2018/2019 Victoria State Budget

For perhaps the first time in a while a Victorian government finds itself in a comfortable financial position, having to make some compromises, but overall being able to deliver a package that well suits the Government’s policy platform and the needs of the State. This financial position is helped by funds from the sale of the Snowy Hydro project, and before the expected sale of the land registry.

The core focus on infrastructure investment, provides not only the direct benefit of the development, but is also delivering substantial jobs, and much secondary activity.

State’s continued growth in revenue

The State government is expected to collect $69.5 billion in revenue in 2018-19, with revenue growth projected to average 4 per cent a year over the budget and forward estimates. This is underpinned by strong revenue growth in taxation, with taxation revenue expected to grow to $24.1 billion in 2018-19, with growth expected to average 4.5 per cent a year over the forward estimates. 

The 2018/19 operating surplus is estimated to be $1.4 billion, with surpluses averaging $2.5 billion over the forward estimates.

Further payroll tax cut for regional employers

The Government has announced that it will further reduce the payroll tax rate for regional employers down to 2.425 per cent .

Having already reduced the payroll tax rate for regional businesses last year, the Government is cutting the payroll tax rate again so that it will be half of the metropolitan payroll tax rate. The reduced rate will apply to businesses based in regional Victoria who pay at least 85 per cent  of their wages to regional employees.

Already heavily promoted, Infrastructure investment is a cornerstone of this budget.  Major projects include:

Transport

• Roads
  • $2.2 billion for the Suburban Roads Upgrade (south-eastern and northern sections) continuing from the Western Roads Upgrade already committed
  • $684 million for Stage 2 of the Monash Freeway Upgrade between Warrigal Road and EastLink and Clyde Road and Cardinia Road
  • $375 million Mordialloc and Dingley Bypasses
  • $110 million for planning and design of North East Link
  • New division of VicRoads, Regional Roads Victoria (RRV) and $941 million for the upgrade and maintenance of regional and rural roads

• Rail
  • $540 million for enabling and planning of duplication of the Cranbourne line and high capacity trains from Sunbury
  • $313 million upgrade to the Shepparton Line to enable VLocity trains
  • $89.4 million for South Morang to Mernda Rail Extension Project
  • $50 million technical investigation of the Airport Rail Link and Geelong fast rail

Health

• $543 million Victorian Heart Hospital at Clayton
• $462 million redevelopment of Ballarat Base Hospital
• $115 million redevelopment of Wonthaggi Hospital
• $70 million upgrading Alfred Hospital
• $30 million expanding Sunshine Hospital Emergency

Social

• $1.3 billion in building or planning for 28 new schools and upgrade of 130 existing schools
• $689 million 700 bed Lara Prison Expansion
• $231 million redevelopment of Etihad, National Sports Museum(MCG), Whitten Oval and Eureka Stadium
• $64.6 million State Netball and Hockey Centre Redevelopment

Planning

• $2 million to supplement the existing Streamlining for Growth Programme in the Growth Area Councils
• $9.8 million over forward estimates period to deliver Stage 3 of the Smart Planning Programme

The 2018-19 Budget shows a continued strong commitment to transport infrastructure, with an emphasis on roads. The Suburban Roads Upgrade and North East Link (current timing late 2018/early 2019 – subject to the State election) being two highlights. There is also some significant expenditure in social and health related infrastructure (including the Lara Prison Expansion and Victorian Heart Hospital). The Government continues previous investments in ongoing infrastructure projects such as the level crossing removals.

In planning, additional funding has been provided to continue the work of the Streamlining for Growth Programme which seeks to reduce time delays for planning approvals for growth area housing developments. A further $9.8 million will be provided to assist local government municipalities to implement reforms to the planning system arising from the Government’s Smart Planning Programme.

Big ticket items in this sector include:

• Dedicated Heart hospital at Clayton - $543 million
• The Electronic medical records project for the Parkville precinct - $123 million
• Ballarat Hospital expansion and redevelopment - $461 million
• Significant upgrades and expansion project for the Alfred and Wonthaggi hospitals - $184 million

Numerous smaller projects are also funded, and come on top of what was already a very significant portfolio of activities in the health sector in excess of $2.1 billion.

Of course Health is not just bricks and mortar, and the service side has also received attention, most compellingly in the area of mental health, which through a variety of service and infrastructure projects will attract $705 million.

What we are seeing in this budget in the health sector is in many respects a return to stable funding, but with a healthy trend of increased investment.

The budget again delivers on the infrastructure front with new schools and upgrades, including land to go with them, attracting over $1.1 billion. Interesting to see mention of a Docklands primary school, and planning for a Fisherman’s bend secondary school.

There is quite an emphasis on the TAFE system, with 30 priority courses going to be made available for free. Not quite the same prominence is given to STEM aspects, but investment in teachers in this important area is flagged.

Again, overall education continues to enjoy solid funding support, responding to growing population, regional needs and feeding future jobs.

The 2018/2019 Victorian Budget is focussed on growing skills and jobs opportunities in cities and in regional Victoria.

The Victorian budget comes off the back of the state’s strong job performance. More than 117 000 new jobs were created in 2016/17, the highest of any state and equivalent to more than 70 per cent of new jobs created across Australia.  Employment in regional Victoria rose by a year average of 3.1 per cent in 2017, the second highest rate in the nation. The budget however forecasts a cooler climate for 2018/2019, with an expected decline in the Employment growth rate from 2.75 per cent to 2 per cent while the unemployment rate will remain the same at 5.75 per cent.

A number of significant initiatives in the Victorian budget will continue to support Victoria’s jobs growth In the near term through infrastructure investment and lowering payroll tax for regional businesses, and in the longer term by investing in skills and capacity building. 

A key initiative supporting Victoria’s jobs growth and to support young people to find ‘good jobs sooner’ is the announcement that 30 ‘priority’ TAFE Courses & 18 pre-apprenticeship courses will become free from 1 January 2019. The courses focus on skills development in priority areas for the State including building infrastructure projects, responding to family violence, and caring for older Victorians or people living with disability.

The Budget also includes:

• $49.8 million for Head Start Apprenticeships and Traineeships to give secondary school students the opportunity to learn their trade at school and get a job sooner
• $25.9 million to improve the quality of secondary vocational pathways
• $109 million in careers education to help students get the right career advice so they can make the right choices early on

Other important jobs initiatives include:

• Investing in the hydrogen energy supply chain pilot project, with funding of $103 million, including a $50 million dollar Commonwealth contribution
• $21.9 million for the Jobs Victoria program, which will assist approximately 20,000 Victorians to find work
• $10 million to boost the Premier’s Jobs and Investment Fund to develop practical ideas that strengthen Victoria’s economy and grow Victorian jobs
• $5 million in government procurement activities to help local businesses secure work supplying government projects
• An additional $16 million to establish a GovHub in Bendigo (1000 staff, 100 new jobs).  The local council, Regional Development Victoria, Parks Victoria, DELWP and DEDJTR will share the Bendigo GovHub
• $2.9 million towards growing defence manufacturing jobs in 2018 – 2019

Key initiatives in respect of the environment include:

• $19.9 million has been allocated to modernise the Environment Protection Authority (EPA) in FY 2018/2019, drawing upon the recommendations of the independent inquiry into the EPA
• $7 million has been allocated to fund councils and the recycling industry to ensure the continuing kerbside collection of household recyclable waste
• $9.1 million over the next four years has been allocated to the EPA’s illegal dumping strikeforce which will continue to receive funding to address illegal dumping of industrial waste
• $1.6 million over the next four years has been allocated to enhance the State’s commercial capability to negotiate and deliver projects through the Victorian Renewable Energy Auction Scheme
• $2.2 million has been allocated to establishing a database and monitoring system to strengthen Victoria’s approach to hazardous waste management, allowing opportunities to be identified to better manage the disposal of hazardous waste
• $4.8 million over the next three years has been allocated to build the Barwon region’s capacity to respond to climate change impacts by identifying vulnerable locations and assets to inform future investment and adaptation plans
• $5.4 million over the next four years has been allocated for the Latrobe Valley Mine Rehabilitation Commissioner to provide independent advice on mine rehabilitation, oversee rehabilitation planning and help develop the Latrobe Valley Regional Rehabilitation Strategy

The Victorian government is continuing to implement the recommendations of the independent inquiry into the EPA, which will culminate in legislative reform to overhaul the Environment Protection Act 1970.

There is a clear focus on issues of community concern, such as the future of the recycling industry following China’s decision to ban foreign waste, illegal dumping, and mine rehabilitation in the Latrobe Valley. The development of a strategic plan in relation to the future of the recycling industry will be particularly important to ensure that Victoria’s recycling industry is sustainable into the future.

The landmark commitment in dollar terms is for the upgrade to the Lara prison where $689 million dollars has been committed to upgrade the prisons maximum security section. Funding is also provided for the Malmsbury and Parkville youth justice centres.

Support of Victoria police is also evident, as well as the justice system more generally, with boosts for court officials, prosecutors and legal aid.

The Budget continues to deliver on variety of fronts directed to reducing family violence, as well as ameliorating is impact with increase support for victims.

Further detailed information on the 2018-19 State Budget can be found here.

For more information, please contact Bernard O’Shea, Sarah Ralph, James Morgan-Payler, Andrew Spalding, Elisa de Wit or Tamara Brezzi.