QLD BUDGET '10-11: Budget delivers lower deficit, still no 'victory'

Queensland will record a $1.74b deficit in 2010-11 as a result of significant capital works funding aimed at strengthening a post-GFC economy

QLD BUDGET '10-11: Budget delivers lower deficit, still no 'victory'
<b><font color=red>QLD BUDGET ‘10-11:</b></font> Budget delivers lower deficit, still no ‘victory’

By Jayne Munday |
June 8, 2010

Queensland will record a $1.74 billion deficit in 2010-11 as a result of significant capital works funding aimed at strengthening a post-GFC economy.

While the Budget handed down today by Treasurer Andrew Fraser remains in the red, the Bligh Government says it must "stick to the plan" by re-building the State’s bottom line.

"We remain in deficit over the forward estimates, which means the hard work is still ahead of us and we need to stick to our strong economic strategy," Fraser says.

"Compared to revenue levels forecast in 2008-09, the global financial crisis wiped off $7.8 billion in taxation, royalties and GST from our bottom line.

"We’ve improved the deficit position, but now is not the time to declare victory."


Economic growth is estimated to strengthen in 2009-10, largely due to a recovery in the trade sector and public sector stimulus.

The Treasury has forecast Queensland to grow at 3 percent in 2009-10, higher than the 1 percent forecast at mid-year review, moving to 3.75 percent in 2010-11 and 4.25 percent in 2011-12.

Economic growth is projected to average 4 percent in 2012-13 and 2013-14.

As a result of cautious spending, the forecast operating deficit of $1.7 billion in 2010-11 is expected to moderate to $1.4 billion by 2013-14.

This places the State further along the path back to surplus than previously forecast, with a surplus now anticipated for 2015-16 – a year earlier than last year’s budget.


Exports growth is expected to remain strong in 2010-11, thanks to further growth in coal exports and a rebound in other mineral exports.

Improved labour market conditions are also tipped to strengthen growth in consumer spending.

In line with weak private sector demand, jobs growth is expected to slow to 0.75 percent in 2009-10, a rate below labour force growth.

As a result, the year-average unemployment rate is estimated to rise to 5.75 percent this financial year.

However, as the economy moves toward more stable ground, jobs growth is forecast to accelerate to 2.75 percent in 2010-11 and 3.25 percent in 2011-12, reducing the year-average unemployment rate to 5.25 percent by 2011-12.

Reflecting a softening in labour demand, year-average growth in the Wage Price Index in Queensland is estimated to ease from 4.2 percent in 2008-09 to 3.25 percent in 2009-10.

However, with faster growth in the domestic sector of the economy anticipated to cause labour market conditions to begin tightening again, growth in the Wage Price Index is forecast to strengthen to 3.5 percent next financial year and 3.75 percent by 2011-12.

Strong growth in public final demand is estimated to contribute 1.5 percentage points to overall economic growth in 2009-10, partly due to the state’s own significant capital works program as well as federal infrastructure initiatives.


Today’s Budget has a strong focus on capital works, transport infrastructure, renewable energy projects, early childhood education, industry training and health initiatives.

During 2010-11, the Government will drive economic and jobs growth through a $17.1 billion capital works program which is expected to support 106,000 jobs.

It will also spend $7.3 billion on transport infrastructure – bringing forward key projects such as the Springfield rail line by two years.

A further $18 million will be injected into an exploration program to support the resource industry, while a record $1.6 billion will go towards a building program for new hospitals.

Pushing ahead with its ‘green’ agenda, the Government is also investing $115 million in a package of solar initiatives.

Key capital outlays include:

  • $4.9 billion for transport and communications
  • $10.6 billion for health
  • $9.9 billion for education
  • $2.6 billion for economic services
  • $3.6 billion for public order and safety
  • $5.6 billion for housing and other community services
  • $5.2 billion for ‘other’ services.

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