2016-17 BUDGET STATE BUDGET BRIEFING SESSION David Martine Melissa Skilbeck 4 May 2016
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2016-17 BUDGET STATE BUDGET BRIEFING SESSION
David Martine Melissa Skilbeck 4 May 2016
Budget overview
The 2016-17 Budget focuses on:
• infrastructure investment
• jobs creation
• improving social outcomes
The budget strengthens the State’s financial position
1
Overview of economic outlook
• Victoria’s economy is growing strongly
• Both employment and real GSP growth are above
trend
• Population is surging, and placing pressure on
government services and infrastructure
2
Transitioning national economy
3
-5
0
5
10
15
20
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
Pe
r c
en
t (a
nn
ual)
Victoria NSW Qld WA
Sources: Australian Bureau of Statistics; Department of Treasury and Finance
Victorian economy growing strongly
4.6
3.4 3.0
1.8
-1.7
-4.7 -5
-3
-1
1
3
5
Vic NSW Tas SA Qld WA
Pe
r c
en
t (A
nn
ual)
State final demand (December 2015)
Domestic final demand growth: 1.1 per cent
Sources: Australian Bureau of Statistics; Department of Treasury and Finance 4
Positive business conditions
5
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15-20
-10
0
10
20
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
AU
D/U
SD
ex
ch
an
ge
ra
te
Net
ba
lan
ce
Victorian business conditions (3 month average) (LHS) AUD - USD exchange rate (inverted) (RHS)
Sources: NAB; RBA; Department of Treasury and Finance
Victoria’s labour market is surging
2.7 2.6
1.2 1.1
0.9
0.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Victoria NSW WA Tasmania Queensland SA
Pe
r c
en
t
Year average employment growth – 2015
National average: 1.9 per cent
Sources: Australian Bureau of Statistics; Department of Treasury and Finance 6
Unemployment rate is falling
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
2002 2004 2006 2008 2010 2012 2014 2016
Pe
r c
en
t
Trend Seasonally Adjusted
Source: Australian Bureau of Statistics 7
-15 -5 5 15 25
Manufacturing
Wholesale Trade
Mining
Public Administration and Safety
Arts and Recreation Services
Other Services
Information Media and Telecommunications
Education and Training
Agriculture, Forestry and Fishing
Financial and Insurance Services
Electricity, Gas, Water and Waste Services
Rental, Hiring and Real Estate Services
Retail Trade
Accommodation and Food Services
Professional, Scientific and Technical Services
Transport, Postal and Warehousing
Administrative and Support Services
Health Care and Social Assistance
Construction
Full-time
Part-time
Change in employment (000’s) by industry – year to February 2016 (Annual average)
Employment growth by sector
Sources: Australian Bureau of Statistics; Department of Treasury and Finance 8
9
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Pe
r c
en
t (a
nn
ual)
Victoria Australia
Strong population growth
Sources: Australian Bureau of Statistics; Department of Treasury and Finance
Economic forecasts
Per cent 2014-15
actual
2015-16
forecast
2016-17
forecast
2017-18
forecast
2018-19
projection
2019-20
projection
Real gross state
product 2.5 3.00 3.00 2.75 2.75 2.75
Employment 2.1 2.00 1.75 1.50 1.50 1.50
Unemployment rate 6.4 6.00 5.75 5.75 5.50 5.50
Consumer price
index 1.4 2.00 2.25 2.50 2.50 2.50
Wage price index 2.7 2.50 2.75 3.00 3.25 3.50
Population 1.7 1.8 1.8 1.8 1.8 1.8
10 Sources: Australian Bureau of Statistics; Department of Treasury and Finance
Strong financial position
Unit of
measure
2014-15 actual
2015-16 revised
2016-17 estimate
2017-18 estimate
2018-19 estimate
2019-20 estimate
Net result from transactions $ billion 1.2 1.9 2.9 1.8 2.1 2.5
Government infrastructure
investment $ billion 4.6 4.5 7.5 7.7 7.4 7.1
Net debt $ billion 22.3 22.5 18.6 20.9 22.3 22.2
Net debt to GSP per cent 6.2 5.9 4.7 5.0 5.1 4.8
Source: Department of Treasury and Finance 11
Revenue and expenses growth
0
4
8
12
16
2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 2017-18 2019-20
Pe
r c
en
t
Revenue growth (YoY) Expenses growth (YoY)
Forward
estimates
Source: Department of Treasury and Finance 12
GST revenue growth
13
-4
-2
0
2
4
6
8
10
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Pe
r c
en
t
Pool growth Population share Relativity Annual growth
Source: Department of Treasury and Finance
Land transfer duty cycle
Source: Department of Treasury and Finance 14
0
2
4
6
8
10
12
14
16
18
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019
per
ce
nt
$ m
illi
on
Quarterly LTD revenue (LHS) Standard variable housing interest rate (RHS)
2016-17 Budget – Key initiatives
• $6.8 billion in new output initiatives
• $12.4 billion TEI in new asset initiatives
15
2016-17 Budget – Key initiatives
• Jobs
• Addressing family violence
• Health
• Education
• Infrastructure
• Community safety
16
Revenue initiatives
• Surcharge for foreign buyers of real estate
7 per cent of property value, from 1 July 2016
• Absentee owner Land Tax surcharge
1.5 per cent surcharge, beginning in the 2017 land tax year
• Brown Coal royalty rate
Increased threefold on 1 January 2017
17
Tax relief
• Payroll tax threshold increased to $650,000 by 2019-20
• Payroll tax exemption for wages of displaced apprentices
and trainees
• Together provides $312 million in tax relief
18
2016-17 Budget Papers
Glossy:
• Budget Overview
• Budget Information Paper (BIP): Rural and Regional
Budget Papers:
1. Treasurer’s Speech
2. Strategy and Outlook
3. Service Delivery
4. State Capital Program
5. Statement of Finances
19
2016-17 BUDGET STATE BUDGET BRIEFING SESSION
David Martine Melissa Skilbeck 4 May 2016
© State of Victoria 2016
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