The 2017-18 Budget is focused on supporting continued growth and creating jobs for Queensland, while enabling the State’s $300 billion economy to transition to be more innovative, diverse and productive.
International ratings agency Moody’s recognised, amongst other things, our fiscal principles and the State’s Debt Action Plan when it lifted Queensland’s credit rating outlook from negative to stable.
Queensland economic growth
Queensland economic growth has accelerated in recent years and is forecast to strengthen further across the forward estimates, from 2.4% in 2015-16, to 2.75% in both 2016-17 and 2017-18, and 3% in 2018-19.
Queensland overseas exports
Queensland overseas exports are forecast to grow solidly over the forecast period. Growth in services exports such as tourism and education will continue to be supported by a sustained lower A$ and growing demand from Asian markets.
Queensland’s domestic economy
Following the LNG investment wind down, GSP growth is increasingly driven by improving state final demand (which is a key measure of the State’s domestic activity). As labour intensive domestic activity strengthens, so too will employment growth.
The Government recognises that the $2.8 billion surplus in 2016-17 is being supported by a number of temporary factors, such as the timing of disaster recovery reimbursements from the Australian Government and spikes in coal prices. This strong 2016-17 operating surplus will see General Government sector debt in 2016-17 around $3.8 billion lower than estimated in the 2016-17 Budget. This has provided the Government the opportunity to support additional infrastructure investment and a range of targeted temporary measures to support businesses and households.
Debt Action Plan
The Government’s actions will continue to manage General Government sector debt and provide additional funds for infrastructure investment without requiring the sale of government-owned corporations, without increases in taxes on Queenslanders, without cuts to services and without redundancies. The strong performance of government-owned corporations in 2016-17 demonstrates the sustainability of the Government’s Debt Action Plan.
General Government sector debt in 2017-18 is expected to be $33.8 billion, a reduction of $14.7 billion compared with the 2014-15 Budget projection. The reduction in General Government debt achieved through the Debt Action Plan, supplemented with further balance sheet measures, has provided the Government with the capacity to fund important new capital infrastructure, without significantly increasing debt, over the forward estimates.