Tax hikes on table amid Qld debt crisis

Queensland's public servants face an agonising wait to learn if they'll soon be in the dole queue.

Those who escape a likely purge face an indefinite cap on pay rises, and the government says they can all thank Labor for their woes.

A commission of audit, led by Howard-government treasurer Peter Costello, released its interim report into the state's finances on Friday.

It said the previous government "embarked on an unsustainable level of spending" and debt would balloon to $100 billion by 2018/19 if drastic action wasn't taken.

The report recommends harsh medicine, including an indefinite three per cent cap on public servant wages, increasing property transfer duty and means-testing some state government services.

Gambling tax and mining royalties could also be lifted and the state's part in funding residential aged care homes passed to the private sector and federal government.

Asset sales are recommended as part of a second stage of action and the report earmarks Goprint, QFleet, QBuild, CITEC and Queensland Shared Services as candidates.

"Get the vital signs beating again and then do the radical surgery," Mr Costello told reporters in Brisbane.

Treasurer Tim Nicholls ruled out selling assets this term, promising the Liberal National Party would only do it with a mandate in a second term.

He also ruled out the recommended $100-per-property landholder's levy but will consider all other options.

Although the report doesn't recommend firing permanent public servants, Mr Nicholls won't make any promises to the 210,000-strong workforce.

He acknowledged the uncertainly that would create in the months before the next budget, due in September.

"At this stage of proceedings what we are doing is working to protect as many jobs as we can," he told reporters.

Opposition treasury spokesman Curtis Pitt says the report is "tainted politically" by Mr Costello.

The forecast debt assumes Queensland will experience a repeat of the floods, cyclones and Global Financial Crisis (GFC), he says.

"They've tried very, very hard to find a massive black hole that doesn't exist," he said.

Mr Pitt says it's now clear the figures will be used to justify cuts to public service jobs and asset sales to pay down debt.

Unions says public servants are "very scared" about the prospect of losing their jobs.

The public sector union, Together, said the government must keep its promise of no forced redundancies and instead look to increased mining royalties to address the debt crisis.

Industry groups are divided on whether asset sales are the answer but agree public service cuts are needed.

Australian Industry Group says the government could net $10 billion if power transmission company Powerlink and generators CS Energy and Stanwell are sold.

But the Chamber of Commerce and Industry Queensland says this would only be a short-term fix and not enough to make a significant difference to debt.

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