The Queensland government will borrow $4 billion to stimulate the state's stagnant economy, raising net debt by more than 20 per cent to almost $102 billion.
Treasurer Cameron Dick forecast net debt to hit $101.96 billion by June 2021, up from the $83.8 billion predicted in December, in a financial and economic update delivered on Monday.
Mr Dick says 138,200 people have lost their jobs since the COVID-19 pandemic began and economic growth will be flat between 2019-2021.
Unemployment is currently at 8.8 per cent and will peak around 9.0 per cent by Christmas before edging down to 8.5 per cent by June.
"There is no sugar coating the impact this pandemic had on the lives and livelihoods of so many Queenslanders," Mr Dick said.
"COVID has taken its toll."
Mr Dick won't trim borrowing, saying it's prudent to take advantage of record low interest rates to get Queensland out of the doldrums.
The government will borrow $4 billion to fund COVID-19 economic and health measures.
That includes a $500 million fund to expand small and medium-sized businesses and a $500 million fund to help public sector companies invest in renewable energy.
Another $249 million will be spent extending a payroll tax holiday for businesses two months into August 2020.
The remaining $2.75 billion will be used to extend land tax rebates, to abolish transfer duties for small business restructures and for other stimulus ahead of the October 31 state election.
The government's total spending on COVID-19 is now set to top $11 billion.
"When the private sector falls down due to circumstances beyond its control, government must stand up, step in and do the heavy lifting, and that's what we're doing," Mr Dick said.
The Chamber of Commerce and Industry Queensland welcomed the extended tax holidays and the business fund.
But CCIQ economist Jack Baxter called for an easing of COVID-19 restrictions so businesses could operate at a sustainable level.
"What we now need to see more on is how the government plans to manage the health crisis without adding harm to service-based industries which the treasurer confirmed as being the hardest hit," he said.
To save money, the government will abolish the Public Safety Business Agency and redistribute staff, while the Queensland Productivity Commission and Building Queensland will be merged with the Treasury.
The treasurer promised there would be no forced redundancies but said some roles could change.
Mr Dick pledged to deliver a full budget on November 30, if Labor is re-elected on October 31.
Opposition Leader Deb Frecklington accused Labor of not having an economic plan and warned that new taxes were a risk.
"Labor has slugged Queenslanders with nine new taxes in this term of government and they won't rule out more," Ms Frecklington said.
"No wonder Labor wanted to cancel the state budget."