Treasurer and Minister for Employment and Economic Development
The Honourable Andrew Fraser

Tuesday, June 16, 2009

Qld economy grows despite global recession with tough outlook ahead

Despite the global recession, Queensland is still expected to record growth in 2008-09 of ½% - to once again stay ahead of the nation.

Even with full impact of the global recession forcing a marginal contraction of ¼ % in 2009-10, Queensland remains well placed for a strong recovery with growth again expected to stay ahead of the nation.

“We entered into this period with momentum that has allowed us to fight off the full impact, but we aren’t out of the woods yet,” Treasurer Andrew Fraser said.

“As a player in a modern global economy, Queensland’s fortunes are linked to those we do business with.

“This will get worse before it gets better – but this Budget charts a course to recovery and ensures we will come through this stronger, not weaker.”

With the world economy now experiencing its most severe financial crisis since the 1930s, economic activity in Queensland’s major trading partners is expected to decline by 3% this calendar year.

“Seven of Queensland’s top 10 trading partners are in deep recessions,” Mr Fraser said.

“Japan, our number one trading partner, has seen its economy shrink by more than 8% over the past year.

“When the world stops buying goods and services, this impacts on the Queensland economy like everywhere else.”

However, Mr Fraser said Queensland would still track ahead of the national economy.

“Australia is regarded as a benchmark performer and Queensland continues to show economic resilience,” Mr Fraser said.

“We will have outpaced the nation for the last 13 years and we will continue to do so,” Mr Fraser said.

“The Queensland economy is forecast to recover by 2¾% in 2010-11, which has it ahead of the expected trajectory of the nation’s economy.

Tackling unemployment is the Bligh Government’s number one priority – with more jobs losses predicted 2010-11.

“Treasury has forecast a peak in the unemployment rate of 7¼% in 2010-11, which remains below the national prediction,” Mr Fraser said.

“But that means that the number of Queenslanders out of work could reach 175,000. That’s why the Bligh Government is determined to fund a record building program that secures and creates Queensland jobs.”

Mr Fraser said the Budget would have a $1.954 billion negative operating balance in 2009-10.

“The final deficit for 2008-09 is forecast at $574 million - below the $1.573 billion deficit forecast as part of the Economic and Fiscal Update in February.

“Our determination has been to support the economy through our building program to stimulate demand and see us through the global recession.

“A $15 billion loss in taxes, royalties and GST over four years has directly impacted on our bottom line, wiping out planned surpluses.

“This includes a further $1 billion which has been wiped off the forecast for royalties across the forward estimates with the setting of coal prices in recent months.

“Queensland will retain its competitive tax regime – including the lowest payroll tax rate in Australia.

Mr Fraser said that Queensland had been dealt a harsh blow by the global recession, but the fundamentals of the Queensland economy were encouraging.

“Our record $18.2 billion building program and our focus on jobs mean that we will emerge from these tough times stronger, not weaker,” Mr Fraser said .”

Media contact (Treasurer’s office): 3224 6361 or 3224 5982

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