TREASURER and Minister for Trade, Tim Nicholls has described the 2013-14 State Budget as a ‘no-frills, no-nonsense budget’ that will deliver the frontline services Queenslanders expect, while fostering economic growth.
He says natural disasters had had a major impact on the framing of this year’s Budget.
“This Budget allocates total disaster spending over the three years from 2012-13 to 2014-15 of $9.3 billion, including $4.2 billion in 2013-14.
“The size of this year’s disaster sparked by ex-Tropical Cyclone Oswald isn’t always clear because it didn’t get the same sort of attention as earlier disasters, but its scale and reach was devastating.”
Nicholls reveals there have been many hard decisions in shaping this year’s Budget.
“Revenue forecasts have fallen by $5.3 billion since the Government was elected last year,” he says.
“This Budget includes a write down in general taxation and royalties of $1.9 billion and a decrease of more than $695 million in GST payments over the forward estimates.
“For the 2013-14 year the Government will record a fiscal deficit of $7.7 billion.
“Given the loss of revenue, the current deficit, the rebuilding task and the need to fund new services we’ve made a balanced decision to delay reaching a fiscal surplus in 2014-15.”
Nicholls says the Budget forecasts a small fiscal deficit of $244 million in 2014-15 and a fiscal surplus of more than $1 billion in 2015-16.
“We’ve made these decisions to ensure we can deliver frontline services in both the quality and quantity we need,” he says.
Premier Campbell Newman says growing Queensland’s economy, rebuilding after natural disasters ravaged much of the State, and making communities more resilient for the future are the main priorities for the Government.
“Ever since the Government was elected we have been an unashamedly a pro-growth Government,” he says.
Newman is determined to see Queensland rebuild strong communities as well as infrastructure.
“We know these disasters will happen again and again in Queensland and we have to increase the resilience of our communities.
“The $40 million in this Budget going towards betterment will be matched by the Commonwealth so we can make a start on the many projects local councils want to undertake to improve resilience.”
However Tax Partner Mark Molesworth (PICTURED) from BDO, one of Australia’s largest associations of independently owned accounting practices, says that the Government’s strategy comes at a cost.
“It’s pleasing the Government is committed to restoring its fiscal position. However, the Henry Tax Review along with the Queensland Commission of Audit showed that doing so by increasing inefficient taxes, particularly insurance duty, has a high economic cost. In fact, the Henry Review found that insurance taxes have an economic cost of about seven times those of more efficient taxes.
“The fall in state tax revenue and the impact of cyclone-related expenditure highlights the need for the Commonwealth and States to work together to progress fundamental tax reform. Such an approach would help ensure the States have an efficient and growing revenue base and have less need to increase taxes deemed inefficient by reviews such as Henry,” says Molesworth.
Executive Director of BDO, Bob Shead, feels that the Newman Government could be setting itself up for a challenge.
“Achievement of the estimated economic growth of three per cent over the next two years could be challenging, especially given expected declines in business investment as the LNG construction phases out. Meeting this goal is also dependent upon quite large increases in exports and a rebound in housing construction.
“The Treasurer’s concept of transitioning from ‘doer’ to ‘enabler’ recalls former Treasurer Keith DeLacy’s mantra of ‘steering rather than rowing’. Making the transition will require stringent procurement practices and the efficient development of new and expanded markets for government services,” says Shead.
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