Queensland's budget surplus will dive almost 95 per cent in the space of 12 months as the state government lifts health and education spending and coal royalties start to decline.
After handing down a massive $2.8 billion surplus for 2016/17, Treasurer Curtis Pitt on Tuesday flagged a decidedly more modest $146 million surplus for the next 12 months.
The decline is partly the result of the impact of Cyclone Debbie, which is expected to cost the state about $700 million over three years, but also reflects higher expenses and an expected slide in royalties.
Coal royalties soared to $3.3 billion in the past year, almost double what had been forecast in the previous budget as coking coal prices surged from around $US88 a tonne to $192 a tonne.
But the increase is expected to be something of a sugar hit, with royalties forecast to slide more than $600 million in 2017/18 and another $500 million the following year.
The Palaszczuk government has also lifted its total spending by almost $3.6 billion in the past 12 months, with a further $2.1 billion increase next year.
The additional money will go towards the cost of staging the Gold Coast Commonwealth Games next April, as well as increased spending on health and education services and the government's efforts to boost jobs growth and rein in electricity prices.
Treasury expects the bottom line to decline further to $117 million in 2018/19, before improving to just over $700 million in 2019/20.
But Chamber of Commerce and Industry Queensland spokeswoman Kate Whittle warned the expected surpluses would not eventuate if the government's growth forecasts turned out to be overly optimistic.
"There is an over-reliance on some growth that we may not see coming though over the forward estimates, she said.
"There are some concerns that what's in the budget won't necessarily meet expectations."
The government expects gross state product, a measure of the size of the economy, to grow by 2.75 per cent in 2017/18, before improving to three per cent growth over the remainder of the forward estimates.
It is also forecasting a modest improvement in the jobs market, with the unemployment rate expected to fall from about 6.25 per cent to about 6.0 per cent next year, while wages are expected to grow by about 2.25 per cent in 2017/18 and 2.5 per cent the following year.
Government debt will fall by $179 million to $33.76 billion, but Mr Pitt made it clear the state wasn't expecting to regain its triple-A credit rating any time soon.
"The triple-A is something we always aspire to get back to, but not going to be at any cost," he told reporters.
"We believe our approach has been methodical, has been steady, and it has been recognised by ratings agencies."
