Victorian Treasurer Tim Pallas has today handed down his eighth successive state budget just six months out from the Victorian election.
The Budget includes $12 billion over four years in a pre-election spending boost to the Victorian healthcare system, including major hospital upgrades and addressing the crisis of hospital waiting lists and ambulance and triple-zero emergency response times.
The Government is forging ahead with a big spending, high-debt budget despite the Reserve Bank of Australia today increasing the cash rate to 0.35 per cent. The RBA has flagged further rate increases, which will increase the cost of debt servicing for Victoria.
After two years of economic pain caused by the global pandemic, the Government is banking on economic growth estimated at 5.5 per cent this financial year to fund its spending and has forecast a turnaround from a $17.6 billion deficit to a $650 million surplus within four years. The Budget forecasts net debt to rise from $101.9 billion in 2021-22 to $167.5 billion in 2025-26.
The Government has placed health at the centre of its budget with a $12 billion spend, including $698 million to expand Victoria’s Hospital in the Home program.
More than $1 billion has been allocated for regional health infrastructure and additional doctors, nurses and paramedics. Regional communities will also receive $17 million for palliative care services, aiming to take the burden off Melbourne based services.
Triple Zero operator, ESTA, will receive $333 million to increase staffing and upgrade IT and security systems.
An extra 1,500 mental health workers will be hired to boost Victoria’s mental health system.
There is $1.3 billion for mental health initiatives, with $490 million for acute hospital care to reduce waiting times and $372 million in workforce initiatives.
The Budget predicts average infrastructure investment of more than $80 billion over the next four years, including funding for big projects already underway or in the pipeline, such as the North-East Link, the Metro Rail project and the West Gate Tunnel.
An additional $3.5 billion will be spent on regional and local transport projects, including $338 million for more train services, level crossing removals and Big Build initiatives, $993 million for road upgrades, and $250 million for 12 more V/Line trains on the Shepparton and Warrnambool lines.
The Budget also flags a potential $10 billion in proceeds from a partial VicRoads privatisation that will provide seed funding for a Victorian Future Fund.
To ease cost of living pressures, the Budget 2022/23 invests $250 million so all Victorian households can apply for the new $250 Power Saving Bonus from 1 July 2022, saving seven-in-10 households an average $330 a year.
$9 million will also be provided for critical energy affordability support services and one-on-one assistance for Victorians who need it most – as well as $1.2 million dedicated to driving down gas bills for businesses and households.
A further $1 billion will be made available in low interest loans and government guarantees to create up to 6,000 more homes with $85 million also supporting after-hours homeless services.
The $1.8 billion for education infrastructure includes building 13 new schools and upgrading 65 existing education settings.
There is $779 million allocated to recruiting 1,900 new teachers and a further $131 million for early childhood education.
The Budget will invest more than $52 million to create jobs, help small businesses and social enterprises grow and invest in medical research, including $10 million for the Business Acceleration Fund to streamline applications and approvals.
The Government has announced a new $40 million Victorian Industry Investment Fund and the creation of a new trade and investment office in Paris, with another $40 million to attract more global business to Victoria.
Regional Victoria hosting the 2026 Commonwealth Games will see four regional hubs established in Geelong, Bendigo, Ballarat and Gippsland backed by $2.6 billion in the Budget. The regions will benefit from the Games spend, with new sporting and transport infrastructure rolled out.
The Budget also provides a total of $5.7 billion for regional initiatives with the Regional Health Infrastructure Fund boosted by $300 million for rural and regional health services.
The Budget includes $300 million to encourage a smooth transition to net-zero emissions, secure the grid and safeguard biodiversity.
The Government has promised to keep working to future-proof Victoria against natural disasters, including communities’ access to energy, through $10 million for microgrids in high-priority locations and $9.4 million to help recovery from storms, floods and fire.
A further $42.2 million will be available for Victorians to take up solar panel rebates and zero-interest loans.
Arts centres are the major beneficiaries receiving $245.8 million, with more than $64 million towards supporting critical sport infrastructure and tourism attractions in a bid to rebuild the state’s visitor economy. There is also $1.7 billion allocated to transform the Melbourne Arts Precinct.
The Andrews Government is banking Victoria can grow its way back towards a balanced budget amid burgeoning debt, interest rate hikes and pressure on its credit rating.
It is also banking that voters will prioritise jobs and health ahead of debt management. The recent SEC Newgate Mood of the Nation poll backs in this sentiment, with recent research showing Victorians prioritise investment in healthcare above all else, with 62 per cent rating this as extremely important. By contrast, only 29 per cent viewed reducing Government debt as extremely important.
The Budget leaves $2.2 billion in unallocated funding that is likely to be reserved for the November election.
Nick Maher, Special Counsel, SEC Newgate Communications – Nick.Maher@secnewgate.com.au
Brenton Baldwin, Account Director, SEC Newgate Communications – Brenton.Baldwin@secnewgate.com.au
Nicoleta Romas, Account Director, SEC Newgate Communications – Nicoleta.Romas@secnewgate.com.au
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