Queensland treasurer reveals massive deficit and falling coal royalties in the latest budget update

Queensland’s budget has plunged into the red, with the state now facing significant deficits and a skyrocketing debt following the end of its coal revenue windfall. In his Mid-Year Fiscal and Economic Review (MYFER), new LNP Treasurer David Janetzki unveiled a grim financial outlook, revealing that the state’s debt is expected to surge to $217 billion by the end of the forward estimates, a stark contrast to the $172 billion forecast under the former Labor government.

The MYFER also highlighted a massive budgetary shift, as the surplus previously projected for 2026-27 — under Labor’s last budget — is now set to become a deficit of over $9 billion. Similarly, a surplus of $2 billion that Labor had forecast for 2027-28 will now be replaced by another $9 billion deficit.

Janetzki wasted no time in pointing out what he described as the “hidden” cost blowouts and “unfunded” services left behind by the former government, calling the report an honest look at Queensland’s fiscal reality. “The Mid-Year Fiscal and Economic Review is an up-front and frank document that reveals the debt and deficit legacy of the Labor government,” he stated. “Labor’s fiscal legacy is a decade in the making, and it is our challenge to overcome. We will do this in a calm and methodical way.”

The significant drop in coal royalties — down by $400 million — has been a major blow to the state’s finances, driven by falling coal prices and a reduction in coal exports. Queensland had relied heavily on its coal industry, but the coal royalty windfall appears to have come to an end. The updated forecast for coal royalties in the 2024-25 financial year now sits just under $8 billion, a steep drop from the $8.4 billion predicted earlier. This shortfall amounts to a loss equivalent to funding almost 18 months of 50-cent public transport fares.

The financial upheaval has sparked heated responses, with Labor’s treasury spokeswoman Shannon Fentiman accusing the LNP of exaggerating the severity of the state’s budgetary issues. “They have juiced this up,” she claimed, arguing that the LNP would later revise the figures once revenue improves and debt forecasts decrease.

Despite political opposition, the fiscal realities of Queensland’s changing economic landscape are undeniable. Coal, once a primary source of revenue for the state, no longer promises the same lucrative returns, signalling the end of an era for the state’s financial windfalls.

The LNP’s approach to the state’s finances has been marked by an emphasis on confronting the fiscal challenges left by the previous government. In a move that might raise eyebrows, Premier David Crisafulli has ruled out any changes to royalty rates for at least four years, making it clear that the state must now adjust to a less prosperous future.

As Queensland grapples with the financial fallout, officials and the public are closely watching the state’s next moves in navigating this turbulent fiscal environment. With more budget updates expected, the pressure on Janetzki and his team is mounting to steer the state through these financially uncertain times.