Queensland Treasurer Tim Nicholls says the state’s debt will hit $121 billion in less than a decade, unless drastic action is taken.

Queensland’s debt will spiral to $121 billion if the government doesn’t take drastic action like assets sales, the treasurer says.

Tim Nicholls says the government is undecided on asset sales but argued a $25 billion correction in the state’s coffers is needed to restore the state’s AAA credit rating.

If assets aren’t sold, payroll and property taxes, transfer duty, and car registration will be raised and services significantly reduced.

“It is going to be very difficult to do it with just one, in terms of taxes or in terms of service reduction,” he said.

“It may involve a combination of all three.”

Mr Nicholls released Queensland Treasury’s economic and fiscal challenges report on Tuesday, which included forecasts beyond projections made in last year’s budget.

A fiscal surplus would be reached in 2015-16, as planned, and maintained for a couple of years.

But in the longer run, if there was no change in policy, spending would rise as an ageing population put pressure on services.

Debt now stands at $80 billion and would increase to $121 billion, or $21,000 per person, in 2022-23, the report said.

Shadow treasurer Curtis Pitt said Mr Nicholls’ scare campaign was a “hallmark of this government”.

“It is a desperate act because he is trying to convince Queenslanders that they need to do something that they clearly don’t want to do, that is sell publicly owned assets,” he said.

Queensland Council of Unions president John Battams is yet to accept a government offer to join a roundtable on tackling debt.

“If he was fair dinkum about public consultation he should get out in front of the 80 per cent of Queenslanders who do not support privatisation to explain his plan to sell off their public assets and privatise essential services,” Mr Battams said.