Economic and Revenue Assumptions
The 2023–24 Budget Update is based in part on assumptions made about parameters, both internal and external to Queensland, which can impact directly on economic and fiscal forecasts.
The forward estimates in the 2023–24 Budget Update are framed on a no-policy-change basis. That is, the expenditure and revenue policies in place at the time of the Budget Update (including those announced in the Budget Update) are applied consistently throughout the forward estimates period.
Key economic assumptions
Key economic assumptions underpinning the 2023–24 Budget Update include:
- Consistent with IMF projections, international economic growth is assumed to slow over the forecast horizon and be below the pre-COVID decade average.
- Interest rates are assumed to plateau at the current level in early 2024 for this monetary tightening cycle before starting to gradually ease thereafter.
- The A$/US$ exchange rate is assumed to trend gradually higher, reaching around US$0.70 by mid2025 and move towards the medium-term anchor of US$0.75 thereafter.
- Brent oil prices to remain elevated in the near term and gradually ease towards a medium-term level of US$75/bbl by the end of the forecast period.
- Residential property prices in Brisbane are expected to maintain modest growth over the forecast horizon.
- Consistent with historical trends, the drier than average conditions resulting from the current El-Niño weather pattern are generally expected persist in the near-term. A return to normal seasonal rainfall patterns is assumed thereafter.
Taxation and royalty revenue
Table 14 shows the main components of taxation and royalty revenue, and the forecast revenues for each component across the forward estimates.
Table 14: Taxation and royalty revenue1
| 2022–23 Actual $ million |
2023–24 Budget $ million |
2023–24 Update $ million |
2024–25 Projection $ million |
2025–26 Projection $ million |
2026–27 Projection $ million |
|
|---|---|---|---|---|---|---|
| Payroll tax and mental health levy | 5,850 | 6,524 | 6,590 | 6,980 | 7,384 | 7,809 |
| Transfer duty | 5,240 | 5,385 | 5,402 | 5,921 | 6,380 | 6,754 |
| Other duties | 2,232 | 2,255 | 2,424 | 2,529 | 2,637 | 2,749 |
| Gambling taxes and levies | 1,911 | 2,015 | 2,000 | 2,096 | 2,182 | 2,271 |
| Land tax | 1,732 | 2,031 | 2,032 | 2,327 | 2,508 | 2,613 |
| Motor vehicle registration | 2,226 | 2,301 | 2,334 | 2,362 | 2,465 | 2,547 |
| Other taxes | 1,409 | 1,426 | 1,429 | 1,501 | 1,587 | 1,658 |
| Total tax revenue | 20,601 | 21,938 | 22,210 | 23,716 | 25,142 | 26,400 |
| Royalties | ||||||
| Coal | 15,360 | 5,345 | 9,188 | 4,342 | 4,272 | 4,149 |
| Petroleum2 | 2,350 | 1,275 | 1,650 | 1,391 | 1,222 | 1,053 |
| Other royalties3 | 504 | 503 | 550 | 549 | 524 | 497 |
| Total royalties | 18,214 | 7,123 | 11,388 | 6,282 | 6,018 | 5,698 |
| Land rents | 181 | 195 | 186 | 189 | 193 | 198 |
| Total royalties and land rents | 18,395 | 7,318 | 11,574 | 6,471 | 6,211 | 5,895 |
1. Numbers may not add due to rounding. 2. Includes liquefied natural gas (LNG). 3. Includes base and precious metal and other mineral royalties. |
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Royalty assumptions
Table 15 below provides the 2023–24 Budget Update assumptions regarding coal royalties, which represent the bulk of Queensland’s royalty revenue.
Table 15: Royalty assumptions
| 2022–23 Actual |
2023–24 Update |
2024–25 Projection |
2025–26 Projection |
2026–27 Projection |
|
|---|---|---|---|---|---|
| Tonnages – crown export1 coal (Mt) | 190 | 200 | 214 | 225 | 233 |
| Exchange rate $US per $A2 | 0.67 | 0.66 | 0.69 | 0.72 | 0.75 |
| Year average coal prices ($US per tonne)3 | |||||
| Hard coking | 279 | 241 | 176 | 175 | 175 |
| Semi–soft | 259 | 142 | 123 | 123 | 123 |
| Thermal | 304 | 138 | 120 | 120 | 120 |
| Year average oil price | |||||
| Brent ($US per barrel)4 | 102 | 83 | 80 | 77 | 75 |
1. Excludes coal produced for domestic consumption and coal where royalties are not paid to the Government (i.e. private royalties). The 2023–24 estimate for domestic coal volume is approximately 25.5 Mt and private coal is 4.1 Mt. 2. Year average. 3. Estimated year-average spot prices for highest quality coking and thermal coal. Lower quality coal can be sold below this price with indicative average prices for 2023–24 as follows: Hard coking US$220 per tonne and thermal US$114 per tonne. 4. Published Brent oil prices are lagged by 4 months to better align with royalty revenue. |
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Exchange rate and commodity prices and volumes
Estimates of mining royalties are sensitive to movements in the A$-US$ exchange rate and commodity prices and volumes.
Contracts for the supply of commodities are generally written in US dollars. Accordingly, a change in the exchange rate impacts on the Australian dollar price of commodities and, therefore, expected royalty collections.
Interest rates
The majority of General Government Sector debt is held under fixed interest rates and, therefore, the impact of interest rate variations on debt servicing costs in 2023–24 would be relatively modest, with the impact occurring progressively across the forward estimates.
