What does the 2021-22 Queensland State Budget mean for you and your business?

The headline message from the Queensland State Budget for 2021-22 is that Queensland’s economic recovery from COVID-19 is well underway and is happening more rapid2021-22 Queensland State Budgetly than forecasted: 

  • The Queensland economy is now forecasted to have grown in 2020-21 by 3.25%, which is well in excess of the national growth rate of 1.7%.  Growth in the remaining forward estimates period is expected to be 2.75%;
  • Net debt in 2021-22 is expected to be $9.7bn lower than original forecasts and is expected to reach $39bn by 2023-24, before peaking at $42bn in 2024-25;
  • Unemployment is expected to fall to 5% by mid-2025, significantly below the 7% rate experienced in 2020-21;
  • Net interstate migration to Queensland during 2020 was 30,000 (the highest net migration rate in Australia), with net migration over the four-year estimates period expected to be 85,000; and
  • The expected deficit for 2020-21 has been revised downwards from $8.63bn to $3.8bn.  The Queensland Government is now projecting a budget surplus of $153m by 2024-25. 

From a business perspective, Queenslanders can expect to pay no new or increased taxes.  Across the four years to 2024–25, general government revenue is expected to grow at an annual average rate of 3.9%, compared to an average annual growth rate for expenditure of 2.3%.  This is despite the pandemic, together with reduced demand from China, significantly impacting coal royalties.  In 2020-21, the State suffered a 50.4% decline in coal royalties, down to a total of $1.75bn.

While the lack of any new or increased taxes is, at first glance, good news, it does mean that the Queensland Government has again deferred the challenge of making generational tax reform. 

Much of the improvement in the Government’s revenue collections is driven by improved stamp duty and payroll tax revenue due to better-than-expected business conditions.  However, unlike the New South Wales Government which is proceeding with replacing residential stamp duty with a broader land tax, the Queensland Government has not sought to undertake any “tax mix switch” away from distortive taxes such as stamp duty towards a broader-based tax such as land tax.2021-22 Queensland State Budget

Outside of tax, there are significant, new infrastructure spending measures ranging from schools, hospitals and roads, and other public infrastructure:

  • The creation of the $3.34bn “Queensland Jobs Fund”, which will bring together the Government’s existing industry development programs, together with a number of new initiatives such as a $2bn Queensland Renewable Energy and Hydrogen Fund;
  • $20.885bn in operating funding and $1.35bn in capital funding for the State’s health service, including $648.7m in COVID-19 response measures;
  • The transfer of the Queensland Titles Office and surplus assets from the State’s Defined Benefit Scheme (representing $7.7bn in initial seed funding) to the newly created “Queensland Future Fund”;
  • $1.4bn in funding for new schools to open in 2023 and 2024, as well as for additional and renewed infrastructure in existing schools;
  • $320m in funding over four years for the “Skilling Queenslanders for Work” initiative, which is expected to up-skill and provide additional training to over 15,000 workers each year; and
  • The establishment of a $1bn Housing Investment Fund to drive new supply to support current and future housing need.

Overall, the Queensland State Budget continues the recent trend of recent Queensland budgets of seeking to invest heavily in the core areas of health, education and infrastructure, whilst making minimal changes to the state tax and transfer system.

For more information

Please contact your local RSM advisor to discuss the implications of this budget for you.