2018-19 Queensland Budget

12 June 2018

OVERVIEW

Queensland Deputy Premier and Treasurer Jackie Trad today delivered the Palaszczuk Government’s fourth budget, and her first since taking on the Treasury portfolio after the Government was returned at the November 2017 State Election.

Under the theme of ‘delivering for Queensland’, the Budget seeks to respond to the Government’s political balancing act between the development and employment concerns of regional Queensland, and facilitating investment in economically necessary, productive infrastructure in Queensland’s populous South East corner. Painting a clear picture of this challenge, the Treasurer described the economic blueprint as a “Budget for all Queensland, and a Budget for all Queenslanders”.

The Budget will inject $45.8 billion in infrastructure funding over the next four years – levels not seen since the 2011 flood recovery – with $11 billion of the funding parcel to be spent during 2018-19. Funding has been allocated to key election commitments and ongoing projects including Cross River Rail, the M1 and Bruce Highway; regional projects including Rookwood Weir, Cairns Convention Centre and Townsville Stadium; hospitals and schools.

Some early rays of economic sunshine have arrived to bolster the Government’s financial credentials, with the Treasurer announcing a larger-than-expected surplus of $1.5 billion for the year to date. This is a $1 billion improvement on the Mid-Year Fiscal and Economic Review forecast in December, driven by larger than expected revenues from Queensland’s resources sector. A more modest operating surplus of $148 million is forecast for 2018-19, increasing to $690 million in 2021-22.

With the State’s total debt forecast to rise by $13.6 billion over the next four years to $83.1 billion, Ms Trad sought to downplay concerns about the balance sheet by describing it as “absolutely sustainable” when considered in the context of the size of the economy and its forecast growth.

Ms Trad confirmed the Government is committed to meeting the demands of a fast-growing state through increased infrastructure investment, and accepts the impact this approach will have on the budget’s bottom line. In an indication that Labor is seeking to redefine its economic narrative in the Palaszczuk Government’s second term in office, the Treasurer told reporters that the Government would make “no apologies for borrowing to build infrastructure” on the basis that “it’s the right thing for jobs”.

The Government has also sought to alleviate concerns about the public sector wage bill, by reaffirming employee expenses will be kept in line with population growth at 1.7 per cent. Meanwhile, the Treasurer has committed $26 million to maintaining a 50 per cent rebate on payroll tax until June 2019.

The Government will spend a record $18.3 billion on the Health portfolio in the 2018-19 financial year, an increase of almost $800 million from last year, with hospitals in Logan, Ipswich and Caboolture to be upgraded. A further $5.5 billion will be spent on concessions to target cost of living pressures, an increase of $200 million on the previous year.

No new taxes have been announced outside of the four ‘luxury taxes’ revealed during the election campaign, and the re-introduced landfill levy, which is expected to raise $1.32 billion over four years. Shoring up the Government’s environmental credentials, $100 million will be made available from the proceeds of Queensland’s re-introduced landfill levy for grants to private companies and local governments to come up with new and environmentally friendly ways to deal with mounting levels of waste. The Government has also directed $330 million toward the Great Barrier Reef for projects to improve water quality and address the effects of climate change.

The Liberal National Party opposition, in its initial response, has criticised the government for increasing taxes and debt. Opposition leader Deb Frecklington will deliver her budget reply speech on Thursday.

FURTHER READING

KEY PARAMETERS

A net operating surplus of $1.5 billion in 2017-18, easing to $148 million in 2018-19, before increasing to $690 million in 2021-22
Average annual growth in Government operating expenses of 2.0 per cent over the forward estimates
Gross state product (GSP) growth forecast of 2.75 per cent in 2017-18, increasing to 3 per cent in 2018-19 and easing to 2.75 per cent annually from 2019-20
2017-18 General Government Sector debt expected to be $2.4 billion lower than estimated in the 2017-18 Budget
Employment growth estimate of 2.75 per cent to June quarter 2018, forecast to return to between 1.5 and 2 per cent over the next four years
Unemployment expected to remain at 6.25 per cent to 2019, falling to 5.75 by 2021-22
Queensland’s population growth projected to continue at 1.75 per cent annually