2019-20 Victorian Budget

In handing down the Labor Government’s first budget since re-election in November 2018, Victorian Treasurer Tim Pallas has announced further investment in the State’s rail and road network, early childhood education and health infrastructure. Dominated by election funding commitments, the 2019-20 State Budget has limited new spending and introduced a $1.8 billion efficiency dividend, in an effort to maintain surpluses and deliver Labor’s election commitments.

Under the theme of “delivering for all Victorians”, Treasurer Pallas described today’s budget as “responsible and fair”, relying on the Government’s “prudent economic management and fiscal discipline.” Despite a stamp duty revenue write-down of $5.2 billion since last year, the 2019-20 Budget has produced an operating surplus of $1 billion with an average surplus of $3.4 billion per year over the forward estimates. The State’s net debt is projected to increase to $55 billion over the next four years.

Economic growth is forecast to slow to 2.75 per cent in 2019-20 and remain steady, with wages set to rise from 3 per cent this year to 3.5 per cent in 2022-23, and an estimated 115,000 jobs to be created through the Government’s ambitious infrastructure agenda. Notably, Labor has claimed that this year’s budget is around $2.6 billion worse off following the Federal Morrison Government’s recent election victory, due to Federal Labor’s $2.5 billion commitment to the Metro Tunnel Project, which the Federal Coalition did not match.

The 2019-20 Budget has locked in a series of election promises, including $15.8 billion to fully fund the North-East Link and an additional 25 level crossing removals at a cost of $6.6 billion. An additional $608 million has been earmarked to fix local roads and $45.4 million will be used to improve bike and foot paths. $2.1 billion has been set aside to upgrade the Sunbury rail line, with $1.3 billion to upgrade and duplicate the Hurstbridge and Cranbourne lines, $300 million for Suburban Rail Loop planning and early works, and $163 million for tram upgrades and improvements. Regional Victorians will benefit from a $615 million investment in public transport that will include 18 new VLocity trains, and a $425 million investment to rebuild regional roads.

The Budget injects a further $5.5 billion package to build additional hospitals, including $1.5 billion to construct a new 504-bed Footscray Hospital by 2025, $332 million for free dental care in government schools from this year, and an additional $592 million for the Frankston Hospital redevelopment project.

In the education portfolio, the Budget includes over $880 million to deliver subsidised kindergarten programs for all three-year-old children by 2022, and features a record $1.8 billion school build. This will include the construction of 17 new schools and 109 further upgrades to existing facilities. The 2019-20 Budget also provides $1.8 billion to expand Victoria’s prisons, including 1,600 new prisons beds, and commits $185.5 million towards family violence prevention efforts.

The 2019-20 Budget provides $260 million in regional payroll tax cuts, reducing the rate to a quarter of that paid in metropolitan areas. Meanwhile, the tax rate on foreign property investments will rise from 7 to 8 per cent from 1 July, while taxes on absentee property owners will rise from 1.5 to 2 per cent – both measures bringing Victoria into line with NSW. Vehicles valued between $100,000 and $150,000 will be charged a duty of $14.00 per $200.00 of market value, while a duty of $18 per $200 will be imposed on cars worth in excess of $150,000. Exemptions will apply to farming vehicles and low carbon emission cars.

The Treasurer reconfirmed Victoria’s prized AAA credit rating by both rating agencies.

The 2019-20 Budget contains few surprises with a focus on delivering on Labor’s election commitments. In acknowledging the tougher economic challenges facing the state, Treasurer Pallas commented that this budget “recognises that our economic security and ongoing prosperity can only be achieved through responsible fiscal settings.”

KEY PARAMETERS

Economic Development, Jobs, Transport and Resources

The Government is undertaking a “Suburban Transport Blitz”, as well as investing over $2.6 billion to implement the Delivering for Regional Victoria program. Key initiatives include:

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

Expenditure for the Health and related portfolios in 2019-20 totals $5.5 billion over four years for new and existing projects, including:

The Budget has committed a record $1 billion for early childhood education and $2.8 billion in schools as part of an overall $4 billion investment in education. Some of the measures include:

In this year’s budget, the Government has allocated $407 million in dedicated funding to the environment and $23.7 million to protect waterways and water management, including: