Victorian Budget 2024-2025
Take-a-ways
– $400 school saving bonus for state school students
– $11 million for community language schools
– $8 million to deliver multicultural festivals and events
– No changes to Land Tax till 2033
– $11 billion for health services
– Expansion of the Victorian Home Buyer Fund
– $550 million for skills training and Free TAFE
Key points
– Victoria’s net debt now forecast to hit $187.8 billion by 2027-28
– Government is banking on growth to reduce debt impact
– Victorian leads the nation in job creation with 560,000 jobs created since September 2020
– Economy to grow by 2.5 per cent in 2025 and 7.5 per cent in 2026
Assistant Treasurer Danny Pearson fronted multicultural media and acknowledged that “inflation is hurting, and interest rates are higher”.
“The cost of groceries, petrol, and bills continues to rise, and that’s why this budget is focused firstly on helping families with the cost of living and investing in education, healthcare, road, and rail.
“We want to make life easier,” said Pearson.
Pearson said the government’s “focus is on driving new growth across the state” while “acting to reduce debt.”
Addressing economic challenges
Victoria’s debt has reached dizzying heights, with net debt now forecast to hit $187.8 billion by 2027-28. Victorians will be paying roughly $25 million each day on interest payments.
The budget faces a $2.2 billion deficit this financial year but is projected to return to a surplus of $1.5 billion by 2025-26. The state’s economic growth is expected to reduce the debt ratio without dramatic cuts to services in the face of high inflation, high interest rates and low unemployment.
The current post-COVID-19 growth, dependent on government investment, especially in infrastructure, through Big Build, skills development, migration, and an increase in housing supply, will offset the mounting debt.
Yet, sluggish approval rates show the government has little chance of meeting the target it set last year of building 800,000 new homes in the next decade, housing industry groups say.
Pearson stressed worker shortages in construction projects and the caring and social sectors. He added that $700 million of gross debt from contingency would be released to expand the Victorian Home Buyer Fund “one final time before conceding the programme time before concluding the programme and transitioning to the Commonwealth scheme.
Pearson said $550 million had been allocated for skills training and free TAFE to fill the worker shortages.
“With high global inflation, the International Monetary Fund says now is the time for governments to adapt infrastructure investment to economic capacity.”
Infrastructure and economic growth is the panacea
The Assistant Treasurer extolled Victoria’s economy for creating “more than 560,000 jobs since September 2020”.
Victoria had “the highest jobs growth in the nation”, said Pearson.
“This is the most jobs created by any state in absolute and percentage terms.
“As a result, unemployment remains historically low at around 4 per cent, near the lowest it’s been in nearly 50 years.”
Melbourne Airport Rail has been delayed for another four years, he said, because the airport “is not prepared to drop its demand for compensation and an underground station”.
“We’ve been left with no choice.”
The knife is coming down on “inefficiency behind the scenes, like reducing the government’s advertising expenditure, office accommodation for public servants and the end of that casual sick pay guarantee.
Pearson said that Deloitte Access Economics’ Business Outlook has forecast that “Victoria’s economy will outpace all other states over the next five years”.
“Victoria’s economy is forecast to grow by 2.5 per cent in 2025 and by two points 7.5 per cent in 2026 in real terms,” said Pearson.
Services will get an investment of $11 billion “to meet the future health needs of Victorians, ” including $8.8 billion in operating funding hospitals. An additional $1.7 billion will go toward improving hospitals and health facilities and upgrades to Monash Medical Centre, the Austin, and Northern Hospitals. And $996 million will go to “the Big Build transport projects, including the Metro Tunnel and Westgate Tunnel.”
“There is $700 million of gross debt from contingency to expand the Victorian Home Buyer Fund.”
“We are progressively returning the capital program to pre-COVID levels to better align with our economy’s ability to deliver and free up capacity in the private sector to build much-needed housing. This budget adds substantially less new capital investment than in recent years.
Support for families and multicultural initiatives is at the centre
A one-off $400 school saving bonus will start next school year to cover a range of school expenses, “including the extras that make school fun”.
“We’re helping kids stay active with vouchers of up to $200 for eligible families to fund sporting memberships, uniforms, equipment and eyesight tests.
“Tripling our free glasses for kids’ program and just like our free dental check-ups in schools save families money.”
“We’re helping families, and we’re building a strong future for Victoria, so it continues to grow, and the labour market is incredibly strong,” said Pearson.
In support of multicultural communities, there is around $30 million over the next three years, which includes $8 million to deliver multicultural festivals and events and nearly $1,000,000 in multicultural media grants.
Victorians of Greek heritage could benefit from an investment in community schools to “support the sustainability of these schools for many years to come”.
“We’re investing $11 million in increasing the funding per enrolled student at community language schools.”
As a result of the additional funding, the amount allocated for each student in these community schools has increased from the current $245 to $255.
Six million dollars have been tagged for additional security upgrades for faith-based non-government schools. The recent rise of antisemitism and islamophobia and the rise of incidents due to the war between Hamas and Israel has spurred action.
“There is no place for antisemitism or Islamophobia in Victoria; racism and discrimination, or any act to threaten fear, hate or violence, is utterly unacceptable and has no place here,” said Pearson.
The government has also reappointed members to the anti-racist task force and is in the process of “finalizing the anti-racism strategy”, which will be “the first of its kind in Victoria,” said Pearson.
Land tax to stay, and not much more for small business
Neos Kosmos asked if there was any relief for small businesses, and Pearson focused on COVID-19 support of $11 billion for small businesses in the economy.
“That was when we were experiencing the greatest economic crisis since seen since the Great Depression.
“Since the depths of the pandemic, business investment has increased by nearly 40 per cent –around a third higher than the rest of Australia.
“Investment grew by more than 13 per cent, the largest increase of all the sales and almost six percentage points higher than growth in the rest of Australia.”
Neos Kosmos asked about the Land Tax – unpopular with Greek Australians who have property investments as a form of superannuation.
“That was about repaying the COVID debt, and we’ve got a 10-year horizon to come 2033; the government of the day will be able to pull off those measures if it sees fit.
“I’ve yet to meet in my ten years in public life. I’ve yet to meet a single Victorian who is happy to pay more taxes than they were previously. ”
Pearson said that government investment in infrastructure adds to the growth of property values.
Melbourne’s growth and its impact, saying that by the 2050s, he said, “Melbourne will have the population and the size of London.
He said that the government wants to “find ways where Melburnians can commute around our city quickly and easily”, talked up the suburban railway.
The government wants to avoid more pain for Victorians suffering from the rising cost of living. Discretionary spending has fallen off a cliff and small business, landowners are still paying of a massive pandemic debt – which the government says was necessary to stave off economic collapse.
Pearson’s and his colleagues’ calculation is that the economic growth Victoria is enjoying, much of it borne of government investment in infrastructure, will make the debt less threatening.
The Victorian State Budget 2024-2025 is available at www.budget.vic.gov.au
