2019-20 Victorian Budget

27 May 2019

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.”


  • A budget operating surplus of $1.0 billion in 2019-20 (averaging $3.4 billion over four years).
  • Economic growth as measured by real GSP is forecast to be 2.75 per cent in 2019-20, holding steady over the remainder of the forward estimates.
  • Net debt is forecast to rise from 5.1 per cent of GSP in 2018-19 to 8.3 per cent in 2019-20.
  • Infrastructure investment is forecast to average $13.4 billion per year over the next four years
  • Unemployment has reached an unexpected low of 4.50 per cent and is projected to slowly rise to 5.50 per cent to 2022-23.
  • Victoria’s population is projected to continue to grow, but at a slower rate of 2.2 per cent by 2022-23.

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:

  • $15.8 billion to fund North East Link.
  • $6.6 billion to remove an extra 25 level crossings.
  • $3.4 billion to deliver upgrades to suburban train network.
  • $608 million in suburban road upgrades.
  • $615 million investment in regional rail
  • $425 million towards regional roads.
  • $30.3 million towards infrastructure upgrades in regional communities.
  • $150 million to establish the Victorian Jobs and Investment Fund.
Law and Order

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

  • $1.8 billion for the prison system, including 1600 new beds and improved infrastructure.
  • $121 million to crackdown on dangerous driving, including planning for new road safety technology.
  • $85 million to ensure family violence perpetrators are held to account.
  • $28.7 million for the Dhelk Dja 10-year Aboriginal Family Violence agreement.
  • $23.9 million to better respond to and meet the needs of victim survivors in emergency accommodation.
  • $20.9 million to make sure victims of family violence and sexual assault have support to rebuild their lives including specialist support for Aboriginal Victorians.
Health and Human Services 

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

  • $321.9 million to deliver the rollout of free dental care to all Victorian government school students.
  • $299.6 million for more paramedics, more cutting-edge vehicles and more ambulance stations.
  • $136.2 million to deliver 500,000 specialist appointments in rural and regional Victoria.
  • $117.8 million to recruit and train more nurses, midwives and frontline health workers.
  • $213.6 million to help new parents with new parenting centres, and more maternal and child health nurses.
  • $116.5 million for cutting-edge medical research projects, including for new cancer therapies.
Education and Training

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:

  • More than $880 million to kickstart the rollout of 15 hours of subsidised kindergarten programs for all three-year-old children by 2029.
  • $316.5 million for investment in and expansion of kindergarten facilities.
  • $92.4 million to support early childhood teachers and educators by providing more professional development, mentoring and scholarships.
  • $1.82 billion to roll out the next phase of the school building boom.
  • $402 million in school infrastructure funding for non-government schools.
  • $20.7 million for a program for girls at government schools to be able to access free tampons and pads.
  • $179.5 million to respond to and remove asbestos that poses a risk to student health by the end of 2020.
Environment, Land, Water and Planning

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:

  • $154 million to create over 6500 hectares of parkland with new walking and bike trails.
  • $43.3 million to mitigate the risks and impacts of bushfires.
  • $34.9 million for measures to strengthen the recycling sector.
  • $15 million for the Environment Protection Authority.
  • $6.9 million to conserve Victoria’s parks.
  • $6 million to support integrated water management projects.
  • $5.1 million to extend protections for waterways in Melbourne’s west and management of Yarra River.


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