Coronavirus: Budget all bad news as state debt soars

Queensland’s debt-laden government is hoping to deliver a delayed mini-budget next month.

Queensland Tresurer Jackie Trad. Picture: Annette Dew

Queensland’s debt-laden government is hoping to deliver a delayed mini-budget next month as economists warn the pandemic is blowing out already forecast fiscal deficits over the next few years.

Sources said Treasurer Jackie Trad, who was to deliver an election-year budget next Tuesday, was planning on releasing a statement on the state’s finances during a yet-to-be confirmed three-day sitting of parliament in May.

State parliament will resume on Wednesday in a special one-day sitting for the government to present an urgent appropriations bill for the $4bn economic stimulus package, which includes a $400m land tax relief package for property owners and $500m in worker assistance measures.

Earlier this month Premier Annastacia Palaszczuk conceded the crisis had already wiped out a forecasted $151m operating surplus and Ms Trad has warned the state’s fiscal position will suffer with a downturn in revenues, including from resources royalties and GST receipts.

It has also been previously reported that The Australian understands the Queensland Treasury Corporation holds $16bn in cash for emergencies such as natural disasters, and is now seeking to borrow extra liquidity to cover the cost of the crisis.

Leading economist Gene Tunny, a former commonwealth Treasury official and director of Adept Economics, said the crisis could blow out the fiscal deficit by several billion dollars each year over the forward estimates.

Mr Tunny said the government’s already forecast fiscal deficits — $4.1bn this financial year and $4.6bn in 2020-21 — would blow out along with state debt, which was predicted to hit $91.8bn by 2022-23.

He said the bottom line would be hit by a confluence of lost resource royalties, payroll taxes, stamp duties and GST receipts with the cost of the already announced stimulus and, the likely need for further financial support in targeted regions.

“It’s probably fair to say the current financial year deficit will be $6bn-$7bn, if not more, compared with $4.1bn forecast in December,’’ he said. “Deficits in future years will be billions of dollars higher and total debt will exceed $100bn by 2023-24, if not earlier.’’

Mr Tunney said tourism centres like Cairns, where local economies had been devastated by international and domestic travel bans, would also need specific stimulus packages.

“The government will have to invest in these regions for much longer,’’ he said.

Ms Trad said the government would deliver a financial statement at least before the October election. “The government is working through the budget impact of COVID-19,’’she said.

“Revenue has been reduced as a result of the necessary steps to implement the shutdown.

“I have previously committed to providing an updated statement on state finances which will ­address funding requirements.

“The statement will be released well in advance of the election.

“The government’s priority is to support jobs and business and to manage the budget responsibly.”