2017-18 Victorian Budget

2 May 2017

In handing down the Victorian Government’s penultimate budget ahead of the November 2018 State Election, Treasurer Tim Pallas has linked the State’s economic success to investment in core Labor values: health, education, jobs, public transport and roads. Target spending on social policies to tackle the vulnerabilities felt in Victorian communities in both metropolitan and regional areas have been expanded in the 2017-18 Budget, including in law and order, with a record investment to add a further 2,700 new recruits to Victoria Police personnel and an additional $1.9 billion to deliver on the Government’s 10-year strategy Ending Family Violence: Victoria’s Plan for Change.

Themed “getting on with the job,” the central message of this year’s State Budget acknowledged the positive returns of previous budget expenditure and investment in state infrastructure and transport networks, creating a firm economic basis on which to invest in jobs and other popular priority areas of capital improvement. The Budget also shifts the transport infrastructure focus from the on-going metropolitan Level Crossing Removal projects to Victoria’s regions though key announcements such as $316 million for V/Line major maintenance works to boost regional on-time train performance and reliability, and $311 million for 39 new VLocity carriages to help meet outer-suburban demand.

The Budget also confirmed the overall strength of the Victorian economy, particularly by comparison to other states and territories. Although the outcome of the 2016-17 budget operating surplus was revised down from a projected $2.9 billion to an actual $1.3 billion for the previous financial year, this was mainly due to one-off factors such as the $266 million package announced to support the transition of the Latrobe Valley community after the Hazelwood power plant closure.  Accordingly, the 2017-18 Budget forecasts more modest surpluses averaging $2.4 billion to 2020-21, with Treasurer Pallas reflecting that “the Government has kept its promises, met every challenge and maintained its triple-A fiscal discipline.” Forecast growth in Gross State Product (GSP) is maintained at a level of 2.75 per cent, higher than growth in national GDP, and average employment has grown by 3.4 per cent in the year to March 2017. Significantly, the Budget also projects net debt will not increase any higher than 6 per cent over the forward estimates.

Today’s budget also brings forward previously announced increases to the payroll tax-free threshold, which is expected to benefit around 38 000 businesses with a payroll tax liability. This measure is coupled with a reduction of the payroll tax rate by 25 per cent for all businesses operating substantially in regional Victoria.

New capital investment has been confirmed, averaging out to $9.6 billion per annum over four years which will go toward supporting Victorians raising a family, studying, commuting and accessing health and housing services, and create thousands of additional jobs across hundreds of projects, including:

  • $700 million for the final upgrade to the M80 Ring Road to complement North East Link
  • $498 million for new and upgraded health facilities, infrastructure and vital health equipment
  • $435 million to upgrade the Gippsland Rail service
  • $685 million for new schools and upgrades
  • $100 million to complete planning and pre-construction of the North East Link.


  • A budget operating surplus of $1.2 billion in 2017-18 ($8.3 billion over four years)
  • Net debt is forecast to rise from 5.8 per cent of GSP in 2017-18 to 6.0 per cent by June 2021
  • Annual economic growth of 2.75 per cent over the next four years
  • Expenditure growth estimated at 3.3 per cent on average per year – forecast revenue growth remains at 3.4 per cent
  • Unemployment currently stands around 5.75 per cent and is projected to fall to a steady 5.5 per cent over the next four years
  • Victoria’s population is continuing to grow at a rate of 1.9 per cent


  • New passenger vehicles will now be charged the same motor vehicle duty rates as used passenger vehicles, driving a budget savings of around $100 million per year
  • A residential property tax will now apply to dwellings that are vacant for more than a total of six months in a calendar year, netting the Government about $80 million over four years
  • The removal of stamp duty exemptions for property transfers between spouses and de facto spouses will deliver additional savings


Economic Development, Jobs, Transport and Resources

The 2017-18 State Budget allocates an additional $2 billion for public transport and an additional $2 billion for roads.

Key initiatives include:

  • $1.5 billion for the Regional Rail Revival package of upgrades to regional rail services, including a $435 million upgrade of the Gippsland Line
  • $218.1 million to order 10 additional E-Class trams
  • $100 million to fund the North-East Link, following the State Government’s previous announcement of the project in December 2016
  • $193.2 million over four years to fund Night Network, a weekend all-night public transport service in Melbourne
  • $67 million in critical safety upgrades for the metropolitan train network
  • $300 million to build the Mordialloc Bypass, joining the Mornington Peninsula Freeway to the Dingley Bypass with a nine kilometre road
  • $343 million to deliver general road maintenance across Victoria
  • $96.6 million to complete the next stages of the Yan Yean Road
  • $58.6 million for maintenance of the West Gate Bridge
  • $700 million over four years for upgrades to the M80 Ring Road
  • $187.4 million to construct new train stables on the Frankston line at Kananook
  • $10 million for a detailed assessment to develop a new airport rail link in partnership with Melbourne Airport and Southern Cross Station
  • $556.4 million to improve roads in regional Victoria.

Law and Order

Significant additional resources have been announced in the areas of Justice and Regulation, including:

  • $2 billion in funding for Victoria Police to assist with measures such as employing over 2,700 additional police officers and 100 new Protective Service Officers
  • $448.1 million to create 17 Support and Safety Hubs for victims of family violence
  • $308.1 million to expand the post-sentence supervision scheme for serious offenders, as recommended by the Harper Review
  • $360.7 million for youth justice facilities in Parkville and Malmsbury as well as to establish a new high security detention centre
  • $145.2 million to fund the expanded prison system
  • $269.4 million to enhance Victoria’s legal system, including the implementation of specialist Family Violence Courts
  • $270.8 million for family violence victim assistance measures.

Health and Human Services

Expenditure for the Health and related portfolios in 2017-18 total $2.9 billion for new and existing projects, including:

  • $162.7 million to expand the Northern Hospital
  • $69.8 to upgrade infrastructure at the Austin and Royal Melbourne Hospitals
  • $63.2 million to upgrade the Monash Medical Centre emergency department
  • $50 million towards the new Footscray Hospital development
  • $26.5 million to improve ambulance response times and further fund emergency helicopter services
  • $15.6 million to prepare for future thunderstorm asthma emergencies
  • $69.2 million for disease treatment, prevention and research
  • $72.3 million to improve Triple Zero response times
  • $8.3 million to promote access to genomic testing for adults and children with rare and complex illnesses
  • $81.1 million for an Enhanced Maternal and Child Health plan
  • $78.4 million to treat substance abuse
  • $166.2 million for disability-related initiatives
  • $1 billion to develop the Social Housing Growth Fund
  • $271.55 million for the third stage of the Melbourne Park redevelopment.

Education and Training

The Budget has committed a further $1.3 billion for Education and Training, including:

  • $269.6 million for the construction, planning and purchasing of land for new schools
  • $239.6 million for upgrades to existing schools across Victoria
  • $44.4 million in upgrades for six special schools, including $11.4 million for improvements to the Bayside Development Special School
  • $90 million for an Investment Attraction and Assistance Program to help establish and retain jobs in areas such as manufacturing and aviation
  • $64.1 million to upgrade 59 regional schools.

Treasury and Finance

Key initiatives in the Treasury and Finance portfolio, effective 1 July 2017 include:

  • Stamp duty exemption for certain property transfers between spouses and de facto partners will be removed and from 2019, property valuations will occur annually rather than every two years
  • Requirement for first homebuyers to pay stamp duty on property purchases under $600,000 will be abolished
  • Duty rates charged for new passenger vehicles will increase from $6.40 to $8.40 per $200.00, and duty rates charged for new non-passenger vehicles will remain at $5.40 per $200.00
  • In addition, an exemption to the First Home Owner Grant (FHOG) will allow Victorian members of the Australian Defence Force (ADF) to bypass the requirement for applicants to live in their new home as a principal place of residence for 12 months following settlement.

Premier and Cabinet

Key items in the 2017-18 Budget include:

  • $8.5 million for new security upgrades for Melbourne Government buildings
  • $15 million for the development of a Pride Centre in Melbourne.

Environment, Land, Water and Planning

Over $798 million in this year’s budget has been allocated for environment and water measures, including:

  • $44.4 million over two years to support Agriculture Victoria improve biosecurity and promote access to international markets
  • $102.6 million for the Water for Victoria initiative to manage Victorian water resources
  • $27.5 million to support identification and implementation of Regional Partnerships priorities
  • $86.3 million in funding for the Biodiversity Plan 2037
  • $162.5 million to modernise the Environment Protection Authority (EPA).



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