Qld’s growth continues to outperform the nation: Bligh

10 January 2007

Queensland’s economic outlook in 2006-07 is stronger than forecast at the June State Budget with growth of 4.75 per cent now anticipated, compared to the original 4.25 per cent, Acting Premier and Treasurer Anna Bligh said today.

“The Review shows the State's finances remain in excellent shape and that the economy is continuing to grow strongly,” said Ms Bligh when releasing the Mid Year Review details.

“Our revised forecast of 4.75 per cent is considerably higher than the national growth forecast of 2.5 per cent.

“Backing this up we now expect employment to rise by 3.5 per cent this financial year – up from the 2.5 per cent growth at Budget time.

“Our unemployment rate is estimated to average 4.5 per cent in 2006-07, a half a per cent lower than forecast at the time of the Budget.

“This is remarkable and will represent the lowest year-average rate in 32 years in Queensland and the third successive year that the State’s unemployment rate remained below that nationally.

The Mid Year Review also revealed a positive fiscal outlook for the State Budget.

The State’s finances are in a strong position with an expected operating surplus of $226 million for 2006-07 - a $19 million reduction from the Budget estimate.

This is the result of higher expenses of $517 million, primarily made up of implementation of the Government’s election commitments including the Government's Early Years Strategy, better public transport in south east Queensland and to assist rural firefighters and SES volunteers.

Other expenditure approved since the 2006-07 Budget included funding for priority health initiatives such as cutting elective surgery waiting lists, the creation of the Queensland Water Commission and a new RSPCA facility.

The outyears also show strong surpluses with 2008-09 and 2009-10 showing much stronger surpluses than forecast at the time of the 2006-07 Budget.

The projected surplus in 2008-09 has increased over the 2006-07 Budget estimate from $224 million to $329 million and in 2009-10 from $102 million to $222 million.

The 2006-07 and 2007-08 surpluses have been negatively impacted by a technical adjustment related to the construction of that part of the Tugun Bypass located in New South Wales.

“Contrary to the views expressed by other states, our surpluses are not the product of a favourable distribution of the GST.

“While Queensland's current share of the GST is marginally above a per capita share, last year’s Grants Commission relativities update suggests that our GST share will fall below a per capita share over the next couple of years largely due to the strength of our mining sector and housing markets.

“Our good results are due to sound fiscal and economic management with our strong economy feeding into solid revenue growth particularly in the areas of payroll tax and transfer duty.

“Our higher revenue growth is not due to changes in tax policy or changes in our tax rates – Queensland is still among the lowest taxing states in the country – tax revenue has been boosted by our buoyant domestic economy.

“Despite these good results, the provision of quality services and infrastructure to the people of Queensland remains this Government’s priority.

This is evidenced by the Government increasing capital spending in 2006-07 and across the forward estimates with the budget now incorporating the impact of the south east Queensland water projects.

In 2006-07, we are forecasting to spend an additional $1.5 billion in capital over that forecast at the time of the Budget.

Despite this increase in capital spending, borrowing is expected to be around $80 million lower in 2006-07 than forecast at the time of the Budget, reflecting the Government’s improved cash position.

Ms Bligh said that the Mid Year fiscal position does not include the impact of the retail energy sales transactions.

The impact of these transactions will be incorporated when further detailed work is undertaken to determine the impact of these divestments on the profitability and dividend streams of Energex and Ergon.

This treatment is consistent with the approach take in the 2006-07 Budget.

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