Auditor-General Brendan Worrall has handed down his report into the Australian state of Queensland’s finances for 2020, finding that the state government is at risk of unduly burdening future generations of Queenslanders with debt.
This is primarily being driven by the pandemic’s impact, which has seen Queensland’s revenue going down and expenses going up.
Over the next four years, the Palazczuk government will rely on borrowings, with government debt forecast to reach $121 billion as the state prioritises support for economic recovery over fiscal targets.
Worrall warned that this could be risky.
“Over the long term, the state must be able to fund its operations and a significant portion of its capital program from the revenue it earns,” the auditor-general wrote. “This is to ensure that a burden of debt is not unduly placed on future generations without the benefit of supporting assets and the services they provide.”
Worrall said the government’s borrowings would prevent it from meeting its debt-to-revenue target in the short to medium term.
The auditor-general noted that additional risks to Queensland’s finances included virus outbreaks that haven’t been budgeted for and geopolitical and trade tensions, namely with China.
“Further outbreaks could require the Queensland Government to introduce new stimulus measures not currently budgeted for or expand on those included in the budget,” Worrall wrote.
Adding to the state’s economic burden was the pandemic’s reduction in the state’s revenue from coal, metals, petroleum, and gas.
“Royalties decreased by $720 million (14 percent) in 2019–20, largely because of decreases in the volume and price of coal exports, with COVID-19 driving weaker global demand for coal,” Worrall wrote.
The Palaszczuk government’s response to COVID-19 has “significantly and adversely” affected the state’s balance sheet in 2019–20 and will continue to do so for several years, Worrall said.
He also found that over the 2019-20 financial year, the Palaszczuk government had to borrow $180 million to partially cover day-to-day operational activities, including measures implemented in response to the pandemic.
“This was the first time borrowings were used to fund operating expenses since 2012–13,” Worrall wrote.
Worrall said the Queensland government’s budget was reliable but not always timely and recommended a statutory deadline after a delay saw them filed after the Oct. 31 state election last year.
“Information in the financial statements becomes less relevant to readers the further away it is from the end of the financial year,” Worrall wrote. “In 2020, it also meant information on the Queensland government’s financial performance and position was not publicly available prior to the state election.”
The auditor-general said there should be a set date before the Oct. 31 elections for filing financial statements for the Queensland government, the consolidated fund, ministerial expenses, and the office of the leader of the opposition.
State Treasurer Cameron Dick is mulling the recommendation, but he hasn’t committed to it yet.
“The recommendation poses some challenges on reporting timeframes, particularly in an election year, but the government is committed to working to determine whether those timeframes can be met,” his spokesman said.
Under state laws, the government only has to file financial statements within six months of the end of the financial year.
Opposition treasury spokesman David Janetzki said while 2020 was an extraordinary year, that was no excuse for failing to release the financial statements before the end of October as other states had.
He said given the precarious state of the budget and the “paper-thin” economy, voters deserved transparency.
“It’s a question of integrity—Queenslanders should not be blindfolded when they go to the ballot box,” Janetzki said. “They deserve to know the true picture of the state’s finances.”