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10 questions to ask about the Mid-Year Fiscal and Economic Review 2017-18

Tomorrow the newly minted State Treasurer, Jackie Trad MP,  will deliver the Mid-Year Fiscal and Economic Review.

The MYFER as it is affectionately known provides an update of the State’s economic and fiscal position since the 2017-18 Budget (delivered 13th June 2017) and outlines “Government’s actions to further support households and businesses, with a key focus on job creation, economic growth and lowering the cost of living.”

This is not as big an event as the State Budget but it is nonetheless important and these are the criteria that I will use to assess how good it is for Queenslanders.

  1. What is the revised surplus for 2017-18?   Is it line with the June State Budget forecast of a very slim $146 million surplus?  It is almost certainly going to be higher than that but not from good management but rather good fortune such as additional coal royalties and additional GST receipts from the Commonwealth.
  2. What is the revised level of coal royalties?  A one per cent variation in the average price of export coal leads to a change in royalty revenue of approximately $37 million.  The State Budget forecast a coking coal price of $131 US per tonne and recent prices have been well above that.
  3. Is government debt rising or falling in 2017-18 and over the forward estimates of the Budget? General government debt for 2017-18 was forecast in the State Budget at $33.7 billion and total public sector debt at $72 billion. I am wanting to see some insight into how the State Government is going to tackle the issue of ‘Debt’ (forecast to hit $81.1 billion by 2020-21).
  4. What is the budget repair across the forward estimates?  As part of the election, Queensland Labor announced a total net budget repair of $261 million over the forward estimates.  We will need to do considerably better if we are to ever get our Triple A credit rating back. Election commitments totalled $2.8 billion and total budget repair measures of $3.0 billion in recurrent expenditure savings, tax increases and capital reprioritisation measures.  However this in my view represents a greater risk to the Budget than opportunity as it is always much easier to spend money than to achieve savings.
  5. How much is Government expenditure growing by in 2017-18 (forecast 3.9%) including employee related expenses (5.7%) and have they kept a lid on growth?  A one per cent reprioritisation measure in the public service saving $1 billion was announced during the State Election and I hope to see some of the detail as to how this will occur.
  6. Are there any new taxes, fees and charges?  Here we will start to see some detail on the State Government’s new ‘robin hood’ taxes.  Three days out from the State Election the previous Treasurer (Curtis Pitt) announced four new taxes including increasing the 3% transfer duty surcharge applied to foreign buyers of Queensland property to 7% (raising $99m over 3 years) and a new land tax category for 850 large property holdings greater than $10m (raising $227m over 3 years).  I am anticipating some of the detail starting to emerge on these unless the State Government heeds the sensible advice of the Property Council - pause to consult on merit and implementation.  Furthermore, anticipate a new ‘waste levy’ but this will probably not be announced until the 2018-19 State Budget in June 2018.
  7. What are the economic and revenue forecasts for the next four financial years and are they realistic? The Queensland economy is forecast to grow by 2.75% in 2017-18, employment by 1% and an unemployment rate at 6.25%.  Given Queensland’s unemployment rate is already at 5.9% expect to see some favourable revisions occur in this area.  Queensland Labor will use tomorrow as an opportunity to press home their economic credentials.
  8. What infrastructure projects will be announced? I am not expecting any new projects announced given how close the MYFER is to the State Election. We have already seen all the election pork barrelling announcements (found here: http://qeas.com.au/entries/general/the-state-election-result-and-what-it-means-for-you
  9. What economic and job growth initiatives will be announced?  Again given how close the State Election was, it is almost certain we will not see any new announcements but rather a rearticulation of the initiatives announced over the course of the election campaign.
  10. Are there any items from left field such as further divesting of underutilised Government parcels of land (privatisation under another name)?

In summary, I am anticipating the new Treasurer from the ‘get go’ seeking to contrast herself against the recently replaced Curtis Pitt.  Tomorrow is her first opportunity to do just that and put her best foot forward in demonstrating capable and competent fiscal and economic leadership.

Source: http://mailchi.mp/6562ad0bcc36/queensland-budget-2017-18-business-update

 

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