Economic and fiscal coordination

Backing Queensland jobs

Treasury provides economic and fiscal leadership, strategy and advice to promote economic growth and job creation for the benefit of all Queenslanders. The cornerstone of this advice is the coordination of the Queensland Budget to deliver the government’s policy objectives.

Treasury does this by:

  • delivering whole-of-government economic, fiscal, revenue, financial management, accounting, policy and reporting services to the Under Treasurer, Treasurer and Cabinet Budget Review Committee
  • providing strategic economic and regulatory reform policy advice, economic impact analysis, modelling and data analysis to inform public policy and decision making across the Queensland Government to promote sustainable economic and employment growth
  • monitoring, forecasting and measuring the state’s economic performance, at industry, regional and state-wide level, to inform development of the Queensland Budget and whole-of-government economic and social policy development
  • coordinating the development of the Queensland Budget, and managing the state’s debt and balance sheet in accordance with government policies
  • delivering statistical, demographic research and program evaluation services across government through the Queensland Government Statistician’s Office.

Our operating environment

Non-financial public sector – debt to revenue ratio

Our operating environment

Analysis

Debt to revenue ratio in the non-financial public sector (NFPS) comprises the General Government Sector and government-owned corporations. It reached a peak in 2012–13 of 140.5 per cent. Since then, the debt to revenue ratio has fallen substantially and is forecast to be 123 per cent in 2021–22. Through measures taken in the 2019–20 Budget, growth in NFPS borrowing is expected to halve from 6 per cent in 2020–21 to only 3 per cent by 2022‑23, such that the NFPS debt to revenue ratio is expected to decline beyond 2021–22, while borrowing costs are at historical lows. Debt to revenue ratio in the non-financial public sector (NFPS) comprises the General Government Sector and government-owned corporations. It reached a peak in 2012–13 of 140.5 per cent. Since then, the debt to revenue ratio has fallen substantially and is forecast to be 123 per cent in 2021–22. Through measures taken in the 2019–20 Budget, growth in NFPS borrowing is expected to halve from 6 per cent in 2020–21 to only 3 per cent by 2022‑23, such that the NFPS debt to revenue ratio is expected to decline beyond 2021–22, while borrowing costs are at historical lows.

Economic growth, Queensland and Australia

Economic growth, Queensland and Australia

Analysis

After stronger than expected growth of 3.5 per cent in 2017–18, economic growth is forecast to remain solid in 2018–19 and beyond. However, a combination of global, national and domestic factors impacting on economic activity is expected to see Gross State Product (GSP) growth in Queensland ease to 2¾ per cent in 2018–19. The easing in Queensland’s economic growth also reflects the impact of the North Queensland floods, with losses in economic output estimated to be around ¼ percentage point of GSP, spread across 2018–19 and 2019–20.

Growth is forecast to strengthen to 3 per cent in 2019–20, underpinned by a modest improvement in domestic activity as business investment returns to growth. From 2020–21 onwards, economic growth is expected to remain solid, at around 2¾ per cent per annum.

Employment growth and unemployment rate, Queensland

Employment growth and unemployment rate, Queensland
Analysis

Reflecting the state’s strong economic growth, employment grew 4.1 per cent in 2017–18, the strongest year average growth in over a decade and the largest single-year rise (almost 98,000 people) in the state’s history.

The gap between regional and South East Queensland unemployment rates has continued to narrow, from 2.5 percentage points in mid-2016 to 0.5 of a percentage point in the year to June 2019, reflecting stronger economic conditions in many parts of regional Queensland.

However, subdued domestic activity has seen Queensland’s employment growth return to a more sustainable rate of 1.5 per cent in 2018–19. Employment is forecast to rise 1¼ per cent in 2019–20, while the unemployment rate is expected to remain stable at around 6 per cent.

Beyond 2019–20, as domestic activity strengthens, labour market conditions are set to improve, with a strengthening in jobs growth to 1¾ per cent and the unemployment rate edging lower to 5¾ per cent by the end of the projection period in 2022‑23.

Objective

Enable sustainable growth that supports current and future government objectives

Treasury uses its role as the government’s expert on state finances and the economy to support the government’s priorities, including ‘backing Queensland jobs’. Each year, Treasury develops the Queensland Budget, which:

  • outlines the state’s economic plan and economic conditions
  • outlines the state’s financial performance
  • implements the government’s fiscal objectives and fulfils the government’s priorities for the community.

The 2019–20 Queensland Budget was guided by the government’s overriding objective to support economic and jobs growth across all regions of the state through:

  • continued investment in job-generating and productivity-enhancing infrastructure
  • providing better frontline services for workers, families and communities across the state.

In line with the government’s economic plan, highlights of the 2019–20 Budget that support these objectives included:

  • a $49.5 billion infrastructure program, which directly supports 40,500 jobs in 2019–20 including 25,500 jobs in regions outside of Greater Brisbane
  • $5.625 billion investment in transformative transport infrastructure
  • a record $18.5 billion health program
  • historic changes to Queensland’s youth justice system through the establishment of a new Department of Youth Justice
  • substantial funding for critical infrastructure programs to support the 1.55 million Queenslanders who live in the state’s regions.

Read more about the Queensland Budget 2019–20 at www.budget.qld.gov.au

The 2019–20 Budget demonstrates the government’s commitment to sound fiscal management, with operating surpluses projected for 2019–20 and the forward estimates. However, the fiscal environment remains challenging with the potential for further reductions in GST and transfer duty.

Other issues with potential to impact on Queensland’s fiscal position are:

  • the state’s future share of GST after the 2020 Methodology Review
  • native title compensation settlement
  • removal of the statutory limitation on physical abuse
  • class action from the 2011 flood events
  • expired and expiring National Partnership agreements.

Until they are considered by government or formal agreements are in place, the exact extent of their impact cannot be determined.

A key role of the Budget Office is to support Treasury and the government in monitoring and reporting on the state’s position, publishing each year’s Report on State Finances and Mid-Year Fiscal and Economic Review. The Budget Office team also:

  • coordinated and delivered the 2019–20 Budget and the 2018–19 Mid-Year Fiscal and Economic Review
  • developed strategy for 2019–20 Budget and future budget processes, including guidelines and funding approaches
  • adopted a process-led approach to deliver the Budget with a view to reducing duplication while maintaining transparency
  • provided decision-makers with timely and quality briefing material, including support for responding to Our Future State: Advancing Queensland’s Priorities.

As the budget cycle continues throughout 2019–20, Treasury will assist in developing the Queensland Budget 2020‑21, Report on State Finances 2018‑19, and the 2019‑20 Mid-Year Fiscal and Economic Review.

The Budget Office also provides expertise for innovative funding approaches such as the three pilot social benefit bonds (SBB). These SBBs – with Uniting Care Queensland, Life Without Barriers and Churches of Christ – have completed their first year of operation. Annual performance reviews for each of the SBBs have been finalised, with support by Treasury’s Budget Office.

Innovation in delivery

In 2018–19, the new BudgetPlus application was used as the primary tool for developing the 2019–20 Budget.

BudgetPlus allows agencies to develop and submit funding requests online. It increased the efficiency of the budget process by:

  • enabling more timely and effective data collection
  • improving the presentation of information to government decision makers
  • increasing review and sharing capability.

In the coming year, the Budget Office will continue to identify and implement system enhancements for the budget process.

Strong, sustainable regulatory frameworks

The Queensland Government Guide to Better Regulation outlines the government’s approach for ensuring regulation is necessary, effective, efficient and provides clear benefits for Queensland. An updated edition of the guide encourages risk-based approaches to regulation, more timely regulatory review, and further assessment of regulatory impacts on small business.

The guide also outlines the government’s recently introduced Regulator Performance Framework. This encourages regulators to adhere to ‘model practices’ that will support better interactions with their stakeholders, resulting in reduced regulatory burden for all parties.

Under the framework, key Queensland Government regulators whose regulatory activities impact business, particularly small business, will report publicly on their performance, including implementation of the model practices. The Office of State Revenue (OSR), part of Queensland Treasury, is one such regulator. OSR has implemented a program to transform its practices to reduce the impact on business. A report on its ‘better regulation’ activities, and the Guide to Better Regulation, are available from www.treasury.qld.gov.au.

Objective

Partner proactively to facilitate better outcomes for the community

Keeping communities safe

In 2018–19, Treasury, through the Queensland Government Statistician’s Office (QGSO), released the Crime report, Queensland, 2017–18 and the Justice report, Queensland, 2017–18 to inform policy development and service delivery in the criminal justice sector. Also released was the Crime Research Agenda, which guides the development of the crime research work program and helps identify potential research partnerships and collaborations.

In the year ahead, Treasury will work with agency partners to implement priority crime research projects, and the results of these will be progressively released throughout 2019–20.

Understanding our communities

The Queensland Government population projections (2018 edition) were released in 2018–19, providing a suite of information products to Queensland Government agencies, business and the community for use in planning services and infrastructure. In 2019–20, Treasury will update and release household and living arrangement projections to complement the 2018 population projections.

Last updated: 1 October 2019