Victoria delivers budget fit for booming state in an election year

By David Donaldson

Tuesday May 1, 2018

Victorian Treasurer Tim Pallas holds a press conference in the lead up to the 2018/19 Victorian budget in Melbourne, Monday, April 30, 2018. Mr. Pallas will release the budget for Victoria Tuesday morning. (AAP Image/Joe Castro) NO ARCHIVING

Victoria’s government is spending big in the lead-up to this year’s state election — and it needs to if it’s going to keep up with the population boom that’s reshaping Melbourne.

It’s investing big in infrastructure, with an average $10.1 billion slated to be spent each year over the next four years, according to the state budget released today — that’s more than double the average of the decade to 2014-15.

State Treasurer Tim Pallas has included $2.2 billion for roads, and $1.9 billion for the state’s public transport system.

It’s part of a game of catchup the government is playing to address the increasing congestion in Melbourne, which has added a million people in the last ten years.

“One in every 10 jobs in our economy today was created over the past three and a half years,” Pallas said.

“In the coming year, $78.9 billion of state capital projects will commence, or are underway.

“But when all the numbers are crunched, this budget is about the fundamental building blocks of any fair and prosperous society — more skills, more jobs, more schools, better hospitals and a better transport network.”

The state’s economy is growing healthily, with a real increase of 3.3% in 2016-17 — well above the national average of 2%. The picture is a little less rosy on a per capita basis, though still positive at 0.9%, compared at the national average of 0.4%.

But they’re more than keeping up — this being a Labor government and an election year, after all.

Government spending is growing much faster than the economy. It is expected to expand by just under 10% this coming year, supported by an 8.6% increase in revenue. This means debt will continue to grow in the near future, though it’s still low, with the proportion of debt to gross state product expected to peak at 6% in 2020.

Yet the Andrews government is also touting its budget surplus of $1.4 billion in the coming year, which is possible thanks to the accounting rule that capital investment doesn’t count when calculating ongoing expenses.

They’re spending up on education and skills, with $1.3 billion to plan and build 28 new schools and upgrade 130 more. There’s $172 million to make a range of TAFE and pre-apprenticeship courses free. TAFE campuses will be upgraded and a new apprenticeship and traineeship program will roll out in high schools.

Health will receive plenty of money, too. The budget promises $1.2 billion for hospital upgrades and equipment, as well as a record $705 million investment in mental health support to provide extra beds, treatment and emergency crisis hubs.

The regional payroll tax will be cut to 2.425% — half the metropolitan rate — in a bid to boost jobs in the country.

Alongside the infrastructure projects already coming to completion, such as level crossing removals, road upgrades and skyrail, the budget sets the government up nicely in its pitch to be re-elected on November 24 this year, and the treasurer was keen to make sure Victorians are aware of the good news.

“This budget is the culmination of four years of growth, of prudent economic management and of good government,” Pallas said.

Click the below image for more of the latest Victorian Budget coverage

Top image: AAP Image/Joe Castro

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