The Queensland Government will spend over $17 billion on infrastructure over the next financial year and has flagged better-than-expected growth of 3.75% and lower unemployment in a budget dedicated to economic recovery.
Treasurer Andrew Fraser delivered an infrastructure-heavy budget yesterday, with over $17 billion set aside for projects in a package designed to push the state out of economic turmoil and restore its AAA credit rating.
He said these projects will protect the jobs of over 100,000 workers.
But while the budget deficit in 2010-11 is set to shrink from a forecast $3.1 billion to $1.7 billion, that decline is mainly due to funding from the Federal Government and an operating surplus isn’t expected until 2015-16.
More exports, business activity and increases in GST revenue are set to move the Government into an eventual surplus, with GDP growth excepted to be at 3.75% this year and 4.25% during 2011.
Debt is also expected to be $6.1 billion lower than expected at $51.6 billion.
Major road projects will be funded, including the Gateway upgrade, while a new $646 million rail line to the Brisbane suburb of Springfield will be fast-tracked.
Other major projects set for funding include the Bogg Road Precinct redevelopment, the call centre for Smart Service Queensland and accommodation for government employee housing in rural areas.
The Government has forecast a peak jobless rate of 5.75% this financial year, well below an initial prediction of 7.25%. That rate will drop to 5% by 2012-13.
The Government also introduced a $26 energy rebate for seniors and pensioners, costing the state over $12 million, while motorists will receive a $24 reduction in third-party insurance. Apart from these initiatives, Fraser said, there wasn’t much more for households.
There wasn’t much for business either, except a new levy for “industry waste” that will be imposed from July 1, 2011. Opposition leader John-Paul Longbroek called it a “great new tax” on businesses, but Fraser said the state remains competitive for corporate tax rates.
“We made some tough choices – about what to do, what not to do anymore, and what’s in the long-term interests of Queensland. In this state budget we report back and recommit ourselves to our true task, providing Queenslanders with a chance at the dignity of work,” he said yesterday.
Other spending included $9.99 billion for health, $9.5 billion for education and skills training, and in a boost to the property industry, an extra $4,000 for the first home buyers’ grant for new homes outside southeast Queensland.
While an earlier-than-expected return to surplus was welcomed by lobby groups, some say the budget needed more of a focus on businesses.
Chamber of Commerce and Industry Queensland president David Goodwin said in a statement the forecast surplus was an improvement, but business needs more relief.
“The business community was today looking to the State Budget to continue on a path of responsible economic management which it does. However at the same time it fails to strengthen its pro business policies.
“A balanced and fairer budget would have invested in the Queensland business community’s future by assisting them. Current business profitability and investment levels are at their weakest levels since the ‘recession we had to have’ in the early 90s. Some of the financial rebound should have been quarantined to help business to employ.
Goodwin noted the waste levy and the upcoming increase in workers’ compensation premiums, and said the state lags behind the budgets seen in Victoria and New South Wales.
“The State Government over the coming year will need to hit the refresh button as under investing in the Queensland business community will risk the long-term sustainable lifestyle that Queensland families currently have.”
The Queensland Resources Council also attacked the Government for referencing an expected $3.2 billion in minerals royalties, a 63% increase from the previous year, saying it is obvious the industry is “paying its fair share”.
Chief executive Michael Roche said minerals and energy companies will pay $13 billion to Queensland taxpayers “free and clear of wages, salaries, infrastructure, community support programs, and corporate taxes to the federal government”.
ANZ senior economist Shane Lee said the budget predicted a “better than expected” economic performance, and commented that rising contract coal prices should deliver long-term financial benefits.
“However, the economic turnaround is not expected to deliver an operating surplus until FY16 and this will probably limit the ability of the State to regain its credit rating in the short- to medium-term.”
“The successful completion of the asset sales program could lead to a positive credit watch, but that is not likely until early next year. Nonetheless, it remains key to the State regaining its credit rating.”
Australian Industry Group Queensland director Chris Rodwell also said while the forecast growth rates are encouraging, the Government needs to catch up with “containing recurrent spending… Such as public sector wages which will grow at 5.4% over the next financial year”.
“A more concerted effort would allow more scope to give cost relief to Queensland businesses. Increases in energy costs and workers compensation premiums, as well as the introduction of the waste levy, deserve a more focused policy response.
However, Rodwell praised the $2.5 million pilot innovation vouchers program, along with the $17 billion infrastructure package.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
