Tuesday, June 25, 2024

Budget surplus buoys Queensland to spend big for future growth and infrastructure goals

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The sunshine state has delivered a record $12.3 billion surplus in its 2023 state Budget, with the government crediting a new way of taking royalties from mining companies that extract coal and gas as bolstering Queensland’s infrastructure fortunes into the future.

In a post-Budget address this week, Queensland treasurer Cameron Dick said a glittering $20.321 billion capital program would deliver the biggest transformation the state had ever seen.

This includes a $7.1 billion Brisbane 2032 venues infrastructure program, major water infrastructure and better health and transport facilities, as well as a “significant reduction of state debt” on previous forecasts.

“This year we’re embarking on Queensland’s Big Build — the biggest infrastructure program ever undertaken in Queensland; we’re also undertaking the largest health infrastructure program in the commonwealth, but there’s more,” Dick said.

“Our big build over the next four years totals $89 billion. As part of that, we’ve got a Queensland health capacity building program — that’s our building program for Queensland hospitals. That’s $10 billion over the forwards. That’s the biggest single hospital building program in Australia,” he said.

By all accounts, Queensland’s fiscal settings and record investments are the exception to the post-COVID economic conditions which have hurt Australia’s other major states of NSW and Victoria.

In both Sydney and Melbourne, this has meant difficult decisions about the size and composition of their respective public services and resulted in cuts. But Queensland’s 2023 Budget announced an appetite for more than 4,500 extra public servants to do the heavy lifting of the government’s ambitious growth plan.

“An unanticipated consequence of COVID was just growth and employment in Queensland, which has led to a historically low unemployment rate of now 3.9% [sic] when we’ve historically had a higher level of unemployment than the rest of the country,” Dick said.

“When I became treasurer in May 2020, I said we wanted to ensure that we didn’t have that long-term structural unemployment that we thought was coming from this terrible virus — we didn’t want that scarifying effect across families and communities and industry that that long term unemployment presents,” he said.

Interstate migration growth has also been a part of the remarkable economic bounce back in Queensland after the long shadow of the COVID-19 pandemic. And a $1.1 billion Budget boost to housing over the forward estimates is slated to help ease the demand for accommodation.

Before the pandemic, a comparison of debt projections by the various state governments of NSW, Victoria and Queensland had the sunshine state flagging, with net debt of $19.6 billion in 2023. But the reality is that Queensland’s net debt today is actually $5.9 billion — significantly less than expected and indicative of how it has been able to navigate and pivot in the midst of the public health crisis.

“NSW, their debt has doubled from $38 billion pre-pandemic to $78 billion. Victoria has also doubled from $54 billion pre-pandemic to $160 billion at the end of this financial year, and that will continue to grow,” Dick said.

“Of all the major states Queensland stands alone with a lower debt after the pandemic than was anticipated prior to the pandemic — the most disruptive event of our lifetime,” he said.

Health and frontline services received $24.2 billion in Queensland’s Budget funding, with a separate $19.8 billion injection to 16 Hospital and Health Services (HHS), and $764 million to address ambulance ramping efficiency and improve access to hospital emergency departments.

“This investment will have the opportunity to use our nursing, midwifery and allied health extended scope of practice and other alternative pathways for specialist clinics to ensure more patients get the care they need,” Dick said when the Budget was handed down earlier this month.

“Our $764 million investment will … allow for the use of specialised staff like Transfer Initiative Nurses, patient flow coordinators and Mental Health Nurses to improve the care we provide,” he said.

The state government has also released a new television advertisement, pushing out the message to the Queenslanders that their resource-rich state was working hard for them. In it, the voiceover says: “We own the coal, so it’s only fair that when prices are higher, we all get our fair share through higher coal royalties so that everybody — especially regional Queensland — benefits.”

The ad package shows community themes of young athletes on the sporting field, families in hospitals, first responders taking to the air in helicopters, the energy infrastructure in regional Australia and a father on a fishing boat with his child. It ends with a very simple line of text to drive the message home: “Everyone benefits from coal royalties”.

The price of coal has reached “exceptionally high” levels in part due to Russia’s illegal invasion of Ukraine, hitting a 186% increase on the previous 2020-21 period and delivering mining companies record profits.

But innovative new gas royalties are also part of Queensland’s healthy Budget equation.

These factors have given Queensland the advantage of painting a picture of a “strong and bright future” with a sunny medium-term view of the 2032 Brisbane Olympics. The state can also boast a dash of bravado that the other states (with the exception of Western Australia) would only dream about in terms of who might fare best in the face of the uncertain global economic context.

“Coal itself will have a future in Queensland, particularly metallurgical — that hard premium coking coal that we have in Queensland ,and Treasury have done the long-term planning for that,” Dick said.

“The need for thermal coal will reduce over time, although there’s been a bump now because of geopolitical pressures, and the obscene war that’s happening — Russia’s war with Ukraine — [and] we’re going to see a continued demand for metallurgical coal to produce the steel the world needs,” he said.

Dick said coal was essential for the global production of transmission pylons, powerlines to connect renewable energy transmission, the construction of hydro dams and wind turbines.

“Until there’s a better way to make steel more commercially, coal will be needed for that purpose, which is why I’m so keen to ensure we can decrease its environmental and carbon footprint going forward,” he said.

Other key initiatives the government wants citizens to know are direct beneficiaries of the coal royalties are $3.619 billion for regional hospitals, $586.1 million for LifeFlight, $333.7 million for the Royal Flying Doctor Service, and a slew of major multi-million dollar clean water and energy infrastructure projects including $800 million for Central Queensland’s wind and solar portfolio.

Dick told the CEDA audience in Brisbane that the 2023 Budget surplus was the biggest single surplus recorded by any state or territory government and even the commonwealth. In history, Queensland’s surplus this year has exceeded all but four surpluses ever recorded by the federal government, and those were all from more than 15 years ago.

While the state is projected to return to deficit next year, the treasurer said the riches of the current climate were being deliberately invested back into the people.

“We can’t stop investing in roads, in transport, in education, in housing, in health, in energy and in water,” Dick said.

“You can’t pause when you’ve got a growth state like Queensland – to pause is to wither. We are determined as a government to charge forward and to make sure we can continue to deliver the infrastructure that Queenslanders need.”

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