State treasurer of Queensland comments on budget
- Thursday, 06 June 2013
In an exclusive interview with KangaNews following the release of the Queensland budget on June 4, Tim Nicholls, treasurer of Queensland, says tackling revenue undershoots has been a key part of the government's budgetary process. He emphasises the state's commitment to controlling expenses and acknowledges that further debt reduction is needed in order to regain a triple-A rating.
Nicholls says the state is acutely aware of consistent revenue undershoots by federal and state governments and factored these revenue pressures into its recent budget. Nicholls says: "We were extremely conscious of the overstating of revenue on previous budgets and it was one of the first things we dealt with when we came into government."
During the budget preparation process Nicholls says in order to combat this issue he consistently challenged assumptions put forward by treasury officials. "But I am satisfied that within the parameters that we have to operate, including a very volatile world economy and world market, these are fair and reasonable predictions," he says.
Although the measures announced in the 2012/13 budget have improved the fiscal position, Nicholls says downward revisions to key discretionary revenues, and the need to fund priority spending measures, has required the government to consider further action. He points out that this year there are plans for a further A$100 million savings requirement across all departments in addition to a vigilant watch on discretionary expenditure – for example, travel and advertising. He adds: "Queensland has managed to achieve the lowest rate of expenditure growth in government expenses since accrual accounting was introduced in 1998/99 so we have been keeping a lid on our own expenses."
Nicholls explains that the state continues plans to involve the private sector as much as possible in infrastructure. For example, the state recently requested for the private sector to build 10 new schools under a public-private partnership (PPP) model. "We are also working with the private sector to deliver a network solution to upgrade our community safety wireless network capability from analogue to digital. In addition, there is a mandate for the construction of a new building for public service – a PPP delivered by Cbus, a construction and building superannuation fund."
Nicholls says the state has stopped its debt spiral and begun controlling expenses – projected debt has been reduced to A$81 billion from A$85 billion – but he recognises that in order to regain a triple-A rating there will need to be a further substantial reduction of debt. He comments: "We always said this would be a two-stage process – the first stage was to stop the rot and get finances back under control, which we have done by restraining expenditure growth. The second step requires the retirement of debt which will be a longer-term project."
Nicholls says it is difficult to put a timeline on how long it will take for the state to regain a triple-A rating because it is dependent on various factors. For example, he points out that earlier this year ex-tropical cyclone Oswald crossed the state's coast causing over A$2.5 billion in repair work – which consequently knocked 0.25 per cent off growth. "We have to be realistic about what we can do and the challenges we face. It is something the government is mindful of, we know it needs to be done but it is a longer-term project," Nicholls concludes.
