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Australia Victoria's post-pandemic recovery 'on track' but budget deficit forecast to be $11.6 billion

00:30  20 may  2021
00:30  20 may  2021 Source:   abc.net.au

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The Victorian budget will remain billions of dollars in deficit until at least 2025 with the seventh budget for Treasurer Tim Pallas forecasting an $11.6 billion deficit next year.

The final deficit for the COVID-hit 2020–21 budget is nearly $6 billion less than forecast at $17.4 billion.

Mr Pallas said the rebound of the economy had been better than first forecast with the state enjoying a $14 billion improvement in its bottom line.

Mr Pallas said yearly deficits were forecast to shrink until a hoped-for surplus in 2025.

"We are massively on track,'' Mr Pallas said.

"The economy is growing so we are in a much stronger position."

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Unemployment is projected to sit at 5.75 per cent next year.

Mental health spending a focus of budget

The state government continues to borrow to pay for major infrastructure and the COVID recovery, with net debt forecast to reach $156 billion — about a quarter of the state's economy.

Among the big capital works in the budget is $1.6 billion to build new 13 schools and upgrade 35 metropolitan and 17 regional schools, including in Melbourne's key growth corridors.

The budget will have a major focus on mental health reforms, including $277 million to boost programs in schools.

The state government wants to have a mental health practitioner in every state school by the end of this year.

One issue the state is yet to address is a recommended levy to help pay for the overhaul of Victoria's mental health system.

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Premier Daniel Andrews has committed to the tax, which was a recommendation from the 2019 royal commission.

Mr Pallas was tight-lipped on when it would be introduced.

The Treasurer said there was no extra money for a quarantine site at Mickleham, in Melbourne's north, but said discussions with the Commonwealth were full of "goodwill".

"The issues we are trying to work through is who pays for the capital? Who pays for the maintenance? And in what share," Mr Pallas told the ABC in a pre-budget interview.

"And is this allocation in substitution of the existing hotel quarantine or in addition to it.

"There's still a bit of work to do."

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It has only been six months since the last Victorian budget was handed down because of delays caused by the pandemic.

The regular pre-budget drip of announcements has been quieter than usual and included a swag of sweeteners for voters.

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Mr Pallas would not rule in or out increased taxes.

"It [the budget] will continue the effort of rebuilding the economy and creating jobs and it is going to make sure that those people who have been most adversely affected by this economic effort, by the pandemic, will be the ones who get the greatest support and assistance from the state," he said.

Mr Pallas has already caused a storm by lifting stamp duty on properties over $2 million and increasing land tax on properties worth more than $1.8 million.

The state government said it was the first step to budget repair, after it was absolutely smashed by COVID.

But it has been slammed by the property industry as a "greedy tax hike'' and has given the opposition some much-needed ammunition.

The pre-budget announcements have been less frequent than normal but still includes some substantial (more than $4 billion) spending.

Here is a look at the mosaic of announcements already detailed by the government:

$986 million for 25 new trains for the metropolitan rail network

The new high-capacity trains will be built at the Alstom factory in Ballarat, securing work for staff until the end of 2025.

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The trains will replace an ageing 40-year-old fleet and run on lines servicing some of the fastest growing suburbs — Frankston, Upfield and Craigieburn.

$759 million to fix the ambulance crisis

Victoria's ambulance response times have blown out to their worst level since 2015. The state government has committed hundreds of millions of dollars to boost ambulance and hospital services to help paramedics cope with unprecedented levels of demand made worse by the pandemic.

$517 million to protect Victoria from bushfires

That money will be used to upgrade technology for firefighters, reduce the risk of bushfires and fund Forest Fire Management workers.

$350 million to upgrade Victoria's hospital for acute mental health patients

The Thomas Embling hospital in Fairfield has been chronically underfunded and will undergo a massive upgrade to expand the hospital by 107 beds. The funding fulfils one of the key recommendations of the state's mental health royal commission.

The public sector will also undergo a $3.6 billion overhaul.

$383 million for TAFE

Including $86 million to establish a new Victorian Skills Authority to coordinate teaching and training across the VET sector.

$210 million to clear court backlogs

More judges and magistrates will be hired to help clear the growing court backlog caused by the pandemic. About half of the cash will be used to upgrade the court's online system to fast-track cases.

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$260 million to revive the City of Melbourne

The money will be used for a new voucher scheme to give diners discounts to attract more people to the CBD. A fund will also be used to support arts and cultural events and small businesses.

$70 million for Victoria's first public IVF service

A total of 4,000 families will be able to access the state's first public IVF service, saving them on average $10,000 each.

$45 million for family violence

The money will be used to support children affected by family violence and sexual assault, to make sure they get the care and counselling they need. It will also extend sexually abusive treatment services to children and young people.

Opposition wants more help for small businesses

The Victorian opposition has called for more support for small businesses in the budget and wants the government to reject any new taxes and charges.

"Victorians desperately need a budget that will support them and support the rebuild of our economy," Opposition Leader Michael O'Brien said.

"We see families in financial distress, we see small business on its knees. All this government offers is more charges and more pain … new taxes are the worst possible solution at the worst possible time."

Victoria's post-pandemic recovery 'on track' but budget deficit forecast to be $11.6 billion .
A better-than-expected deficit of $11.6 billion is forecast for next year in the Victorian budget as the state economy bounces back after last year's lockdown.The final deficit for the COVID-hit 2020–21 budget is nearly $6 billion less than forecast at $17.4 billion.

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