Queensland Treasurer David Janetzki flags huge increase in state debt

Millions of Aussies are confronting a stark budget black hole, with an economic update exposing a serious $217bn breakdown in one state’s finances.

Queensland is sinking into a larger-than-expected budget black hole, with billions in additional debt as the mining powerhouse confronts a sharp rise in public sector spending and reduced revenue intake from coal royalties.

The state’s closely-watched Mid Year Fiscal and Economic Review, released on Thursday, shows the state’s debt hitting $217.8bn by 2028, far beyond the $172bn forecast by the previous Labor government in its final budget last year.

The review now expects a projected $500m deficit in the 2025-26 financial year to blow out to $6.9bn.

It also shows an $887m surplus forecast for 2026-27 disintegrating into a $9.2bn deficit and an earlier forecast surplus of $2bn for 2027-28 collapsing into another $9.2bn deficit.

“The three projected deficits from 2025-26 onwards would each be the largest on record, surpassing the $5.7bn deficit recorded in 2019-20 at the onset of the Covid-19 pandemic,” the MYFER document states.

From 2024 through to 2027-28, deficits are expects to total $30.2bn.

Capital project costs are expected to jump from $107.3bn in the 2024-25 budget to $129.9bn by 2027-28.

Queensland Treasurer David Janetzki has revealed a worsening financial picture for Queensland in Thursday’s MYFER. Picture: NewsWire / John Gass

Economic growth is also expected to slow from a projected 3 per cent to 2.5 per cent across 2024-25, while unemployment will likely remain steady at 4.25 per cent through to 2025-26.

Treasurer David Janetzki said the update exposed “the debt and deficit legacy of the Labor government”.

“Labor’s last budget update reveals the lies and deceit of the former Labor government’s hidden blowouts and unfunded essential services,” he said on Thursday.

“Under Labor, Queensland would have been saddled with $218bn in debt.

“This would have had real-world costs for Queenslanders, impacting programs and services.

“Today we confirm our promise that debt will be lower under the LNP than Labor’s $218bn debt disaster.

“Labor’s mess was a decade in the making and it is now our challenge to overcome.”

If the forecast holds, Queensland would exceed Victoria’s expected net debt load of $188bn by 2028.

Forecast borrowings per capita for the non financial public sector is expected to skyrocket from about $23,000 in 2024-25 to almost $40,000 by 2027-28.

Victoria’s NFPS borrowing per capita, by contrast, is expected to reach $37,000 by that year.

Labor’s Shannon Fentiman said Mr Janetzki was exaggerating the debt in the Queensland budget update. Picture: NewsWire / Glenn Campbell

The LNP government, led by Premier David Crisafulli, booted Labor from government after nine years in opposition at last year’s October election.

Mr Janetzki said the Crisafulli government would work in a “calm and methodical” manner to reduce the state’s debt load and services.

“We are working through the budget process and will take a calm and methodical approach to deal with Labor’s deception, so we deliver on our promises to tackle Labor’s youth crime, health, housing and cost of living crises,” he said.

Shadow treasurer Shannon Fentiman, speaking before the release of the MYFER, said Mr Janetzki had “juiced” the numbers for political reasons.

“He is making this as bad as possible and then lo and behold in five months time there will be an improvement in revenue and a reduction in the debt forecast,” said.

“They have juiced this up, the same way they cooked Cross River Rail to play a political game, which would be funny if it wasn’t serious for Queensland’s borrowing cost.”

The budget outlook is expecting lower than expected coal exports. Picture: Supplied

The MYFER provides an update on the state’s financial health and economic outlook halfway through the financial year.

Alongside debt and deficit projections, it presents a general picture of economic growth, employment and new funding allocations.

Lower revenues from the state’s all-important resource royalties are also expected to hit government coffers, with the royalty haul for 2024-25 expected to hit $8bn, a $420m fall from the $8.42bn forecast in the budget.

“The downward revision is largely driven by lower than anticipated coal export volumes combined with a faster-than-expected decline in hard coking coal prices, which were only partly offset by a weaker Australian dollar,” the forecast states.

“Beyond 2024-25, the outlook for total royalties is broadly unchanged compared to the 2024-25 budget, with further declines in royalty revenue still expected in coming years as commodity prices continue to normalise, before royalty revenue broadly stabilises from 2027-28.”

Originally published as Queensland Treasurer David Janetzki flags huge increase in state debt