Queensland’s economy teeters on edge of ratings downgrade despite coal royalty windfall

Queensland’s treasurer says he’s “not giving up” on halting a ratings downgrade for the state’s finances after handing down a budget full of red ink, amid predictions state borrowing will top $200bn in three years. David Janetzki promised a budget surplus in 2029-30, the year after the state’s next election – but only after years of billion-dollar deficits. Handing down his second budget on Tuesday, Janetzki forecast relatively positive economic growth and a strong labour market despite volatility caused by the conflict in Iran – and billions more in coal royalties to the state, driven by a 6% rise in exports in 2026-27. The state will earn $6.9bn in coal royalties that year alone, up from $4.79bn in 2025-26, according to the budget. But despite a forecast recovery in coal prices, the state continues to teeter on the edge of a credit rating downgrade . “Labor’s legacy left us highly likely, or even an air of an inevitability, to getting a rating down grade, but I’m not giving up,” the treasurer said. “We’re not giving up because we’re making the budget improvements while delivering what we promised.” Sign up for the Breaking News Australia email In February the rating agency S&P affirmed a negative outlook for Queensland government debt, warning of “large deficits”. It described the state’s budgetary performance as “weak” but refrained from a credit downgrade, saying it expected a return to operating surplus in the 2028 fiscal year. …