QLD BUDGET 09-10: GFC digs $2 billion black hole

By: Graham Gardiner

Queensland will record a $1.954 billion deficit in 2009-10 as a result of record infrastructure spending and lower tax revenues,

Queensland will record a $1.954 billion deficit in 2009-10 as a result of record infrastructure spending and lower tax revenues, according to the Budget handed down today by Treasurer Andrew Fraser.

Premier Anna Bligh admits it is a "tough times Budget", as the State continues to battle the financial crisis.

The forecast for Queensland’s economy reveals disappointing figures in relation to unemployment, business investment and growth.

Treasurer Andrew Fraser says business investment is set to fall by 17 percent in 2009-10, as the economy contracts by a quarter of a percent over the same period.

To reduce the impact of an economic downturn and further job losses, Fraser says tackling unemployment is the Bligh Government’s number-one priority.

"Treasury has forecast a peak in the unemployment rate of 7 3/4 percent in 2010-2011, which remains below the national prediction," he says.

"But that means that the number of Queenslanders out of work could reach 175,000.

"That’s why the Bligh Government is determined to fund a record building program that secures and creates Queensland jobs."

With millions directed toward education, health, economic services and social welfare, the front-line focused Budget has resulted in a $1.954 billion shortfall.

"The final deficit for 2008-2009 is forecast at $574 million – below the $1.573 billion deficit forecast as part of the Economic and Fiscal Update in February," Fraser says.

"Our determination has been to support the economy through our building program to stimulate demand and see us through the global recession."

A $15 billion loss in taxes, royalties and GST over the next four years has also directly impacted on the Government’s bottom line.

"This includes a further $1 billion which has been wiped off the forecast for royalties across the forward estimates with the setting of coal prices in recent months," Fraser explains.

On the upside, Queensland will retain its competitive tax regime, including the lowest payroll tax rate in Australia.

While the State has been dealt a harsh blow by the global recession, the fundamentals of Queensland’s economy are encouraging, according to Fraser.

"Our record $18.2 billion building program and our focus on jobs mean that we will emerge from these tough times stronger, not weaker," he says.

Fraser assures that Queensland’s economy is forecast to recover to growth of 2.75 percent in 2010-11.

Other positive measures announced in today’s Budget include an increase to the first homebuyer vacant land concession and a $37.8 million boost to the tourism industry.

While these measures will certainly generate growth, Bligh says the $18.2 billion infrastructure splurge is the "centrepiece" of the Budget, as it will support 127,000 full-time jobs.

Estimated capital spending of $18.2 billion will go towards building infrastructure over the 2009-10 period.

Key capital outlays include:
  • $7.307 billion for transport and main roads
  • $1.296 billion for health
  • $1.837 billion for education and training
  • $3.206 billion for energy infrastructure.

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