2018-19 Victorian Budget

1 May 2018

OVERVIEW

The Andrews Labor Government’s 2018-19 pre-election Budget focuses on infrastructure spending, health, education, and law and order, providing the Government with a positive platform on which to build its re-election campaign ahead of the 24 November poll. With several measures released ahead of time, Treasurer Tim Pallas’ speech confirmed funding to address voter concerns about population growth across outer-suburban Melbourne. The Budget also provides additional funding for law and order initiatives, and significantly increases investment across key portfolios, including health and education.

Under the theme of ‘getting things done’, the Budget highlights the Government’s policy priorities ahead of the upcoming election, and refocuses infrastructure investment at both state and community levels. Notably, voters in key marginal electorates will benefit from a $2.2 billion package to duplicate and widen 13 arterial roads in Melbourne’s northern and south-eastern suburbs, along with other targeted infrastructure funding. Victoria’s regional capitals of Ballarat, Bendigo and Geelong are also set to receive additional funding to improve notable public assets, as part of a $1.1 billion regional infrastructure focus. Treasurer Pallas said the Budget addresses issues familiar to all Victorians, including “the dignity of work, access to decent health care, getting home from work safely and quickly, and stable, affordable housing”.

Around half of the proceeds from the sale of Victoria’s share of Snowy Hydro Limited to the Federal Government will be used to upgrade more than 130 schools across the State, alongside funding of $353 million to build and plan 28 new schools; and $272 million to purchase land for future schools in growing suburbs and regional Victoria. The Budget also includes $172 million to make 30 priority TAFE courses free for students, in a bid to address Victoria’s skills shortage; a further $120 million has been committed to upgrade and modernise three TAFE facilities in regional Victoria.

The Budget injects significant new funding into Victoria’s judicial system, including $129 million to introduce a new Bail and Remand Court and appoint 18 additional magistrates, two new County Court judges and a Supreme Court judge to handle growing demand. These initiatives will form the basis of local Labor campaigns and highlight the choices before Victorian voters, come November.

In the Health portfolio, a funding boost of $705 million has been earmarked to address mental illness and drug and alcohol addiction, providing community-based mental health services for an additional 12,800 Victorians and supporting 89 new acute inpatient beds.

The Budget includes a payroll tax cut for regional businesses, reduced from 3.65 per cent to 2.425 per cent. These cuts are in addition to the previously announced payroll tax threshold increase, to take effect from 1 July 2018.

The Budget confirms that Victoria is Australia’s fastest growing state, both in terms of population and economic growth. It speaks to Treasurer Pallas’ willingness to fund the Government’s ambitious infrastructure agenda via borrowing, noting that the forward estimates offer the highest average surplus of any Victorian government in history. The Budget also confirms Victoria’s prized AAA credit rating.

Treasurer Pallas has benefited from recent economic good fortune. The strong surge in revenue has been fuelled by increases in land tax and land transfer duty receipts over recent years. As the Treasurer remarked to reporters, “sometimes I can’t believe how well the Victorian economy is performing”.

KEY PARAMETERS

A budget operating surplus of $1.4 billion in 2018-19 (averaging $2.5 billion over four years).
Economic growth as measured by real GSP is forecast to be 2.75 per cent in 2018-19, holding steady over the remainder of the forward estimates.
Net debt is forecast to rise from 4.6 per cent of GSP in 2017-18 to 5.4 per cent in 2018-19.
Infrastructure investment is forecast to average $10.1 billion per year over the next four years, reaching a record high of $13.7 billion in 2018-19.
Unemployment is forecast to hold at 5.75 per cent and then projected to fall to a steady 5.5 per cent to 2021-22.
Victoria’s population is continuing to grow at a rate of 2.2 per cent, making Victoria the fastest growing state.

MAJOR EXPENDITURE

Economic Development, Jobs, Transport and Resources

The 2018-19 State Budget allocates an additional $1.9 billion for public transport and an additional $4.3 billion for roads.

Key initiatives include:

$2.2 billion to upgrade 13 arterial roads across the northern and south-eastern suburbs, in addition to a $1.8 billion package to upgrade roads across western Melbourne, previously announced.
$941 million to upgrade regional roads, including $229 million for safety upgrades across Victoria’s regional road network. A new delivery agency, Regional Roads Victoria, will be established within VicRoads and based in Ballarat.
$712 million to undertake the second stage of the Monash Freeway upgrade.
$704 million to improve regional public transport efficiency, including $313 million to upgrade the Shepparton line.
$572 million to upgrade the Cranbourne, Pakenham and Sunbury rail lines.
$231 million to redevelop Etihad Stadium and other major sporting venues.
$116 million for road repair measures across metropolitan Melbourne.
$110 million for further design and planning work for the North East Link project.
$104 million to fund five new X’trapolis trains.
$89.4 million to extend services on the South Morang, Hurstbridge and Dandenong lines.
An extra $75 million to complete the Mordialloc Bypass, bringing the total investment to $375 million.
$60 million for new car parking spaces at metropolitan train stations.
$55.7 million to improve metropolitan bus services.
$50 million for detailed investigations into a high-speed rail link between Melbourne and Geelong, integrated with an Airport Rail Link. This funding is alongside the Commonwealth Government commitment of up to $5 billion for the Airport Rail Link.
$26.2 million for V-Line rail services.
$21.1 million to strengthen bridges across the State.
$3 million to construct a light rail connection between Caulfield and Rowville.
$1 million to deliver a business case for transport connections between Fishermans Bend and the Melbourne CBD.

Law and Order

Significant additional resources have been announced in the areas of Law and Order, including:

$689 million to expand the Lara prison, housing an additional 700 inmates.
$160 million to expand the Malmsbury and Parkville youth detention centres.
$129 million to introduce a Bail and Remand Court, and provide 18 new magistrates; two new County Court judges; and one new Supreme Court judge.
$119 million for additional police prosecutors and to assist the Office of Public Prosecutions to prosecute serious crime.
$49.9 million to ensure victims of family violence have access to appropriate support packages, following $1.9 billion in last year’s Budget.

Health and Human Services

Expenditure for the Health and related portfolios in 2018-19 totals $4.2 billion for new and existing projects, including:

$705 million for initiatives to address mental illness and addiction.
$462 million to expand and redevelop Ballarat Base Hospital.
$369 million for Australia’s first dedicated cardiac care hospital.
$115 million to expand the Wonthaggi Hospital.
$124 million to roll out electronic health records across the Peter MacCallum Cancer Centre, Melbourne Health and Royal Women’s Hospital.
$58.5 million for additional ambulance services.
$50 million to upgrade rural and regional health infrastructure via the Regional Health Infrastructure Fund.

Education and Training

The Budget has committed a further $2.8 billion for schools and a $640 million package for skills, including:

$304 million to train more Victorians via TAFE, including $120 million to upgrade facilities and $172 million to fully fund 30 TAFE priority courses.
$483 million to upgrade 130 existing schools.
$353 million for 28 new and planned schools.
$272 million to purchase additional land for future school sites.
$181 million to build and upgrade 60 regional schools.

Premier and Cabinet

Key items in the 2018-19 Budget include:

$4.9 million for security and other upgrades to Melbourne’s government buildings.
$1.3 million to enhance public sector capability.

Environment, Land, Water and Planning

$266 million has been allocated in this year’s Budget for environmental measures, along with $65 million to secure and protect waterways, including:

$70.6 million for Parks Victoria to continue its work in protecting parks.
$32 million for the East Grampians Water Supply Project, which will provide secure water supply in the region.
$8 million for Victoria’s contribution to the Murray-Darling Basin Authority.

FURTHER READING