In what is becoming an all too familiar song, the Queensland Government announced over the weekend that its promised Budget surplus would not be delivered following a $4.8 billion hit to forecast revenues over the past 18 months mostly on account of falling coal royalties. From Business Spectator:
Tim Nicholls says the Liberal National Party’s (LNP) promise of a surplus by 2014-15 will now be pushed back a year to 2015/16.
In a sobering financial outlook just a week out from the budget, Mr Nicholls says the government had already had to write down revenues over the past 18 months by $4.8 billion.
He said revenues in next week’s budget will be written down by another $1.7 billion.
Advertisement“I don’t think anyone can deny that the strain on the budget is enormous,” he told reporters in Brisbane.
“It hasn’t been an easy decision to make and it’s certainly not something that the government has wanted to do.
“But in light of the difficult circumstances … we are going to find it enormously difficult.” Mr Nicholls also attributed a fall in coal prices and a high Australian dollar to the tough economic circumstances framing the budget.
He said the 2014/15 budget would still have a deficit of about $300 million.
According to another report, the state is now facing a $7 billion deficit in 2013-14. Accordingly, the Government is planning a range of tax increases and/or expenditure cuts, including:
- Cancelling a planned rebate of more than $100 from July 1 to help people cope with rising electricity prices; and
- Deferring the planned increase in the tax-free threshold for payroll tax, which was due to start on July 1.
On the other hand, the Government also ruled out a new flood levy, which was expected to raise around $1 billion over four years.
Predictably, the opposition Treasury spokesman has blamed the Government for the revenue slump, claiming “Campbell Newman’s cuts have led to a slowing economy and increased unemployment”.
While the Newman Government has made cuts to public sector employment since coming to office, it would appear that Queensland’s bureaucracy remains bloated, as illustrated by the below chart showing the proportion of Queensland’s population employed in public administration and safety.
As has been the case throughout Australia, the former Labor State Government looks to have spent too much during the boom, leaving a fiscal hole once the good times ended.
