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Queensland Mid-Year Fiscal and Economic Review 2018-19

The Queensland Mid-Year Fiscal and Economic Review 2017-18 has been released providing an update on the State's economic and fiscal position since the State Budget delivered in June of this year.  

Key points include:

  • The surplus has been revised upwards from $148 million to $524 million in 2018-19 and across the next two financial years due to favourable revisions in royalty and tax revenue;
  • Revenue and tax growth will be stronger in 2018-19. The revenue windfall in 2018-19 is $1.264 billion and is thanks to coal royalties revised up by $1.8 billion over the next 3 years;
  • Budget expenditure and employee related expenses will be growing faster than forecast in 2018-19. Expenses in 2018-19 are estimated to be $58.478 billion, $888 million higher than the Budget estimate;
  • Borrowings of $71.609 billion are projected at 30 June 2019 for Queensland's public sector, $738 million more than the 2018-19 Budget estimate and will rise across the forward estimates;
  • Infrastructure spend will rise to 2.9% of GSP in 2019-20 and is higher than the State Budget estimate in June 2018 (2.8%). It will then fall back to 2.5% by 2021-22; and
  • Economic forecasts are unchanged between the and the State Budget delivered in June 2018.

In summary,  the MYFER delivers an improvement in Queensland's budgetary position in 2018-19 and across the next two years through revenue windfalls mainly in the area of coal royalties. The warning though is that expenditure continues to ramp up with the additional revenue and through history we know that it can be very difficult to turn an expenditure tap off once on. I also note that public sector debt will continue to increase and if anything at a rate faster than was budgeted for back in June 2018.

I have provided below some graphs that I think best describe the main points to note.

 

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