Queensland will run deficits for the next four years and plunge into almost $130 billion worth of debt.
That’s the grim outlook of the sunshine state’s 2020/21 budget, unveiled on Tuesday.
There will be another $17 billion borrowed before July next year to stimulate the economy amid falling revenue.
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Queensland’s 2020/21 deficit will be $8.6 billion, which swamps last year’s $5.7 billion black hole, Treasurer Cameron Dick revealed.
The bottom line has suffered a $3.5 billion hit to revenue with GST receipts, tax and royalties all down due to the COVID-19 pandemic and lower coal and oil prices.
Mr Dick says $17 billion must be borrowed this financial year to fund economic stimulus, including the newly re-elected Labor government’s $9 billion in election promises, and day-to-day government operations.
That will take the total debt to $110.1 billion this year and $129.7 billion over the forward estimates.
“Borrowing is not my first choice, but right now, and for several years into the future, borrowing is the only choice,” Mr Dick said.
“As I said during the election campaign, budget deficits must be funded from borrowings. Accordingly, borrowings will increase.
“No Queenslander will be surprised by that.”
Mr Dick’s calculations rely on a Government forecast of a coronavirus vaccine by late 2021 and the budget indicates the economy is showing green shoots.
Queensland’s economy contracted by 0.4 per cent in 2019/20 but it’s forecast to grow by 3.5 per cent in 2020/21.
Forecasts show continued expansion by 2.75 per cent in both 2022/23 and 2023/2024.
Unemployment will no longer peak at nine per cent by Christmas, as previously predicted, with the budget showing it reached its highest point at 7.9 per cent in the September quarter.
Mr Dick said Queensland initially lost 205,400 jobs due to coronavirus, but the state has now recovered after creating 205,900 jobs since the pandemic began.
“The good news is that here in Queensland we have recovered every job that was lost during COVID,” he said.
“No other state and territory has achieved that feat.”
He was optimistic that reopening the state’s borders will further boost the economy, but he warned that would also create new problems.
The treasurer said the primary issue was the net migration from other states putting stress on Queensland’s labour market.
Federal treasury forecasts indicate 86,000 people will move to Queensland from other states over the next four years, Mr Dick noted.
That will account for eight per cent of Australia’s net internal migration.
“When those people get to Queensland they’ll want a job,” he said.
“And as a government we remain resolutely committed to helping.”
The government is still aiming to cut $750 million from existing spending in 2020/21 and $3 billion over the forward estimates.
Mr Dick says government operations will be more efficient with a number of spending targets for departments and agencies.
About four per cent will be cut in direct government funding to the arts and cultural sector.
“We know we must make every dollar work as hard as it can,” he said.
© AAP 2020