Why is queensland in so much debt

Updated Jun 16, — 5. Save Log in or Subscribe to save article. Mark Ludlow writes on politics, energy and infrastructure based in Brisbane. Connect with Mark on Twitter. Email Mark at mludlow afr. License article. Follow the topics, people and companies that matter to you. Find out more. Queensland budget. As a reference, the bottom of the table also reports the ratio of debt to Gross Domestic Product GDP in selected countries of the world. However, this ratio remains relatively low in comparison to other G20 countries , including the Australian Commonwealth.

You can read more in these and papers from Reinhart and Rogoff. In other words, working out how much debt Queensland has is the simple part; deciding whether that debt is too high, about right, or quite low, remains a much more subjective matter.

So perhaps a simple comparison of debt ratios is not the best way to assess the extent of the problem. In fact, debt is not always bad and the objective of fiscal policy cannot simply be the minimisation of debt levels.

Yet that is something we should all be able to agree on. In the end, debt is a tool that governments should use to achieve fundamental goals like growth and welfare. The fact that in Queensland debt is higher than, say, New South Wales is not, in itself, enough to conclude that Queensland has a debt problem.

The more relevant question for us to consider is then whether the debt level is sustainable or not. And that means looking at whether or not the debt-to-GSP ratio is likely to climb too rapidly in future. In this regard, three factors determine the evolution of the debt-to-GSP ratio: the interest paid on the existing stock of debt, the rate of GSP growth, and the primary balance which is the budget balance after the government has made its interest payment.

If the primary balance is zero that is, revenues are equal to expenditures after accounting for the interest payment , then debt is sustainable as long as the rate of growth is not smaller than the interest rate on debt. Save Log in , register or subscribe to save articles for later.

Normal text size Larger text size Very large text size. Mr Dick said Queensland could not rule out its credit rating being placed on a negative outlook. Opposition leader David Crisafulli will deliver his budget reply speech on Thursday.

License this article. Queensland budget Cameron Dick.