Queensland State Budget 2020-2021: Creating more jobs for Queenslanders

01 December 2020

Leisa Rafter, Partner, Tax |

The COVID-19 pandemic deferred Queensland’s State Budget, with the Government releasing its COVID-19 Fiscal and Economic Review in September 2020 to provide an update on the State’s economic and fiscal estimates for 2019-2020 and 2020-2021.

After promising to deliver a budget before Christmas following a state election win, the Palaszczuk Government has handed down its sixth budget on the day the state welcomes travellers from New South Wales and Victoria.

There was significant emphasis on the efforts of Queenslanders in containing the health impacts of COVID-19 and the potential for the State’s economy to recover faster than its neighbours. However, the effects of the Government’s initiatives on the rate of Queensland’s recovery can only be measured in time.

Jobs and capital expenditure, but no further tax relief

The Budget outlined the continued steps the Government will take towards economic  recovery. It follows the path outlined in the COVID-19 Fiscal and Economic Review and the Government’s Economic Recovery Plan, which focused on protecting our health, creating jobs and working together.

With most of the economic announcements made in the lead-up to the October state election, the Treasurer promised there would be no surprises in a budget about building back Queensland’s confidence. The Budget’s overarching objective is clear – it is about creating more Queensland jobs and a willingness to take on debt to fund the capital expenditure. Despite this, taxpayers (particularly struggling business owners), may be disappointed that further tax relief measures were not provided as part of this budget.

The Budget will put Queensland in a deficit of $8.633 billion for FY 2020-2021. This deficit will be funded through borrowings, with Queensland’s borrowings forecasted to increase to more than $100 billion in FY 2020-2021, and almost $130 billion by FY 2023-2024.

Key measures at a glance

After reading through both the Budget and the bills, our experts have prepared an assessment of the situation and highlighted the top measures you need to be aware of.  These are outlined as follows:

  • The Budget highlights and builds on Queensland’s previously announced $7 billion Unite and Recover Economic Recovery Plan, with an additional commitment of $4.3 billion for four years
  • There were no changes or extensions to the COVID-19 tax relief measures already announced. These previously communicated measures include:
    • Payroll tax refunds and holidays for more than 16,700 businesses
    • Payroll tax deferrals for more than 10,800 businesses
    • Payroll tax exemptions for wages subsidies by JobKeeper payments
    • FY 2019-2020 and FY 2020-2021 land tax rebates for eligible landlords, and a three-month land tax deferral
    • Waiver of foreign land tax surcharge for FY 2019-2020
    • Lottery tax deferrals.
  • Key infrastructure and spending commitments include:
    • $1 billion to bring train manufacturing back to Queensland
    • $1.6 billion for health infrastructure projects
    • Funding for additional frontline health staff including 5,800 nurses, 1,500 doctors and 1,700 allied health professionals through to 2024
    • Four new schools opening in 2022 and 2023, investing almost $1 billion in four years for school upgrades and employing 6,190 new teachers and 1,139 new teacher aides during the next four years
    • $6.3 billion for transport infrastructure in FY 2020-2021, including continued construction of the Cross River Rail Project ($1.5 billion) and ongoing spending to fund major upgrades to the M1 Pacific Motorway and the Bruce Highway
    • $6.3 billion in support in FY 2020–2021 to reduce costs of transport, electricity and water. The support will be delivered through targeted discounts, fee waivers, rebates, and subsidies for individuals, households and businesses.

Funding for Queensland businesses

The Budget also included an additional $15.4 million for the Made in Queensland program for 2020-2021, indicating that funding under Round 3 of the program should be allocated prior to the end of the financial year. There are yet to be any announcements regarding the opening of Round 3, but this is expected early in the new year. It is worth noting that, should the guidelines for Round 3 be similar to Round 2, this program is broader in scope than the Federal Government’s Modern Manufacturing Fund, which is due to open 7 December. Notably, Made in Queensland:

  • Is not limited to the six priority sectors
  • Provides matched funding up to $2.5 million as opposed to the Modern Manufacturing Fund providing 25% of funding up to $1 million.

Additional funding measures are outlined below.

Small business funding:

  • $196 million for Small Business Adaption Grants - up to $10,000 for small and medium sized businesses based in Queensland creating new jobs
  • $100 million Business Investment Fund
    • For small and medium sized businesses with significant growth potential
    • This is part of the new $500 million Backing Queensland Investment Fund that targets investments in businesses that:
      • Are based in Queensland and support Queensland jobs
      • Have a proven product and market opportunity, but require capital to grow/build market share
      • Are at the mature stages (i.e. not a startup), approaching profitability or are profitable
      • Are seeking capital to expand or restructure operations, enter new markets or finance acquisition
  • $30 million, including grants and small business support.

Renewables funding:

  • $500 million Renewable Energy Fund
    • Announced in September 2020
    • The State Government will undertake strategic network investments and streamline development of new renewable projects.

Tourism funding:

  • $5 million in grants to support regional tourism operators reliant on international tourism, to redesign their businesses
  • $25 million for the Growing Tourism Infrastructure Fund
  • $15 million for the establishment of a Regional Tourism Organisation Fund.

Manufacturing funding:

  • $15.5 million to boost the Made in Queensland Grants Program
  • $16.5 million to establish Manufacturing Skills Queensland - Part of a $200 million investment in future skilling programs
  • $10 million to continue the development of Queensland’s hydrogen industry during the next four years.

Prepare your business

If you have any questions about our State Budget analysis, or you would like to discuss how the Budget measures could impact you or your business, please contact your BDO adviser.

Our advisers have developed a range of resources to assist you in safeguarding your business to keep it up and running. Visit our COVID-19 hub to learn more.