Queensland faces up to $22 billion in additional costs over the next five years due to federal budget reforms, according to new projections from the Queensland Treasury. The funding changes, introduced under the Albanese government, are being criticized as a shift of financial responsibility from Canberra to the states, raising concerns about the stability of Australia’s federal system.
Queensland Treasury’s analysis estimates that cumulative financial pressures from these reforms could range between $12.7 billion and $22.1 billion by the end of the 2030-31 fiscal year. The largest cost driver is expected to be reforms to the National Disability Insurance Scheme (NDIS), projected to impact Queensland’s budget by $3 billion to $10.1 billion. This comes even though Queensland is currently the only state yet to sign onto the federal Thriving Kids program, which is due to commence funding shortly.
Other significant budget implications include a $2.5 billion to $3.6 billion increase in expenses related to disaster recovery funding adjustments. Queensland, as the state most vulnerable to natural disasters, anticipates substantial strain under the new funding arrangements. Additionally, the shortage of aged-care beds is projected to cost the state $5.9 billion, as hospital patients who no longer require acute care remain in public hospitals due to a lack of alternatives.
Further costs emerging from changes to healthcare rebates for older Australians and cuts to transport funding could add up to $2.6 billion. The cumulative financial burden has drawn strong criticism from Queensland opposition leader David Janetzki. Speaking at the National Press Club in Brisbane, Janetzki described the federal government’s approach as an inappropriate cost shift that places undue pressure on states to improve Canberra’s budget outcome at their expense.
“This cost-shifting of long-held federal responsibilities or agreements from Canberra to the states is problematic — and must be called out,” Janetzki said. “Some of it is subtle — some of it is not. Nevertheless, it’s a threat to the stability of the federation.” He emphasized that these decisions were made without input from the Queensland government and stressed that state treasurers nationwide are acutely aware of the magnitude of the issue.
Queensland’s financial outlook is further complicated by a recent credit rating downgrade from AA+ to AA stable by S&P, attributed in part to the state’s extensive infrastructure commitments and ongoing operating deficits. The downgrade could result in an additional $1 billion in debt servicing costs for the state. However, Moody’s has maintained Queensland Treasury Corporation’s senior unsecured rating at AA+ with a stable outlook, citing Queensland’s diversified economy, broad revenue base, strong liquidity, and fully funded pension liabilities.
Janetzki pointed to a decade of fiscal challenges stemming from previous state government policies and recent federal cost shifts as factors contributing to Queensland’s budget pressures. He reaffirmed the state’s commitment to delivering necessary services and infrastructure despite financial headwinds.
The state’s fiscal position is also strained by a $1 billion decline in stamp duty revenue following a downturn in the property market, attributed to rising interest rates and recent changes to federal taxation. Meanwhile, Queensland’s share of the Commonwealth’s Goods and Services Tax (GST) distribution has diminished over the past three years, with the state receiving the largest net funding outflow of any jurisdiction last year at $2.1 billion. Although overall GST collections have increased by 80 percent over several decades, Queensland’s share has only grown by 39 percent, lagging behind New South Wales, Victoria, and Western Australia, which have seen significantly larger increases.