Jim Chalmers has a fair criticism of Qld Government

Federal Treasurer Jim Chalmers is hardly a neutral observer of Queensland politics, but on the state's finances he has a point.

Queensland is reportedly on the brink of another S&P credit-rating downgrade. Chalmers described the prospect as “very troubling”, arguing that Queensland's fiscal position has deteriorated sharply despite increased Commonwealth support.

The political argument over who is responsible is more complicated. Treasurer David Janetzki says the Crisafulli Government inherited the problem from Labor and is also being squeezed by Commonwealth cost-shifting, weaker GST receipts and falling stamp-duty revenue. Indeed, Queensland is now reportedly tracking around $1 billion below expectations on stamp duty, after collections fell 16.5 per cent in the first two months of this financial year.

But those explanations do not make the underlying numbers disappear.

Benchmark recently compared state finances using the Australian Bureau of Statistics' consistent Government Finance Statistics framework. Queensland's state and local general government sector spent $103.2 billion in 2025–26 against revenue of $94.8 billion, leaving an $8.4 billion operating deficit. Once investment was included, net borrowing reached $19.1 billion — 20.2 per cent of revenue, the highest proportion of any state or territory.

Queensland's own Budget tells much the same story. Its estimated 2025–26 operating deficit was $8.85 billion. Non-financial public sector borrowings are forecast to rise from $142.4 billion to $216.5 billion by 2029–30, while annual interest expenses climb towards $10.9 billion.

S&P had already shifted Queensland's AA+ outlook to negative in February 2025, warning about weaker budget performance and rapidly rising debt. Its concern is fundamentally about spending: operating expenses have risen around 50 per cent over five years.

The LNP can reasonably argue that much of the deterioration predates it. Chalmers can reasonably be challenged over Commonwealth decisions.

But the fiscal diagnosis is becoming difficult to contest: Queensland is spending too much relative to its revenue base, borrowing heavily, and becoming increasingly exposed whenever revenue disappoints.

Sources: ABS Government Finance Statistics; Queensland Budget 2026–27; S&P Global Ratings; Benchmark Analytics calculations.