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Ten Questions that should be asked about Queensland's State Budget 2017-18


 
The State Budget to be delivered on the 13th June by Treasurer Curtis Pitt will be his third and last before a State Election to be held either late this year or early next year.
 
If he plays to the rulebook there will be little to agitate the broader community and it will be a Budget that splurges on infrastructure and other initiatives thanks to a $2.7 billion election war chest from coal royalties and GST windfalls.
 
Indeed the Premier has proclaimed this will be a 'jobs' budget and not a single member of Parliament will be unhappy with the Government’s foremost instrument of economic and financial management.
 
To set the scene the previous two budgets delivered by the Treasurer were relatively well received and it is perhaps what has occurred between them that has let the State Government down.  The biggest example is the ballooning public service (an additional 15,782 FTEs since elected) and the impact it has had and will have ($1.6 billion recurrent annual expense) for many years on the State Budget.
 
Furthermore Queenslanders slowly cottoned on to the fact that the Treasurer’s progress on debt reduction was a result of taking time-out on paying superannuation, ‘repatriation’ of funds set aside for employee liabilities and the transference of debt to GOCs.  None of which meaningfully addressed structural imbalances in the budget nor paid down public sector debt. 
 
However the past is the past and this is a new opportunity for the State Government.  So to help us judge the forthcoming Budget I have penned the following 10 questions that should be asked:
 

  1. What is the surplus for 2016-17 and was it is line with the Budget forecast ($867 million) and with the revised Mid Year Fiscal and Economic Review (MYFER) estimate of $2,026 million?  We should also ask was the surplus through good management or good fortune such as additional coal royalties ($1.5 billion) and additional GST receipts?
  2. What is the forecasted surplus or deficit for 2017-18 (MYFER had a surplus of $1,095 million) and is it under threat from Severe Tropical Cyclone Debbie and its predicted $1.1 billion hit to the State Budget?
  3. Indeed what is the impact of TC Debbie on the State Budget and the Economy?  State Budget papers immediately following previous natural disasters provide a section crunching these impacts.  
  4. How much is Government expenditure growing by in 2016-17 (MYFER 5.8%) and in 2017-18 (MYFER 3.0%) including employee related expenses (16-17: 4.6% and 17-18: 3.4%) and have they kept a lid on growth or have they lost control?
  5. Is general government debt rising or falling over the forward estimates of the Budget? General government debt for 2016-17 at the MYFER is estimated at $36,022 million rising to $38,443 million in 2019-20 or $77,518 million if we include GOCs.
  6. What are the economic and revenue forecasts for the next four financial years and are they realistic? For example the Queensland economy is forecast to have grown by 4.0% in 2016-17 and  to grow by 3.5% in 2017-18.
  7. What 'cost of living' initiatives are there and conversely are there any new taxes, fees and charges.  The State Government has announced $770 million to reduce regional Queensland electricity bills and at the same time are stinging Queensland motorists $300 million in higher motor vehicle registration fees which are seemingly at odds with each other.
  8. What infrastructure projects will be announced? Despite the ‘Accelerated works’, ‘Works for Queensland’ and ‘Advancing our cities and regions’ programs the State Government has an infrastructure spend at 1.5% of GSP where as recently as 2009-10 we were at 3.5%. A two per cent difference literally accounts for $6 billion in infrastructure underspending that has serious repercussions for our economy.
  9. What economic and job growth initiatives will be announced?  Is the State Government sticking with the ‘Advance Queensland’, ‘Back to Work’ and ‘Jobs and Regional Growth’ initiatives.  These have had mixed successes and other Labor Governments across Australia are continuing to play the game of competitive federalism to attract new investment and drive jobs.  For example the Victorian Budget lifted the payroll tax exemption threshold and gave regional businesses a 25% payroll tax cut.
  10. Are there any items from left field such as privatisation or taxation by stealth? Probably not but you never know.

 
This is the most widely anticipated State Budget in many years and if you want to see how Queensland Labor does election budget’s look to Andrew Fraser’s 2011-12 State Budget for an example.
 
In summary the 2017-18 State Budget will have a lot of talk about the economy and jobs but in reality it will be rich in measures to address cost of living increases; it will invest in education and health; it will play to the green vote with initiatives for the environment; and it will be supporting the regions (particularly key election seats) by investing heavily in infrastructure.

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