Fiscal position over time

The General Government Sector recorded a $4.296 billion operating surplus, a $7.781 billion improvement on the $3.485 billion deficit forecast in the 2021-22 Budget, and $2.381 billion above the $1.915 billion surplus estimated at the 2022-23 Budget. It marked a substantial turnaround from the prior year's restated $915 million deficit.

RoSF 2021-22, Outcomes Report — Net Operating Balance and Overview, p.3-1, p.3-6, p.3

GGS revenue grew 18.1 per cent ($11.394 billion) on 2020-21, well above the 6.1 per cent average annual growth of the previous decade. Other revenue (predominantly royalties and land rents) rose $6.563 billion, reflecting a temporary surge in coal and oil prices, while transfer duty rose $2.382 billion (60 per cent) and payroll tax $835 million (20 per cent) on a strong housing and labour market.

RoSF 2021-22, AASB 1049 Overview — Revenue, p.4-2 to 4-3, p.4

Net debt finished at $10.997 billion versus the original 2021-22 Budget estimate of $24.75 billion, as stronger operating cash flows reduced borrowing requirements and lower net debt rolled forward from the 2020-21 Outcome. The net debt to revenue ratio was 15 per cent, down from 18 per cent in the 2020-21 Outcome. The government invested $2.5 billion of the royalty windfall for future critical infrastructure.

RoSF 2021-22, Outcomes Report — Net Debt and Fiscal principles, p.3-2 to 3-6, p.3

GGS expenses grew 9.7 per cent ($6.183 billion) on 2020-21, well below revenue growth. Employee and superannuation expenses rose 7.2 per cent, reflecting the deferral of scheduled wage increases from 2020-21, growth in frontline services and higher defined benefit superannuation costs. Other operating expenses rose $1.727 billion on demand for hospital and health, child protection and family violence services, and grants expenses rose $2.104 billion.

RoSF 2021-22, AASB 1049 Overview — Expenses, p.4-3 to 4-4, p.4

The State Non-financial Sector capital program delivered in 2021-22 was $14.294 billion, $240 million higher than the 2022-23 Budget estimated actual. General Government purchases of non-financial assets were $7.889 billion, $356 million above the estimated actual, mostly relating to transport infrastructure. GGS net investments in non-financial assets were funded in full through net cash inflows from operating activities.

RoSF 2021-22, Outcomes Report — Fiscal principles and Capital Purchases, p.3-3, p.3-6, p.3

Non-financial Public Sector borrowings reached $116.252 billion, $9.479 billion higher than the 2022-23 Budget forecast, largely reflecting short-term upward valuations of electricity hedging contracts entered into by energy government-owned corporations before a rise in electricity prices. The impact on NFPS net debt was largely offset by an associated increase in the value of derivative assets, and these positions are expected to reverse as forward contracts unwind.

RoSF 2021-22, Outcomes Report — Overview, p.3-2, p.3

Royalties and land rents are now estimated to total $6.255B in 2021-22, $2.914B higher than forecast at budget, after the premium hard coking coal price peaked above US$400 per tonne in September 2021 and oil prices rose above US$80 per barrel. State taxation and royalties are expected to be $8.1 billion higher over the four years to 2024-25. The elevated coal price is described as temporary, driven by short-term supply-side disruptions.

MYFER 2021-22 (Budget Update), Revenue — Royalties and land rents, p.25; Box 3 Banking Queensland's resources windfall, p.26, p.25

Taxation revenue is estimated to total $18.491B in 2021-22, $1.092B higher than at budget, with large upward revisions to transfer duty as elevated transaction volumes, increased first home buyer and investor activity and significant price growth produced a later peak in the housing market cycle. The recovering labour market also lifted payroll tax forecasts. Upward revisions to taxation total $4.656 billion over the four years to 2024-25.

MYFER 2021-22 (Budget Update), Revenue — Taxation, p.23, p.23

A General Government net operating deficit of $1.492B is forecast for 2021-22, a $1.993B improvement on the $3.485B deficit forecast at budget. Deficits are expected to narrow by $2.5 billion over the four years to 2024-25, with a return to surplus still anticipated in 2024-25.

MYFER 2021-22 (Budget Update), Net operating balance, p.20; Table 3 Reconciliation, p.21, p.20

General Government net debt is estimated at $17.536B by 30 June 2022, $7.214B lower than projected at budget, largely from lower borrowing with Queensland Treasury Corporation on the improved operating position and positive market-value adjustments on financial assets. The improvement is forecast to persist across the forward estimates, with net debt of $35.633B by 2024-25 (down from $42.573B at budget).

MYFER 2021-22 (Budget Update), Debt, p.28; Government Fiscal Principles, p.31, p.28

The government will invest $2.5 billion of the 2021-22 royalty windfall as a Long Term Asset held by the Consolidated Fund, available to fund future priority capital initiatives. This is intended to offset an expected future reduction in Queensland's GST share, as under Commonwealth Grants Commission principles up to 80 per cent of a royalties windfall is redistributed to other states over time. A further $2.1 billion is committed over the forward estimates to support the COVID-19 response.

MYFER 2021-22 (Budget Update), Net operating balance, p.20; Box 3 Banking Queensland's resources windfall, p.26, p.26

General Government expenses are estimated at $69.727B in 2021-22, $2.579B above the budget estimate. The increase reflects $600 million of 2021 COVID-19 Business Support Grants, further funding for the pandemic health response, quarantine and compliance services, HomeBuilder grants and revisions to the state's defined benefit superannuation liabilities. A further $1.1 billion has been allocated to extend or make permanent limited-life programs due to expire within the forward estimates.

MYFER 2021-22 (Budget Update), Expenses, p.26; Box 4 Limited life programs, p.27, p.26

Employment is now forecast to grow by 4.5 per cent in 2021-22, up from 3 per cent at budget and the strongest jobs growth in 15 years, after employment by October 2021 was already 90,000 persons above its pre-COVID March 2020 level — the strongest of any state. Gross State Product growth was upgraded to 3.25 per cent (from 2.75 per cent), primarily on a stronger outlook for dwelling investment.

MYFER 2021-22 (Budget Update), Economic Overview, p.10; Labour market, p.17; Table 1, p.10, p.10

Year-average Brisbane inflation is now forecast at 3 per cent in 2021-22, up from 1.75 per cent at budget, amid a surge in property and fuel prices and rising bond yields, making earlier monetary policy tightening more likely. The emergence of the Omicron COVID-19 variant, trade tensions with China and the expected normalisation of coal and oil prices are noted as key risks to the outlook.

MYFER 2021-22 (Budget Update), Economic Overview, p.7-8; Risks to the outlook, p.18; Table 1, p.10, p.18