As noted earlier in the week (see here), the 2014-15 QLD Budget (full details here) has forecast the deficit increasing to $2.7bn (from the MYFER estimate of $0.66bn) as a result of a $0.95bn hit to NDRRA spending (caused by a mis-match between the timing of expenditures and commonwealth reimbursements) and a $0.63bn decline in mining royalties. Estimated tax revenue fell by $0.18bn but this was offset by a $0.18bn increase in GST received.
The government are still predicting a small ($0.86bn) surplus in 2015-16 to be followed by equally small surpluses out to 2017-18. However, the Budget sees the existing $80bn of debt increasing to $82bn by 2017-18 without further action.
The “further action” they are proposing is, of course, asset sales, leases and “structured private sector financing”. The Budget notes a total of $33.6bn proposed “divestments” and intends to use $25bn of that money to reduce debt (bringing net debt to $57bn in 2017-18). The remainder would be channeled into various investment funds and projects. Since none of this will happen without a new mandate in next year’s election these changes have not been incorporated into this budget.
QLD’s economy is forecast to grow at 3% in 2014-15 but then ramp up to 6% as the LNG boom takes grip in 2015-16, then falling back to 4% in 2016-17.
The unemployment rate is forecast to gradually fall from about 6% in 2014-15 to 5.25% by 2017-18 (which makes Newman’s promise of 4% unemployment by end 2018 look unlikely in the extreme; which it always was. Why pollies continue to make “unbreakable promises” about things that they have so little control over never ceases to amaze!)
Business Investment is forecast to be the big drag on Gross State Product in 2014-15 as mining investment declines but this foreshadows the anticipated addition to GSP by net exports as the production phase starts in earnest in 2015-16.