10:40a.m. 2nd December 2008

| By AAP

Queensland’s budget will go into deficit for the next two years as the global financial crisis continues to bite, treasurer Andrew Fraser says.

Mr Fraser told Queensland parliament today that the state’s $809 million budget surplus faced being wiped out this year.

And things would get tougher during the next two years, he said.

Mr Fraser said the government had decided to sacrifice its bottom line to ensure the state’s economy continued to grow, capital works could be built and jobs were secure.

“Next year will be the toughest for generations and we need to set the course now,” he said.

“This necessitates a budget deficit (which is) likely in the year after also.”

He said while it was a hard thing to do politically, it was the right move for the state’s economy.

“We are prepared to put our jobs on the line to give Queenslanders every chance to stay in theirs,” Mr Fraser said.

“A budget surplus next year would be cold comfort to Queenslanders cast into unemployment queues.”

But Mr Fraser said the budget would also map a pathway out of the short-term deficit.

The announcement follows a meeting of state and federal treasurers and a Council of Australian Governments meeting last week during which the fallout of the economic crisis was discussed.

Mr Fraser previously would not rule out a deficit next year, but said he was determined to deliver a “skinny” surplus.

The mid-year budget review, delayed to calculate the cost of Brisbane’s severe storms and ongoing fluctuations in global markets, will be released on December 9.