Following its resounding election victory in October, Annastacia Palaszczuk’s Labor Government has announced its 2020/21 budget, which was delayed six months due to the COVID-19 pandemic.
The Government’s strong election performance that delivered an increased majority; a fixed four-year term; and the reality that bold decisions need to be made for the State to recover effectively from the pandemic are all factors that have underpinned a big-spending, high-debt Budget that is all about creating jobs.
There were few surprises in the Budget announcement, with all of the major announcements released during the election campaign.
Treasurer Cameron Dick and the Premier had flagged the Budget would build on September’s Queensland Treasury Covid – 19 Fiscal and Economic Review which outlined the State’s six main priorities:
Premier Palaszczuk and her team are staring into an extremely challenging outlook.
The Queensland Government‘s Report on State Finances revealed a $5.7 billion operating deficit for 2019-20. General government sector expenses for 2019-20 totalled $63.5 million – $119 million lower than expected in September’s COVID-19 Fiscal and Economic Review in September, although the $25.6 billion public service wages bill was not reduced.
The Government’s response, as we have seen with the NSW and Victorian Budgets recently, has been to bite the bullet and borrow big, albeit at record low interest rates, to invest in jobs-creating infrastructure and build the State’s future resilience.
Some economic green shoots have already started to emerge.
Queensland is the first state in Australia to put back every job lost since COVID restrictions started in March. Retail sales rebounded by 8.9 per cent in the September quarter to be 11 per cent higher than the same period in 2019. Dwelling approvals rose 11.6 per cent in the September quarter, higher than pre COVID levels.
Treasurer Dick used his Budget speech to hammer home the message that the Government is unashamedly prepared to borrow and spend money to grow Queensland’s economy.
While, the Budget did not include any new or increased taxes, borrowings will increase to $130 billion by 2024 to make up for revenue shortfalls and increased Government spending.
However, the Government is betting that the State’s economic recovery will come from its pro-business, pro-growth strategy to create a larger economic pie that helps bridge the gap towards a more balanced budget.
Budgets are always about choices and the Government has chosen to reinforce the State’s macroeconomic position through big, expensive investments including the $1 billion commitment to make trains in Queensland; employing 19,000 more frontline public servants across four years; and the projected 86,000 net interstate migration over the next four years.
On the same day the State’s borders finally opened to interstate travellers from Victoria and greater Sydney, the Queensland Budget is built around a sense of hopefulness that things are getting better.
The Treasurer will be banking on the fact that visitors returning to the State will help build business and consumer confidence in the economy that lifts all sectors.