QUEENSLAND Treasurer Cameron Dick has revealed Queensland’s debt has ballooned amid the COVID crisis during a special budget update on Monday.
Total debt will skyrocket to $101.9 billion in 2020-21, up from the $100.7 billion predicted just two months ago.
The forecast $234 million budget surplus for this financial year is also out the window and has instead turned into an $8.1 billion deficit.
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The state government has also laid out a plan to borrow an extra $4 billion over the forward estimates, of which $3 billion would be used to announce major projects in the lead up to the state election on October 31.
Mr Dick admitted the COVID crisis was unlike anything the state’s finances had seen before.
“We see the continued challenges faced by industries whose demand outlook remains bleak. Our services export sectors like tourism and international education are our clearest examples,” Mr Dick said.
“While fiscal stimulus has been targeted at short-term measures to support demand, it is expected that economic recovery from the COVID-19 pandemic will take some time.
“As such, the government anticipates the need for further economic stimulus in the medium term. This will need to be provided for through additional borrowings, with a provision of $4 billion identified, reflecting a balance between supporting economic activity and sustainably managing borrowings.
“There is no need to increase taxes to pay this additional debt … this is an important point,” he said.
It was also revealed unemployment will peak at 9% in the December quarter 2020, improving to 8% by the June quarter in 2021 as people start to return to the workforce.
Key tourism regions, particularly on the Gold Coast, have been the hardest hit due to the border closures and international travel restrictions.
Mr Dick announced the government would put up $1 billion to directly invest in businesses to create jobs.
That includes $500 million for a Business Investment Fund that will target investments in reputable small and medium-sized Queensland businesses that require capital to grow.
“Business as usual will not cut it as we recover from COVID-19,” the Treasurer said.
“More than ever, Queensland businesses need to be resilient and agile to deal with rapidly evolving threats and opportunities.
“The Backing Queensland Business Investment Fund will provide a catalyst for these businesses to address challenges or take opportunities much more rapidly than they would be able to do so otherwise.”
The other $500 million is for a Renewable Energy Fund that will allow publicly-owned energy companies to invest in renewable projects across the state.
“By putting our money on the table, we can get more projects through the vital investment decision phase, to get construction underway as soon as possible,” he said.
The payroll tax holiday will also be extended to July and August 2020 for small business, as well as land tax rebates.
The Treasurer also noted that while there is not currently enough financial certainty to allow for four years of economic forecasts, should the Palaszczuk Government be re‑elected in October, a full budget will be delivered in the week commencing Monday 30 November.
“Given the importance of Federal payments, until the Federal Government deliver the 2020-21 budget, State Governments are unable to finalise their own budgets,” the Treasurer said.
The Treasurer and the Premier will be grilled on the state of the budget when they front the parliamentary economics committee on Friday.