The Queensland government has trimmed its deficit but will borrow another $4 billion to stimulate the economy, raising net debt by more than 20 per cent to almost $102 billion.
Treasurer Cameron Dick forecast net debt to hit $101.96 billion by June 2021, up from the $83.8 billion predicted in December, in a financial and economic update released on Monday.
He said the government will run a slightly smaller deficit of $8.13 billion in 2020/21, down from $8.5 billion forecast in July.
But the state government is not cutting borrowing, saying it’s prudent to take advantage of record low interest rates to support Queensland companies.
“At a time when we can increase our borrowings without increasing tax burden, it’s appropriate we do so to support the economy and Queensland jobs,” Mr Dick said.
The government will borrow another $4 billion, with $500 million to be allocated to a new fund to help grow small and medium-sized businesses and another $500 million for a fund to help public sector companies invest in renewable energy.
Another $249 million will be used to extend a payroll tax holiday for small businesses to August 2020 for small business.
Mr Dick said the remaining $2.75 billion will be used to extend land tax rebates, to abolish transfer duties for small business restructures and other health and economic measures to deal with the pandemic.
The government’s total spending on its response to COVID-19 is now set to top $11 billion.
As part of cost-savings, the Public Safety Business Agency will be abolished with staff redistributed in the police and fire services, while the Queensland Productivity Commission and Building Queensland will be merged with Queensland Treasury.
Mr Dick promised no forced redundancies but said roles could change.
The treasurer predicts state final demand to rise by 3.75 per cent in 2020/21, after falling 5.9 per cent in the June quarter of 2020.
He also forecasts unemployment to be 8.5 per cent by June 2021, up from 6.0 per cent forecast in December.
“We’re increasing our debt because we have to stimulate the economy, we have to keep Queenslanders in work and get the 130-odd thousand (unemployed) Queenslanders back into work, and that’s the priority,” Mr Dick said.
“When the private sector falls down due to circumstances beyond its control, government must stand up, step in and do the heavy lifting, and that’s what we’re doing.”
Mr Dick promised to deliver a full budget on November 30, if Labor is re-elected at the state election on October 31.