Global Financial Crisis wipes out $12 billion of revenue: Fraser

The full force of the global financial crisis on Queensland was given a price tag of $12 billion by Treasurer Andrew Fraser today.

After accounting for a drop in revenues of $4 billion in the mid-year review of the Budget in December, Mr Fraser today said revised forecasts from the Treasury expected a further $8 billion in lost revenue as the global financial crisis hit home.

“Every economy around the world is taking a hammering – and we are not immune.

“The full cost is now expected to be a loss of revenue of $12 billion across the forward estimates of the Budget.”

The dramatic fall in revenue will result in deficit budget positions as the Bligh Government maintained its commitment to the vital $17 billion infrastructure program this financial year.

Confirming the Bligh Government’s commitment to supporting the economy through infrastructure spending against a projected $1.57 billion deficit in 2008-09, Mr Fraser said the government was sticking to the economic strategy outlined in December’s Major Economic Statement.

“We are holding our nerve on the infrastructure program – it supports 119 000 jobs in the economy and accounts for 1% of our overall economic growth.

“The economy needs the stimulus of the infrastructure spend, to support activity, support demand and support jobs as private investment evaporates.

“We are choosing to put the interests of Queenslanders facing unemployment ahead of the political sanctity of a budget surplus.

“We are elevating the interests of the economy ahead of our own political interests.

“It’s the right decision,” Mr Fraser said.

The drop in revenue this year now totals $2 billion, with transfer duty receipts nearly halved from the original budget figure.

“The loss on transfer duty is now $1.4 billion this year alone.

“Our coal royalty increase forecast at the mid-year on the back of the currency depreciation has now evaporated, with a $434 million downward revision in this update.”

Further declines in motor vehicle sales has resulted in another reduction in vehicle duty also, while payroll tax remains in line with original forecasts.

Revenue from the GST was plummeting, with a further $2 billion wiped out across the forward estimates on top of the $1.3 billion hit taken at mid-year.

“The economic slowdown has seen GST cut by more than $3.3 billion,” he said.

Mr Fraser said Queensland, which is now a donor state, could face further reductions when the Commonwealth Grants Commission released its annual allocations report next month.

Contact (Treasurer’s office): 3224 6361 or 3224 5982