The Queensland government expects to post an operating surplus of just over $1 billion in the current financial year.
Delivering his mid-year fiscal and economic review today, acting Premier and Treasurer Terry Mackenroth says the forecast result is an increase of $450 million on the June 2004 prediction.
He says it is proof the state's finances are continuing to strengthen.
"It just shows that our economy is very strong and continuing to grow. We are predicting a cash surplus of the 2004/05 year of $1.5 billion, which also is about $450 million greater," he adds.
One of the big drivers of the forecast higher surplus is an expected $297 million increase in tax revenue, which will drop slightly the following year as a result of the abolition of debits tax and an anticipated moderation in housing activity.
Mackenroth says the housing market is currently a strong contributor to the Budget's expected surplus, with transfer and mortgage duties up by $122 million on the prediction for the first six months. Payroll tax and land tax collections also are up on Budget forecasts – as is GST payments to the state.
He says Queensland is enjoying a "boom period", anticipating unemployment will be down from a predicted 6.25% to 5.5% as a result of 4% growth in employment in 2004/05, compared with 2.5% anticipated at the time of the state Budget.
While the economy is expected to grow by 4.25%, in line with Budget forecasts, Mackenroth says the composition of growth is expected to change slightly.
Domestic demand continues to consolidate, while growth in private spending is likely to remain strong with interest rates currently on hold, he says.
"Private household consumption has also been bolstered by continued growth in real wages and record levels of consumer confidence.
"Housing investment is also expected to be higher than forecast, reflecting a more supportive interest rate environment than expected at the time of Budget and a backlog of construction and renovation work, which is yet to be done," he says.
Mackenroth says in line with the upgraded surplus, the government will not be borrowing for infrastructure activity.
"We had at Budget time predicted that we would borrow some $40 million to meet some of our infrastructure costs.
"At this stage we won't be borrowing any money on Budget this financial year. All our infrastructure that we've outlined in the Budget will be met by cash," he says.