The Victorian government is set to introduce new tax measures and infrastructure delays as Treasurer Tim Pallas attempts to repair the state’s finances and tackle the rising debt. The government has pledged to deliver a $1 billion surplus within three years, with interest on the state’s debt starting to bite. However, business and property groups have warned against increasing taxes, and ministers are bracing for a voter backlash.
Balancing the books
Deputy Premier Jacinta Allan has warned that the “time had come” to start balancing the books, with the government aiming for a $1 billion surplus within three years. The figure is predicted to grow to $1.2 billion in the year after. With net debt forecast to reach $116 billion at the end of this financial year, the government is expected to introduce revenue-raising measures aimed at big businesses.
Concerns from business and property groups
Australian Industry Group boss Tim Piper has expressed concern that businesses may bear the brunt of the government’s need for extra revenue. Property Council executive director Cath Evans has also warned against imposing new taxes on property owners, as further measures would “dent business confidence” at a time when the state needs to attract more investment.
Ministers gathered for their usual 2 pm cabinet meeting on Monday, where they received a budget briefing. However, ministers and departments were not invited to make submissions to the cabinet expenditure review committee, as Premier Daniel Andrews had made it clear the budget would predominantly focus on funding election commitments, repairing the finances, and quarantining frontline services.
Debt repayment plan
The government has pledged to detail a $31.5 billion “COVID-19 Debt Repayment Plan” to repay emergency funding borrowed at the height of the pandemic, which will include both savings and new revenue measures. Dr. David Hayward, an emeritus professor of public policy at RMIT University, welcomed the government’s pledge to reduce the deficit more quickly.
Impact on vulnerable Victorians
Shadow treasurer Brad Rowswell has expressed concern that the budget will affect vulnerable Victorians. With department bosses asked to hand in proposals to slash public service staff numbers by up to 10%, Community and Public Sector Union secretary Karen Batt has called on Allan to clarify her comments, given such a move would result in thousands of jobs axed.
The Victorian government faces a difficult task as it attempts to repair the state’s finances and tackle rising debt. While the government has pledged to deliver a surplus within three years, business and property groups have warned against increasing taxes. Ministers are bracing for a voter backlash, and there are concerns that vulnerable Victorians may be affected by the budget. However, the government’s pledge to detail a COVID-19 Debt Repayment Plan has been welcomed by experts.