Queensland Treasury 18-K/A Annual report (foreign governments) (amended)

EXHIBIT (c)(ix)

2021-22 Budget Update: Mid-Year Fiscal and Economic Review

FORWARD-LOOKING STATEMENTS

This exhibit contains forward-looking statements. Statements that are not historical facts, including statements about the State of Queensland’s (the “State” or “Queensland”) beliefs and expectations, are forward-looking statements. These statements are based on current plans, budgets, estimates and projections and therefore you should not place undue reliance on them. The words “believe”, “may”, “will”, “should”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “forecast” and similar words are intended to identify forward-looking statements. Forward-looking statements speak only as of the date they are made, and neither the Queensland Treasury Corporation nor the State undertake any obligation to update publicly any of them in light of new information or future events.

Forward-looking statements are based on current plans, estimates and projections and, therefore, undue reliance should not be placed on them. Although the Queensland Treasury Corporation and the State believe that the beliefs and expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such beliefs and expectations will prove to have been correct. Forward-looking statements involve inherent risks and uncertainties. We caution you that actual results may differ materially from those contained in any forward-looking statements.

A number of important factors could cause actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause the actual outcomes to differ materially from those expressed or implied in forward-looking statements include:

• the international and Australian economies, and in particular the rates of growth (or contraction) of the State’s major trading partners;

• the effects, both internationally and in Australia, of any subsequent economic downturn, as well as the effect of ongoing economic, banking and sovereign debt risk;

• the effect of the ongoing novel coronavirus (COVID-19) pandemic;

• increases or decreases in international and Australian domestic interest rates;

• changes in the State’s domestic consumption;

• changes in the State’s labor force participation and productivity;

• downgrades in the credit ratings of the State and Australia;

• changes in the rate of inflation in the State;

• changes in environmental and other regulation; and

• changes in the distribution of revenue from the Commonwealth of Australia Government to the State.

(c)(ix)-1

QUEENSLAND BUDGET 2021–22 Unite & Recover

2021–22

BUDGET UPDATE

MID-YEAR FISCAL AND ECONOMIC REVIEW

© The State of Queensland (Queensland Treasury) 2021

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Content from the 2021–22 Budget Update - Mid-Year Fiscal and Economic Review should be attributed to:© The State of Queensland (Queensland Treasury) 2021–22 Budget Update - Mid-Year Fiscal and Economic Review.

The Queensland Government is committed to providing accessible services to Queenslanders from all cultural and linguistic backgrounds. If you have difficulty in understanding this publication, you can contact us on telephone (07) 3035 3503 and we will arrange an interpreter to effectively communicate the report to you.

CONTENTS

Foreword	2
Overview	3
Our Economic Plan	4
Economic Overview	7
External conditions	8
Queensland conditions	10
Labour market	16
Fiscal Overview	19
Net operating balance	20
Revenue	21
Expenses	26
Balance sheet	27
Intergovernmental Financial Relations	29
Government Fiscal Principles	30
Uniform Presentation Framework	33
Taxation and Royalty Revenue Assumptions	42
Key Fiscal Aggregates	44

1

FOREWORD

FOREWORD

This 2021–22 Budget Update underscores the resilience and tenacity of Queenslanders.

By following the health advice across nearly two years of the pandemic, our state has contained the spread of COVID-19.

That world-leading health response has delivered a strong economic position – the envy of other states and nations.

Through the most challenging of economic conditions, the Palaszczuk Government’s COVID-19 Economic Recovery Plan is working.

By keeping Queenslanders safe, avoiding prolonged lockdowns, and rolling up our sleeves to get vaccinated, our state can now reap the dividends outlined in this update.

As of October 2021, employment is up 90,000 persons on pre-COVID levels (March 2020) – the highest jobs growth of any state or territory.

Over the same period, employment across the rest of Australia fell by 250,300.

Looking ahead, employment growth is forecast to be 4¹⁄₂ per cent in 2021-22, our strongest jobs growth in 15 years.

Our domestic economy has grown, with State Final Demand growing 6.4 per cent from its pre-COVID level (March quarter 2020), outpacing the 1 per cent growth for the rest of Australia.

Queensland’s overall Gross State Product is forecast to strengthen a further 3¹⁄₄ per cent in 2021–22.

Notwithstanding the challenges of COVID-19, Queensland businesses have remained ‘open for business’.

Real retail trade outstripped the rest of Australia, growing by 8.9 per cent between December quarter 2019 and September quarter 2021.

Nonetheless, COVID-19 has had a significant impact on sectors of our economy including tourism and border communities.

In response, the Queensland Government (jointly with the Australian Government) supported more than 40,000 businesses through a $600 million COVID-19 Business Support Grants program, including $84.5 million in Tourism and Hospitality Sector Hardship grants that has supported more than 3,000 businesses.

Our June Budget outlined a new plan to manage debt and reduce the debt burden over time.

Spending needs to be in line with our budget strategy, ensuring the economy grows faster than debt.

General Government Sector (GGS) net debt is forecast to reach $17.5 billion by 30 June 2022.

This will be $45.7 billion lower than New South Wales, where net GGS debt will reach $63.3 billion.

Queensland’s net debt will also be $86.9 billion lower than Victoria, where net GGS debt will rise to $104.5 billion.

Increases in the price of hard coking coal, combined with the strong property sector have delivered increased revenues from coal royalties and transfer duties. State taxation and royalties are expected to be $8.1 billion higher over the forward estimates than forecast at the time of the 2021–22 Budget.

$2.5 billion from the increase in coal royalties will be invested as a Long Term Asset held by the Consolidated Fund to support future priority capital initiatives.

A further $2.1 billion has also been committed over the forward estimates to support our response to COVID-19. These commitments will also ensure the budget has the prudent buffers required to protect and grow our economy.

Our $50 billion infrastructure guarantee over four years remains on track, as the government continues to deliver the critical infrastructure that supports economic growth.

The COVID-19 pandemic hit Queensland’s overseas goods and services exports, but key commodities are expected to rebound in 2021–22.

Our traditional resource, agriculture and manufacturing sectors have again contributed significantly to our state’s economic performance.

Investments in renewable hydrogen and energy generation, in the context of our government’s commitment to net zero emission targets, will also add further diversity to our economy.

The Brisbane 2032 Olympic and Paralympic Games are forecast to generate a 10-year pipeline of construction jobs, trade and investment opportunities, and legacy projects that will benefit Queenslanders for decades to come.

Securing the Games provides the certainty and confidence in our economy to unlock increased investment and innovation.

While global economic turbulence remains, this Budget Update recommits us to sustained, responsible economic management and to building an economy that benefits all Queenslanders.

A golden decade of opportunity is dawning.

The Honourable Cameron Dick MP

Treasurer

Minister for Trade and Investment

2    2021–22 BUDGET UPDATE

OVERVIEW

OVERVIEW

The 2021–22 Budget Update (Mid-Year Fiscal and Economic Review) provides the state’s economic and fiscal position since the 2021–22 Queensland Budget.

The Update shows the fundamentals of the budget and economy remain strong with highlights including:

• economic output is expected to grow by 3¹⁄₄ per cent in 2021–22, faster than the 2³⁄₄ per cent growth forecast at Budget

• employment is expected to increase by 120,000 persons between September quarter 2021 and June quarter 2023. On top of the 90,000 jobs added between March 2020 and October 2021, this equates to an increase in employment of almost 210,000 persons between the pre-COVID level in March quarter 2020 and June quarter 2023

• General Government Sector revenue has been revised upwards in every year of the forward estimates, compared to the 2021–22 Budget, reflecting a stronger outlook for the housing and labour markets

• the General Government Sector net operating deficit for 2021–22 is forecast to narrow by $2 billion relative to the 2021–22 Budget

• General Government Sector net debt by 30 June 2022 is expected to be $7.2 billion lower than anticipated at the 2021–22 Budget.

Throughout the COVID-19 pandemic, the Queensland Government has acted to protect the health and wellbeing of Queenslanders.

Queensland’s economic recovery from COVID-19 has been stronger than the rest of Australia. The government’s strong health response has underpinned Queensland’s strong economic recovery.

The government’s actions have contained the spread of the virus, allowing emergency health restrictions to be lifted sooner, which has maintained consumer and business confidence and supported economic activity.

The proportion of Queenslanders vaccinated against COVID-19 has risen substantially in recent months. The state’s 80 per cent double-dose target was reached on 8 December and a 90 per cent double-dose rate is now an achievable target.

An increasing vaccination rate will see Queensland continue to re-open its borders to interstate and overseas travellers, supporting ongoing economic recovery and growth in the tourism sector.

The government remains on track to deliver a budget surplus by the end of the forward estimates and to stabilise net debt over the medium term.

The significant public infrastructure investment program outlined in the 2021–22 Budget remains a major driver of economic growth and job creation, underpinned by the Government’s $50 billion 4-year infrastructure guarantee.

3

OUR ECONOMIC PLAN

OURECONOMIC PLAN

A strong economy for all Queenslanders

Throughout the COVID-19 pandemic, the Queensland Government has acted decisively to protect the health and wellbeing of Queenslanders. The government’s strong health response has underpinned Queensland’s strong economic recovery.

The government’s actions have contained the spread of the virus, allowing emergency health restrictions to be lifted sooner, which has maintained consumer and business confidence and supported economic activity.

As a result, Queensland’s economic recovery from COVID-19 has been earlier and stronger than the rest of Australia. The number of people employed in Queensland, as of October 2021, is 90,000 persons above the pre-COVID levels of March 2020, by far the highest jobs growth of any state or territory in Australia. By comparison, over the same period employment in the rest of Australia fell by 250,300.

The government’s COVID-19 Economic Recovery Plan has driven these outcomes by safeguarding Queenslanders’ health, creating jobs and working together to support businesses, families and communities across the state.

The government’s response has focussed on the six key elements of the COVID-19 Economic Recovery Plan:

• safeguarding our health

• backing small business

• making it for Queensland

• building Queensland

• growing our regions

• investing in skills.

Despite the strength of Queensland’s economic recovery, some industries and regions have continued to be impacted by international border closures, interstate lockdowns and other restrictions as part of the emergency health response.

To help support impacted businesses across all industries, the Queensland Government is delivering a $600 million program of COVID-19 Business Support Grants, jointly funded with the Australian Government. More than 40,000 businesses across the state are expected to benefit from this timely financial support.

The Queensland Government has also provided additional targeted support through the $47.75 million Tourism and Hospitality Sector COVID-19 Lockdown Support Package and the $20 million COVID-19 Cleaning Rebate.

The government’s response to the pandemic and the resulting strength of Queensland’s economic performance has positioned Queensland well for the next phase of recovery, including the reopening of borders under Queensland’s COVID-19 Vaccine Plan to Unite Families.

The vaccine plan continues to prioritise the health and wellbeing of Queenslanders, while providing certainty and confidence for the community and businesses. Opening Queensland’s interstate borders with an 80 per cent vaccination rate could deliver direct economic benefits of up to $1.5 billion per annum.

As borders reopen, the government’s economic plan will navigate the challenges ahead, delivering healthy and thriving communities, more jobs and new exports which build on Queensland’s strengths.

This will include an ongoing focus on diversifying the goods and services produced across the state, in both traditional industries, such as tourism and agriculture, and sunrise industries such as renewable energy and new economy minerals.

4    2021–22 BUDGET UPDATE

OUR ECONOMIC PLAN

Through initiatives such as the $3.3 billion Queensland Jobs Fund, the government is supporting the growth of industries, enabling Queensland businesses to make more and add more value across the state’s regions.

The government’s COVID-19 Economic Recovery Plan will help manufacturers to develop advanced capabilities and support sustainability, backed by reliable, renewable competitively priced energy.

Investments in skills and training, such as the Skilling Queenslanders for Work initiative, continue to support Queenslanders to upskill and reskill, preparing them for the jobs of the future.

An ongoing focus on innovation will promote the development of new ideas in Queensland and help businesses to draw on the world’s best-practice business models, technology, products and services.

The government is continuing to deliver the critical infrastructure that supports economic growth by increasing productivity, lowering business costs, and helping to deliver the services that continue to make Queensland a great place to live.

By protecting the health and wellbeing of Queenslanders, the Queensland Government has given the state a head start in its recovery from the COVID-19 pandemic.

Building on this strength, Queensland’s COVID-19 Economic Recovery Plan will continue to provide certainty and security to all Queenslanders so that the state can move forward to realise a golden era of opportunity.

5

OUR ECONOMIC PLAN

Queensland’s strong economic recovery

  Faster domestic economic growth than the rest of Australia   State Final Demand up 6.4%   March quarter 2020 – September quarter 2021   Highest jobs growth in Australia   Employment up by 90,000   March 2020 – October 2021   Fastest workforce participation growth rate in Australia   Participation rate up 4.5 percentage points   May 2020 – October 2021

  Faster retail trade growth than the rest of Australia   Real retail turnover up 8.9%   December quarter 2019 – September quarter 2021     Faster dwelling investment growth than the rest of Australia   Investment up 23.3%   March quarter 2020 – September quarter 2021   Faster consumption growth than the rest of Australia   Household consumption up 4%   March quarter 2020 – September quarter 2021     More interstate migrants than any other state or territory   Welcoming 30,785 net interstate migrants   in 12 months to March quarter 2021

6    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

ECONOMICOVERVIEW

The Queensland economy and labour market have continued to recover faster than the national average and faster than the other major eastern states, reflecting Queensland’s ongoing success in containing COVID-19.

Queensland’s domestic economy, as measured by State Final Demand, was 6.4 per cent larger in September quarter 2021 than its pre-COVID level in March quarter 2020. By contrast, Australia’s domestic economy was just 1.0 per cent larger over the same period. Queensland’s above-average domestic economic growth has translated to nation-leading jobs growth, with 90,000 more Queenslanders employed in October 2021 than in March 2020, the best performance of any state and well ahead of the quarter of a million jobs lost in the rest of Australia over the same period.

The increase in the COVID-19 vaccination rate means that the state’s borders have begun to re-open, which will continue to support the state’s economic recovery and jobs growth.

Following a solid rebound of 2.0 per cent in 2020–21, Queensland’s economic output is expected to grow by 3¹⁄₄ per cent in 2021–22, faster than the 2³⁄₄ per cent growth forecast at Budget.

Underpinned by robust domestic activity, employment is expected to increase by 4¹⁄₂ percent in 2021–22, stronger than the 3 per cent forecast at Budget, and the strongest employment growth in 15 years, followed by further solid growth of 2¹⁄₂ per cent forecast for 2022-23. In quarterly terms, this equates to an increase in employment of almost 210,000 persons between the pre-COVID level in March quarter 2020 and June quarter 2023.

While the economic recovery from COVID-19 continues in many advanced economies, concerns about rising inflation and associated monetary tightening present emerging risks to the global economic outlook.

Assessments of the implications of the Omicron COVID-19 variant are also still being made internationally and domestically.

Key developments since the 2021–22 Budget

Key economic and fiscal developments since the delivery of the 2021–22 Budget in June 2021 include:

• a significant increase in the COVID-19 vaccination rate and the release of the Queensland Government’s COVID-19 Vaccine Plan to Unite Families

• further increases in residential property prices

• significant volatility in coal prices, including a substantial increase in prices across the second half of 2021

• rising long-term interest rates and increased inflation expectations

• extended lockdowns in southern states to combat the Delta variant of COVID-19.

The proportion of Queenslanders vaccinated against COVID-19 has risen substantially in recent months. The state’s 80 per cent double-dose target was reached on 8 December and a 90 per cent double-dose rate is now an achievable target.

An increasing vaccination rate will see Queensland continue to re-open its borders to interstate and overseas travellers, supporting ongoing economic recovery and growth in the key tourism sector.

A substantial pipeline of construction work, together with expectations of further capital gains, have fuelled the current strength of the residential property sector in Queensland. The upward trend in dwelling investment is expected to extend well into 2022, with activity remaining at elevated levels in 2023.

7

ECONOMIC OVERVIEW

Despite China’s unofficial ban on Australian coal imports, global coal prices have risen significantly since mid-May 2021. However, given the upward pressure on prices was largely driven by supply–side constraints, coal prices are expected to return to more sustainable levels over coming quarters. More than 85 per cent of the decline in Queensland coal exports to China since October 2020 have been offset by increased tonnages to other key markets, including India, Japan and Korea.

While the widespread extended lockdowns across New South Wales, Victoria and the Australian Capital Territory in the second half of 2021 had only limited direct effects on economic activity in Queensland, they have slowed the recovery in the national economy and impacted tourism operators reliant on interstate travellers.

Triggered by a surge in property prices nationally and an increase in fuel prices, inflation has been stronger and may be more prolonged than previously expected, prompting an increase in bond yields of all durations since late September.

Table 1: Queensland economic forecasts¹

	2020–21	2021–22		2022–23
	Outcome	Budget	Update	Budget	Update
Gross state product2	2.0	23⁄4	31⁄4	23⁄4	23⁄4
State Final Demand	3.9	31⁄2	41⁄4	23⁄4	21⁄2
Employment3	2.4	3	41⁄2	13⁄4	21⁄2
Unemployment rate4	5.6	53⁄4	51⁄4	51⁄2	5
Inflation3	2.1	13⁄4	3	13⁄4	21⁄2
Wage Price Index3	1.6	21⁄4	21⁄2	21⁄4	3
Population3,5	1.1	1	1	11⁄4	11⁄4

Notes:

1.  Unless otherwise stated, all figures are annual percentage changes.

2.  Chain volume measure, 2019–20 reference year.

3.  Annual percentage change, year–average.

4.  Per cent, June quarter, seasonally adjusted.

5.  Population growth for 2020–21 is the annual growth rate in the three quarters to March quarter 2021.

Sources: ABS Annual State Accounts, Labour Force, Consumer Price Index, Wage Price Index and National, State and Territory Population.

External conditions

International

In October 2021, the International Monetary Fund’s (IMF) World Economic Outlook noted that the global economic recovery was continuing, despite the ongoing spread of COVID-19 in many countries. Following a 3.1 per cent contraction in 2020, the global economy is forecast to rebound by 5.9 per cent in 2021 and a further 4.9 per cent in 2022, according to the IMF.

The economic recovery remains most advanced in China, where output in September quarter 2021 was already 8.1 per cent above the pre-pandemic level in December quarter 2019. The IMF expects China’s economy to continue to grow strongly in the near-term, rising by 8.0 per cent in 2021 and a further 5.6 per cent in 2022.

While the United States economy only recovered to its pre-pandemic level of GDP in mid-2021, the country’s labour market continues to strengthen, potentially pointing to a sustained recovery. The IMF forecasts the United States’ economy to grow by 6.0 per cent in 2021 and by 5.2 per cent in 2022. However, the economic recovery in some European economies has been more subdued, with economic activity in the United Kingdom and the Euro area economies still below their pre-pandemic levels as of September quarter 2021.

8    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

The IMF expects economic growth amongst Queensland’s major trading partners to be 6.0 per cent in 2021, before rising a further 5.0 per cent in 2022, slightly stronger than overall global growth in both years.

Annual inflation has risen sharply in most advanced economies over the second half of 2021 (Chart 1), with inflation in the United States and the Euro area reaching its highest levels in several decades.

Rising inflation has been driven by a range of factors, including increased global demand for goods (as households have been restricted in their ability to spend on services) against an interrupted global goods supply chain.

Oil and gas prices have also risen sharply due to stronger demand as economies emerge from restrictions at the same time as global supply has fallen. The price of Brent crude oil has risen from a COVID-low of US$5.60 per barrel to more than US$70 per barrel, with direct flow-on impacts to the price of automotive fuel.

Central banks around the world have generally viewed the recent rise in inflation as transitory, with an expectation that inflation will ease as households gradually resume higher levels of consumption of services and as supply chain issues ease.

However, financial markets suggest inflation may prove more persistent than initially anticipated, with a resulting risk that central banks may increase interest rates earlier than currently expected, slowing the global economic recovery. Over 2021, the central banks of South Korea, New Zealand and Norway have raised official interest rates, while other central banks have begun to taper their quantitative easing programs.

Chart 1: Inflation by country¹

Note:

1.     Monthly, Annual change, per cent.

Source: Refinitiv.

National economy

National economic activity was significantly reduced throughout the September quarter as a result of lockdowns in New South Wales and Victoria. However, as vaccination rates pass 80 per cent and restrictions have been gradually unwound in those states, more timely indicators are suggesting signs of a substantial recovery in activity.

As the national economy opens further and household consumption gathers momentum, the national economy is expected to rebound in the December quarter, and recover further in March quarter 2022. Dwelling and business investment are expected to recover from the disruptions of the recent extended lockdowns in New South Wales and Victoria, and further support the national recovery.

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9

ECONOMIC OVERVIEW

Reflecting the impact of the lockdowns in the September quarter, the Reserve Bank of Australia (RBA) revised down its forecast for Australia’s GDP growth in 2021–22 to 3¹⁄₄ per cent in its November Statement on Monetary Policy (from 4¹⁄₂ per cent forecast in August). Noting the strong growth in new housing construction costs as well as higher automotive fuel prices, the RBA substantially upgraded its forecast profile for Australia’s headline inflation, mostly in the near term.

Despite discontinuing the yield target on the 3-year Australian Government bond in November, the suite of other monetary settings by the RBA remain highly accommodative. The latest forecast profile for national underlying inflation suggests the RBA now expects to raise the official cash rate in late 2023 or early 2024. The RBA’s outlook for future interest rate rises contrasts with current financial market indicators, which suggest increases in the cash rate are expected earlier and potentially prior to the end of 2022.

Queensland conditions

Queensland’s domestic economic recovery from COVID-19 has been stronger than the rest of Australia, primarily reflecting Queensland’s better health outcomes and avoidance of a major outbreak of the virus. As of September quarter 2021, Queensland’s domestic economy, as measured by State Final Demand, is 6.4 per cent larger than its pre-COVID level in March quarter 2020, compared with growth of 1.0 per cent in the domestic economy across the rest of Australia.

Underpinned by the strength of the domestic economy, Queensland’s overall Gross State Product (GSP) rebounded by 2.0 per cent in 2020–21. Economic activity in Queensland is expected to grow by 3¹⁄₄ per cent in 2021–22, faster than the 2³⁄₄ per cent growth forecast at the time of the 2021–22 Budget. This upward revision has been primarily driven by an improved outlook for private investment, particularly dwelling investment.

GSP is expected to grow by 2³⁄₄ per cent in 2022–23, as the dwelling investment cycle approaches its peak and international services trade increases due to the opening of borders.

The COVID-19 economic recovery is being driven by a strong domestic economy, with State Final Demand growing by 3.9 per cent in 2020–21 and expected to strengthen further to 4¹⁄₄ per cent in 2021–22.

Reflecting the strength of Queensland’s economic recovery, Queensland’s labour market has also recovered strongly. By October 2021, employment in Queensland was 90,000 persons (or 3.5 per cent) above the pre-pandemic level in March 2020, compared with a fall in employment across the rest of Australia of 250,300 persons (or 2.4 per cent) over the same period.

Employment is expected to increase by 4¹⁄₂ per cent in 2021–22, faster than the 3 per cent forecast at Budget and its fastest rate in 15 years, followed by further solid growth of 2¹⁄₂ per cent in 2022–23. In quarterly terms, this equates to an increase in employment of almost 210,000 persons between the pre-COVID level in March quarter 2020 and June quarter 2023.

Household consumption

Since the first national lockdowns in 2020, an unprecedented level of government support has helped underpin household balance sheets and sentiment. Combined with record low interest rates, a sharp rebound in the labour market and substitution of expenditure away from services such as overseas travel, household consumption in Queensland rebounded by 5.1 per cent in 2020–21, the highest growth in 13 years.

Since the Budget, consumer spending in Queensland has persisted at levels well above the pre-COVID trend. The total number of days of lockdown across parts of Queensland was 21 in 2021, in contrast to 116 in New South Wales and 114 in Victoria. As a result, New South Wales and Victoria have experienced substantial declines in retail turnover to be below pre-COVID levels as the extended lockdowns impacted spending (Chart 2).

10    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

Chart 2: Real retail turnover1 by major states

Note:

1.     Seasonally adjusted, index points, December quarter 2019 = 100.

Source: ABS Retail Trade.

Looking forward, household incomes in Queensland are expected to be supported by solid growth in labour income, with recent rises in housing and equity prices underpinning household wealth. However, as vaccination rates improve and overseas and interstate travel restrictions unwind, the reallocation of household spending away from domestic expenditure towards services is expected to take place sooner than foreseen at Budget.

As the composition of expenditure continues to adjust gradually, Queensland’s household consumption growth in 2021–22 and 2022–23 is forecast to return to rates similar to those seen prior to the pandemic.

Dwelling investment

Dwelling investment in Queensland has risen strongly since the pandemic-induced low in mid-2020, rising by 30.6 per cent over the period from June quarter 2020 to September quarter 2021. Dwelling investment has been driven by both the construction of dwellings and renovation activity.

A combination of record low interest rates (and indications that rates will remain low for an extended period), and generous government stimulus and incentives, have driven strong increases in building approvals and lending indicators throughout 2020–21, boosting the outlook for dwelling investment, particularly for detached houses.

Dwelling approvals have moderated in recent months following the ending of the Australian Government’s HomeBuilder Grant in March 2021 but remain above pre-COVID levels. Market expectations that dwelling prices will continue to rise into 2022 and the substantial amount of work in the pipeline will continue to drive growth in dwelling investment throughout 2021–22 and 2022–23 before moderating in later years.

11

ECONOMIC OVERVIEW

Chart 3: Residential work in the pipeline, Queensland¹

Note:

1.     Quarterly.

Source: ABS Building Activity.

Business investment

The outbreak of COVID-19 and the resulting uncertainty in the global economic outlook temporarily discouraged investment across a range of sectors in 2020 and early 2021.

Driven by significant fiscal and monetary stimulus, as well as the strong recovery in the domestic economy, machinery and equipment investment rebounded during the second half of 2020–21, limiting its annual decline to just 3.6 per cent. Amidst global and national economic uncertainty, businesses remained conservative in extending their investment in buildings and structures, which fell 8.6 per cent in 2020–21.

The outlook for business investment has improved in recent months, with commercial transactions regaining momentum over 2021. The increase in vaccination rates should provide increased certainty and confidence to businesses as borders open.

Investments in renewables and hydrogen are likely to gather pace in coming years. The 2032 Olympic and Paralympic Games are likely to be catalytic for business investment across Queensland. The completion and opening of the Queen’s Wharf project in 2023 is likely to support more widespread urban renewal within the Brisbane CBD and surrounding areas.

Public final demand

Following five years of solid growth, public final demand rose a further 2.9 per cent in 2020–21. Growth in public final demand is expected to remain robust in 2021–22, as construction of the Cross River Rail project ramps up and COVID-19 recovery measures continue to be rolled out.

The Queensland Renewable Energy and Hydrogen Jobs Fund provides $2 billion for government owned corporations to increase ownership of commercial renewable energy and hydrogen projects and to support infrastructure, including in partnership with the private sector.

12    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

Overseas exports

Queensland’s overseas goods and services exports fell by 15.9 per cent in 2020–21. This reflects the impact of the COVID-19 pandemic on a range of industries, particularly tourism, education and coal, as well as China’s import bans on a range of Australian goods, particularly coal. Exports are expected to recover from 2021–22 onwards, with volumes for a number of key exports recovering from their COVID-19 impacted lows driven by solid demand amidst the ongoing global economic recovery. Prices of key commodity exports have also rebounded strongly since the Budget, underpinning an improved outlook for royalty revenues in 2021–22 compared with that anticipated at Budget.

Coal

Since Budget, coal prices in the spot market have reached historic highs for both thermal and metallurgical coal. The premium hard coking coal price increased from US$173.25 per tonne on 15 June to US$408 per tonne on

22 September, the first time the price has breached US$400 per tonne since the price series commenced in 2013.

The hard coking coal spot price moderated somewhat throughout November falling from US$403 at the start of November to as low as US$315.50 by early-December, as supply constraints eased somewhat and demand from China fell following declines in steel production. Despite the decline, spot prices remain very high by historical standards.

Similarly, in the thermal coal market, the spot price for benchmark Australian coal1 increased from US$74.50 per tonne on 15 June to a peak of US$179.05 per tonne on 19 October, the highest spot price in the eight-year history of the series. On 19 October, China’s National Development and Reform Commission announced they would intervene in the domestic coal market and since the announcement, the thermal spot coal price had fallen to US$97.50 by early December.

¹  FOB Newcastle 20% Ash 5,500 NAR.

13

ECONOMIC OVERVIEW

A number of short-term factors have contributed to the rapid increase in the hard coking coal price, including:

• China’s strong import demand from other exporters (due to the self-imposed ban on sourcing Australian coal) is distorting market dynamics, leading to short supply of spot cargoes that is impacting the broader market

• mine accidents and inspections in China have been limiting the expansion of domestic coal production

• COVID-19 outbreaks in Mongolia have been limiting coal exports from that country to China

• flooding in China and heavy rains in Indonesia impacting thermal coal supply

• local coal production was temporarily impacted by mine and coal rail supply side issues, which resulted in the suspension of operations at some Queensland mines and on the Blackwater line for short periods of time during the year.

Coal prices are expected to return to more sustainable levels over the coming months as the short-term supply disruptions unwind, although the timing and extent of the decline remains uncertain.

China’s informal ban on the import of Australian coal remains in place, with a substantial decline in coal exports to China since October 2020. However, Queensland exporters have been successful in finding alternative markets for the majority of these coal exports, with more than 85 per cent of export volumes lost to China having been replaced by increased exports to other markets, particularly India, Japan and South Korea.

Queensland’s total coal export volumes fell 6.9 per cent in 2020–21, which is a smaller decline than the 8³⁄₄ per cent decline forecast at Budget. Export volumes are now forecast to fall marginally in 2021–22 due to China’s ban on coal imports now being expected to last longer than previously anticipated. Coal exports are expected to return to solid growth in 2022–23, as global economic activity continues to normalise following the COVID-19 pandemic. Nevertheless, export volumes by 2023–24 are still expected to be less than the peak volumes of 226 million tonnes in 2018–19.

Chart 4: Queensland hard coking coal contract price¹

Note:

1.    Quarterly, US$ per tonne.

Source: Queensland Treasury estimate.

14    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

LNG

The volume of Queensland’s LNG exports was largely unaffected by the COVID-19 pandemic, growing by 4.0 per cent in 2020–21. However, prices for Queensland’s LNG exports declined rapidly in the second half of 2020, reducing the overall value of LNG exports.

LNG prices have since recovered strongly throughout 2021, which has seen the value of Queensland’s LNG exports rebound to pre-COVID levels. Further, the continued global economic recovery from COVID-19 and a colder-than-expected winter in the Northern Hemisphere are driving demand for LNG, which should see export volumes increase further in 2021–22.

Metals

The outlook for Queensland’s industrial metals exports is largely unchanged from Budget. The real value of exports is expected to grow in 2021–22 following several temporary production disruptions in 2020–21, while the recently completed expansion of the Sun Metals refinery is also adding to the state’s zinc production capacity.

The nominal value of metal exports has risen sharply, reflecting the surge in metal prices since mid-2020 following the initial stages of the pandemic. The volume of metal exports is forecast to be relatively stable across the forward years but there is some potential upside to the outlook in the context of any further supply side response to the elevated prices, several project expansions awaiting final investment decisions and an increased level of exploration expenditure.

Agriculture

Continued improvement in Queensland’s agricultural conditions are expected to support strong growth in Queensland’s agricultural exports and a stronger performance than previously anticipated. Higher beef prices are encouraging additional production earlier than anticipated and the forecast for overall agricultural export growth has been revised up substantially in the 2 years to 2022–23 compared with the outlook at Budget.

Services

Closure of the international border since March 2020 has led to a sharp decline in overseas services exports. Overseas tourist arrivals fell from 1.7 million in 2019–20 to only 32,000 in 2020–21, while overseas student enrolments in Queensland in the first 9 months of 2021 were 21.4 per cent below that of a year earlier.

However, with Queenslanders also constrained from travelling abroad, this resulted in a temporary surplus in the overseas services trade balance in 2020–21. The likely substitution of expenditure by Queenslanders from international travel to domestic consumption is likely to also have been a factor in supporting the unprecedented levels of household spending in other key sectors of the domestic economy such as retail trade.

Given the anticipated reopening of the international border, in line with the Queensland Government’s Vaccine Plan, overseas exports of tourism and education are expected to start to recover from late-2021. This recovery is expected to be gradual as vaccination rates increase and global confidence returns in terms of international travel.

As international travel recovers, both in terms of overseas visitors coming to the state and Queenslanders travelling abroad, Queensland’s overseas services trade balance is expected to gradually normalise and expenditure patterns revert to be more in line with those experienced prior to the crisis.

Key tourism regions reliant on interstate and overseas travellers, including the Gold Coast, Cairns and the Whitsundays, are expected to benefit from the re-opening of interstate borders to fully vaccinated visitors, as well as from the return of overseas tourism over the longer term as international travel gradually recovers.

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ECONOMIC OVERVIEW

Labour market

Queensland’s labour market performance has been stronger than anticipated at Budget. This reflects a range of factors including Queensland’s ongoing strong health response, which has seen Queensland avoid the sustained and severe lockdowns experienced in several other jurisdictions.

As of October 2021, employment in Queensland is 90,000 persons above its pre-COVID level in March 2020, the strongest growth of any state or territory over this period. Hours worked in October were 4.2 per cent above the level in March 2020, also the strongest growth of any state or territory.

The monthly seasonally adjusted unemployment rate has fallen from a recent peak of 8.7 per cent in July 2020 to 5.1 per cent in October 2021, to be below the national rate (5.2 per cent). Queensland’s unemployment rate in October 2021 was below the 5.8 per cent rate in March 2020 prior to the COVID-19 pandemic.

International border closures have resulted in labour shortages in various sectors across the state, creating increased employment opportunities for people more marginally attached to the labour force. The impacts of the recent labour shortages in some key sectors are likely to be partially unwound as international borders re-open and temporary non-residents re-enter the labour market.

Queensland’s labour market is expected to remain strong over the coming years, with employment forecast to grow by 4¹⁄₂ per cent in 2021–22 up from 3 per cent forecast at Budget. This will be the strongest employment growth in Queensland in 15 years.

Further robust growth of 2¹⁄₂ per cent is forecast in 2022–23 up from 1³⁄₄ per cent forecast at Budget.

The drivers of Queensland’s economic recovery and the forecast strengthening in economic growth in Queensland are broad based, therefore the benefit to employment should be felt across most regions, including the state’s key tourism regions as borders reopen.

Key growth industries are likely to include construction, retail trade, transport and warehousing, accommodation food services and professional services.

The unemployment rate is forecast to remain low, at around 5–5¹⁄₄ per cent, over the next two years, as the continued strong employment growth pushes the participation rate higher, as marginally attached workers are encouraged back into the labour force.

Chart 5: Employment and unemployment rate forecasts¹

Note:

1.    Seasonally adjusted, quarterly.

Sources: ABS Labour Force and Queensland Treasury.

16    2021–22 BUDGET UPDATE

ECONOMIC OVERVIEW

 Box 1 Queensland’s Stronger Economic Recovery

Throughout this once-in-a-century health emergency, we have supported a strong economy by safeguarding the health of Queenslanders.

Our success in containing the spread of the virus has seen a remarkably strong recovery in Queensland’s domestic economy. An economic performance and recovery that has been the envy of not just the rest of the country but the rest of the world.

This stronger economic performance shows up in a range of indicators, including:

• State Final Demand in September quarter 2021 is up 6.4 per cent from pre-COVID levels, much stronger than the 1.0 per cent growth recorded in the rest of Australia

• nominal retail turnover was at an all-time high of $6.6 billion in October, up 16.6 per cent on pre-COVID levels

• households are investing in their homes, with renovation activity also at an all-time high

• Australians also continue to vote with their feet and move to Queensland. Our gain from net interstate migration of more than 30,000 residents in the year to March quarter 2021 dwarfs the next best outcome, of only 3,250 net migrants to Western Australia over the same period.

But it is in the most important economic indicator – employment – that Queensland really out-shines.

Jobs data for October 2021 show that employment in Queensland was 90,000 persons, or 3.5 per cent, higher than the pre-pandemic level recorded in March 2020.

This was the strongest performance of any state and contrasts with the rest of Australia, where employment fell by over a quarter of a million jobs over the same period, driven by falls in New South Wales (down 174,200) and Victoria (down 126,200).

Chart 6: Employment growth since March 20201

Note:

1.    Seasonally adjusted, monthly, thousand persons.

Source: ABS Labour Force.

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ECONOMIC OVERVIEW

Risks to the outlook

In the 2021–22 Budget, the timing of the reopening of borders and the pace of the vaccination rollout were highlighted as major risks to the economic outlook. Since Budget, Queensland’s vaccination rate has accelerated significantly, with the 80 per cent target reached on 8 December. A 90 per cent fully vaccinated rate is now achievable in coming months.

Vaccinations in 12- to 15-year-olds are also well progressed, while COVID-19 booster shots became available in early November. This means the risk of significant COVID-19 outbreaks following the reopening of state borders, is much lower than expected in June 2021.

The 2021–22 Budget also highlighted as a key risk the possibility of an earlier-than-expected monetary policy tightening. Given the inflationary pressures triggered by the surge in property and fuel prices, as well as the recent increase in bond yields across all durations, it is now more likely that some normalisation of monetary policy settings will be implemented by the RBA prior to 2024. The potential impact on various financial asset prices and the associated wealth effects are likely to be exacerbated by scheduled tightening in monetary policy by other major central banks, with potential flow-on impacts on consumer spending and investment.

Trade tensions between Australia and China remain a key risk to the outlook for Queensland’s exports.

Queensland’s coal exports have proved to be resilient against China’s ban on Australian coal imports, with more than 85 per cent of tonnages lost to China diverted to other markets. Queensland remains exposed to national foreign policy settings that may elicit additional retaliatory measures from China.

The recent emergence of the Omicron variant of COVID-19 has raised concerns globally. Health experts are still fully assessing its potential transmissibility, resistance to vaccines and severity. In addition, other new variants may emerge over the period of the forecast horizon. The emergence of any more severe and/or transmissible variants could negatively impact consumer and business confidence and could pose a significant downside risk to the global and local economic outlook.

18    2021–22 BUDGET UPDATE

FISCAL OVERVIEW

FISCAL OVERVIEW

The key fiscal aggregates of the General Government Sector are outlined in Table 2.

Table 2: General Government Sector – key fiscal aggregates¹

	2020–21 Actual2 $  million		2021–22 Budget $  million		2021–22 Update $  million		2022–23 Projection $  million		2023–24 Projection $  million		2024–25 Projection $  million
Revenue		62,732		63,664		68,235		67,531		70,072		71,781
Expenses		63,669		67,148		69,727		69,928		70,631		71,623
Net operating balance		(937)		(3,485)		(1,492)		(2,397)		(559)		158
PNFA3		6,835		7,800		8,317		8,078		7,674		7,642
Fiscal balance		(5,015)		(7,965)		(6,726)		(6,490)		(3,568)		(2,667)
Borrowing with QTC4		46,153		57,240		55,473		65,386		71,719		76,878
Leases and similar arrangements		7,704		7,603		7,778		7,509		7,775		7,622
Securities and derivatives		220		198		220		220		220		220
Net Debt		11,360		24,750		17,536		26,049		31,656		35,633

Notes:

 1. Numbers may not add due to rounding. Bracketed numbers represent negative amounts.

 2. Reflects published actuals.

 3. PNFA: Purchases of non-financial assets.

 4. Queensland Treasury Corporation.

For the 2022–23 Budget, the government will be moving to reporting financial information in full compliance with the Uniform Presentation Framework (February 2019), providing actual, budget, and forward estimates for the General Government Sector. Actual and budget-year reporting will be provided for the Public Non-financial Corporation Sector and the Non-financial Public Sector.

This approach is consistent with the approach used in the Federal Budget. The Uniform Presentation Framework (UPF) can be accessed from the Federal Treasury website.

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FISCAL OVERVIEW

Net operating balance

The General Government Sector net operating deficit for 2021–22 is expected to be $1.492 billion, compared to the operating deficit of $3.485 billion forecast at the 2021–22 Budget. The $1.993 billion reduction in the operating deficit in 2021–22 is largely driven by an unprecedented coal price spike providing a temporary increase in royalty income along with higher transfer duty receipts, as a result of ongoing strength in residential transactions and an uplift in property prices.

State taxation and royalties are expected to be $8.1 billion higher over the forward estimates than forecast at the time of the 2021–22 Budget.

In 2021–22, the government will invest $2.5 billion of the windfall gains in royalty revenue into the State’s Long Term Assets portfolio. This will be available to support future government priority capital initiatives (see Box 3).

The government has committed up to $2.1 billion over the forward estimates to support our response to COVID-19. A further $1 billion has been allocated to extend or make permanent limited-life programs that were due to expire within the forward estimates (see Box 4).

Reflecting the improved revenue and expenditure decisions outlined above, deficits are expected to narrow by $2.5 billion over the forward estimates, with a return to surplus still anticipated in 2024–25.

Chart 7: Net operating balance 2021–22 to 2024–25

20    2021–22 BUDGET UPDATE

FISCAL OVERVIEW

Reconciliation with 2021–22 Budget

Table 3 provides a breakdown of the movements in the net operating balance since the 2021–22 Budget.

Table 3: Reconciliation of net operating balance, 2021–22 Budget to 2021–22 Budget Update¹

	2021–22     Update     $  million		2022–23     Projection     $  million		2023–24     Projection     $  million		2024–25     Projection     $  million
2021-22 Budget net operating balance		(3,485)		(2,440)		(968)		153
Royalty revisions		2,914		324		136		62
Taxation revisions2		1,092		920		1,385		1,259
GST revisions		(236)		(2)		(3)		(3)
Change to net flows from PNFC and PFC entities		(55)		8		(55)		(114)
Australian Government Funding revisions		(138)		46		11		8
Natural Disaster revisions (DRFA3)		(48)		73		(108)		(95)
Expense measures4		(715)		(633)		(527)		(528)
Other parameter adjustments5		(821)		(693)		(430)		(584)
2021-22 Budget Update net operating balance		(1,492)		(2,397)		(559)		158

  Notes:

1. Numbers may not add due to rounding.

2. Includes the impact of the new Interstate land tax revenue measure

3. Disaster Recovery Funding Arrangements

4. Reflects net operating balance impact of Government decisions made since the 2021–22 Budget.

5. Refers to adjustments largely of a non-policy nature, primarily changes in interest paid on borrowings, actuarial adjustments to superannuation liabilities, depreciation, swaps and deferrals. The government recognises the potential uncertainty around COVID-19 and has included an allowance for additional spending in 2021–22 and 2022–23.

Revenue

Overview

General Government Revenue in 2021–22 is estimated to be $5.504 billion higher than in 2020–21 and $4.571 billion higher than the 2021–22 Queensland Budget estimates. The improved outlook for estimated revenues in 2021–22 is primarily driven by significant upward revisions in coal royalties, reflecting higher-than-expected prices, and higher-than-expected transfer duty collections as a result of ongoing strength in residential transactions and significantly higher property prices.

Compared with the 2021–22 Queensland Budget, revenue forecasts over the forward estimates have been revised upwards by $1.821 billion in 2022–23, $1.664 billion in 2023–24 and $1.415 billion in 2024–25.

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FISCAL OVERVIEW

The stronger outlook in years beyond 2021–22 is largely due to upward revisions to transfer duty forecasts, reflecting a later peak in the housing market cycle combined with higher-than-expected property prices, and higher payroll tax revenue as the labour market has continued to improve.

Total General Government Revenue in 2019–20 was $2.137 billion lower than expected at the 2019–20 MYFER, however, total revenue in 2020–21 was $1.017 billion higher than forecast at the 2019–20 MYFER. In 2021–22 and 2022–23, total General Government Revenue is expected to be $7.207 billion higher than projected at the 2019–20 MYFER.

Chart 8 outlines the revisions to forecasts in key revenues since the 2021–22 Queensland Budget.

Chart 8: Revisions in key revenues since 2021–22 Budget

Taxation

Revenue from taxation is estimated to total $18.491 billion in 2021–22, $2.242 billion higher than in 2020–21 and

$1.092 billion higher than forecast at the 2021–22 Queensland Budget. The upgrades to forecast revenues for several key taxes in 2021–22 are also expected to flow through to the years beyond 2021–22, with upward revisions to taxation revenues, totalling $4.656 billion over the four years to 2024–25.

A stronger outlook for the housing market has resulted in large upward revisions to transfer duty revenue. Elevated transaction volumes, and increased first homebuyer and investor activity have delivered significant price growth and a later peak in the current market cycle. Residential property prices are expected to remain elevated even as transfer volumes moderate and, along with an increased contribution from the non-residential sector, this will support transfer duty collections across the forecast period.

Meanwhile, the exceptional recovery of the Queensland labour market and resulting improvements in employment, wages growth and the unemployment rate forecasts suggest higher payroll tax collections than previously expected.

22    2021–22 BUDGET UPDATE

FISCAL OVERVIEW

Revenue collections to date in 2021–22 and the outlook for other tax lines are largely in line with the forecasts outlined in the 2021–22 Budget.

The government is committed to no new or increased taxes, and also ensuring the overall tax burden remains lower than the national average. However, this does not preclude revenue reforms including:

• removing loopholes and inequities

• altering the distribution of tax on a budget-neutral basis or modifying indexation arrangements

• introducing levies for a specific purpose, on a budget-neutral basis.

Since the 2021–22 Budget, the government has announced budget-neutral changes to the Waste Levy, and this Budget Update also reflects the inclusion of improvements to the land tax system to ensure interstate landholders pay their fair share of land tax (see Box 2).

 Box 2 A fairer land tax system

The land tax system in Queensland is one of the most generous in the nation, including principal places of residence being exempt from land tax, a tax-free threshold that is higher than the median-valued parcel of residential land, and a rate structure that ensures that smaller landholders are subject to lower marginal rates of tax.

The framework recognises that individuals and entities with more substantial taxable landholdings of commercial or investment properties have a greater capacity to pay.

As land tax is administered by state governments, some interstate landholders exploit tax-free thresholds in different jurisdictions to minimise their tax obligations. Landholders with all of their land holdings in Queensland end up paying more land tax than their interstate counterparts despite Queensland’s generous system.

For example, an individual with taxable landholdings of $1 million in Queensland would pay $4,500 in land tax (or an average rate of 0.45 per cent). Another individual landholder with $600,000 in taxable land in Queensland and $400,000 in New South Wales, would only pay $500 in land tax in Queensland and no land tax in New South Wales at current thresholds.

This inequity, or loophole, will be addressed by amending the current land tax arrangements to account for the value of land held interstate when assessing taxpayers’ land tax liability.

A total national taxable land value will be established for each Queensland landholder, which will continue to exclude exempt land such as principal place of residence. The national taxable value will determine the appropriate tax rate that will then be applied to the Queensland proportion of the value of the individual or entity’s landholdings.

Under this approach, an individual with $600,000 in taxable land in Queensland and $400,000 in New South Wales would pay $2,700 in land tax in Queensland, an average rate of 0.45 per cent on their Queensland landholdings, being the same rate as the landholder with all their landholding in Queensland.

Landholders who only own land in Queensland will not be affected by this change. Landholders will continue to be able to access all available exemptions, such as the principal place of residence and primary production exemptions.

Additional land tax will only apply to the taxable Queensland landholdings of individuals who own land in multiple jurisdictions.

The timing of commencement of this reform will be subject to the passage of appropriate legislative amendments.

23

FISCAL OVERVIEW

Royalties and land rents

Revenue from royalties and land rents are now estimated to total $6.255 billion in 2021–22, $3.593 billion higher than in 2020–21 and $2.914 billion higher than estimated in the 2021–22 Queensland Budget. Coal and oil prices have risen substantially since the 2021–22 Queensland Budget, providing a short-term boost to revenues.

The premium hard coking coal price increased to a peak above US$400 per tonne in September 2021, while the thermal coal price increased to as high as US$179.05 per tonne in October 2021.

China’s strong import demand from other exporters (due to its reduced importation of Australian coal) is tending to distort global market dynamics, leading to a shortage in supply of spot cargoes. However, the recent spike in coal prices is primarily driven by a range of short-term supply side factors and disruptions. As such, prices are expected to return to more sustainable levels in coming quarters, but the timing and extent of the decline remains uncertain.

Meanwhile, oil prices remain persistently high, reaching above US$80 per barrel in October 2021, due to strong demand as a result of the cold winter in the Northern Hemisphere and the global economic recovery from the pandemic. Oil prices are also expected to moderate from current levels over coming quarters.

Growth in petroleum royalties in 2021–22 also reflects the first full year of the volume-based royalty regime, which replaced the previous wellhead model from October 2020.

Reflecting the expected moderation in coal and oil prices, revenue from royalties and land rents is expected to total $4.067 billion in 2022–23, $2.188 billion lower than in 2021–22, but remains $324 million higher than expected at the time of the 2021–22 Queensland Budget.

Coal export volumes are expected to return to solid growth in 2022–23, as global economic activity continues to normalise in line with the ongoing global recovery from the COVID-19 pandemic. This will drive a moderate increase in royalty revenue from 2022–23.

GST

GST revenue is estimated to total $15.380 billion in 2021–22, $236 million lower than forecast at the 2021–22 Queensland Budget.

The lower GST revenue expected in 2021–22 largely reflects weaker-than-expected national GST collections in the first quarter of 2021–22, driven by the extended lockdowns in New South Wales and Victoria over that period.

Forecast GST revenue beyond 2021–22 is broadly consistent with 2021–22 Queensland Budget expectations. Annual average growth in GST revenue of 5.4 per cent is forecast across the three years to 2024–25, reflecting steady growth in nominal consumption as the national economy continues to improve.

Current risks to the national GST pool remain over the medium term, including any changes in household spending trends as international borders reopen and the impact of responses to any future COVID outbreaks.

The impact of the significant revisions to Queensland’s coal royalties has not been incorporated into the forward estimates of this Budget Update.

In early 2022, the Commonwealth Grants Commission is expected to deliver its recommended relativities for distributing the GST among states and territories for the 2022–23 financial year.

24    2021–22 BUDGET UPDATE

FISCAL OVERVIEW

Box 3 Banking Queensland’s resources windfall

Every Queenslander has a stake in our state’s natural resources.

Queensland’s resource royalties in 2021–22 are expected to increase by $2.9 billion relative to projections in the 2021–22 Queensland Budget.

The increase in royalties is largely the result of an unprecedented rise in the global price of premium hard coking coal, which reached a new peak of more than US$400 per tonne in September 2021.

The elevated coal price is only expected to be temporary, as it has been driven by a range of short-term supply-side factors and disruptions. Similarly, the uplift in Queensland’s royalties is only expected to be transitory.

All else being equal, under the principles developed by the Commonwealth Grants Commission, up to 80 per cent of a royalties windfall would be redistributed to other states over time through a reduction in Queensland’s GST revenue. An increase in royalties in 2021–22 would impact Queensland’s GST share from 2023–24 until 2025–26.

To offset this future reduction in GST distributions, the Queensland Government is investing $2.5 billion of the royalties windfall as a Long Term Asset held by the Consolidated Fund.

This investment, along with its returns, will be available to be drawn down to fund future priority capital initiatives, to ensure Queenslanders can continue to enjoy the benefits of our resources for years to come.

25

FISCAL OVERVIEW

Expenses

General Government Expenses in 2021–22 are estimated to be $69.727 billion, $2.579 billion higher than the budget estimate.

Contributing to the increase in expenses in 2021–22 are $600 million in 2021 COVID-19 Business Support Grants introduced to support small businesses impacted by Queensland’s lockdowns, further funding for Queensland’s on-going health response to the pandemic, including support on easing of restrictions, and additional funding for quarantine and COVID-19 compliance services.

Grants under the HomeBuilder program and revisions to the state’s defined benefit superannuation liabilities also contribute to the increase in expenses in 2021–22 compared to the 2021–22 Budget.

Expenses over the next three years to 2024–25 are expected to be higher than the 2021–22 Budget, reflecting expense measures made since the 2021–22 Budget, including additional funding for the continuation of time limited programs and new policy decisions. Other non-policy adjustments, including actuarial revisions to the state’s defined benefit superannuation liabilities and increases in the legislated superannuation guarantee charge rate, also contribute to the increase in expenses.² Expenditure growth is expected to moderate from 2022–23 with the unwinding of COVID-19 support measures.

Emerging fiscal pressures

Other than on-going uncertainties related to future COVID-19 outbreaks, key emerging pressures include:

Native title compensation settlement

The government has a potential liability with respect to compensation arising from acts that have extinguished native title or impaired native title since 1975.

Expiring agreements

Queensland’s fiscal position is exposed to decisions made by the Australian Government, including not renewing funding for National Partnership payments (NPs) where there are on-going community service needs that must be met.

² The state’s defined benefit liabilities remain full offset by assets held in the defined benefit fund.

26    2021–22 BUDGET UPDATE

FISCAL OVERVIEW

Box 4 Limited life programs

As part of this 2021–22 Budget Update, the government has extended or provided permanent and ongoing funding to a number of limited life programs, as well as to support ongoing negotiations with other levels of government. In this Budget Update, $1.1 billion has been allocated towards these purposes, which aims to provide greater certainty to service providers.

Key programs with extended funding include:

• $25.9 million over 4 years to support continued operationalisation of the National Redress Scheme in Queensland

• $2.5 million for the Queensland Police Service to continue police operations utilising overtime in Safe Night Precincts between 1 January 2022 and 30 June 2022

• permanent funding of $2 million per annum from 2022–23 for the Queensland Water Regional Alliance Program, delivered in partnership with the Local Government Association of Queensland.

Balance sheet

Box 5 Net debt

Net debt is useful for examining the soundness of a government’s fiscal position. The net debt measure is the preferred debt position by governments, including the Australian Government. The Queensland Government’s disciplined approach to its fiscal strategy is establishing the path to stabilising its debt burden and returning to operating surpluses.

Compared to Budget, the 2021–22 Budget Update demonstrates the government’s performance in debt management. The 2021–22 Budget Update reflects a significant reduction in General Government net debt and Queensland’s outlook compares very favourably to its peers New South Wales and Victoria.

Chart 9: Net debt of major states

27

FISCAL OVERVIEW

Debt

The Palaszczuk Government remains focussed on supporting economic recovery and ongoing growth. By delivering on its clear fiscal strategy, underpinned by the Charter of Fiscal Responsibility, the government remains on track to return the budget to surplus over the forward estimates and to stabilise the net debt burden over the medium term.

General Government Sector

Net debt is expected to reach $17.536 billion by 30 June 2022, which is $7.214 billion lower than anticipated at the 2021–22 Queensland Budget. This is largely due to a combination of lower-than-expected borrowing with Queensland Treasury Corporation (QTC) as a result of the improved operating position, and improvements in the value of financial assets, mainly as a result of positive market value adjustments on financial assets in 2020–21.

General Government Sector (GGS) borrowing with QTC is estimated to be $55.473 billion by 30 June 2022, $1.767 billion lower than projected in the Budget. This is predominantly due to the improved revenue outlook for 2021–22 impacting favourably on operating cash flows as well as lower borrowings in 2020–21.

Public Non-financial Corporations Sector

Public Non-financial Corporation (PNFC) Sector debt is primarily held by government-owned corporations and is supported by income-generating assets including key pieces of economic infrastructure.

Borrowing with QTC of $40.278 billion are projected for 30 June 2022 in the PNFC Sector, $377 million less than the 2021–22 Budget estimate. With leases and other similar arrangements of $405 million and securities and derivatives of $921 million, total PNFC Sector borrowing is expected to be $41.604 million by 30 June 2022, rising by just $364 million to $41.968 billion by 30 June 2025.

Capital program

The capital program outlined in the 2021–22 Budget Update continues to deliver on the government’s $50 billion 4-year infrastructure guarantee. In line with the Queensland’s COVID-19 Economic Recovery Plan, the capital program focuses on maintaining a sustainable program of works and investment in critical infrastructure across Queensland that will help ongoing economic recovery and support increased private sector productivity. Improvements in net cash flows from operating activities are still expected to primarily fund the GGS capital program from 2024–25.

General Government Sector

The GGS capital program in 2021–22 is estimated to be $12.340 billion, $1.320 billion higher than projected in the 2021–22 Queensland Budget. This increase is largely due to road and rail projects as well as an increase in capital grants for the HomeBuilder program. Over the four years to 2024–25, the total capital program is $41.719 billion, $3.469 billion higher than estimated at the 2021–22 Budget.

Public Non-financial Corporations Sector

The PNFC Sector capital program in 2021–22 is estimated to be $3.660 billion, $58 million lower than budgeted in the 2021–22 Budget. Over the four years to 2024–25, the total capital program of $14.259 billion, $212 million higher than estimated at the 2021–22 Budget.

28    2021–22 BUDGET UPDATE

INTERGOVERNMENTAL FINANCIAL RELATIONS

INTERGOVERNMENTAL

FINANCIAL RELATIONS

Australian Government Payments

Payments for specific purposes

Australian Government payments contribute to Queensland’s ability to meet its current and future service delivery and infrastructure responsibilities. In recent years, the Australian Government has created uncertainty around these by imposing unwarranted conditions, delaying advice on funding extensions or unilaterally changing the basis of payments, all which impact Queensland’s ability to plan and deliver critical services and infrastructure.

In contrast, the Queensland Government seeks to negotiate Commonwealth–state funding arrangements that are sustainable, provide adequate funding for the delivery of services, give the State flexibility in the way it delivers services, and achieve positive outcomes for Queenslanders.

The Queensland Government is currently negotiating funding agreements for skills, mental health and suicide prevention, and early childhood education, among others.

General revenue assistance

The Commonwealth Grants Commission will recommend updated state and territory shares of GST revenue to the Australian Treasurer in early 2022, to be factored into the 2022–23 Federal Budget. Shares are based on jurisdictions’ revenue raising capacity and expenditure needs, and this update will incorporate responses to COVID-19 in 2020–21.

The Commission’s recommendations will impact Queensland’s GST share at the same time as the implementation of the Australian Government’s changes to horizontal fiscal equalisation (HFE) ramps up.

In 2018, the Australian Government legislated changes to HFE: states will no longer receive GST revenue to equalise them to the same standard as the fiscally strongest state (Western Australia), but to the stronger of New South Wales or Victoria; states are assured a minimum GST revenue sharing relativity (a relativity floor); and the Australian Government will boost the GST pool. These changes are being implemented over a six-year transition period (2021–22 to 2026–27).

Most states, including Queensland, did not support the changes when they were announced. The key concern is that all states except Western Australia will receive less GST revenue because the boost payments will not be sufficient to offset the other changes. In response, the Australian Government legislated a ‘no worse off’ guarantee for the transition period that ensures states will receive at least as much GST revenue under the new system. This guarantee will only apply up to 2026–27.

The Australian Government estimates that the additional GST assistance for Queensland under the ‘no worse off’ guarantee would be $627 million in 2024–25. Given this guarantee will not be available from 2027–28 onwards, this could present a significant fiscal risk to Queensland.

29

GOVERNMENT FISCAL PRINCIPLES

GOVERNMENT FISCAL PRINCIPLES

The Government developed a new Charter of Fiscal Responsibility (Charter) to inform the 2021–22 Budget strategy by providing a balanced path to restore Queensland’s fiscal buffers as the economic recovery continues. The Fiscal Principles underpin the development of the state’s fiscal strategy and financial decision-making.

Principle 1 – Stabilise the General Government Sector net debt to revenue ratio at sustainable levels in the medium term, and target reductions in the net debt to revenue ratio in the long term

A key component of the fiscal strategy is to stabilise debt at a sustainable level in the medium term. Queensland’s strong public health response and decision to prioritise health and economic recovery during the crisis made increased borrowings unavoidable. However, revenue improvements and a disciplined approach to the fiscal strategy meant that forecast borrowings were far lower in the 2021–22 Budget than in the 2020–21 Budget. Since the 2021–22 Budget, forecasts for borrowings have reduced further, largely as a result of stronger revenue growth forecasts. The value of investments has also increased significantly making an important contribution to the reduction in net debt.

This improvement is evident in the 2020–21 results where the ratio of net debt to revenue fell from 45.3 per cent in the 2020–21 Budget, to 26.2 per cent in the 2021–22 Budget and an actual of 18.1 per cent. By 2024–25, the ratio of General Government net debt to revenue is expected to reach 50 per cent, far below the 61 per cent forecast in the 2021–22 Budget. Growth in the net debt to revenue ratio is forecast to moderate towards the end of the forward estimates. Material improvements in the 2021–22 Budget and 2021–22 Budget Update are consistent with debt stabilising at a sustainable level in the medium term.

Chart 10: Ratio of General Government net debt/revenue

30    2021–22 BUDGET UPDATE

GOVERNMENT FISCAL PRINCIPLES

Principle 2 – Ensure that average annual growth in General Government Sector expenditure in the medium term is below the average annual growth in General Government Sector revenue to deliver fiscally sustainable net operating surpluses

Fiscal Principle 2 is designed to provide a broad measure of expenditure growth management. Maintaining a lower rate of expenditure growth than revenue growth will deliver sustainable operating surpluses and assist debt stabilisation.

Over the four years to 2024–25, revenues are forecast to grow by an average of 3.4 per cent per annum, relative to average expenses growth of 3.0 per cent per annum. Far higher revenues and lower expenses in the 2020–21 outcome than forecast in the 2021–22 Queensland Budget have contributed to a narrowing of the difference in average revenue and expenses growth over the four-year period. For example, using 2019–20 as the base year revenue is estimated to grow by 4.4 per cent per annum over the 5 years to 2024–25 compared to annual expenses growth of 2.4 per cent. Forecasts remain on track to return to an operating surplus by 2024–25, consistent with the 2021–22 Budget.

Principle 3 – Target continual improvements in net operating surpluses to ensure that, in the medium term, net cash flows from investments in non-financial assets (capital) will be funded primarily from net cash inflows from operating activities. The capital program will focus on supporting a productive economy, jobs, and ensuring a pipeline of infrastructure that responds to population growth

Large capital programs that will support jobs and enhance the productive capacity of the economy remain a government priority. A capital program of $55.9 billion is planned over the four years to 2024–25. Maintaining a large capital program at the same time as stabilising net debt will require the capital program to be primarily funded through operating cash surpluses rather than additional borrowings.

In 2021–22, the operating cash surplus has increased significantly as a share of net cash flows from investments in non-financial assets, from 7 per cent in the 2021–22 Budget to 49 per cent in the 2021–22 Budget Update. The increase is due mostly to windfall gains in royalty revenue resulting from the temporary coal price increase in 2021–22, which will be invested to support future government initiatives. Adjusted for the $2.5 billion royalty investment, the share of capital funded through operating cash surpluses in 2021–22 would be 19 per cent.

By 2024–25, 53 per cent of investment in non-financial assets is expected to be funded from operating cash, broadly consistent with 2021–22 Budget forecasts. Across the four-year period 2021–22 to 2024–25, even though the capital program has increased, an increasing proportion of it is being funded from net cash inflows.

31

GOVERNMENT FISCAL PRINCIPLES

Principle 4 – Maintain competitive taxation by ensuring that, on a per capita basis, Queensland has lower taxation than the average of other states

Fiscal Principle 4 directly measures the competitiveness of Queensland’s taxation regime and policies compared to other states.

Using the latest forecasts, Queensland’s taxation per capita of $3,537 in 2021–22 compares favourably to other jurisdictions. On average, Queenslanders are expected to pay $452 less tax compared to the residents of other states and territories in 2021–22. While Queensland’s tax forecasts have increased significantly across the four years to 2024–25 since the 2021–22 Budget, the state is maintaining a highly competitive regime.

Chart 11: Taxation per capita, Queensland and other jurisdictions

Sources:

 1. 2021–22 Budget Update for Queensland.

 2. 2021–22 State Budget for all other jurisdictions.

Principle 5 – Target the full funding of long-term liabilities such as superannuation and workers’ compensation in accordance with actuarial advice

The full funding of superannuation and other long-term liabilities is a long-standing Queensland Government priority and a key element of Queensland’s financial management. A commitment to this principle has continued through the economic and fiscal recovery from the COVID-19 crisis, and it remains part of the long-term fiscal strategy. The State Actuary has confirmed that Queensland’s defined benefit superannuation scheme remains fully funded with total assets exceeding accrued liabilities by greater than $6 billion as at 30 June 2021. Full funding is unique amongst Australian jurisdictions.

32    2021–22 BUDGET UPDATE

UNIFORM PRESENTATION FRAMEWORK

UNIFORM PRESENTATION FRAMEWORK

Table 4: General Government Sector Operating Statement¹

		2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
		Outcome			Budget			Update			Projection			Projection			Projection
		$ million			$ million			$ million			$ million			$ million			$ million
	Revenue from Transactions
	Taxation revenue		16,249			17,399			18,491			18,317			19,117			19,867
	Grants revenue		33,013			31,935			32,491			33,733			35,264			36,252
	Sales of goods and services		6,063			6,062			5,966			6,168			6,353			6,211
	Interest income		1,948			2,537			2,575			2,793			2,859			2,933
	Dividend and income tax equivalent income		1,310			1,142			1,085			1,111			946			877
	Other revenue		4,148			4,589			7,627			5,410			5,533			5,642
	Total Revenue from Transactions		62,732			63,664			68,235			67,531			70,072			71,781
Less	Expenses from Transactions
	Employee expenses		26,501			27,474			27,976			29,063			29,927			31,050
	Superannuation expenses
	Superannuation interest cost		246			373			376			404			462			474
	Other superannuation expenses		3,073			3,156			3,432			3,505			3,594			3,710
	Other operating expenses		16,335			17,963			18,264			17,586			17,402			17,341
	Depreciation and amortisation		4,187			4,356			4,450			4,652			4,680			4,836
	Other interest expenses		1,619			1,667			1,694			1,853			2,063			2,247
	Grants expenses		11,709			12,160			13,535			12,867			12,502			11,965
	Total Expenses from Transactions		63,669			67,148			69,727			69,928			70,631			71,623
Equals	Net Operating Balance		(937	)		(3,485	)		(1,492	)		(2,397	)		(559	)		158
Plus	Other economic flows - included in operating result		9,787			195			195			401			377			512
Equals	Operating Result		8,850			(3,290	)		(1,297	)		(1,996	)		(182	)		670
Plus	Other economic flows - other movements in equity		7,044			1,773			2,152			2,943			2,049			1,716
Equals	Comprehensive Result - Total Change In Net Worth		15,894			(1,517	)		855			947			1,866			2,385
	KEY FISCAL AGGREGATES
	Net Operating Balance		(937	)		(3,485	)		(1,492	)		(2,397	)		(559	)		158
Less	Net Acquisition of Non-financial Assets
	Purchases of non-financial assets		6,835			7,800			8,317			8,078			7,674			7,642
	Less   Sales of non-financial assets		216			240			238			186			264			190
	Less   Depreciation		4,187			4,356			4,450			4,652			4,680			4,836
	Plus Change in inventories		46			9			24			(8	)		(4	)		29
	Plus Other movements in non-financial assets		1,599			1,266			1,582			861			284			181
	Equals Total Net Acquisition of Non-financial Assets		4,078			4,480			5,235			4,093			3,009			2,825
Equals	Fiscal Balance		(5,015	)		(7,965	)		(6,726	)		(6,490	)		(3,568	)		(2,667	)
Note:
1. Numbers may not add due to rounding.

33

UNIFORM PRESENTATION FRAMEWORK

Table 5: Public Non-financial Corporations Sector Operating Statement¹

		2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
		Outcome			Budget			Update			Projection			Projection			Projection
		$ million			$ million			$ million			$ million			$ million			$ million
	Revenue from Transactions
	Grants revenue		615			711			737			714			630			616
	Sales of goods and services		12,199			11,161			11,618			11,110			10,812			11,013
	Interest income		65			58			55			59			66			74
	Dividend and income tax equivalent income		15			—			—			—			—			—
	Other revenue		345			306			396			378			344			351
	Total Revenue from Transactions		13,240			12,237			12,807			12,262			11,852			12,053
Less	Expenses from Transactions
	Employee expenses		2,123			2,211			2,262			2,363			2,448			2,526
	Superannuation expenses
	Superannuation interest cost		(3	)		—			—			—			—			—
	Other superannuation expenses		249			241			231			243			252			261
	Other operating expenses		4,895			3,996			4,451			3,749			3,512			3,642
	Depreciation and amortisation		2,640			2,882			2,883			2,931			2,998			3,022
	Other interest expenses		1,691			1,661			1,658			1,579			1,538			1,519
	Grants expenses		24			24			14			24			24			24
	Other property expenses		457			448			449			377			290			252
	Total Expenses from Transactions		12,078			11,463			11,948			11,265			11,061			11,246
Equals	Net Operating Balance		1,162			774			858			997			790			808
Plus	Other economic flows - included in operating result		(466	)		13			(25	)		(191	)		(398	)		(547	)
Equals	Operating Result		696			787			833			806			392			261
Plus	Other economic flows - other movements in equity		(1,010	)		288			59			354			458			(79	)
Equals	Comprehensive Result - Total Change In Net Worth		(315	)		1,075			892			1,159			850			181
	KEY FISCAL AGGREGATES
	Net Operating Balance		1,162			774			858			997			790			808
Less	Net Acquisition of Non-financial Assets
	Purchases of non-financial assets		3,157			3,713			3,655			3,691			3,464			3,392
	Less   Sales of non-financial assets		69			68			47			63			49			52
	Less   Depreciation		2,640			2,882			2,883			2,931			2,998			3,022
	Plus Change in inventories		—			4			11			(1	)		24			18
	Plus Other movements in non-financial assets		77			106			85			112			110			103
	Equals Total Net Acquisition of Non-financial  Assets		525			872			821			809			551			438
Equals	Fiscal Balance		637			(98	)		37			188			240			369
Note:
1. Numbers may not add due to rounding.

34    2021–22 BUDGET UPDATE

UNIFORM PRESENTATION FRAMEWORK

Table 6: Non-financial Public Sector Operating Statement¹

		2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
		Outcome			Budget			Update			Projection			Projection			Projection
		$ million			$ million			$ million			$ million			$ million			$ million
	Revenue from Transactions
	Taxation revenue		15,906			17,062			18,147			17,956			18,740			19,479
	Grants revenue		33,020			31,951			32,511			33,752			35,277			36,264
	Sales of goods and services		15,667			14,320			14,734			14,507			14,538			14,635
	Interest income		2,007			2,578			2,624			2,846			2,919			2,999
	Dividend and income tax equivalent income		150			129			145			161			162			180
	Other revenue		4,478			4,894			8,021			5,786			5,875			5,991
	Total Revenue from Transactions		71,228			70,934			76,183			75,008			77,510			79,549
Less	Expenses from Transactions
	Employee expenses		28,498			29,561			30,110			31,293			32,242			33,443
	Superannuation expenses
	Superannuation interest cost		243			373			376			404			462			474
	Other superannuation expenses		3,322			3,397			3,662			3,748			3,846			3,971
	Other operating expenses		18,610			19,049			19,857			18,556			18,279			18,387
	Depreciation and amortisation		6,827			7,238			7,333			7,582			7,678			7,858
	Other interest expenses		3,114			3,107			3,140			3,208			3,361			3,513
	Grants expenses		11,125			11,489			12,832			12,195			11,909			11,386
	Total Expenses from Transactions		71,739			74,213			77,311			76,986			77,777			79,032
Equals	Net Operating Balance		(511	)		(3,279	)		(1,128	)		(1,978	)		(267	)		517
Plus	Other economic flows - included in operating result		8,872			118			80			140			(92	)		(314	)
Equals	Operating Result		(8,361	)		(3,161	)		(1,048	)		(1,839	)		(358	)		203
Plus	Other economic flows - other movements in equity		7,532			1,644			1,904			2,786			2,225			2,182
Equals	Comprehensive Result - Total Change In Net Worth		15,894			(1,517	)		855			947			1,866			2,385
	KEY FISCAL AGGREGATES
	Net Operating Balance		(511	)		(3,279	)		(1,128	)		(1,978	)		(267	)		517
Less	Net Acquisition of Non-financial Assets
	Purchases of non-financial assets		10,007			11,513			11,973			11,769			11,137			11,035
	Less   Sales of non-financial assets		272			308			286			250			313			243
	Less   Depreciation		6,827			7,238			7,333			7,582			7,678			7,858
	Plus Change in inventories		46			13			35			(9	)		20			47
	Plus Other movements in non-financial assets		1,676			1,372			1,667			974			394			284
	Equals Total Net Acquisition of Non-financial Assets		4,630			5,352			6,056			4,902			3,560			3,264
Equals	Fiscal Balance		(5,141	)		(8,631	)		(7,184	)		(6,880	)		(3,826	)		(2,747	)
Note:
1. Numbers may not add due to rounding.

35

UNIFORM PRESENTATION FRAMEWORK

Table 7: General Government Sector Balance Sheet¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		1,072			860			818			713			649			608
Advances paid		1,339			1,545			1,520			1,621			1,587			1,508
Investments, loans and placements		41,742			39,319			45,073			46,146			47,134			48,066
Receivables		5,521			3,305			3,633			4,342			4,438			4,808
Equity
Investments in other public sector entities		21,429			22,857			22,334			23,493			24,343			24,525
Investments - other		165			161			164			164			164			164
Total Financial Assets		71,267			68,047			73,541			76,479			78,315			79,679
Non-financial Assets
Land and other fixed assets		243,075			243,243			249,199			254,357			258,858			262,811
Other non-financial assets		7,390			6,920			7,355			7,501			7,692			7,977
Total Non-financial Assets		250,464			250,163			256,553			261,858			266,550			270,788
Total Assets		321,731			318,210			330,094			338,337			344,865			350,467
Liabilities
Payables		4,725			4,673			4,707			4,782			4,831			4,920
Superannuation liability		27,322			22,686			25,705			23,672			22,145			20,604
Other employee benefits		8,914			8,514			9,433			9,585			9,793			10,067
Advances received		1,435			1,432			1,476			1,413			1,312			1,095
Borrowing with QTC		46,153			57,240			55,473			65,386			71,719			76,878
Leases and other similar arrangements		7,704			7,603			7,778			7,509			7,775			7,622
Securities and derivatives		220			198			220			220			220			220
Other liabilities		15,633			12,690			14,823			14,343			13,777			13,382
Total Liabilities		112,106			115,037			119,614			126,910			131,571			134,788
Net Worth		209,625			203,174			210,480			211,427			213,294			215,679
Net Financial Worth		(40,839	)		(46,989	)		(46,073	)		(50,431	)		(53,256	)		(55,109	)
Net Financial Liabilities		62,268			69,847			68,407			73,924			77,599			79,633
Net Debt		11,360			24,750			17,536			26,049			31,656			35,633
Notes:
1.  Numbers may not add due to rounding.

36    2021–22 BUDGET UPDATE

UNIFORM PRESENTATION FRAMEWORK

Table 8: Public Non-financial Corporations Sector Balance Sheet¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		1,159			784			975			974			1,041			1,172
Advances paid		1,135			1,214			1,226			1,212			1,160			991
Investments, loans and placements		1,345			308			985			818			806			817
Receivables		1,829			1,572			1,620			1,669			1,671			1,726
Equity
Investments - other		7			9			7			7			7			7
Total Financial Assets		5,474			3,887			4,813			4,680			4,685			4,713
Non-financial Assets
Land and other fixed assets		64,054			66,328			65,158			66,655			67,747			68,630
Other non-financial assets		2,014			1,463			2,016			2,004			2,006			2,022
Total Non-financial Assets		66,068			67,791			67,174			68,659			69,754			70,652
Total Assets		71,543			71,678			71,987			73,339			74,438			75,364
Liabilities
Payables		2,304			1,640			1,839			1,887			1,849			1,987
Superannuation liability		(273	)		(152	)		(273	)		(273	)		(273	)		(273	)
Other employee benefits		963			940			964			965			980			997
Deposits held		12			13			12			12			12			12
Advances received		5			4			4			4			3			2
Borrowing with QTC		39,747			40,655			40,278			40,476			40,629			41,029
Leases and other similar arrangements		454			405			405			371			337			301
Securities and derivatives		1,357			245			921			691			647			638
Other liabilities		8,319			7,857			8,291			8,500			8,697			8,933
Total Liabilities		52,888			51,608			52,440			52,633			52,882			53,627
Net Worth		18,655			20,070			19,547			20,706			21,556			21,737
Net Financial Worth		(47,414	)		(47,721	)		(47,628	)		(47,953	)		(48,198	)		(48,914	)
Net Debt		37,936			39,017			38,434			38,550			38,623			39,003
Notes:
1.  Numbers may not add due to rounding.

37

UNIFORM PRESENTATION FRAMEWORK

Table 9: Non-financial Public Sector Balance Sheet¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		2,232			1,644			1,792			1,687			1,690			1,780
Advances paid		1,334			1,540			1,515			1,617			1,584			1,506
Investments, loans and placements		43,086			39,628			46,058			46,963			47,939			48,883
Receivables		6,418			4,037			4,367			5,036			5,172			5,453
Equity
Investments in other public sector entities		2,775			2,788			2,788			2,788			2,788			2,788
Investments - other		172			171			170			171			171			171
Total Financial Assets		56,016			49,807			56,691			58,262			59,344			60,581
Non-financial Assets
Land and other fixed assets		307,128			309,570			314,356			321,011			326,605			331,440
Other non-financial assets		1,256			1,107			1,205			1,100			1,029			1,019
Total Non-financial Assets		308,385			310,677			315,561			322,112			327,634			332,459
Total Assets		364,401			360,484			372,252			380,374			386,978			393,040
Liabilities
Payables		6,150			5,520			5,713			5,748			5,798			5,882
Superannuation liability		27,049			22,534			25,432			23,399			21,872			20,331
Other employee benefits		9,877			9,453			10,397			10,551			10,773			11,064
Deposits held		12			13			12			12			12			12
Advances received		300			218			250			201			152			103
Borrowing with QTC		85,901			97,896			95,751			105,862			112,348			117,908
Leases and other similar arrangements		8,158			8,009			8,182			7,880			8,112			7,923
Securities and derivatives		1,567			436			1,131			901			857			848
Other liabilities		15,762			13,231			14,903			14,393			13,760			13,288
Total Liabilities		154,775			157,310			161,771			168,947			173,684			177,360
Net Worth		209,625			203,174			210,480			211,427			213,294			215,679
Net Financial Worth		(98,759	)		(107,503	)		(105,080	)		(110,684	)		(114,340	)		(116,780	)
Net Financial Liabilities		101,534			110,291			107,868			113,472			117,128			119,568
Net Debt		49,287			63,760			55,961			64,589			70,269			74,626
Notes:
1.  Numbers may not add due to rounding.

38    2021–22 BUDGET UPDATE

UNIFORM PRESENTATION FRAMEWORK

Table 10: General Government Sector Cash Flow Statement¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Taxes received		15,882			18,657			19,748			18,315			19,115			19,865
Grants and subsidies received		31,226			31,906			33,037			33,230			35,238			36,101
Sales of goods and services		6,217			6,312			6,272			6,420			6,601			6,518
Interest receipts		2,077			2,535			2,601			2,790			2,857			2,931
Dividends and income tax equivalents		1,673			897			1,140			1,022			998			938
Other receipts		5,745			5,730			9,191			6,948			6,957			7,125
Total Operating Receipts		62,820			66,038			71,989			68,726			71,766			73,477
Cash Payments for Operating Activities
Payments for employees		(30,320	)		(31,442	)		(31,864	)		(33,273	)		(34,402	)		(35,710	)
Payments for goods and services		(19,002	)		(20,402	)		(21,035	)		(19,973	)		(19,817	)		(19,733	)
Grants and subsidies		(11,709	)		(12,100	)		(13,469	)		(12,742	)		(12,458	)		(11,921	)
Interest paid		(1,568	)		(1,600	)		(1,625	)		(1,780	)		(1,983	)		(2,165	)
Other payments		(2	)		—			(1	)		—			—			—
Total Operating Payments		(62,601	)		(65,544	)		(67,995	)		(67,768	)		(68,659	)		(69,528	)
Net Cash Inflows from Operating Activities		219			493			3,995			959			3,107			3,949
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(6,835	)		(7,800	)		(8,317	)		(8,078	)		(7,674	)		(7,642	)
Sales of non-financial assets		216			240			238			186			264			190
Net Cash Flows from Investments in Non-financial Assets		(6,619	)		(7,561	)		(8,079	)		(7,892	)		(7,410	)		(7,452	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		(33	)		(636	)		(525	)		(532	)		(398	)		57
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		(3,513	)		(821	)		(1,027	)		(1,061	)		(984	)		(924	)
Receipts from Financing Activities
Advances received (net)		(410	)		(69	)		45			(60	)		(99	)		(216	)
Borrowing (net)		10,224			8,501			5,337			8,482			5,720			4,546
Deposits received (net)		(1	)		—			—			—			—			—
Net Cash Flows from Financing Activities		9,813			8,433			5,382			8,422			5,622			4,330
Net Increase/(Decrease) in Cash held		(133	)		(91	)		(255	)		(104	)		(63	)		(41	)
Net cash from operating activities		219			493			3,995			959			3,107			3,949
Net cash flows from investments in non-financial assets		(6,619	)		(7,561	)		(8,079	)		(7,892	)		(7,410	)		(7,452	)
Surplus/(Deficit)		(6,401	)		(7,067	)		(4,085	)		(6,933	)		(4,303	)		(3,503	)
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		(6,401	)		(7,067	)		(4,085	)		(6,933	)		(4,303	)		(3,503	)
Acquisitions under finance leases and similar arrangements		(1,547	)		(1,088	)		(1,410	)		(757	)		(102	)		—
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(7,948	)		(8,155	)		(5,495	)		(7,690	)		(4,405	)		(3,503	)
Note:
1.  Numbers may not add due to rounding.

39

UNIFORM PRESENTATION FRAMEWORK

Table 11: Public Non-financial Corporations Sector Cash Flow Statement¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Grants and subsidies received		614			681			720			702			619			604
Sales of goods and services		13,555			12,674			13,513			12,679			12,328			12,492
Interest receipts		66			58			55			59			66			74
Dividends and income tax equivalents		15			—			—			—			—			—
Other receipts		182			206			286			269			250			263
Total Operating Receipts		14,433			13,620			14,574			13,710			13,263			13,432
Cash Payments for Operating Activities
Payments for employees		(2,295	)		(2,426	)		(2,493	)		(2,604	)		(2,686	)		(2,770	)
Payments for goods and services		(5,931	)		(5,593	)		(6,188	)		(5,136	)		(4,808	)		(4,927	)
Grants and subsidies		(24	)		(24	)		(14	)		(24	)		(24	)		(24	)
Interest paid		(1,684	)		(1,645	)		(1,634	)		(1,576	)		(1,534	)		(1,514	)
Other payments		(1,002	)		(869	)		(814	)		(827	)		(725	)		(753	)
Total Operating Payments		(10,936	)		(10,557	)		(11,144	)		(10,166	)		(9,777	)		(9,988	)
Net Cash Inflows from Operating Activities		3,497			3,063			3,430			3,544			3,486			3,445
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(3,157	)		(3,713	)		(3,655	)		(3,691	)		(3,464	)		(3,392	)
Sales of non-financial assets		69			68			47			63			49			52
Net Cash Flows from Investments in Non-financial Assets		(3,088	)		(3,644	)		(3,608	)		(3,628	)		(3,414	)		(3,340	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		262			(68	)		(181	)		(56	)		(18	)		84
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		10			(12	)		(14	)		(12	)		(12	)		(13	)
Receipts from Financing Activities
Advances received (net)		(1	)		(1	)		(1	)		(1	)		(1	)		(1	)
Borrowing (net)		806			380			472			141			97			342
Dividends paid		(1,071	)		(419	)		(723	)		(494	)		(578	)		(498	)
Deposits received (net)		(1	)		—			—			—			—			—
Other financing (net)		(144	)		543			439			506			508			112
Net Cash Flows from Financing Activities		(411	)		503			188			152			26			(45	)
Net Increase/(Decrease) in Cash held		270			(157	)		(185	)		—			66			131
Net cash from operating activities		3,497			3,063			3,430			3,544			3,486			3,445
Net cash flows from investments in non-financial assets		(3,088	)		(3,644	)		(3,608	)		(3,628	)		(3,414	)		(3,340	)
Dividends paid		(1,071	)		(419	)		(723	)		(494	)		(578	)		(498	)
Surplus/(Deficit)		(662	)		(1,001	)		(901	)		(578	)		(507	)		(394	)
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		(662	)		(1,001	)		(901	)		(578	)		(507	)		(394	)
Acquisitions under finance leases and similar arrangements		(18	)		(5	)		(5	)		(18	)		(17	)		(16	)
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(680	)		(1,006	)		(905	)		(596	)		(524	)		(410	)
Note:
1.  Numbers may not add due to rounding.

40    2021–22 BUDGET UPDATE

UNIFORM PRESENTATION FRAMEWORK

Table 12: Non-financial Public Sector Cash Flow Statement¹

	2020–21			2021–22			2021–22			2022–23			2023–24			2024–25
	Outcome			Budget			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Taxes received		15,549			18,321			19,405			17,955			18,739			19,478
Grants and subsidies received		31,233			31,910			33,046			33,237			35,238			36,102
Sales of goods and services		17,166			15,702			16,556			15,941			15,921			16,032
Interest receipts		2,136			2,575			2,650			2,844			2,917			2,997
Dividends and income tax equivalents		121			122			139			150			161			170
Other receipts		5,893			5,926			9,475			7,216			7,205			7,386
Total Operating Receipts		72,098			74,556			81,270			77,343			80,181			82,164
Cash Payments for Operating Activities
Payments for employees		(32,489	)		(33,744	)		(34,229	)		(35,744	)		(36,954	)		(38,346	)
Payments for goods and services		(22,256	)		(22,714	)		(23,995	)		(21,945	)		(21,609	)		(21,676	)
Grants and subsidies		(11,128	)		(11,428	)		(12,765	)		(12,070	)		(11,864	)		(11,342	)
Interest paid		(3,061	)		(3,024	)		(3,049	)		(3,133	)		(3,278	)		(3,427	)
Other payments		(490	)		(508	)		(531	)		(443	)		(461	)		(479	)
Total Operating Payments		(69,424	)		(71,419	)		(74,568	)		(73,335	)		(74,167	)		(75,270	)
Net Cash Inflows from Operating Activities		2,675			3,137			6,702			4,008			6,014			6,894
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(10,007	)		(11,513	)		(11,973	)		(11,769	)		(11,137	)		(11,035	)
Sales of non-financial assets		272			308			286			250			313			243
Net Cash Flows from Investments in Non-financial Assets		(9,735	)		(11,205	)		(11,687	)		(11,519	)		(10,824	)		(10,792	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		(84	)		(183	)		(177	)		(97	)		39			84
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		(3,503	)		(832	)		(1,040	)		(1,073	)		(997	)		(937	)
Receipts from Financing Activities
Advances received (net)		(55	)		(47	)		(47	)		(47	)		(47	)		(47	)
Borrowing (net)		11,031			8,881			5,809			8,623			5,817			4,888
Deposits received (net)		(1	)		—			—			—			—			—
Other financing (net)		(191	)		—			—			—			—			—
Net Cash Flows from Financing Activities		10,783			8,835			5,763			8,576			5,770			4,841
Net Increase/(Decrease) in Cash held		137			(249	)		(439	)		(105	)		3			90
Net cash from operating activities		2,675			3,137			6,702			4,008			6,014			6,894
Net cash flows from investments in non-financial assets		(9,735	)		(11,205	)		(11,687	)		(11,519	)		(10,824	)		(10,792	)
Surplus/(Deficit)		(7,060	)		(8,068	)		(4,985	)		(7,511	)		(4,810	)		(3,898	)
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		(7,060	)		(8,068	)		(4,985	)		(7,511	)		(4,810	)		(3,898	)
Acquisitions under finance leases and similar arrangements		(1,565	)		(1,093	)		(1,415	)		(775	)		(119	)		(16	)
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(8,625	)		(9,161	)		(6,400	)		(8,286	)		(4,929	)		(3,913	)
Note:
1. Numbers may not add due to rounding.

41

TAXATION AND ROYALTY REVENUE ASSUMPTIONS

TAXATION AND ROYALTY

REVENUE ASSUMPTIONS

Table 13: Taxation and royalty revenue¹

	2020–21		2021–22		2021–22		2022–23		2023–24		2024–25
	Actual		Budget		Update		Projection		Projection		Projection
	$ million		$ million		$ million		$ million		$ million		$ million
Payroll tax		4,166		4,484		4,634		4,876		5,122		5,298
Transfer duty		3,954		4,598		5,389		4,679		4,845		5,018
Other duties		1,788		1,830		1,960		1,983		2,068		2,157
Gambling taxes and levies		1,586		1,553		1,541		1,606		1,672		1,730
Land tax		1,524		1,617		1,617		1,706		1,823		1,954
Motor vehicle registration		2,011		2,044		2,074		2,136		2,204		2,280
Other taxes		1,220		1,273		1,276		1,331		1,383		1,431
Total taxation revenue		16,249		17,399		18,491		18,317		19,117		19,867
Royalties
Coal		1,740		2,048		4,640		2,611		2,909		3,031
Petroleum2		298		632		959		805		624		610
Other royalties3		499		487		482		475		483		468
Land rents		126		174		174		177		179		182
Total royalties and land rents		2,662		3,341		6,255		4,067		4,196		4,291

Notes:

1.  Numbers may not add due to rounding.

2.  Includes impact of liquefied natural gas (LNG).

3.  Includes base and precious metal and other mineral royalties.

42    2021–22 BUDGET UPDATE

TAXATION AND ROYALTY REVENUE ASSUMPTIONS

Table 14: Royalty assumptions

	2021-22	2022-23	2023-24	2024-25
	Update	Projection	Projection	Projection
Tonnages – crown export1 coal (Mt)	193	206	219	226
Exchange rate $US per $A2	0.74	0.75	0.75	0.75
Year average coal prices ($US per tonne)3
Hard coking	222	150	150	150
Semi-soft	165	113	113	113
Thermal	110	80	75	75
Year average oil price
Brent ($US per barrel)	74	68	60	60

Notes:

1.  Excludes coal produced for domestic consumption and coal where royalties are not paid to the Government, i.e. private royalties. 2021–22 estimate for domestic coal volume is approximately 22.6 Mt and private coal is 8.5 Mt.

2.  Year average.

3.  Price for highest quality coking and thermal coal. Lower quality coal can be sold below this price with the indicative average prices for 2021–22 as follows: Hard coking US$205 per tonne and thermal US$102 per tonne.

4.  Published Brent oil prices are lagged by 4 months to better align with royalty revenue.

43

KEY FISCAL AGGREGATES

KEY FISCAL AGGREGATES

Table 15: Key Fiscal Aggregates¹

	2013–14			2014–15			2015–16			2016–17			2017–18			2018–19			2019–20			2020–21			2021–22			2022–23			2023–24			2024–25
	Actual1			Actual1			Actual1			Actual1			Actual1			Actual1			Actual1			Actual			Update			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million
General Government
Total revenue		46,705			49,970			50,780			56,194			58,087			59,828			57,778			62,732			68,235			67,531			70,072			71,781
Taxation revenue		11,840			12,598			12,547			12,919			13,244			14,165			14,585			16,249			18,491			18,317			19,117			19,867
Total expenses		46,217			49,551			50,112			53,369			56,337			58,843			63,505			63,669			69,727			69,928			70,631			71,623
Employee expenses		17,816			18,592			20,045			21,258			22,681			24,019			25,662			26,501			27,976			29,063			29,927			31,050
Net operating balance		488			420			668			2,825			1,750			985			(5,728	)		(937	)		(1,492	)		(2,397	)		(559	)		158
Capital purchases		6,323			4,635			4,044			4,620			5,126			5,764			6,306			6,835			8,317			8,078			7,674			7,642
Net capital purchases		3,085			996			1,163			2,265			2,337			3,192			3,436			4,078			5,235			4,093			3,009			2,825
Fiscal balance		(2,597	)		(576	)		(495	)		560			(587	)		(2,207	)		(9,164	)		(5,015	)		(6,726	)		(6,490	)		(3,568	)		(2,667	)
Borrowing with QTC		39,864			41,343			34,200			31,358			29,256			29,468			37,570			46,153			55,473			65,386			71,719			76,878
Leases and similar arrangements2		1,503			1,761			1,286			1,882			2,142			2,612			6,485			7,704			7,778			7,509			7,775			7,622
Securities and Derivatives		1			(0	)		(0	)		(0	)		122			121			198			220			220			220			220			220
Net debt		5,208			5,749			654			(355	)		(509	)		(198	)		14,036			11,360			17,536			26,049			31,656			35,633
Non-financial Public Sector
Total revenue		53,502			56,178			57,393			64,855			66,164			68,329			66,171			71,228			76,183			75,008			77,510			79,549
Capital purchases		9,313			7,811			6,852			7,291			7,643			8,460			9,482			10,007			11,973			11,769			11,137			11,035
Borrowing with QTC		70,668			73,256			71,160			69,107			66,964			67,576			76,464			85,901			95,751			105,862			112,348			117,908
Leases and similar arrangements2		1,752			1,802			1,316			1,882			2,142			2,612			6,977			8,158			8,182			7,880			8,112			7,923
Securities and Derivatives		216			175			446			895			405			720			1,503			1,567			1,131			901			857			848
Notes:
1.  With the implementation of the latest GFS Manual (AGFS15), some categories have been restated to ensure comparability.
2.  Approximately $2.2 billion increase in General Government and $2.6 billion in NFPS in 2019-20 on adoption of the new lease accounting standard AASB 16.

44    2021–22 BUDGET UPDATE

KEY FISCAL AGGREGATES

Table 16: Key Fiscal Indicators¹

	2013–14			2014–15			2015–16			2016–17			2017–18			2018–19			2019–20			2020–21			2021–22			2022–23			2023–24			2024–25
	Actual1			Actual1			Actual1			Actual1			Actual1			Actual1			Actual1			Actual			Update			Projection			Projection			Projection
	%			%			%			%			%			%			%			%			%			%			%			%
General Government
Revenue/GSP		16.1			16.9			16.8			17.1			16.5			16.3			16.0			17.1			16.3			16.3			16.3			15.9
Tax/GSP		4.1			4.3			4.2			3.9			3.8			3.9			4.0			4.4			4.4			4.4			4.4			4.4
Own source revenue/GSP		8.6			8.9			8.9			8.8			8.6			8.6			8.3			8.1			8.6			8.2			8.1			7.9
Expenses/GSP		16.0			16.8			16.6			16.2			16.0			16.1			17.6			17.4			16.7			16.9			16.4			15.9
Employee expenses/GSP		6.2			6.3			6.6			6.5			6.5			6.6			7.1			7.2			6.7			7.0			6.9			6.9
Net operating balance/GSP		0.2			0.1			0.2			0.9			0.5			0.3			(1.6	)		(0.3	)		(0.4	)		(0.6	)		(0.1	)		0.0
Capital purchases/GSP		2.2			1.6			1.3			1.4			1.5			1.6			1.7			1.9			2.0			2.0			1.8			1.7
Net cash inflows from operating activities/Net cash flows from investments in non-financial assets		45.9			97.5			122.9			134.2			107.0			105.5			(2.6	)		3.3			49.4			12.1			41.9			53.0
Fiscal balance/GSP		(0.9	)		(0.2	)		(0.2	)		0.2			(0.2	)		(0.6	)		(2.5	)		(1.4	)		(1.6	)		(1.6	)		(0.8	)		(0.6	)
Total borrowings/GSP		14.3			14.6			11.7			10.1			9.0			8.8			12.2			14.8			15.2			17.7			18.5			18.8
Total Borrowings/Revenue		88.6			86.3			69.9			59.2			54.3			53.8			76.6			86.2			93.0			108.3			113.8			118.0
Lease and other liabilities/revenue		3.2			3.5			2.5			3.3			3.7			4.4			11.2			12.3			11.4			11.1			11.1			10.6
Net debt/revenue		11.2			11.5			1.3			(0.6	)		(0.9	)		(0.3	)		24.3			18.1			25.7			38.6			45.2			49.6
Revenue growth		11.9			7.0			1.6			10.7			3.4			3.0			(3.4	)		8.6			8.8			(1.0	)		3.8			2.4
Tax growth		8.3			6.4			(0.4	)		3.0			2.5			7.0			3.0			11.4			13.8			(0.9	)		4.4			3.9
Expenses growth		(0.2	)		7.2			1.1			6.5			5.6			4.4			7.9			0.3			9.5			0.3			1.0			1.4
Employee expenses growth		(1.7	)		4.4			7.8			6.1			6.7			5.9			6.8			3.3			5.6			3.9			3.0			3.8
Non-Financial Public Sector
Capital purchases/GSP		3.2			2.6			2.3			2.2			2.2			2.3			2.6			2.7			2.9			2.8			2.6			2.4
Total borrowings/GSP		25.1			25.5			24.1			21.9			19.8			19.4			23.5			26.1			25.2			27.7			28.2			28.1
Total Borrowings/Revenue		135.8			133.9			127.1			110.8			105.1			103.8			128.4			134.3			137.9			152.8			156.5			159.2
Net financial liabilities/revenue		129.8			125.2			127.4			111.2			111.5			114.9			158.3			142.5			141.6			151.3			151.1			150.3
Notes:
1.  With the implementation of the latest GFS Manual (AGFS15), some categories have been restated to ensure comparability. GSP figures reflect 2020-21 ABS National Accounts: State Accounts.

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