Name of Person
www.cprcomm.com.au
2015-16 VICTORIAN BUDGET BRIEFING NOTE
5 May 2015
At a glance
Operating surplus of $1.2 billion in 2015-16, rising to $1.8
billion by 2018-19 Increased expenditure by 0.5 per cent to provide
funding for services $5.2 billion infrastructure investment with a
further $16.1 billion across the forward estimates 6.25 per cent
unemployment rate, dropping to 5.75 per cent in 2018-19 Key themes
include jobs, schools, hospitals and transport
Budget in focus
Today Victorian Treasurer Tim Pallas handed down the Andrews
Governments first Budget. The Budget largely delivers on the
promises undertaken by Labor made during last Novembers election
campaign and accounts for each initiative in their 2014 Financial
Statement.
The Budget produces a $1.2 billion surplus, with accumulated
surpluses of $5.8 billion across the forward estimates. This years
surplus is lower than that forecast by the previous government;
however, Labor has said that their expenditure increase, from 2.5
per cent to 3 per cent, will be used to provide additional funds
for education and health services.
The theme of this years Budget is For Families. In his speech,
the Treasurer described the Budget as getting back to basics: jobs,
schools, hospitals and transport.
Economic outlookVictorias economy is continuing to improve as
the Australian economy moves from a reliance on mining investment
to broader based drivers. Settings such as extremely low interest
rates and rising asset prices are strengthening household budgets,
which is improving consumer spending. However, this growth has come
at a time when employee income has stalled and aggregate hours
worked have flattened. Business investment is expected to grow
moderately as consumer spending improves.
Employment continues to be of concern, although this is
predicted to improve with a stable 1.5 per cent employment growth
forecast over the forward estimates, a drop in unemployment to 5.75
per cent by 2018-19. Population is expected to remain high over the
forecast period
The emphasis of this Budget on service delivery is linked to the
strong reliance of the Victorian economy on human capital. Compared
nationally, Victorias economy is uniquely dependent on industries
which require high labour input as well as knowledge industries
such as finance and professional services. The Budget argues that
economic prosperity relies on policies that invest in people
through services such as health and education.
Victorias Gross State Product (GSP) is expected to rise to 2.5
per cent in 2015-16 reflecting stronger consumer sentiment.
International ratings agencies have confirmed Victorias triple-A
credit rating, meaning that the Government is able to borrow at
lower rates to fund items such as the states $5.2 billion
infrastructure program.
Jobs
The Government has recommitted to its goal of creating 100,000
new jobs.
Their $100 million Back to Work scheme has been funded and will
provide incentives for companies to hire unemployed young people,
the long term unemployed and retrenched workers.
$508 million has been set aside for the Premiers Jobs and
Investment Fund and is reserved for investment in strategic job
creation initiatives.
$60 million from this fund is included for a start-up initiative
to assist new companies with the development of business cases,
intellectual property and patent advice and other new business
assistance.
$200 million is committed to the establishment of the Future
Industries Fund, offering grants of up to $1 million for companies
working across the six sectors the Government has identified for
extraordinary growth: medical technology and pharmaceuticals, new
energy technology, food and fibre processing, transport, defence
and construction technology, international education and
professional services.
Transport
Transport was a key focus throughout last years election
campaign; in particular the tension between competing projects the
East West Link and Metro Rail. The Government has begun to deliver
on its transport priorities.
$2 - $2.4 billion has been budgeted over the forward estimates,
and a further $3.6 billion has been committed beyond this, to fund
the removal of metropolitan level crossings.
$9 - $11 billion has been committed to the Melbourne Metro Rail
Project.
$690 million will go towards the Governments Rolling Stock
Strategy, to be spent on the manufacture and refurbishment of
trains and trams, including five new XTrapolis trains to be built
by Alstom.
$574 million will be spent on road construction and
improvements; this includes $150 million for the next stage of the
M80, $110 million to duplicate the Chandler Highway Bridge, $40
million for the first stage of the West Gate Distributor.
Additionally $273 million has been provided towards the widening of
the Tullamarine Freeway and $76 million for the delivery of 23 key
freight corridor projects.
Education and schools
$2.9 billion has been committed to investment in education over
four years. This will include upgrades to 67 schools and $111.1
million for 10 new schools across the state.
$400 million has been allocated across TAFE, Local Learning and
Employment Networks and Tech School funds in order to deliver on
the Governments commitment to skills and training.
Health and hospitals
$2.1 billion has been invested across the health budget. $560
million of this will be spent on the construction and renovation of
hospitals including the Western Womens and Childrens Hospital, the
Casey Hospital, the Werribee Mercy Hospital, the Angliss Hospital,
the Ballarat Base Hospital and the Victorian Heart Hospital.
More information
The 2015-16 Victorian Budget papers are available online at
http://www.budget.vic.gov.au.
For more information or advice please contact the CPR team.
Brendan RowswellSenior AdviserCPR Melbourne+61 3 9993 6412+61
402 916 [email protected] @BrendanRowswellChanmali
TregambeSenior AdviserCPR Melbourne+61 3 9654 4799+61 488 440 058
[email protected] @CPRComms
Level 4, 100 Collins Street, Melbourne VIC 3000, Australia T: 61
3 9654 4799 F: 61 3 9654 4756