Worse than GFC: COVID’s $12.3bn blow to Qld economy
Queensland's debt will sail toward $130 billion as Treasurer Cameron Dick railed against the "myth" that all debt was bad debt.
Releasing his first and belated Budget today, Mr Dick revealed how big the government's total debt bill will grow to in four years, as the global COVID-19 crisis smashed a $12.3 billion hole in revenues.
Despite an improving unemployment rate as 160,000 new jobs are created in the next year, improving economic growth and an expected economic shot in the arm as 86,000 interstate migrants flock to the Sunshine State over the next four years, Budget papers warn COVID-19 continues to threaten finances.
Tax revenue has fallen by $4.5 billion across four years, GST by $3.7 billion and royalties have tanked by $4 billion as lower coal and LNG prices and weak global growth bite.
It means COVID-19's budgetary impact on Queensland is far worse than the Global Financial Crisis, which took a $9.6 billion chunk out of the state's finances over four years.
Mr Dick said coal exports were due to rebound next year, but had fallen by 45 per cent in this financial year relative to the previous one.
But recent import restrictions and trade uncertainty with China could bite, as could another substantial or elevated wave of COVID disrupting recovery in global export demand, delays in the availability of an effective vaccine or an abrupt unwinding of federal fiscal stimulus.
The Budget is predicated on a vaccination being available in the middle of next year but international student intake and international tourism - both important to the state's economy - will remain limited into 2021.
Queensland finishes 2019-20 with a $5.734 billion deficit that rises to $8.633 billion next year, before falling deficits reach $1.389 billion in 2023-24.
"I make it clear today that the budget will only return to balance when the economy returns to normal," Mr Dick said.
Queensland's unemployment rate - currently at 7.7 per cent - is due to fall to 7 per cent in 2021-22 and remain at 6.5 per cent for the following two years.
Today's "no surprises" Budget contained few new promises following last month's election, besides $360.5 million in new money to continue to fund the government's COVID response, paying for services like fever clinics, contact tracing, the running of quarantine.
Total debt will hit $130 billion by 2023-24, as Treasurer Cameron Dick took a swipe at the "false argument" that debt was always dangerous.
"For nearly a decade, Queensland politics has been haunted by the false argument that debt in Queensland was somehow inherently more dangerous and damaging than debt borrowed anywhere else, or borrowed by anyone else," he said.
"That somehow, Labor borrowing to build schools, hospitals or prisons was somehow more harmful to the economy than the LNP borrowing to pay consultants who informed their cut, sack and sell agenda.
He said the argument was an attempt to justify cuts to essential services "and the sale of the public service" but "today is the day that myth is finally and conclusively dispelled".
"If there has ever been a time to borrow to build, to create jobs and to strengthen the Queensland economy, it is now," he said.
But he couldn't rule out that Queensland will be put on a negative outlook by ratings agencies.
Mr Dick announced Treasury had already achieved $352.2 million in its planned $750 million in savings this year in its four-year quest to make $3 billion in savings.
It's also saved $783 million from its public servant wage freeze.