Dire Queensland finances need urgent action
Good economic and fiscal management has the profound ability to influence business and consumer confidence, spending and investment decisions.
Queensland businesses are concerned about the State Government’s inherited deficit and high levels of Government spending.
The State Government's commitment to fiscal discipline and actions to commence bringing the State Budget closer to a sustainable position is commendable.
Queensland must systematically go about restoring the State’s vitally needed AAA credit rating.
Today’s Independent Commission of Audit’s Interim Report confirms the urgent need to rein in recurrent expenditure.
Key points that can be discerned from the State’s financial position:
- Expenditure is increasing at a significantly higher rate than revenue and CPI;
- The budget position has been progressively eroded with actual and forecast deficits;
- Debt is now expected to peak at $100 billion in 2018-19 and not $85 billion with an annual debt servicing bill of $5.3 billion if remedial action is not taken.
- Forward estimates unless action is taken do not contain trends that will restore the State's vitally needed AAA credit rating and could possibly lead to a further downgrade;
- The overall trend in recent years has been one of deterioration driven by growth in recurrent spending
Failure to reduce spending growth will threaten the sustainability of our public finances over the medium term and damage the economy’s competitiveness through dependence on prevailing high business taxes and charges.
Queensland is dramatically out of sync with the budget positions of all other States. This is no doubt the major contributing reason for the Credit Rating Agencies’ poor assessments of our financial position.
Unless action is immediately taken to rein in public spending, a series of unpalatable measures may need to be considered such as:
- A further asset privatisation program
- Increases in taxes, fees and charges
- Redundancies across the public sector
The challenge for this State Government is now to improve Queensland’s fiscal management. CCIQ believes the only way that this can occur is by dramatically reining in the expenditure of the State Government.
During the most recent economic downturn the Queensland business community has had to look at its own expenditure in order to balance the books. Businesses are rightly asking the question why the State Government should be any different.
The Queensland Government must adopt strategies that achieve a balanced budget that does not rely upon Queensland’s small and medium business community to prop up public spending.
Such policies would bring about a return to a budget operating surplus and the restoration of the State’s AAA credit rating.