Queensland Treasurer Cameron Dick has today pledged $249 million to extend COVID-19 tax relief, as well as $1 billion towards two new funds for businesses and projects.
The state will invest $500 million into the Backing Queensland Business Investment Fund, which the Treasurer likens to the Victorian Business Growth Fund and the Federal Government's Business Growth Fund.
"The fund will target investments in businesses that are small and medium sized based in Queensland, will create Queensland-based jobs that have a proven product and defined market opportunity, but requires significant capital to aggressively build scale or grow market share," Treasurer Dick told a press conference this morning.
He said target businesses would need to be relatively mature with proof of concept, either profitable or approaching profitable, and have reputable owners who are committed to growing their businesses in and from Queensland.
The fund's managers will look for such businesses that are seeking capital to expand or restructure operations into new markets or make significant acquisitions.
The State Government will also invest $500 million into a Renewable Energy Fund.
"That means our publicly owned energy corporations can increase public ownership of commercial renewable energy projects and support infrastructure," the Treasurer said.
"Partnering with the private sector to increase investment, including renewables investment, is a key platform of Queensland recovery plan to support jobs and growth.
"The Renewable Energy Fund will complement our $145 million commitment announced by the Premier to establish three renewable energy zones in our state."
COVID-19 relief extended
The Treasurer announced an additional $249 million from existing funding in COVID-19 related tax relief to small businesses, including the following:
- A two-month waiver for businesses with payrolls of up to $6.5 million for July and August 2020;
- An extension of the 25 per cent land tax rebate for FY21 to enable landlords to continue providing rental relief to tenants;
- An extension of the exemption of JobKeeper payments for payroll tax;
- An extension of existing rent relief to the end of 2020 for business renting state government premises and still affected by COVID-19.
Treasurer Dick also announced transfer duty would be abolished when eligible small businesses restructure to reduce the cost of doing business.
The Government will also be working with Local Governments in regional Queensland to help them refinance their existing debt on more favourable terms.
The Chamber of Commerce & Industry Queensland noted the additional immediate relief measures to help companies through COVID-19 recovery represented "tangible support", and especially welcomed the new fund aimed at SMEs.
"The transpiring COVID-19 crisis has not been a time for tightened government spending. Without large volumes of government spending today we risk the ability to rebuild and recover for tomorrow," CCIQ economist Jack Baxter said.
"Increased short term borrowing and investment is also in line with monetary policy objectives following Australia's record low cash rate target of 0.25 per cent.
"The new 'Backing Business Investment Fund' is a positive step forward in supporting business to scale up and grow, and we will be looking forward to more details on how the fund will operate."
The chamber has also urged the State Government to further ease its restrictions.
"The Treasurer also spoke of Queensland's 'diversified economy' with the extent of losses softened by primary producing industries," Baxter said.
"However, it is argued that Queensland's reliance on primary industries in the past has resulted in overlooking necessary policy changes and support required for small businesses that were confirmed to be amongst the hardest impacted by the crisis.
"What we now need to see more on is how the government plans to manage the health crisis without adding harm to service-based industries which the treasurer confirmed as being the hardest hit."
Treasurer Dick noted that prior to COVID-19 the state was on track to delivering its fifth budget surplus, with gross state product (GSP) expectations of 2.5 per cent and 2.7 per cent in FY20 and FY21 respectively.
That trajectory has been set back by the pandemic with GSP to decline this year, but the Treasurer expects a recovery in 2021.
"The outlook is undeniably challenging, but not as challenging as other parts of the world or even other parts of Australia," he said.
"Queensland's gross state product is forecast to grow by 3.75 per cent in calendar year 2021, compared to an RBA forecast of Australia's GDP to grow by 2 per cent.
"This follows a forecast 2.5 per cent fall in Queensland GSP in calendar year 2020 compared to an RBA forecast of a 4 per cent fall in Australia's GDP."
The Treasurer explained Queensland's state final demand fell by 5.9 per cent in the June quarter.
"As painful as that is, Queensland's performance was better than New South Wales and Victoria, who both saw falls of around 8.5 per cent," he said.
"It's important to bear in mind that those quarterly figures reflect the period before Victoria went into Stage 4 restrictions and before restrictions in Queensland.
"The fall in state final demand in Queensland was mitigated by a 4.6 per cent rise in government consumption expenditure, the largest rise of any state or territory, reflecting $7 billion in investment through our 'Unite and Recover' economic recovery strategy."
He referred to an announcement in July when a gross government deficit of $8.4 billion was estimated, but that has now been reduced to $8.1 billion.
"By the end of this financial year, we forecast our gross general government debt to be $60.9 billion, an increase of $1.5 billion from the fiscal update I delivered in July," he said.
"This is attributable to the decision of government to extend our payroll tax deferral measures, a $300 million increase in derivative liabilities, and an additional $130 million in lease liabilities."
Queensland's unemployment rate is forecast to peak at around 9 per cent in the December quarter, followed by a gradual recovery which will likely slow to an expected increase in the participation rate, meaning the percentage of the population that is actively looking for or in work.
Updated at 10:51am AEST on 7 September 2020.
Get our daily business news
Sign up to our free email news updates.