Queensland’s economy teeters on edge of ratings downgrade despite coal royalty windfall

Queensland's economy faces the risk of a credit ratings downgrade despite an anticipated surge in coal royalty revenue, which is projected to increase to $6.9 billion for the current financial year, up from $4.8 billion. The state's budget deficit is expected to reach $6.17 billion. Treasurer David Janetzki expressed determination to prevent a ratings downgrade, presenting a budget that forecasts deficits for several years before a projected surplus in the 2029-30 financial year, which falls after the state's next election. Government revenue is set to rise by 5.1% over the forward estimates, bolstered by increased income from government duties, payroll tax, and royalties. However, government spending is also slated to climb, from $100.8 billion in 2025-26 to $111.6 billion by 2029-30. The government has committed to achieving fiscal sustainability through stringent expenditure management, with expense growth anticipated to decrease from 4.9% in 2026-27 to an average of 2.6% annually for the four years leading up to 2029-30. Significant savings are expected from improved procurement coordination, a cap on senior executive positions, and reduced spending on contractors and consultants, amounting to $500 million. The budget also allocates $119.2 billion for new infrastructure projects, including roads and bus routes.