions and half of the $4.3bn taken in 2018-19.

Unemployment is predicted to peak at about 9 per cent in the December quarter; already, nearly 140,000 Queenslanders have lost their jobs since the pandemic started.

Yet Queensland’s public service continues to expand, increasing by 4300 full-time equivalent workers to 232,554 in the six months to March.

Mr Dick defended the expansion as continuing to “build the frontline” but could not explain the increase of more than 3000 public servants earning more than $120,000 a year.

He strongly backed the state’s decision to borrow more to help the economy out of its COVID-19 slump, announcing he would borrow an extra $4bn over four years to increase the total stimulus package to $11bn, of which $1bn would go into two separate funds, including a $500m renewable energy fund, to invest public money in private companies to help the state hit its 50 per cent by 2030 target. An extra half-billion would form a Backing Queensland business investment fund that would consider investing in small to medium businesses as well as buying back privatised assets such as the Dalrymple Bay Coal Terminal.

Mr Dick said the remaining $3bn would be “allocated” between now and the October 31 state election, but denied it was to fund election sweeteners.

“No, it’s doing what the governor of the Reserve Bank and the federal government have asked us to do, and that’s to borrow more to invest in Queensland, particularly infrastructure and to create jobs,” he said.

With borrowing costs so low, falling from $2.3bn in 2014-15 to $1.5bn this financial year, Mr Dick said there was no need to increase taxes to repay the extra debt.

“At a time when we can increase the borrowings without increasing the tax burden, it’s appropriate we do so to support the economy and Queensland jobs,” he said.