Separate to the Budget, the previously announced Land Tax Reform measures have been tabled in Parliament.
The Queensland Budget will return to surplus faster than expected boosted by higher revenue from surging coal and oil prices and strong housing activity. The Budget will achieve a $1.9 billion surplus in 2021-22 - a turnaround from the $1.4 billion deficit forecast in the December 2021 Budget update and the $3.4 billion deficit projected in last year's Budget. However, it will only be short-lived with deficits of more than $1.0 billion forecast in 2022-23 and 2023-24, before climbing back into the black with a projected modest surplus of $137 million in 2024-25.
While net debt is projected to rise over successive financial years, the annual totals have been revised down from previous Budgets. The 2020-21 Budget forecast net debt to reach $50.8 billion in 2023-24. However, the 2022-23 Budget estimates this figure will almost halve to $27.6 billion. On current estimates, net debt will be $11.4 billion in 2021-22 and $19.8 billion in 2022-23.
Despite supply and inflationary pressures stemming from the Omicron outbreak, Ukraine conflict and South East Queensland floods, the 2022-23 Budget confirmed economic growth of 3% in 2021-22 and forecast ongoing growth at a rate of 2.75% per year up to 2025-26.
Year-average employment grew 4.75% in 2021-22 – the strongest in 15 years – and is forecast to lift by a further 3% in 2022-23, before dropping back to 1.5% in 2023-24. This healthy job growth is expected to hold Queensland’s unemployment rate close to the current level of 4.5%, with the Budget forecasting rates of between 4.0% and 4.25% from 2022-23 to 2025–26.
The 2022-23 Queensland Budget provides:
- $59b over four years for infrastructure, comprising $15.5b in 2022-23 of which 63% will be spent outside Greater Brisbane and includes: 2,200 additional overnight beds at 15 hospitals, including three new hospitals and the new Queensland Cancer Centre, over the next six years; and five new schools in 2025 and 2026
- $6.8b worth of new concessions for Queenslanders in 2022-23, including a $175 Cost of Living rebate to offset rising electricity prices
- $2.9b for police services in 2022-23
- $2.2b over five years and $500m per year ongoing towards child protection services
- $150m over 10 years for a new Trade and Investment Strategy to help exporters reach new markets and enhance existing trade opportunities
- $68.5m over five years for the Queensland Resources Industry Development Plan, including a further $17.5m to encourage exploration and new mineral discoveries
- $59.3m over four years and $4.7m per year ongoing to support preparations for the 2032 Olympic and Paralympic Games
- $50m in additional funding over two years to continue the Made in Queensland and Manufacturing Hubs Grant programs.
In addition, the Queensland Government has introduced the Revenue Legislation Amendment Bill 2022 into Queensland Parliament which legislates amendments for previously announced measures, including the land tax reform 2021-22 Budget Update – Mid-Year Fiscal and Economic Review.
Our commentary on the Land Tax Reform can be read here.
The budget has revealed the following revenue measures which are subject to the passage of legislative amendments:
- Additional Foreign Acquirer Duty Exemption for Retirement Visa Holders
- Payroll Tax changes:
- Mental Health Levy
- Extending Deduction Phase Out
- Apprentice and Trainee Rebate
- Betting Tax Reform
- Drought Assistance and Reform Package
- Progressive Coal Royalty Rates
Additional Foreign Acquirer Duty (AFAD) Exemption for Retirement Visa Holders
Retirement visa holders (subclass 405 and 410 visas) will be exempt from AFAD for purchases of their principal place of residence on or after 1 January 2023. AFAD is currently charged at 7 per cent on direct and indirect acquisitions of residential land in Queensland by foreign persons.
This measure is similar to that announced in the 2019-20 New South Wales Budget which waived the stamp duty and land tax surcharge for subclass 410 and 405 retirement visa holders as long as they live in it as their principal homes.
It should be noted that both the subclass 405 and 410 visa programs are closed and will not be accepting new applications.
Payroll Tax changes
Mental Health Levy
A mental health levy will be imposed from 1 January 2023 on large employers (or groups of employers) with annual Australian taxable wages over $10m. This measure appears to be modelled on the mental health and wellbeing surcharge that commenced in Victoria from 1 January 2022.
For payroll tax liabilities arising on or after 1 January 2023, it is proposed that a 0.25% levy will apply to an employer's (or group of employers) annual Australian taxable wages above $10m, and an additional 0.5% levy will apply to annual Australian taxable wages above $100m. The rates will be applied to the Queensland payroll tax liability as relevant.
Extending deduction phase out
For payroll tax liabilities arising on or after 1 January 2023, the payroll tax deduction will be extended from the current maximum of $6.5m in annual Australian taxable wages up to $10.4m. This measure reflects an increase in the phase out rate of the deduction from $1 for every $4 to a rate of $1 for every $7 of taxable wages above the $1.3m threshold.
Extension of the apprentice and trainee rebate
To support Queensland business and assist in building Queensland’s skills base, there is an extension to the 50% payroll tax rebate on the exempt wages of apprentices and trainees until 30 Jun 2023.
Betting tax reform
A new funding model for Queensland’s racing model has been announced which will take effect from 1 December 2022. Under the reform, a 5% racing levy will apply to the betting tax and bonus bets/free bets will be made taxable.
Drought Assistance and Reform Package
The Queensland Government has announced two revenue measures under this package.
Firstly, the government is waiving fees associated with an annual water licence invoice and applications for stock or domestic water licences, which it estimates will provide up to $1.5m in relief in 2022-23.
The waiver is available to primary producers in drought-declared areas and those who have an individually droughted property.
Secondly, the government has announced rent rebates for drought-declared areas, which it estimates will provide up to $3.2m in relief in 2022-23.
Progressive Coal Royalty Rates
Three additional royalty rate tiers are being introduced to the coal royalty structure for coal sold, disposed of, or used, on or after 1 July 2022. The additional royalty rate tiers are as follows:
- a rate of 20% on that part of the average price per tonne more than $175 but not more than $225
- a rate of 30% on that part of the average price per tonne more than $225 but not more than $300 and
- a rate of 40% on that part of the average price per tonne more than $300.