As expected, the Queensland Government has today announced a budget deficit of $7.6 billion for 2013-14, breaking an earlier promise that the government would return the budget to surplus next financial year. The result follows an estimated $8.6 billion deficit this financial year.
The miss to budget forecasts was driven by a large 26% slump in coal royalties, with land taxes also recording their first fall since 1996. Neither are expected to bounce-back anytime soon, with forward estimates of coal royalties falling and land tax expected to decline by a further 1.4% in 2013-14.
The Queensland Treasurer described the outcome as a “revenue collapse”:
“This downturn also reflects the ongoing weakness of export coal prices … and the slower than anticipated property market recovery on transfer duty and land tax,” he said.
Taxation and mining royalties have fallen by $5.3 billion since the Newman government was elected in March last year.
Queensland Treasury is forecasting “very restrained growth” over the next few years for land tax collections due to “declining values particularly for commercial and multi unit residential land”. The government’s first home owner grant has produced slow results with 1403 grants paid since the program’s inception in August last year.
The Government now forecasts a return to suplus of $1 billion in 2014-15, with extra revenue to be made up by increases in taxes on households and business, although no further public sector job losses have been announced:
Apart from a string of revenue-saving measures previously announced – including increasing insurance duty, scrapping a household rebate to deal with power price rises and deferring lifting the pay roll tax-free threshold – the government will also ask the public service to find a total in $100 million in annual savings over the next four years…
On the positive side, there will be no more public service job cuts following the 14,000 positions down-sizing outlined in last year’s budget.
Mr Nicholls admitted there was not much “razzle dazzle” in this year’s budget, he said it was another step towards repairing the state’s finances and regaining the AAA credit rating which the state lost in 2009.
The State Budget also forecasts unemployment to remain at 6% next financial year.
