Queensland general government revenues are $60 billion higher than once expected over 2020-21 to 2023-24, but debt is only $23 billion lower, with total spending revised up by around $32 billion. Some of this is understandable due to higher inflation and population growth, but much of it is due to policy choices, such as power price rebates. 

Since the current Queensland Treasurer’s first budget handed down in December 2020, estimates of total general government revenue across 2020-21 to 2023-24 have been revised upwards by $60 billion. The 2020-21 to 2023-24 time period is relevant because these were the four financial years forecast in the Treasurer’s first budget. Revenues have been higher than first expected because the economic recovery from the COVID-recession was much stronger than expected, meaning higher payroll tax and stamp duty revenues, and because of super-high commodity prices, primarily coal but to a lesser extent oil and gas, associated with the invasion of Ukraine. Partly, the revenue revisions were associated with the Government’s new royalty regime which imposed additional tiers of royalty rates.

At the time of the 2020-21 budget, Queensland general government debt was projected to increase to over $88 billion in 2023-24 and the total non-financial public sector was projected to increase to $130 billion. The non-financial public sector excludes state-owned financial corporations such as Queensland Treasury Corporation and Queensland Investment Corporation. Such entities can hold substantial amounts of debt unassociated with the usual business of government or traditional government trading enterprises. For instance, as well as borrowing money for the general government, QTC borrows additional money and lends it to local governments, universities, and private schools, among others.  

Thankfully, higher revenues since the 2020-21 budget have resulted in lower estimates of government debt in 2023-24, but not by as much as might be expected. Let’s consider the general government sector and I’ll aim to examine the total non-financial public sector including the government-owned corporations in a future article. The state Treasury is now forecasting debt levels of $65 billion for the general government and $111 billion for the non-financial public sector in 2023-24. For the general government sector, total debt is only $23 billion lower, despite $60 billion of revenue upgrades. What’s going on? 

Since the 2020-21 budget, total operating expenses over 2020-21 to 2023-24 have been revised upwards by around $30 billion, and capital expenses have been revised upwards by nearly $2 billion, meaning around $32 billion of additional spending. Around $14 billion of these additional expenses could be explained by higher inflation, average wages growth, and population on my calculations, which leaves over half of the increase in expenses due to explicit government policy decisions.  

Overall, we have accounted for $55 billion of the $60 billion of revenue revisions over 2020-21 to 2023-24: i.e. lower debt of $23 billion, higher spending of $32 billion. The remaining $5 billion could be explained by the government pre-borrowing money – that is, the government did not reduce its borrowing to the full extent its additional revenue would have allowed. There is also the tricky issue of the operating statement figures I’m quoting being accrual accounting estimates rather than cash estimates, and ultimately it’s the cash balances of the government that drive the borrowing requirements. I’ll aim to have an analysis of the cash flow statement which is also published in the budget in a future post. 

Finally, I should note that because the government is projected to run a total of over $25 billion of fiscal deficits over 2023-24 to 2026-27, total debt will continue to rise, and is expected to reach $95 billion for general government and $147 billion for the non-financial public sector in 2026-27.

I’ll be sharing more of my views on the Queensland budget and economy at an Australian Taxpayers’ Alliance event at the Paddington Tavern tomorrow night (Tuesday 20 June 2023). You can book tickets via:

Queensland’s State of the Economy

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