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2015-16 Queensland Budget
14 July 2015

 Fiscal and Political Budget Strategy

Continuing the Palaszczuk Labor Government’s strategy, which has been maintained since Opposition and its successful election campaign, Treasurer Curtis Pitt’s maiden budget is a steady-as-she-goes, no-frills effort focussed on gradual improvement.

The Treasurer also announced a range of economic and social investments, including a $1.6 billion Working Queensland jobs plan and $180 million Advance Queensland plan, as well as $500 million of new money for schools and hospitals.  Budget commitments will be paid for through savings and restructuring the balance sheet of Queensland’s Government Owned Corporations (GOCs).

The Budget also provides some comfort to the market through a close to $1 billion surplus in 2014-15; a $1.2 billion surplus in 2015-16; and a gradual reduction in state debt.  Surpluses are set out in the General Government Sector (GGS) – key fiscal aggregates:

Budget 2015-16: Budget Paper No. 2 Budget Strategy and Outlook; Table 1.1, page 8.
 
Growth, Unemployment and Revenue

Queensland Treasury has forecast an improvement in growth from 2% currently, to 4 ½% in 2015-16 and 2016-17.
Unemployment is forecast to remain at around 6% over coming years.

Due to a softening international outlook resulting in lower demand for the State’s resources, royalty forecasts have been revised down by $3.186 billion since the 2014-15 Mid-Year Fiscal and Economic Review.
 
An Innovative Budget

Over the last two weeks, Treasurer Pitt promised that the Budget would include some innovative measures: these are set out in its Debt Action Plan and include a halt of Government contributions for public servant superannuation for up to 5 years.  This is possible, as public servant superannuation liabilities are currently well in excess of being fully funded by about $10 billion.  This measure will result in debt reduction of approximately $3.4 billion.

The second measure relates to the movement of $4.1 billion of State Government debt onto the balance sheets of state-owned energy businesses while maintaining gearing ratios at around 70-75%, which remains lower than industry average levels of gearing.

The Government is also looking at ways to invest public servant superannuation entitlements into government assets.  While this may be seen as privatisation by stealth, it may provide the Government with much needed additional investment.  Measures in this area continue to be considered by government.

Advance Queensland

In a measure which the Government and media are promoting as a re-introduction of the Beattie Government’s very successful Smart State Strategy, Premier Palaszczuk and Treasurer Pitt have strongly promoted investments in innovation, skills, education, business development and startups.

The Premier has said she would like to see the next Silicon Valley happen in Queensland, creating a new and fresh, albeit returned, narrative for the administration.

Infrastructure Investment

The Government has announced a $10 billion capital works budget to support 27,500 jobs, including $4 billion for the Transport and Roads Program.

Projects the Program will fund include:
  • Six lanes on the Gateway Motorway North;
  • Commencement of the Toowoomba Second Range Crossing;
  • Gold Coast road projects to support the Commonwealth Games; and
  • Further duplication of the Bruce Highway.
Significantly, there was only one reference to the Cross River Rail Project – this was in relation to the establishment of a Market-Lead Proposals framework, akin to the unsolicited proposals framework already in place in other states.  The Treasurer said the new framework might allow the Government to consider a genuine partnership with the private sector to deliver this essential rail infrastructure.

Review of State Finances

A review of state finances undertaken by the Queensland Treasury has been published as part of the Budget.  The Review has confirmed the importance of delivering sustainable net operating surpluses to ensure the Government’s capital program can be funded primarily from recurrent revenues.

The Review found the State’s debt-to-revenue ratio should be reduced from its current level of 87% to between 70-80% over the next decade; the Treasurer today announced that the Government intends to reduce the ratio to 70% over the forward estimates.

The Review also resulted in the establishment of five fiscal principles, namely:
  • Target ongoing reductions in Queensland’s relative debt burden as measured by the GGS debt to revenue ratio;
  • Target net operating surpluses that ensure any new capital investment in the GGS is funded primarily through recurrent revenues rather than borrowing;
  • The capital program will be managed to ensure a consistent flow of works to support jobs and the economy and reduce the risk of backlogs emerging;
  • Maintain competitive taxation by ensuring that GGS own-source revenue remains on average at or below 8.5% of nominal gross state product across the forward estimates; and
  • Target full funding of long-term liabilities, such as superannuation and WorkCover, in accordance with actuarial advice.
 
KEY ECONOMIC AND FISCAL MEASURES IN DETAIL
 
Debt Action Plan
  • Plan to reduce government debt by $9.6 billion by 2017-18
Election Commitments:
 
Advance Queensland
  • $180 million investment in innovation, skills, business development and startups
    • Government’s $180 million Advance Queensland investment expected to co-leverage funding and generate total investment of $300 million into the Sate
    • $50 million to develop, attract and retain world-class talent and skills
    • Turning ideas into new products and services:
      • $45 million in an Advance Queensland Future Jobs Strategy
      • $24 million Startup Queensland program to increase startup formation and attraction in Queensland
      • $52 million investment to improve access to finance and management support for startups and SMEs
Skills and Training
  • Skilling Queenslanders for Work receives an investment of $240 million over four years to support 32,000 Queenslanders back into work
  • Establishment of Jobs Queensland providing $40 million over four years to establish jobs in Queensland
  • $34.5 million over four years to deliver foundation courses, increase the number of qualifications available through VET in schools, and additional teaching and support staff
Supporting Business
  • Employers who hire apprentices and trainees will receive payroll tax rebate of 25% on wages in addition to those being exempt from payroll tax until 30 June 2018 providing a $45 million incentive over the next three years
  • $40 million Business Development Fund as part of the $180 million Advance Queensland package

Queensland Health

The 2015-16 health budget will be $14.183 billion, an increase of 4.1% from last year. The Government has committed an additional $2.302 billion over four years to restore frontline services. 81.6 percent of the total budget will be allocated through service agreements to provide public healthcare services from Hospital and Health Services (HHS) and other organisations, including Mater Health Services and St Vincent's Health Australia. Major commitments include:
  • An additional $2.302 billion over four years to ensure health and ambulance services keep pace with ongoing demand for services
  • $320.3 million over four years to restore cuts to frontline services and address priority areas of need
  • $361.2 million over four years to reduce the number of people waiting longer than recommended for outpatient appointments with specialists
  • $193.5 million over four years to reconfigure services across the Sunshine Coast HHS region and facilitate the safe establishment of the Sunshine Coast Public University Hospital (SCPUH), opening November 2016
  • Recruitment of an additional 75 paramedics throughout the State
  • $101.7 million over four years ($26.6 million in 2015-16) for the Refresh Nursing program, which will provide up to 4,000 graduate and nursing midwifery jobs in Queensland public hospitals over four years
  • $9.3 in million in 2015-16 for the Nursing Guarantee election commitment to recruit 400 additional Nurse Navigator positions across Queensland
  • Additional funding of $11.4 million over four years ($2.7 million in 2015-16) for re-establishing the primary school aged nurse service in vulnerable communities in Logan
  • Capital investment of $1.299 billion (including capital grants) to progress health infrastructure priorities, including hospitals, health technology, research and scientific services, mental health services and information technologies

Department of Education and Training

Key initiatives for 2015-16 include:
  • Investing $152.4 million over three years and $86 million ongoing under the Government’s Extra Teachers policy to reduce class sizes and support high schools
  • Recruitment of up to an additional 875 teachers (including 275 specialist high school teachers) in Queensland state schools
  • Investing $6 million over three years ($2 million in 2015-16) to establish an improved teacher classification system and pay structure
  • $178 million for maintenance of existing state schools
  • Improving the participation of students in science, technology, engineering and mathematics (STEM) in state schools through implementation of the Australian Curriculum for Mathematics, Science and Technologies
  • Investing $60 million (as part of $240 million over four years) to reinstate Skilling Queenslanders for Work to bring up to 32,000 Queenslanders back to work
  • Investing $40 million over four years to establish Jobs Queensland, an independent statutory entity advising the Government on skills demand and workforce planning

Department of Environment and Heritage Protection

The Government’s budget commitments for the environment are focused on protecting the Great Barrier Reef, establishing water quality initiatives, and providing a target of 1 million rooftops with solar energy by 2020. Key initiatives for 2015-16 include:
  • Improving the water quality of the Great Barrier Reef through an additional $100 million over five years for water quality initiatives, scientific research and helping businesses establish better environment practices in primary production, mining and fishing industries as part of the Save the Great Barrier Reef policy
  • Monitoring and reporting under the Reef Water Quality Protection Plan report card
  • Repeal the North Stradbroke Island Protection and Sustainability and Another Act Amendment Bill 2013 to phase-out sand mining on Stradbroke Island
  • $20 million over five years to develop the North Stradbroke Island Economic Transition Strategy
  • $15 million over three years for climate change adaptations

Department of Tourism, Major Events, Small Business and the Commonwealth Games

Major focuses of the Department include the provision of funding to Tourism and Events Queensland (TEQ) and the Gold Coast 2018 Commonwealth Games Corporation. Key initiatives in the 2015-16 Budget include:
  • An additional $128.3 million over four years to revitalise TEQ and ensure it plays a vital role in supporting tourism growth in Queensland
  • $10 million over three years for the Attracting Aviation Investment Fund (AAIF), which will be used to promote Queensland tourism destinations to international markets and attract new direct flights to Queensland
  • $40 million over four years for TEQ to grow and promote events

Department of Transport and Main Roads

Key programs continuing in 2015-16 and beyond include:
  • $8.5 billion Australian and Queensland Government funded program to fix the Bruce Highway over 10 years (2013-14 to 2022-23)
  • $635 million Australian and Queensland Government funded Warrego Highway Upgrade Program over five years (2014-15 to 2018-19)
  • $260.5 million Australian and Queensland Government funded Cape York Region Package over five years (2014-15 to 2018-19)
  • $104.8 million Australian, Queensland and Local Government funded Bridges Renewal Program over four years (2014-15 to 2017-18)
  • $170 to provide an elevated Bruce Highway crossing of the Yeppen Floodplain, south of Rockhampton, open to traffic early 2016

Further Information:

Budget 2015-16         http://www.budget.qld.gov.au/index.php
The Premier               http://www.thepremier.qld.gov.au/
 
Budget Timeframe

16-17 July 2015  -  Second Reading Debate on the Appropriation Bills
 
Estimates Timeframe

18 August 2015  -  Finance and Administration Committee (Speaker, Premier and Minister for the Arts and Treasurer, Minister for Employment and Industrial Relations and Minister for Aboriginal and Torres Strait Islander Partnerships)
19 August 2015  -  Infrastructure, Planning and Natural Resources Committee (Deputy Premier, Minister for Transport, Minister for Infrastructure, Local Government and Planning and Minister for Trade and Minister for State Development and Minister for Natural Resources and Mines)
20 August 2015  -  Legal Affairs and Community Safety Committee (Attorney-General and Minister for Justice and Minister for Training and Skills and Minister for Police, Fire and Emergency Services and Minister for Corrective Services)
21 August 2015  -  Agriculture and Environment Committee (Minister for Agriculture and Fisheries and Minister for Sport and Racing and Minister for Environment and Heritage Protection and Minister for National Parks and the Great Barrier Reef)
25 August 2015  -  Education, Tourism and Small Business Committee (Minister for Education and Minister for Tourism, Major Events, Small Business and the Commonwealth Games)
26 August 2015  -  Health and Ambulance Services Committee (Minister for Health and Minister for Ambulance Services)
27 August 2015  -  Communities, Disability Services and Domestic and Family Violence Prevention Committee (Minister for Communities, Women and Youth, Minister for Child Safety and Minister for Multicultural Affairs and Minister for Disability Services, Minister for Seniors and Minister Assisting the Premier on North Queensland)
28 August 2015  -  Utilities, Science and Innovation Committee (Minister for Main Roads, Road Safety and Ports and Minister for Energy and Water Supply and Minister for Housing and Public Works and Minister for Science and Innovation)
 
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