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Queensland Economic Advocacy Solutions

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QEAS Business Update: Queensland Budget 2021-22

The Hon Cameron Dick’s second Queensland Budget as Treasurer is all about managing the tension that exists between keeping the COVID-19 economic recovery underway but inevitably casting an eye to the future and addressing underlying issues such as getting the budget back into surplus and getting our State’s debt back under control.

The key point to note from the 2021-22 State Budget is that the level of negative economic impact from COVID-19 has not been as great as anticipated and accordingly the revenue side of the budget is much better than anticipated. This has positive impacts on results in multiple areas.

The Queensland Budget deficit for 2020-21 was revised upwards with the deficit now only expected to be $3.8 billion (was $8.6 billion) and is based on better than expected revenue. The deficit for 2021-22 is projected to be $3.5 billion with recovering revenue hoped to deliver a small surplus by 2024-25 of $153 million.

Public sector debt will continue to grow from $95.8 billion in 2020-21 to $127.4 billion in 2024-25. However this is approximately $7 billion lower than forecast in the last budget and also reflects better revenue across the forward estimates.

The $52.2 billion infrastructure spend over 4 years announced in this year’s budget compares to a $56 billion announcement in last year's budget. Infrastructure spend as a percentage of gross state product now peaks at 2.9 per cent and not 3.1 per cent. This compares to the decade average of 3.0 per cent and accordingly there is room for improvement on this indicator.

Queensland's economy continues to impress. GSP growth for 2020-21 is revised up from 0.25 per cent to 3.25 per cent and then 2.75 per cent across next 4 years. Unemployment rate is revised down from 7.5 per cent to 6.25 per cent in 2020-21 and then 5.75 per cent in 2021-22. Population growth is anticipated to be grow at a rate above 1 per cent despite international border restrictions largely thanks to strong interstate migration.

With a vaccine roll-out now underway and light slowly starting to appear at the end of the COVID-19 tunnel we will need to inevitably transition to focusing on getting the budget back into surplus and paying down debt. 

This budget does not achieve this until the outer years of the forward estimates - nor should it. However the budget position's gradual improvement in the next several years is entirety thanks to revenue growth and not substantial expenditure restraint. This continues to expose the budget to significant risk.

This will in all likelihood be the last budget that we can forgive the Queensland Government for poor fiscal and economic results due to the extraordinary circumstances related to COVID-19. To this end, this budget essentially represents the line in the sand.

A full QEAS update can be found here

 

 

 

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