Vic Budget 2020-21: A Big Build Budget for Victoria

Vic Budget 2020-21: A Big Build Budget for Victoria

This afternoon, Treasurer Tim Pallas handed down the delayed 2020-21 Victorian State Budget, recognising a difficult year for Victoria and committing to the “biggest infrastructure pipeline in the history of the State”. Delivering his sixth Budget, Mr Pallas paused to acknowledge the stress and trauma wrought by last summer’s bushfires, the pandemic, and the complex problem of having to ask Victorians not to go to work in 2020.

Treasurer Pallas revealed that in 2020-21, the deficit is estimated to approach $23.3 billion, with net debt rising to $155 billion in 2023-24. Mr Pallas said that access to a borrowing facility will keep Victorian livelihoods afloat in the short-term, with the Government leveraging its robust balance sheet and credit rating to fuel a targeted economic recovery. Setting out a fresh Jobs Plan, the Treasurer added that the initiatives included within the Budget will produce approximately 125,000 jobs and fast-track the process of fiscal repair.

The Victorian Government has committed to local capability and supply chains; harnessing research; development; and innovation across health, education, and energy via a $2 billion Breakthrough Victoria Fund. The Treasurer outlined a program of investment in science and research, in addition to low-interest loans being made available to Victorian enterprises. A further raft of taxation concessions has been incorporated into the Budget, totalling $1.5 billion, in a bid to reduce the burden on small business and stimulate property investment activity. This includes a 50 per cent stamp duty waiver for the remainder of FY2020, reduced payroll tax thresholds, and greater flexibility for homebuyers.

Continuing the theme of his recent Budgets, Mr Pallas announced significant investments in major projects, transport infrastructure, and construction. This was headlined by the Big Housing Build – a $5.3 billion package to finance the creation of 12,000 new social and affordable dwellings. The Victorian Government has also allocated $2.2 billion for early works on the Suburban Rail Loop project and it has cemented its partnership with the Commonwealth for the commencement of works on the Melbourne Airport Rail Link in 2022. In addition, this Budget dedicates $2 billion towards Geelong Fast Rail.

On education, the Treasurer highlighted forthcoming upgrades to more than 160 schools and early childhood learning centres, forming part of $5.6 billion in funding for the sector. Support for vocational training has also been bolstered, via $1 billion of subsidised placements and streamlined courses within Victoria’s TAFE system. The Treasurer said that this will “expand pathways” and enable quick retraining for an agile workforce. One anticipated area of demand is in clean energy, with Victoria’s pursuit of net zero emissions by 2050 receiving a $1.6 billion boost. The development of the Victorian Big Battery and incentives for the installation of solar energy in the home underpin this objective.

Finally, Treasurer Pallas stated that protecting vulnerable Victorians and supporting families is a priority for the Government, as is providing specific initiatives to combat the ills of gender inequality. To this end, $150 million will be made available to businesses in the form of wage subsidies to facilitate jobs for 6,000 women, with a minimum of one-third to be allocated to those aged 45 and over. Interim recommendations from the Royal Commission into Mental Health will be implemented, contributing to an $870 million commitment to the State’s mental healthcare system. In a response to the fragile and insecure working conditions exacerbated throughout the pandemic, the Treasurer unveiled $5 million for a Secure Work Scheme — a pilot initiative offering sick and carer’s leave entitlements to workers in casual positions in certain high-risk industries.

For further information on key Vic portfolio measures, please refer to GRACosway’s detailed briefings:

KEY PARAMETERS

Deficit of $23.3 billion
$86.7 billion in net debt
$19.4 billion investment in infrastructure
Government revenue $66.7 billion, a 1.9 per cent reduction on 2019-20
Gross State Product (GSP) to decline by 4 per cent
Employment to decline by 3.25 per cent
Net debt to reach $155 billion by 2024 or 28.9 per cent of GSP

FURTHER READING

Please note, the Victorian Government has opted not to publish a budget paper focussing on the state capital program at this time.