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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 outlook
Victorias 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 Rowswell
Senior Adviser
CPR Melbourne
+61 3 9993 6412
+61 402 916 952
b.rowswell@cprcomm.com.a
u
@BrendanRowswell

Chanmali Tregambe
Senior Adviser
CPR Melbourne
+61 3 9654 4799
+61 488 440 058
c.tregambe@cprcomm.com.au
@CPRComms