WHAT BOOM? $92 BILLION BLOWOUT OF STATE’S DEBT
Written on the 21 June 2012
QUEENSLAND’S management of the mining boom is under fire after an audit by former Federal Treasurer Peter Costello revealed the state’s debt would total $92 billion by 2016.
The Review of Queensland’s Finances Report shows ongoing interest repayments on the debt will amount to nearly 10 per cent ($5.3 billion) of annual state revenue in FY16, raising speculation the state’s credit rating could be downgraded.
However, ratings agency Moody’s Investors Service denied having plans to review the state’s credit rating of AA1.
“Normally, if it was something serious we would announce a review, but we have not done that. At the moment the rating is stable,” says a spokesperson.
Despite Premier Campbell Newman’s promise to “protect” permanent roles in the public service, Treasurer Tim Nicholls says public sector job cuts cannot be ruled out if the state’s debt is not reined in.
He also warns of new taxes and charges to cover the ballooning interest payments.
The Chamber of Commerce and Industry Queensland says business competitiveness will suffer unless immediate action is taken to reduce the debt.
“Increases in taxes, fees and charges will be put forward and further redundancies across the public sector will be mooted as solutions to address a brewing debt storm,” says CEO Stephen Tait.
Australia Industry Group Queensland suggests selling more state-owned assets could help reduce debt.
“The government should look at a second round of asset sales involving CS Energy, Powerlink Queensland and Stanwell Corporation,” says state director Matthew Martyn-Jones.
“Previous asset sales of QR National, Queensland Ports and Forestry Plantations Queensland were very well received by the market and secured healthy returns.”