Queensland budget tips gas growth but $80 billion debt

BUSINESS investment in the mining industry will peak in 2013 and fall from historic highs through to 2015-16 as three major gas projects wind up their $60 billion construction phase.

Queensland Treasury forecasts a $5.3 billion revenue drop from taxation, GST and mining royalties but it expects a ramp up in liquefied natural gas production which could lead to overseas export growth nearing 23.5% by 2015-16.

Combined with a stronger domestic sector, Queensland Treasurer Tim Nicholls believes that will lead to 6% economic boost in that year.

"While these figures underpin our confidence for the future we need to recognise they are the product of the export of gas," he told Queensland Parliament in his 2013-14 parliament speech on Tuesday.

"We need to continue our work to strengthen and grow the other pillars of the economy that employ so many Queenslanders.

"The revenue environment is weak and Queenslanders have again had to deal with the devastation of natural disasters.

"The national economy is trying to manage the transition from an unprecedented peak in mining investment back to consumption in the broader economy on a more normal basis."

Mr Nicholls will also commit $30 million funding over three years to upgrade the Geological Survey of Queensland.

"This is a sound investment in Queensland's future prosperity," he said.

"Queensland is world famous for its mining resources and expertise, but there is much that remains to be known about the geology and mineral potential of the state.

"We want Queensland to be the exploration capital of Australia, and for quality geological data to be there for the world to see."

The 2013 Queensland Budget speech in full

The 2013 Queensland Budget Strategy and Outlook

The 2013 Queensland Budget - where the money is going

Mr Nicholl said economic growth in Queensland's major trading partners in 2013 was estimated to be 2.75%, similar to that in 2012.

He said he expected growth to strengthen to 3.25% from 2014 onwards, with non-Japan Asia continuing to be the main driver of growth.

Mr Nicholls said the government was also predicting the unemployment rate to reduce from 6% in 2013-14 to 5.5% in 2015-16.

He said this was "not a frivolous or fanciful budget" as he forecast a gross debt reaching $80.1 billion in 2014-15.

He said extra costs from floods, a change in timing for Australian Government disaster recovery funding and lower royalty revenue would had contributed to a fiscal deficit of $7.7 billion budgeted for in 2013-14.

Mr Nicholls told parliament the budget allowed for $9.3 billion for the three financial years from 2012-2015.

He said the total cost of natural disasters had reached $13.8 billion since 2010.

"This represents enough funds to have built two cross river rail projects and a second range crossing for Toowoomba or $3010 per man, woman and child," he said.

Mr Nicholls said the government would provide an extra $40 million towards a betterment fund in this budget which the Australian Government would match.

In outline just one example of how the fund was working, he spoke about the Gayndah water intake plant on the banks of the Burnett River which was damaged in 2011.

He said the intake was the only source of water for the town and it cost $1.22 million to repair to original standard.

"Along came the January 2013 floods and again, the Gayndah water intake plant, only a year old was severely damaged," he said.

"This time it will be different, in partnership with the North Burnett Regional Council a new pumping station and intake will be built upstream at the Claude Wharton Weir, at a slightly greater cost, but a cost that is an investment in the future."

Mr Nicholls said the government would commit another $384 million over four years to improve the beleaguered Queensland Health rostering system.

He said the payroll system had already cost an estimated $1.25 billion over seven years since its failed implementation in 2010.

The government will commit $147 million over four years to clear maintenance backlogs in hospitals in rural and regional Queensland and $100 million for schools.