State Budget crystal ball reveals troubled times ahead
Statement by David Goodwin, CCIQ President
Chamber of Commerce & Industry Queensland (CCIQ) cannot fully recognise the promising features of this State Budget when many of the fiscal fundamentals are dramatically out of step with the other states.
State Budgets by their nature aren’t exciting documents but they are the state government’s foremost instrument of fiscal and economic management.
On this basis CCIQ is worried by some elements of today’s State Budget.
There is a great deal of good within this budget supporting the community following Queensland's natural disasters.
However these initiatives are a quarter of what could be achieved if the government had made sensible decisions to reign in expenditure several years ago when the State’s poorer financial position was first emerging.
CCIQ is concerned at the budget deficit of $2.13 billion for 2010-11, effectively $660 million higher than the Mid Year Fiscal and Economic Review released only in February of this year.
More troubling is the budget deficit ballooning out to $4.06 billion in 2011-12 with net debt expected to reach $84.9 billion by 2014-15.
To be fair a hefty proportion of the 2010-11 and 2011-12 deficits needs to be attributed to the natural disasters but an embedded structural deficit within the Budget continues to compound.
Even knowing that the State’s debt servicing bill is set to skyrocket the State Government is still yet to seriously reign in expenditure.
For example in 2010-11 and 2011-12 expenditure growth is more than double that of revenue.
To place in context the debt servicing bill, it would take only three weeks of this bill for Queensland to exempt 72 per cent of all businesses that are required to pay Payroll Tax on employment.
If CCIQ had to crystal ball gaze, a further asset privatisation program will be considered; increases in taxes, fees and charges will be put forward; and further redundancies across the public sector will be put forward as solutions to address a brewing debt storm.
In focussing on the budget positives CCIQ is highly supportive of:
- The removal of the Community Ambulance Cover Levy;
- $140 million stimulus to the housing industry including a $10,000 home building grant and revisions to transfer duty;
- Continuation of the 25 per cent Payroll Tax rebate for apprentices and trainees;
- $100 million over three years to assist businesses in their research and development to restore the Smart State strategy; and
- $85.8 million over five years to support increased events and tourism within Queensland.
Furthermore there is hope for a better business environment particularly if the five per cent growth rate for our economy in 2011-12 and beyond is realised. However we would have to cast our minds back to 2006-07 for growth of a similar level.
This bullish forecast whilst surprising many will hopefully see economic activity occurring outside of the resources sector.
The importance of the economic forecasts cannot be underestimated given they predicate our State’s finances returning to surplus by 2015-16.
In summary no amount of good intentions and positive initiatives to meaningfully help Queenslanders today can outweigh the liability that we are imposing on ourselves for the immediate years ahead.