CPA Australia – Queensland budget strategy sound but still in a COVID straitjacket

CPA Australia

15 June 2020

Queensland budget strategy sound but still in a COVID straitjacket

Queensland’s 2021-22 budget strategy is sound but the state won’t experience full economic recovery until two pre-conditions are met, according to Australia’s leading professional accounting body, CPA Australia.

General Manager External Affairs Dr Jane Rennie said, “The Queensland Government has delivered an expansionary budget. We think this is the right approach for an economy facing considerable uncertainty, despite recent strong economic data.”

“Focusing on jobs creation through infrastructure and tourism and environmental regeneration are sound fiscal strategies for Queensland but their effectiveness may be nobbled by external influences.

“There are two pre-conditions to Queensland’s economic recovery; the successful national COVID-19 vaccine roll-out and the re-opening Australia’s international borders.

“Taking an ‘If you build it, they will come’ approach, only works if the people you’re trying to attract aren’t locked out.

“Domestic migration is absorbing some of the slack, but the economy will remain in a straitjacket until these pre-conditions are met and international tourists and students return.”

Like last year, the 2021-22 Queensland budget has an overarching theme of jobs growth. A new $3.34 billion Queensland Jobs Fund is the centrepiece of this budget.

“The Jobs Fund includes a number of elements designed to pique interest from interstate. This is evidence that competition among states for business investment is heating up across Australia.

“The government’s focus is on attracting bigger employers and mature industries, which deliver better bang for your buck in terms of jobs growth.”

The small business sector has not been overlooked, however, with $140 million allocated to the Big Plans For Small Business Strategy.

“The Small Business Strategy provides welcome acknowledgment of the importance of the small business sector to the state’s economy.

“Small businesses are significantly more likely to seek advice from their trusted advisor than government. To achieve the best possible results, the government should work with trusted advisers to bring the Small Business Strategy to life.”

There are no new taxes for businesses or individuals in the budget. Payroll tax refunds and deferrals and other tax relief measures introduced last year have not been extended.

More than $300 million has been allocated to reef and land restoration, in an initiative linked to jobs creation and support for tourism.

“These are important environmental initiatives but for the tourism sector it’ll a case of delayed gratification.

“In the long term, projects like this will attract tourists to the state. In the meantime, there needs to be more short-term support for international tourism operators, many of whom are battling for survival right now.

“Even operators who’ve successfully pivoted to domestic tourism are being thwarted by interstate restrictions, which make customers hesitant to book holidays.

“We support targeted financial assistance for otherwise viable businesses which continue to be heavily impacted by COVID restrictions.”

Part of the Queensland Jobs Fund is allocated toward establishing the state’s capability to develop and produce vaccines.

“It’s pleasing to see forward thinking initiatives like this, which will not only help futureproof Queensland’s economy, but also that of the whole country.”

The budget forecasts net debt of $24.75 billion for 2021-22, which is $9.69 billion lower than expected. This is the result of improved revenue performance and moderate expenses growth.

“With the cost of borrowing so low at present, we don’t consider the size of Queensland’s debt concerning. Expansionary fiscal policy is appropriate at this stage of state’s economic recovery.”

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