Our financial position explained

The government has established the Queensland Future Fund (QFF) to support Queensland’s future economic success. The Debt Retirement Fund (DRF) is the first fund established under the Queensland Future Fund Act 2020 (QFF Act 2020) with the purpose of debt reduction.

The QFF DRF will hold state investments for future growth to be used to offset state debt when assessing Queensland’s credit rating. The QFF DRF investment on Queensland Treasury’s balance sheet takes the form of a Fixed Rate Note with Queensland Treasury Corporation (QTC). The QFF DRF is backed by investments in Queensland Investment Corporation (QIC) trusts held on QTC’s balance sheet. The investment objectives, strategies and policies of these QIC trusts are advised by the State Investment Advisory Board (SIAB).

In 2020–21, assets contributed to the QFF DRF totalled $7.7 billion and included a $6 billion investment in Queensland Titles Registry, $1.5 billion from the surplus assets held to support the Defined Benefit Scheme and $206 million in securities held by the State.

The QFF DRF transferred the contributed assets listed above to QTC. On receipt, QTC transferred the contributed assets to QIC managed trusts. In consideration of the back to back transfers, QTC issued the QFF DRF fixed rate note to Queensland Treasury, and QIC issued units in the QIC trusts (referred to as the DRF asset portfolio) to QTC.

Interest from the DRF is quarantined and reinvested in the DRF asset portfolio.

QIC has been appointed as investment manager to implement the investment objectives set by SIAB for the DRF portfolio. Rebalancing of the DRF asset portfolio occurred following the initial asset contributions to the fund.

The actual asset allocations of the QIC trust investments for the DRF portfolio as at the reporting date are:

Only the Treasurer has the power to authorise or make payments from QFF DRF under section 10 of the QFF Act 2020. Payments from the DRF may be made only for repayment of the state’s debt and paying fees or expenses relating to the administration of the fund. No withdrawals were made from the DRF for debt repayment in 2020–21.

The Queensland Government Insurance Fund (QGIF), administered by Treasury, is a self-insurance arrangement which commenced on 1 July 2001. Government agencies pay premiums intended to meet the cost of claims arising from incidents occurring in the premium year, with the claims to premium ratio at 93% since commencement. QGIF also meets the cost of claims arising from incidents occurring prior to 1 July 2001.

Claims are paid out of Queensland Treasury’s Administered accounts, while the provision for outstanding claims is held at the whole of government level.

The estimated outstanding claims liability as at 30 June 2021 was $3,501 million, compared to $2,624 million at 30 June 2020. The significant increase is largely driven by an increase in the provision for historical child sexual abuse claims following greater than expected claim experience. Investments intended to meet the government’s outstanding claims liabilities are held by Queensland Treasury Corporation within its long-term assets. The fund reinsurance program has been in place since 1 November 2011 and is subject to annual renewal.

QGIF’s outstanding claims liability and associated investments are reported in the government’s annual Report on State Finances.

State taxes, royalties and other state revenue 2020–21

• Duties $5.74B
• Payroll tax $4.21B
• Land tax $1.53B
• Gaming taxes and other taxes $1.47B
• Royalties $2.49B
• Fees, levies and fines $0.35B
• Other state revenue $0.39B

Total administered expenses by category 2020–21

• Superannuation benefit payments $1.73B
• Annual Leave Central Scheme claims paid $1.85B
• Long service leave reimbursements $0.38B
• Finance/borrowing costs $1.33B
• Grants and subsidies $0.9B
• Supplies and services $0.13B
• Other expense $0.27B

• Employee expenses $138.54M
• Supplies and services $116.65M
• Grants and subsidies $68.86M
• Depreciation and amortisation $4.52M
• Interest expenses $0.05M
• Other expenses $4.03M