24.11.2020State Government Budget 2020-21
Rebuilding Victoria’s Economy
The following is the Committee’s for Melbourne’s perspectives on the Victorian Budget 2020-21. This is a very important budget, and wide-ranging in scope.
The Committee offers some views on whether the budget addresses the critical sectors we have identified of strategic importance for Melbourne’s future, including its COVID-19 Road to Recovery.
The Budget in brief
The Victorian Government Budget 2020-21 is one of the state’s most important in modern times.
Following Melbourne and Victoria’s pandemic-induced lockdown throughout much of 2020, the Andrews Government has provided its blueprint that aims to drive the state’s recovery.
With a commitment to putting people first, this budget is designed to kickstart investment in jobs, infrastructure and services, and to lay the groundwork for renewed growth in coming decades.
Victoria will remain in deficit for some time. A forecast budget deficit of $23.3 billion in 2020-21 is expected, with further operating deficits forecast over the forward estimates.
Tax revenue will decrease by 9.7 per cent compared with 2019-20, while total revenue is expected to be 4.2 per cent lower than 2018-19 levels.
With a focus on getting people back into employment, the government is taking advantage of historically low interest rates to repair the damage inflicted by COVID-19.
Victoria’s debt will grow with total net debt forecast to rise from $86.7 billion this financial year to $154.8 billion by 2023-24.
Employment is expected to decrease by 3.25 per cent, with the unemployment rate expected to peak at 8.25 per cent in the December quarter 2020 and average 7.75 per cent over 2020-21.
Significant investment in social housing is a key feature of this budget with $6 billion allocated for the construction of around 12,000 social and affordable homes over four years.
Investment in transport infrastructure is another prominent feature of this year’s budget, with a focus on the Suburban Rail Loop, Melbourne Airport Link, Geelong Fast Rail, the regional rail network, trams and roads.
In a bid to continue to support Victorian businesses hit hard by the pandemic, an additional $1.5 billion will be provided in the form of tax and fees relief.
The support package includes the New Jobs Tax Credit, which supports those small and medium businesses that rehire staff, restore hours or create new jobs.
The slump in economic activity combined with the rise in government spending means the budget position has deteriorated sharply. Victoria’s fiscal aggregates and economic forecasts are summarised below.
Read the brief here