Stay the course today, change tomorrow Queensland Business Outlook: Budget Edition - Deloitte
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Stay the course today, change tomorrow Queensland Business Outlook: Budget Edition 12 June 2019
02
Queensland Business Outlook |
Section title goes here
Contents
Comment 04
Budget snapshot 07
Queensland’s economic strategy 07
Queensland’s fiscal strategy 09
Is payroll tax the Budget Messiah? 11
Big ticket items 14
Capital works 14
Business and industry 14
Education and skills 15
Health, communities and social 16
Transport 17
Environment and energy 17
Contacts 19
03
Stay the course today, change tomorrow
Backing Queensland jobs…
requires embracing change,
and delivering reform
Reflections This affects the regions. The foundation To mitigate the risk to Queensland’s
of each regional economy is built on economy and the balance sheet,
The economic fundamentals that make
the strength of its natural geographic Queensland needs to make technological
Queensland strong, are equally what
advantage – and the skills and resolve of advancements work for Queensland
expose the state – and its balance sheet –
its people. This makes Queensland’s business, and its workers. All the while
to disruption and change.
economy diverse. And with more than turning the economic risks of climate
Exposure to the economic whims of the half of Queensland’s population living change and the changing nature of global
global economy position Queensland at the outside of Brisbane, sustainable and demand into opportunities.
forefront of both good times and bad. shared economic growth is not just nice
While ‘staying the course’ is a safe strategy
to have, but fundamental to Queensland’s
Queensland’s 2019-20 Budget sees the for managing an economy in the short
economic success.
signs of change beginning to creep in. term; the reality is that change is something
In light of such uncertainty and change, Queensland can count on.
Until the middle of last year, the global
the Reserve Bank Governor of Australia
economy was growing at a cracking pace – Queensland’s changing production mix, in
recently raised the key concern when
but over the second half of the year, growth part technological advancements and in
speaking in Brisbane: that there is a
slowed and this continued into 2019. While part the benefits of agglomeration
collective diminished trust in the idea
the future picture looks a little brighter, economies in our cities, has been a key
that living standards will continue to
big uncertainties remain around the trade contributor and will inevitably continue
improve. The impact of flat wages are
tensions of Brexit and US-China relations. to change the economy.
hitting people’s confidence in the idea of
And the persistent global harmony
shared prosperity – and also hitting the Industries such as agriculture, mining,
between low rates of unemployment
budget bottom line. manufacturing and retail trade, have seen
and inflation are a source of uncertainty.
significant increases in automation in
Sluggish household disposable income This diminished trust and loss of faith in
production and distribution – leading to
growth (low wages growth) and the the idea of shared future prosperity weighs
change where the pace and scale can be
consequent break on consumption is also heavy – in Queensland, across Australia
hard to keep up with.
holding the economy back. and the rest of the world.
Also there is no question that Government
All the while, Queensland’s economy Following the same train of thought,
economic strategy must meet the
rides the wave of uncertainty and broad the Reserve Bank Governor also
challenge of climate change head on
economic change. acknowledged how hard it is to implement
- especially for an economy such as
much needed structural economic reform.
And change is something Queensland’s Queensland’s.
Reform that will:
economy can count on:
The private sector is already adapting to
•• Lift productivity
•• Queensland’s changing production mix, the disruptions of technological change
in part technological advancements and •• Improve – and share that improvement – and climate change. However, government
in part the benefits of agglomeration in living standards policy has to do more to accelerate this
economies in our cities, has been a key adoption by business, by our communities
•• Build sustained – and sustainable –
contributor. and by individual Queenslanders.
economic growth
•• Industries such as agriculture, mining, This is no small task – and it is not a task
For Queensland this requires tackling
manufacturing and retail trade, have that any State Government can deliver on
the twin forces of disruption confronting
seen significant increases in automation its own. Business, industry, community
the state - technological change and the
in production and distribution – leading groups, local governments and the Federal
economic consequences of global
to change of which the pace and scale Government all have a role to play.
climate change.
can be hard to keep up with.
Where a State Government alone can’t
deliver the scale, pace and types of
changes required, we all have to step up.
04Queensland State Budget 2019-20
Where the State Government can shift the •• Despite a difficult environment, the Not widely trumpeted is the establishment
dial to address the disruption confronting Budget remains in surplus each year of a Service Priority Review Office
Queensland in the long-term, it is pulling across the forward estimates. in Queensland Treasury. It will
some of the levers available to it: conduct reviews of programs and the
•• The big surprise was the pro-business,
administration of departments with the
•• The payroll tax reforms in net terms pro-jobs $885 million payroll tax
objective of achieving a reprioritisation
are pro-business and pro-jobs growth reform package aimed at incentivising
target of $1.7 billion over the forward
– especially in the regions where a 1% small and medium businesses to expand
estimates. In terms of strategy this can also
reduction for businesses with 85% of and create jobs. It’s a move to signal
better align government programs with
employees outside SEQ is a small, but business-led economic growth and will
the Government’s Advancing Queensland
decent incentive. be well received, even though larger
Priorities released in 2018.
•• The $100m boost in funding for the businesses will end up paying a bit more.
This is a significant development, signalling
North West Minerals Province and –– All businesses benefit from an increase a focus on efficiency and management
the drive for more exports through in the payroll tax threshold from $1.1m within the public sector to drive
Townsville is welcome, and is focussed on to $1.3m. expenditure restraint. This is, arguably, a
the future mineral needs of the world. –– The regional aspect of the payroll tax development born of the need to maintain
•• The $19m Hydrogen initiative – centred reform- a 1% discount on payroll tax fiscal controls but also the Coaldrake
around Gladstone – is a great signal in for businesses where 85% of their staff review into the Queensland Public Service
seeing a new industry for Queensland are outside South East Queensland - is and the adherence to a fiscal principle to
meet the emerging demands for low- a clever move. keep public sector jobs growth in line with
carbon energy from countries including –– The introduction of an employment population growth.
Japan and Korea. growth rebate for two years from 1 July By and large, industry will find many
•• The $49.5 billion infrastructure spend 2019 for all employers. positives. Although specific groups such as
especially on the big areas of transport, •• The signalling of a new industry with those in the petroleum and LNG sector will
health, and education. $19m provided for the development of a find the petroleum royalty problematic.
The State Budget also flags two critical Hydrogen industry. Social groups will feel that the Government
areas for further action: should have spent more on housing,
But, someone always has to pay… with
health, and other social services.
01. The development of a Skills Strategy increases in some taxes such as payroll tax
for large business, land tax for foreigners, Green groups will feel this is a lost
02. The release of a refreshed strategy
companies and trusts, and royalties on opportunity, with not enough to drive
for Advance Queensland – the
petroleum. renewables and the greening of
Government’s flagship innovation and the economy.
entrepreneurship program. Government borrowings have
But this is the nature of budgets. They
Deloitte Access Economics’ key also increased to pay for increased
give with one hand and take away with
takeaways on Budget 2019-20: infrastructure. But the debt to revenue
the other. They focus on some priorities
ratios (both General Government and Non-
The Government’s 2019-20 Budget is over others. They balance the competing
Financial Public Sector) and servicing costs
framed around the theme of ‘staying the objectives of signalling for the future with
remain within manageable limits. Credit
course’ with its focus on jobs and regions. balancing the books. And the imperative to
rating agencies have confirmed this view.
Its key points include: invest in the services that citizens need.
And the Budget projects expenditure If we all want to secure jobs for the future,
•• A challenging global economy, and a
restraint – projecting expenditure growth then business, the community and
slowing Australian economy, has left
to be lower than revenue growth over the Queenslanders must work together to
little economic room to move for the
forward estimates. But here’s the rub – the create the conditions for change.
Queensland Government.
Government has struggled to maintain
•• The budget has taken a $3.8 billion expenditure controls and must now do so
hit to its bottom line from what could over the forward estimates which includes
have been a toxic fiscal mix of falling GST, an election in October 2020.
natural disasters and lower stamp duty; Dr Pradeep Philip
in part countered by additional royalties. Deloitte Access Economics
05Queensland State Budget 2019-20
Budget snapshot
Queensland’s economic strategy Addressing these is critical to a future How to interpret these? Standing still,
economic strategy. To back jobs treading water, could have been worse,
The economic strategy for the Budget
necessitates embracing change and the or not good enough?
remains unchanged with a focus on jobs
delivery of reform. Because one thing is
and regions. The Budget’s economic These unemployment figures might appear
certain for Queensland – change is coming.
strategy is described by the Treasurer as reasonable in the current environment,
And Queensland’s economic strategy must
‘staying the course’. but we can and must do better.
tackle this head on to make change work
In many respects this is the right thing for Queensland. Which is why the signals for the Hydrogen
for the Budget – focussing on the industry, the pro-business payroll
Domestically, the Budget forecasts
jobs that Queenslanders need and initiatives, and reviews for skills and
growth to pick up to 3% in 2019-20 and
the quintessential characteristic of Advance Queensland are welcome and
then moderate to 2.75% over the forward
Queensland, its regions. In doing so, the critical for the future. They are critical to
estimates. Employment growth, coming off
Budget ticks a number of boxes – budget drive productivity, investment, and the
a high in 2017-18 will tick along between
surpluses, infrastructure spending, adoption of new technology into
1.25% and 1.75% across the forward
remaining a low tax state, and increased our businesses.
estimates with the unemployment rate
spending on social portfolios.
steady at 6%.
These measures work in the short run.
But in the long run, there are disruptions
in the global economy which warrant
greater focus. Chart 1: GSP and Employment Forecast (% annual change)
As a small open trading economy,
4.5
Queensland is highly exposed to global
economic conditions, which, over the 4
coming years will have a sustained and
3.5
structural impact on the state’s economy.
Trade tensions are already high, and 3
Annual % Change
uncertainty is all pervasive.
2.5
Compounding this, technology and climate
2
change are key disruptions which are
dislocating business models, markets, 1.5
consumer preferences, and the production 1
methods of industries as well as the skill
sets for the jobs of the future. 0.5
0
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
GSP (Real) Employment
•• A range of global, national and local •• Within the domestic market, the
factors are expected to see growth in expected slowdown in housing further
Queensland’s Gross State Product (GSP) contributed to easing economic growth.
ease to an estimated 2.75% in 2018-19.
•• However, in line with more subdued
•• Global economic conditions have domestic activity, employment growth is
deteriorated substantially since early expected to return to more sustainable
2018. A slowdown in China’s domestic rates of 1.5% in 2018-19 and to 1.25% in
economy, escalation of trade tensions 2019-20.
between the United States and China,
•• Similar to recent years, variations in
and uncertainty surrounding Brexit have
employment growth are expected to
contributed to slowing global growth in
be mostly absorbed by changes in
late 2018 and into 2019.
participation, seeing the unemployment
rate stabilise around 6%.
07Stay the course today, change tomorrow
Queensland’s fiscal strategy
This budget keeps Queensland in the black
– just! In the context of a challenging global
economy, a slowing domestic economy,
sluggish wages growth and consumption
growth, and a hit to the housing sector –
the delivery of surpluses is no mean feat.
The budget has taken a $3.8 billion hit to
the bottom line from lower GST revenues
than expected, the cost of natural
disasters, and lower stamp transfer duties.
On the flip side, royalty revenues have
delivered an additional benefit to the
bottom line.
Operating surpluses across the forward
estimates are delivered though a cocktail
of some tax increases, some expenditure
restraint, and increased borrowings.
Chart 2: Net Operating Balance ($)
Expenditure growth remains a bug bear for
the Government. A blowout in the last year
4000
translates into restraint over the forward
estimates. Maintaining expenditure 3000
controls will be critical to delivering the 2000
surpluses forecast in the Budget.
1000
Borrowings rise in the Budget as
Millions ($)
the Government struggles to meet 0
infrastructure needs in a tough operating -1000 12 13 14 15 16 17 18 19 20 21 22 23
11- 12- 13- 14- 15- 16- 17- 18- 19- 20- 21- 22-
environment. But debt is not a bad thing 20 20 20 20 20 20 20 20 20 20 20 20
per se. It depends on the economic and -2000
social rates of return the investments -3000
generate. Moreover, the Budget papers
-4000
make it clear that an increasing proportion
of new capital investments is being funded -5000
from operating revenue.
•• Despite a $3.8 billion hit to the •• Ratings agencies have noted that the
bottom line from a mix of falling GST, budget is likely to remain in operating
natural disasters and lower stamp surplus despite weaker goods
duty, a General Government net and services tax and stamp duty
operating surplus of $841 million is forecasts, noting that strong mining
expected for 2018-19, about $700 royalties and new taxes should
million higher than forecast in the partially offset these – indicating the
2018-19 Budget (or $317 million more budget position is manageable.
than the 2018-19 Mid-Year Fiscal and
Economic Review estimate).
08Queensland State Budget 2019-20
Revenue and expenses
•• Net operating surpluses will be achieved Chart 3: Revenue and expenses growth (% annual growth)
across the forward estimates with
revenue growth expected to increase and 6.0%
exceed expense growth from 2020-21.
5.0%
•• Total revenue growth is mainly driven by 4.0%
% Growth
growth in GST, royalties, and taxation.
–– Lower revenue growth from royalties is 3.0%
expected in 2019-20 compared to 2018- 2.0%
19, due to an expected decline in coal
prices during 2019-20. 1.0%
–– Total revenue growth over the forward 0.0%
estimates is mainly driven by moderate 2018-19 2019-20 2020-21 2021-22 2022-23
taxation revenue growth, averaging
5.8% over the four years to 2022-23,
Revenue (%) Expenses (%)
supported by expected growth in major
taxes such as payroll tax, transfer duty
and land tax, and by the introduction of Chart 4 : Borrowing
the Waste Disposal Levy.
–– Revenue growth over this period is 90,000
also supported by current grants of
80,000
2.1% but is also affected by declining
royalties with coal prices expected to 70,000
return to medium-term levels, lower 60,000
interest income due to a reduction in
Millions ($)
the portfolio of financial assets held, 50,000
and lower dividends from the Non- 40,000
financial Public Sector (NFPS).
30,000
•• The Budget projects expenditure
20,000
restraint – projecting expenditure
growth to be lower than revenue growth 10,000
over the forward estimates. But here’s
0
the rub – the Government has struggled
to maintain expenditure controls and 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
must now do so over the forward
estimates which includes an election in Borrowing (General Government) Borrowing (NFPS)
October 2020.
•• Ongoing investment in economic •• The introduction of the AASB 16
•• The budget establishes a Service Priority
and social infrastructure has Leases, has resulted in a one-off
Review Office in Queensland Treasury.
been attributed to the increase in increase to General Government
It will conduct reviews of programs and
General Government and NFPS Sector borrowing of over $2.2 billion
the administration of departments
borrowing with Queensland Treasury and an increase for NFPS borrowing
with the objective of achieving a
Corporation (QTC) over the period of over $2.6 billion, on 1 July 2019.
reprioritisation target of $1.7 billion
to 2022-23.
over the forward estimates. In terms
of strategy this can also better align •• These figures remain largely in line
government programs with the with the 2018-19 Budget projections,
Government’s Advancing Queensland excluding the implications from the
Priorities released in 2018. introduction of AASB.
09Stay the course today, change tomorrow
Chart 5: Total borrowings to revenue (%)
160
140
120
100
Ratio (%)
80
60
40
20
0
2 3 4 5 6 7 8 9 0 1 2 3
-1 -1 -1 -1 -1 -1 -1 -1 -2 -2 -2 -2
011 012 013 014 015 016 017 018 019 020 021 022
2 2 2 2 2 2 2 2 2 2 2 2
General Government NFPS
•• Across the forward estimates, the •• On average over the budget and
expected moderation in revenue forward estimates, the debt to
growth and the timing of significant revenue ratio for the general
capital projects and associated government sector is 71%.
borrowings, as well as the impacts
of AASB 16, sees a gradual increase
in the forecast debt to revenue ratio
before a stabilisation in 2022-23.
10Queensland State Budget 2019-20
Is payroll tax the Budget Messiah?
Payroll Tax Regional rate reduction This rebate will operate in addition to the
‘Back to Work’ jobs incentive scheme that
Payroll tax in Queensland will change From 1 July 2019 to 30 June 2023,
will also continue to apply.
considerably from 1 July 2019 with a businesses with a registered business
number of measures introduced as part of address in a specified regional area (i.e. Land tax
the Budget. outside S.E. Queensland), that pay at least
Land tax was also a big revenue spinner
85% of their taxable wages to employees
The exemption threshold increases, in the Budget and foreign land owners
residing in one of the specified regional
but so does the rate will shoulder a significant portion of the
areas, will be eligible for a 1% reduction in
increased revenue expected to be received
From 1 July 2019, the taxable wages their applicable payroll tax rate. This will
from changes announced to land tax in the
exemption threshold will increase from reduce the payroll tax rate for qualifying
Budget. Overall, the land tax measures
$1.1 million to $1.3 million. No payroll tax medium size businesses (taxable wages up
in the Budget are forecast to return an
will apply where total taxable Australian to and including $6.5 million) to 3.75% and
additional $778 million revenue to the
wages are below this threshold. The for qualifying large businesses ($6.5 million
State over the next four years. Land tax will
threshold will continue to reduce by $1 for and over) to 3.95%.
also increase proportionally as a share of
each $4 by which taxable wages exceed the
The specified regional areas will include total State taxation revenue. The two key
threshold, as currently. Accordingly, the
Cairns; Central Queensland; Darling Downs measures announced in the Budget were:
threshold will cease to apply where taxable
– Maranoa; Mackay – Isaac – Whitsunday;
wages are $6.5 million and above, and 01. An increase in the absentee owner
Queensland – Outback; Townsville; and
payroll tax will then be payable on every land tax surcharge from 30 June 2019
Wide Bay.
dollar of taxable wages. to 2.0% (up from 1.5%) and will be
What is attractive for regional business is extended to include foreign companies
The payroll tax rate will remain at 4.75% for that they could get access to multiple or all and trustees in addition to absentee
taxable wages paid up to the $6.5 million of the payroll tax benefits and apprentice individuals, which is expected to raise
threshold, however where businesses and employment growth rebates. an additional $540 million in revenue.
pay total taxable Australian wages of
$6.5 million or more, the payroll tax rate Apprentice and Trainee rebate 02. The land tax rate for companies and
(applying to all Queensland taxable wages) The extension of the 50% payroll tax rebate trusts with aggregate landholdings
will be 4.95%. The increased payroll tax for apprentices and trainees for a further above a land tax value of $5 million will
rate will also apply from 1 July 2019. 24 months until 30 June 2021 is most increase by 0.25%, which is expected
welcome. The rebate benefits employers by to raise an additional $238 million
These changes will result in approximately
reducing the payroll tax payable by them in revenue. The rates applying to
12,000 employers paying a reduced
on their overall taxable wages (in addition landholdings with a land tax value
amount of payroll tax and approximately
to the wages for the apprentice/trainee below $5 million will not change.
1500 employers no longer falling within the
being exempt). The rebate amount is equal Accordingly, the rate applying to
payroll tax net. However, at least 13,000
to 50% of the wages paid to apprentices aggregate landholdings with a land tax
employers are also expected to pay more
and trainees multiplied by the payroll tax value from $5 million to less than $10
payroll tax. The reductions in payroll tax are
rate. Since its introduction in 2015-16, million will be $75,000 plus 2.25% on
worth $885 million, while larger businesses
more than 5,300 business have claimed a the amount over $5 million, and the
will pay $544 million, resulting in the payroll
total of $76 million in rebates. rate applying to aggregate landholdings
tax measures in this budget having a cost
with a land tax value of $10 million or
to revenue of $341 million over the next Employment growth rebate
more will be $187,500 plus 2.75% on
four years. The Budget also acknowledges
From 1 July 2019 until 30 June 2021, a the amount over $10 million.
that a 1% change in wages or employment
rebate of payroll tax, capped at $20,000
growth will result in a $43 million change to
per employer, will be available for
the payroll tax revenue base.
businesses with a net increase in their
level of full-time employees in a year. The
amount of payroll tax rebate will be relative
to the increase in full-time employment
generated in the year.
11Stay the course today, change tomorrow
Petroleum royalty Gambling tax
The rate of petroleum royalty will be The Government introduced a point of
increased from 10% to 12.5% of the consumption tax in October 2018 for all
wellhead value for petroleum (including betting operators licenced in Australia on
coal seam gas) disposed of or produced wagers placed by Queensland customers.
from 1 July 2019. However, for annual No changes to the gambling tax rates
return lodgers with a return period ending were announced in the Budget however,
31 December 2019, a rate of 11.25% of total gambling tax and levy collections are
the wellhead value will apply to this years’ estimated to grow by 5.9% in 2019-20,
return only. and 4.5% on average over the four years
to 2022-23. These growth rates are
In a welcome measure, the State
directly supported by expected increased
Government has announced a proposed
revenue from the point of consumption
review of the design of the current royalty
tax (betting tax).
regime to address existing uncertainty
in the calculation of royalty, although the Compliance programs
specific details of this review are yet to be
The Government has proposed an increase
announced. This should provide much
to resourcing for Treasury to undertake
needed certainty and simplification to the
a program of additional targeted tax
current regime.
compliance activities to key taxes such
Landholder duty changes as payroll tax, land tax, transfer duty and
royalties. The compliance program is
Although not announced as part of the key
expected to increase compliance-related
Budget measures, contained within the
revenue by $220 million over four years
changes are amendments to the Duties Act
ending 2022-23. As a direct result of this
2001 (Qld) that will expand the landholder
additional resourcing, taxpayers can expect
stamp duty base. As a consequence
to see increased compliance activities
of the amendments, all landholdings
undertaken by the Office of State Revenue.
of a partnership, where the landholder
or a subsidiary of the landholder is a
partner, will be included in the duty base,
irrespective of the interest held in the
partnership. These amendments are
to address the decision of the Court of
Appeal of the Victorian Supreme Court in
Commissioner of State Revenue v Danvest
Pty Ltd & Anor [2017] VSCA 382. No
significant revenue impact is noted in the
Budget as a result of these changes, but
this remains to be seen.
12Stay the course today, change tomorrow
Big ticket items
Capital works •• Housing and Public Works: Key highlights include:
–– Total capital purchases for the portfolio
Key highlights include: •• The payroll tax package which includes
totals $666.5 million in 2019-20. This
an increase in the exemption threshold
•• The total value of the Government’s includes $63.3 million for social housing
from $1.1 million to $1.3 million, a regional
capital works program is $49.544 billion in Aboriginal and Torres Strait Islander
payroll tax discount of 1% for employers
over the forward estimates, with $12.941 communities and $102.8 million to
with 85% of their employees outside of
billion in 2019-20. Sixty per cent will compete the construction of the North
South East Queensland, an employment
be to fund projects outside of Greater Queensland Stadium.
growth rebate (payroll tax rebate) for
Brisbane, with 63% of the jobs generated
•• Innovation and Tourism Industry employers who increase the number
by investment in infrastructure to be in
Development: of full-time employees, and an extension
regions outside Greater Brisbane.
–– Total capital grants of $93.4 million of the apprentice and trainee rebate
•• Of the total capital works budget, for 2019-20, include major funding to June 2021.
transport infrastructure was the for Great Barrier Reef Island Resorts
•• Increased funding of up to $14 million
biggest winner recording 46% of the Rejuvenation Program ($23.1 million)
over two years to meet continued
total, followed by energy infrastructure and the Growing Tourism Infrastructure
demand for the Back to Work program
(spanning initiatives across all portfolios) Fund ($19.9 million).
in South East Queensland, bringing
at 20%, education and training at 12%,
•• State Development: total funding under the program to
and health, housing and community
–– Disaster Management: The Queensland $383 million. The Back to Work program
services at 12%.
Reconstruction Authority (QRA) has a also predominantly benefits small
•• The Government estimates that the capital spend of $1.3 million and capital businesses, with 77% of total firms
direct cost of recovery and damage to grants of $236.2 million to support the accessing payments through the initiative
public assets from the 2018-19 natural Queensland Government’s program employing less than 20 staff members.
disasters to be $1.3 billion. of infrastructure renewal and recovery
State development
within disaster-affected communities
Portfolio related highlights include:
and to help build disaster resilience •• $70 million over the next four years to
•• Health, communities and social: across the State. deliver Round 5 of Building our Regions,
–– Total value of the capital works is which will provide infrastructure in
•• Justice:
$777.7 million in 2019-20. Key measures Queensland regions.
–– $178 million over three years for
include $78.6 million for Enhancing
additional youth justice infrastructure. •• $25 million in additional funding for
Regional Hospitals, $40.7 million as part
–– Queensland Corrective Services the Jobs and Regional Growth Fund –
of Rural and Regional Infrastructure,
received $88 million (of $241 million) assisting businesses and projects to fuel
$36.3 million as part of the Building
to provide an additional 348 cells at economic development and employment
Better Hospitals Program.
Capricornia Correctional Centre. opportunities in regional Queensland.
•• Education:
Business and industry •• $6 million additional funding over two
–– Capital purchases for the Department
years to the ‘Made in Queensland’
total $1.227 billion, including $479.2 Small to medium businesses
grant program.
million as part of the Building Future
This Budget has a particular focus on
Schools Fund, $296.7 million for the •• The Government is providing increased
small to medium businesses, committing
provision of additional facilities at funding of $5 million over four years
$885 million over four years in a series
state schools experience faster to continue advancing Queensland's
of targeted payroll tax initiatives that
enrolment growth. biofuture’s agenda.
will deliver lower taxes for an estimated
•• Transport: 13,200 small and medium businesses
–– The total capital program for transport across Queensland.
is $4.096 billion, including $3.979 billion
and capital grants of $216.7 million.
–– Port of Townsville Channel Capacity
Upgrade is estimated at a cost of
$193.5 million (funded through the
North West Minerals Province funding).
14Queensland State Budget 2019-20
Queensland Hydrogen Industry Education and skills Skills
Strategy
Education There is also continued investment in skills
•• Under a new agenda for establishing and training, underpinned by a growing
The 2019-20 Queensland State budget
a renewable hydrogen industry, the Queensland workforce and the need to
commits more than $14.9 billion in
Government has developed a Hydrogen provide people with the right skills to drive
Education and Training, delivering
Industry Strategy. Some $19 million is economic growth and employment. Going
more teachers and enhancing services
allocated over four years – with a focus forward, the Queensland Government’s
to improve educational outcomes
on job creation, regional growth and focus on skills will also be bolstered by a
across Queensland.
increased innovation and development. new Skills Strategy, informed by the Skills
Gladstone will be the hydrogen hub, Key highlights include: and Industry Summit held in late 2018.
building on existing infrastructure •• $1.1 billion of funding over the forward Key highlights include:
located in the region. estimates for Queensland state schools
as part of the five-year school funding •• $80 million in 2019-20 as part of a $420
Advance Queensland
agreement with the Federal Government. million, six year commitment to the
•• While no additional funding has been Skilling Queenslanders for Work program,
allocated to Advance Queensland, •• An additional $532.6 million over seven which helps eligible Queenslanders to
the Budget flags the release of a new years from 2018-19 to expand the develop skills, gain qualifications and
Advanced Queensland Strategy later in Building Future Schools Fund (to a total of provides direct assistance to enter and
2019. The Advance Queensland Industry $1.3 billion) to deliver three new primary stay in the workforce.
Attraction Fund, however, has received schools, seven secondary schools and
two special schools opening in 2020 and •• $105.8 million in 2019-20 for upgrades
$45 million additional funds – with the
2021. and improvements in Queensland’s
total funding amount now sitting at $150
training infrastructure, including the
million for the fund. •• An additional $235 million over four years
upgrade of TAFE campuses at Mount
to 2021-22 provided by the Renewing Our
Tourism Gravatt, Gold Coast, Pimlico in Townsville,
Schools Program to upgrade facilities in
Alexandra Hills and Toowoomba.
The $25 billion tourism industry also schools across the State.
gets some attention in the Budget. Key •• Additional funding of $5.5 million over
•• Increased funding of $251.3 million for
highlights from the 2019-20 Budget include: three years for the Micro-Credentialing
the provision of facilities at existing
Pilot to support industry-led skills
•• An additional $48 million has been state schools experiencing growth in
development designed to address
allocated to Tourism and Events enrolments over three years from 2018-
emerging workforce skills requirements.
Queensland over the forward estimates 19.
(an increase on the 2018-19 Budget’s •• $100 million will be provided over •• $4.6 million over five years for the Digital
$47 million). four years to fund state school air Engagement Strategy to improve online
conditioning projects across the state. accessibility of vocational education and
•• The Wangetti Trail, in Tropical North
consumer training information for young
Queensland, has been provided with •• Increased funding of $30.4 million over
people.
additional funding of $33.7 million two years to support the continued
(and $5.7 million internally funded) – provision of universal access to •• $16.6 million over four years from 2018–
to build infrastructure (including kindergarten for children in the year 19 for FlexiSpaces to support schools
ecotourism accommodation sites) and before school. to provide innovative learning spaces to
continue to develop the trail as an retain students at risk of disengagement.
•• $721,000 over three years will also
ecotourism attraction.
be provided to support the Daniel •• $11.2 million expansion of the Regional
•• $13.9 million is allocated over two years, Morcombe Foundation. Youth Engagement Hubs program to locate,
for funding of $7.5 million internally, to case manage and re-engage early school
progress market approaches for the leavers back into school and training.
Cairns and Gold Coast Global Tourism
Hub procurement processes, for the
contract management of the Queens
Wharf Brisbane Integrated Resort
Development, and for the progression
of the Thorsborne, Cooloola and the
Whitsunday Ecotourism Trails Program.
15Stay the course today, change tomorrow
Health, communities and social •• A further $100.6 million allocated over •• $550 million has been committed in
five years to support the health needs Youth Justice reforms since 2017,
Health
of prisoners. including overall investment of $154.5
The 2019-20 Budget continues to focus million operating funding and $178
•• NDIS Transition Support – Community
on increased front line services, regional million capital over five years as part of
health support programs: Government
hospital expansions, funding for regional the Youth Justice investment package,
is providing an additional $35.2 million
and remote health care access, and suicide supporting a range of initiatives:
in 2019-20 for the Community Nursing
prevention – all of which are key election
Program, Community Managed Mental –– $27 million over three years for an
commitments. However, there has been
Health Program, the Medical Aids Subsidy additional 16 new beds at the Brisbane
no growth in the expansion of primary and
Scheme and the Housing and Support Youth Detention Centre and $150
prevention care, which is in contrast to key
Program. This funding is part of $61.9 million to construct a new 32-bed youth
Queensland Health initiatives, such as the
million over two years of temporary detention centre at Wacol.
Health and Wellbeing Queensland initiative.
funding to assist the transition to –– $27.5 million over four years for the
Key highlights include: the NDIS while interface issues with Restorative Justice Conferencing
mainstream services are being resolved. program in the youth justice system.
•• An increase of operating expenditure by
–– Increased funding of $28.7 million over
6.6% on 2018-19 budgeted expenditure. Communities and social
four years to expand on the Transition
Much of this increase in funding is being The 2019-20 Budget includes a number to Success program and support young
allocated to employment expenses, with of key measures to improve the protection people to reconnect with education,
a projected increase of approximately of vulnerable people within society, such training, employment and life skills.
3% in FTE. Approximately 80% of the as through child safety and child abuse –– $33.5 million over four years for the
projected increase in FTE expenses will prevention initiatives and support for continuation and expansion of the
be allocated to acute and emergency disabled people in light of the NDIS Townsville Community Youth Response
services, with no growth in department roll-out and insights from the ongoing and to establish new locations in
staff and prevention, primary and Royal Commission. Cairns, Ipswich and Brisbane.
community care.
Key highlights include: –– $6.4 million has been allocated over
•• Development of Logan, Caboolture and two years for an enhanced Youth and
•• Department of Child Safety, Youth and
Ipswich hospitals have been allocated Family Wellbeing service for young
Women has been allocated $369.4 million
$36.3 million this year under the Building people and their families at risk of
over four years to continue to deliver
Better Hospitals initiative. entering the youth justice system.
Supporting Families Changing
•• Extension of the specialist outpatient Futures reforms. Police
service strategy until 2020-21, with an •• $14.8 million of a $21.9 million project to •• Queensland Police have been allocated
additional $71.4 million in that year. develop an integrated Client Management an operating budget of $2.4 billion,
System Replacement Program (stage a 5.2% increase on the operating budget
•• An extension of the Nurse Navigator
1), which will improve multi-agency in 2018-19 which will contribute to an
commitment to include $116.8 million
collaboration and information sharing in increase of 436 police officers within
over 2021-22 to 2022-23, and ongoing
the child safety service sector. the force.
funding of $59.8 million per annum from
2023-24. •• The Department Communities, Disability •• Queensland Police have been allocated
Services and Seniors has been allocated an additional $28 million to continue
•• Ongoing funding support for community
$34.3 million over four years, for greater to work on the $52.2 million Counter-
helicopter providers to support
support for people with disabilities, Terrorism and Community Safety Training
Queensland's Emergency Helicopter
particularly NDIS and ensuring centre at Wacol.
Network services, including $58.5 million
continuity of support for those not •• In addition to major infrastructure
over four years (an increase
eligible for the NDIS. projects such as the expansion of the
of approximately $30 million over
planned centrally held funding from Justice Capricornia and South East Queensland
the 2018-19 Budget). Correctional Centres, the Queensland
The budget delivers an additional $847.9
Corrective System has been allocated a
•• $61.9 million allocated over five years to million investment across Queensland’s
further $2.5 million over four years for
support suicide prevention as part of the justice system through a series of new and
a rehabilitation program in the remote
Shifting Minds Suicide Prevention Flagship. ongoing programs designed to enhance
Indigenous community of Aurukun.
justice and safety outcomes.
16Queensland Business Outlook |
Thought Leadership
Transport •• The total value of projects which aim to •• The Government has committed $12.5
grow the rail network across Queensland million for National Parks – across capital
The total capital works program for
are valued at $254.4 million. This includes infrastructure – for the revitalisation
the Department of Transport and Main
provisions for the New Generation walking trails, lookouts, camping and day
Roads is $4.096 billion across the State.
Rollingstock delivery which is valued at use facilities.
This is down from last year’s budgeted
$4.15 billion in its entirety.
$4.217 billion over the forward estimates. •• The Government is allocating $6.8 million
Transport Budget measures build on •• Ongoing funding to major highway over three years towards accumulation
existing major programs of work, some upgrades across the State, including the of fire management infrastructure
of which have received funding top-ups. Pacific Motorway valued at $897.5 million. and equipment. A further $9.2 is
Measures have also drawn on alternative As well as continuing Bruce Highway committed over four years, with all funds
funding buckets including the North West upgrades with start dates post 2019-20, contributing to increasing the capabilities
Minerals Province, central funding from including the Rockhampton Ring Road of Queensland Parks and Wildlife Service
Queensland Treasury or are being funded and the Cooroy–Curra Section D at a to reduce risks to life, property and
internally by the Department itself. cost of $1 billion each, the Pine River– biodiversity from bushfires.
Caloundra Road Interchange at a cost of
Key highlights include: •• $17.1 million is allocated for a
$662.5 million and the Townsville Ring
continuation of the Shark Control
•• The Queensland Transport and Road at $180 million.
Program and will contribute to a trial
Investment Program (QTRIP) represents
•• Far North Queensland Ports has been application of new technologies, such
$23 billion (capital and non-capital costs)
allocated $70.1 million towards the Cairns as drones, in swimmer risk mitigation,
over four years, this total funding is a
shipping development project for the research, and rolling out education and
top-up of $1.3 billion when compared to
dredging of Trinity Inlet shipping channel. awareness programs.
last year’s forward estimates. More than
$14.5 billion of this will be spent outside •• The expanded Camera Detected Offence •• The Drought Assistance Package and
Brisbane City, Ipswich City and Redland Program capital and expense measures Queensland Drought Reform is allocated
City local government areas. total $6.26 million and $166.5 million a total of $74.6 million over four years
respectively over the forward estimates; from 2019-20 to support drought
•• With the recently re-elected Coalition
with $110 million in expense measures affected communities across the State.
Federal Government not committed to
allocated exclusively in 2022-23.
funding the Cross River rail project, it •• The Queensland Government has
remains to be seen how the Queensland Environment and energy secured Australian Government matched
Government will fund its flagship project funding for $254 million under the
The 2019-20 Budget has committed to
over and beyond the forward estimates. jointly funded Disaster Recovery
a focus on wildlife and the environment
The 2019-20 allocation for works Funding Arrangements. This includes
– revitalising national parks, fire
commencing this year is approximately a $242 million disaster funding package
management, protected animal
$1.48 billion. following the North and Far North
management and conservation. Improving
Queensland Monsoon Trough; and
•• Projects funded internally by TMR: waste management continues to be a
$12 million to respond to the Central
focus, with the introduction of the new
•• The Roma Street Busway Interchange, Queensland Bushfires.
waste disposal levy, alongside a focus on
$250 million over 5 years.
scientific research and development. The •• Hopeland (Linc Energy) Management
•• Clapham Rail Yards land acquisition, $81 Treasurer’s Budget Speech also highlighted and Remediation: Capital funding of $4.3
million over 2 years. the Government’s focus on renewable million and expense funding $17.6 million
energy and Queensland’s transition to a (over four years) for the management and
•• Projects funded via the North
low carbon economy. remediation of the Linc Energy site.
West Minerals Province $110 million
funding pool: Key highlights include: •• Community Service Obligation payments
for the Cloncurry Pipeline: Funding of
•• The Mount Isa Line Below Rail Subsidy •• $25 million is allocated over four years
$18.6 million over three years to support
which has been bundled with the Port for the Queensland Government
the Cloncurry Shire Council’s long-term
of Townsville Common User Facility and Research Infrastructure Co-Investment
water supply and industrial development.
allocated $30 million. Fund – supporting investment in
scientific research and development
in Queensland.
17Queensland Business Outlook |
Contacts
Contacts
Dr Pradeep Philip James Petterson
Partner, Deloitte Access Economics Partner, Deloitte
pphilip@deloitte.com.au jpetterson@deloitte.com.au
+61 416 214 760 +61 7 3308 7188
Contributors
Kelly Heaton Claire Atkinson Kieran Cooke
Associate Director Manager Manager
Deloitte Access Economics Deloitte Access Economics Deloitte
Liesda Marsdon Nathan Brierley Jessica Bohan
Senior Analyst Economist Analyst
Deloitte Access Economics Deloitte Access Economics Deloitte
Mairead Davis Michael Stoneham Hai Pham
Graduate Economist Graduate Economist Graduate Economist
Deloitte Access Economics Deloitte Access Economics Deloitte Access Economics
19Deloitte Access Economics 123 Eagle Street GPO Box 1463 Brisbane QLD 4001 Australia +61 7 3308 7000 www.deloitte.com/au/deloitte-access-economics Deloitte Access Economics is Australia’s pre-eminent economics advisory practice and a member of Deloitte’s global economics group. For more information, please visit our website www.deloitte.com/au/deloitte-access-economics Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK of which is a legally separate and independent entity. Please see www.deloitte. com/au/about for a detailed description of the legal structure of Deloitte The entity named herein is a legally separate and independent entity. In providing this document, the author only acts in the named capacity and does not act in any other capacity. Nothing in this document, nor any related attachments or communications or services, have any capacity to bind any operating in Australia). About Deloitte and private clients spanning multiple industries. With a globally connected class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 200,000 professionals are committed to becoming the standard of excellence. About Deloitte Australia advisory services through approximately 6000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www.deloitte.com.au. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited © 2019 Deloitte Touche Tohmatsu
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