The Victorian government will offer stamp duty discounts and spend close to $50 billion on other concessions, subsidies and projects in a bid to get hundreds of thousands of people back to work and breathe new life into a state economy battered and bruised by the coronavirus pandemic.
Treasurer Tim Pallas says it will go down in history as the budget that kept Victoria afloat, but the opposition has attacked the government over its decision to withhold information on which of the state’s major infrastructure projects are over budget or behind schedule.
The government has set a goal of creating 200,000 jobs by 2022 and 400,000 by 2025, focusing on those hardest hit by the disruption wrought by COVID-19, including women, young people, older workers and those without formal qualifications.
To help it achieve its goal, the government has committed $250 million to subsidise the wages of at least 10,000 workers.
At least $150 million of this will go towards employing women, and $50 million of this will support women over the age of 45, in recognition of the additional challenges they face.
Tax credit for businesses who generate new jobs
The government will introduce a tax credit to encourage small and medium businesses to rehire staff, restore hours or create new jobs.
Businesses will get a tax credit of 10 cents for every dollar they increase taxable Victorian wages.
The measure will last for two years and the government expects it will support 9400 people to return to work.
The budget contains further funding of $266.5 million for intensive individual support for job seekers, such as career counselling and help to update resumes, as well as an extra 80,000 free TAFE and training places in courses linked to in-demand jobs.
Stamp duty discount until July next year
To stimulate the property market, the government will waive up to 50 per cent of stamp duty on newly built or off-the-plan homes valued at up to $1 million until June 30.
Existing homes will be eligible for a 25 per cent waiver.
A $500 million Victorian Homebuyer Fund will be launched to help people who do not have a 20 per cent deposit to buy homes.
The fund will contribute to the purchase price in exchange for equity in the property.
The government hopes a 50 per cent land tax discount to be introduced from 2022 will attract new investment in build-to-rent developments and boost housing supply by about 5000 homes.
Funds to expand National Gallery of Victoria and build Melton Hospital
The budget commits billions to building projects, including $1.9 billion for school infrastructure, $5.3 billion for new public housing dwellings and $1.46 billion to redevelop the Southbank arts precinct, including building NGV Contemporary, a new branch of the National Gallery of Victoria dedicated to contemporary art and design.
The budget also contains $2 billion to build new hospitals and upgrade existing ones.
This includes $384 million to redevelop Warrnambool Hospital and $75 million to buy land and start work on the new Melton Hospital, on Melbourne’s fast-growing north-western fringe.
It also contains $10 million to start planning a redevelopment of the Royal Melbourne Hospital, including setting up a new campus of the hospital, and possibly also the Royal Women’s Hospital, in the Arden renewal precinct in North Melbourne, where a train station is being built as part of the Metro Tunnel project.
Zero-emission buses trial and funds to fix mobile phone black spots
There are also billions of dollars for transport infrastructure, including for 100 new accessible trams and upgrades to the Warrnambool Line so VLocity trains can run on the line.
The budget includes previously announced funding for the first stage of the Suburban Rail Loop, Melbourne Airport rail, Geelong fast rail and upgrades to the Shepparton Line to allow trains to travel at higher speeds on the line.
There is $20 million for a trial of zero-emission buses.
Venturing into an area that is usually the domain of the federal government, the state government will spend $300 million to tackle mobile phone black spots, and $250 million to co-fund better broadband access in regional areas.
Opposition scathing on missing capital works budget papers
Absent from the budget papers was an update on the progress, delays or budget adjustments for the state’s multibillion-dollar capital works programs.
The opposition’s transport infrastructure spokesman David Davis said the failure to release Budget Paper No.4 effectively handed a “blank cheque” of taxpayer dollars to the government, “with no performance or accountability strings attached”.
“Running up huge debts to create a massive slush fund for poorly managed and woefully underperforming transport infrastructure projects will simply not wash with Victorians,” he said.
But the Treasurer said the information had not been produced this year because of the disruption the coronavirus had caused both to projects and to the preparation of the budget.
“We are currently going through a process of reviewing all of those projects. Some have been affected by time. Some will have been affected by cost,” Mr Pallas said.
He said the information would be provided with next state budget, due in May.
Debt will fuel quicker recovery, Treasurer says
The budget, which is usually delivered in May but was postponed due to the pandemic, lays bare the toll the pandemic has taken on the state’s finances.
Total revenue is down 4.2 per cent compared with pre-pandemic levels, while state tax revenue has fallen 11.3 per cent.
Stamp duty revenue in 2020-21 is expected to be almost 26 per cent lower in 2020-21 compared to 2019-20, reflecting weaker house prices as well as fewer sales.
The combination of the hit to revenue and billions in new spending is projected to produce a deficit of $23.2 billion this year.
The government is borrowing up big to cover the shortfall, taking advantage of low interest rates and the state’s AAA credit rating.
The interest rate on Treasury Corporation of Victoria three-year bonds is just 0.2 per cent.
Net debt will be $86.7 billion this year, rising to $154.8 billion by 2023-24.
Net debt as a proportion of Gross State Product will rise from 19.5 per cent this year to 28.9 per cent by 2023-24.
“In keeping with the federal government and other states and territories, we are borrowing to keep Victoria’s economy and livelihoods afloat,” Treasurer Tim Pallas said.
“We are borrowing to make the necessary investments to drive a quicker and stronger recovery.”
Mr Pallas said the cost of servicing the debt would not be challenging for the state, with the interest costs averaging 4.4 per cent of revenue over the next four years.
Unemployment is expected to peak at 8.25 per cent this quarter before declining to an average of 7.75 per cent for the 2020-21 year.
Other measures announced in the budget include:
- $2 billion “Breakthrough Victoria” fund to support research and innovation
- $200 million to fund upgrades to suburban health services
- $120 million for regional health infrastructure projects
- $12.1 million for initiatives to unlock job opportunities in suburban and regional communities with high unemployment
- $121 million to meet growing demand for in-home delivery of health services, such as dialysis, chemotherapy and palliative care
- $20 million to improve town centres in Altona, Broadmeadows, Boronia, Frankston, Lilydale, Melton, Noble Park, Reservoir and Tarneit
- $100 million for low-interest loans for councils to build community infrastructure, such as dog parks and bike trails
- $20.2 million to continue negotiations for a treaty with Victoria’s First Nations people
- $66 million to acquire new land and plan for new community hospitals in in Cranbourne, Pakenham, Torquay, Eltham, Point Cook and the City of Whittlesea
- $272 million to build new law courts in Wyndham
- $26.8 million to upgrade Sunshine law courts.