Victoria’s 2016-17 Budget Update
Treasurer Tim Pallas announced the 2016-17 Victorian Budget Update today, heralding record government investment in infrastructure (GII), solid economic growth, and job creation in the months following delivery of the April Budget. Real GSP has increased to 3.3 per cent from a projected 3 per cent, which has been primarily driven by increased investment in dwellings and strong household consumption. Victoria’s general government sector surplus for the same period has been revised down from a forecast $2.9 billion to $1.7 billion and attributed to a range of government funding initiatives, including assistance for the LaTrobe Valley following announcement of the Hazelwood power station closure next year.
Economic growth is forecast above trend at 3 per cent, in-line with the 2016-17 Budget projection, with the unemployment rate remaining steady at 5.75 per cent and forecast to drop over the forward estimates.
Spending projected across the Budget and forward estimates reflects increased and ongoing investment in core services such as health, education and public safety, together with significant funding for transformative projects, including the Melbourne Metro Tunnel and the Western Distributor. The Treasurer indicated net debt as a percentage of GSP is expected to remain at a sustainable level over the medium term, which will provide the means to potentially increase future borrowings for further infrastructure projects across the State while keeping debt levels consistent with maintaining a triple-A credit rating.
In delivering the update, Treasurer Pitt said “This Budget Update confirms Victoria as an economic powerhouse of the nation, as we create the jobs and infrastructure a modern growing economy needs.”
Key economic indicator forecasts:
- Real GSP growth of 3 per cent
- Unemployment remains steady at 5.75 per cent, forecast to drop to 5.5 in 2018-19
- Population growth of 1.9 per cent
- General government sector surplus is forecast to be $1.7 billion and revised down