The cost of the Borumba Pumped Hydro project has blown out by $4 billion, taking the total cost to more than $18 billion, a new report from Queensland Hydro has showed.
It comes as project cost blowouts and extra government spending threatens to put too much pressure on the state’s budget for it to retain its longstanding AA+ credit rating.
Queensland Hydro’s report also found there was less than a 1 per cent chance of the project being completed in time for its planned first power in 2030.
It found the risk-adjusted final completion date of the project had blown out by almost three years from November 2032 to July 2035.
Treasurer and Energy Minister David Janetzki was meeting with Queensland Hydro on Thursday to work out a way forward to save the project, covering off environmental, stakeholder and cost issues.
“The report shows the former Labor government’s timing and costings were pie in the sky. They might as well have been made up entirely,” he said.
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“The government will deliver an energy policy guided by engineering and economics, not ideology.
“Our energy policy will always be grounded in reality, on cost, timeframes and delivery.”
Meanwhile, S&P Global Ratings confirmed Queensland’s AA+ credit rating – which it has held since 2009 – is at risk if further pressure is applied to the budget.
Mr Janetzki told an Australian British Chamber of Commerce lunch on Wednesday a deep-dive into government books could reveal further cost overruns.
The LNP took power after winning the October 26 election but endorsed the June budget sight unseen.
“We will continue to look under the bonnet and at the various cost overruns that are there,” Mr Janetzki said.
“This will be a long process and Labor have left us with an inheritance that they had deceived Queensland about.”
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Opposition deputy leader and former treasurer Cameron Dick rubbished the accusations, saying the budget and credit rating had been stable under Labor.
“They put us on a stable outlook which means they did not see any danger of a credit downgrade under the Labor government,” he said.
“The only thing that’s changed since then is a new LNP government that promised $20 billion in election commitments and put forward an absolutely cooked costings document.”
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Mr Dick conceded a downgraded credit rating could mean higher borrowing costs and result in less infrastructure and fewer services for Queenslanders.
S&P Global Ratings analyst Anthony Walker said cost blowouts and extra spending on new policies could weaken the state’s budget and increase debt beyond expectations.
“This could pressure our AA+ credit rating on Queensland, especially if additional spending is not offset by savings or revenue increases,” he said.
The ratings agency did not indicate what the credit score could fall to.
The best borrowing rating is AAA, followed by AA+, AA and AA-.
A downgrade in the state’s creditworthiness would increase project borrowing costs as Brisbane prepares to host the Olympics in 2032.
Treasury had said in the budget that coal royalties were poised to drop by billions.
Queensland’s credit rating is equal second with South Australia, with Western Australia on top at AAA.
