Queensland Defers Surplus Return as Second-Fastest Growth Seen
Queensland deferred a return to budget surplus by a year as weaker commodity prices and the currency’s sustained strength eroded state revenue, even as it projected the fastest growth after Western Australia.
The nation’s most indebted state projected a deficit of A$7.7 billion ($7.5 billion) in the 12 months through June 2014, wider than the A$4.6 billion forecast in December, Treasurer Tim Nicholls said in handing down the Liberal National Party government budget. It predicted 3 percent growth over the period and a 21 percent rise in gross general government borrowings.
“The delay in reaching a fiscal surplus means that the government will not have to raise taxes or cut spending by as much as it would have otherwise had to do,” Nicholls told state parliament in the text of a speech, forecasting the budget will be back in the black in 2015-16. “There is no magic pudding. Government must strive to live within its means.”
Nicholls’s dilemma in resource-rich Queensland echoes that of his federal counterpart, Treasurer Wayne Swan, who in December abandoned a surplus pledge this fiscal year because of the currency’s impact on tax revenue. Queensland is also grappling with reconstruction from Tropical Cyclone Oswald in January that damaged railway lines and prompted Rio Tinto Group and Xstrata Plc to declare force majeure on thermal coal supply contracts.
“We know now with some accuracy that we were blown off course by ex-Tropical Cyclone Oswald and the summer of natural disasters to the extent of A$2.5 billion in damage and between A$500 million and A$750 million in lost economic production,” Nicholls said. The government will introduce measures including increased duties on insurance premiums and a higher levy for emergency services to help meet the shortfall, he said.
Queensland’s general government net borrowings are forecast to decline to A$7.97 billion in 2013-14, from A$9.04 billion in the previous year, the budget papers show. Gross borrowings on that basis will climb to A$47.2 billion from A$38.9 billion.
Total Queensland government borrowings, including debt issued by government-run commercial organizations such as transport and water utilities, are forecast at A$8.5 billion from A$7.8 billion on a net basis. Gross borrowings for the non-financial public sector are estimated to expand to A$78.1 billion from A$69.5 billion.
The government forecast a deficit of A$244 million in the 2014-15 fiscal year, compared with a surplus seen in the previous budget, and projects a fiscal surplus of more than A$1 billion a year later in 2015-16, Nicholls said.
“This budget is another way point on our journey,” he told parliament. “It supports the growth we need to pay off the debts of the past while providing the jobs of the future.”
Queenslanders are proving more forgiving of Premier Campbell Newman, who ended 14 years of state Labor rule in 2012, than the national government.
The Sydney Morning Herald reported today, citing an unidentified senior Labor official, that Swan will probably lose his federal district in Queensland at the Sept. 14 election, and Labor may only retain one seat in the state -- that of former Prime Minister Kevin Rudd.
In contrast, Newman is recovering from a dip in the polls and his LNP led Labor by 24 percentage points on a two-party preferred basis in the most recent Newspoll at the end of March.
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