Trad’s $5b answer to ballooning debt crisis
JACKIE Trad will today reveal a $5 billion Queensland Future Fund to pay down the state's escalating debt bomb through a raid on public servants' superannuation.
Likening it to a mortgage offset account, the Treasurer last night told The Courier-Mail the money would be skimmed from a $7.3 billion surplus sitting in the Government's defined benefits nest egg and repurposed as a long-term debt plan.
The plan, to be laid out at today's Mid Year Fiscal and Economic Review, follows June's Budget forecast that debt would balloon to $90.7 billion by 2022-23, and comes ahead of next year's election, when both parties will need to sell their debt-reduction strategies.
Ms Trad said Queensland had set aside more money than it needed to fully fund its superannuation liabilities for public servants and would still have a $2.3 billion surplus once the fund was created.
"This is money that is currently sitting in an account, essentially doing nothing," she said.
"By setting up the $5 billion Future Fund from these surplus funds, what we're actually doing is creating a revenue fund that will be able to pay down debt."
Earnings will be quarantined and returned to the fund so that it may grow over time while sitting against Queensland's borrowing, which will reduce the state's net debt.
"That means that over time, the Fund's balance will grow to offset any borrowings required to build the infrastructure we need for Queensland's future growth," Ms Trad said.
The fund mirrors NSW's $10 billion Generations Fund, the majority of which was funded from asset sales.
It's the second time the Palaszczuk Government has taken from its defined benefits scheme to pay down debt, and $2 billion of the $5 billion had already been due to come out in a second debt repayment.
But Ms Trad said that plan no longer made sense at a time of rock-bottom interest rates.
"We would be losing money by repatriating these funds and paying down debt because the interest we are earning on it is greater than our interest repayments," she said.
Legislation will ensure the Future Fund can only be drawn on to pay debt and will require that defined benefits is always 100 per cent funded.
Meanwhile, Ms Trad will today lay out what savings her public service razor gang has made as it aims to claw back $200 million this financial year, rising to $500 million each year as it reins in the Government's wages bill, set to hit $25.4 billion this year.
She'll also reveal whether lower-than-expected coal prices have dented the state's surplus, but yesterday ruled out introducing any new taxes.