Being realistic about the challenges

The world has changed rapidly since 2020.

Melbourne skyline along the Yarra River

A once-in-a-generation pandemic. Global upheaval. Increasingly intense competition for materials and workers around the world.

As the Government stares down these challenges, we need to ensure we’re making decisions not for yesterday – but for today.

With this Budget, we’re being realistic about the challenges ahead – and setting out a sensible and disciplined plan to respond.

High inflation

Just as inflation has impacted families, it’s also impacted the Victorian economy.

Inflation has increased costs for groceries and other daily expenses, and has increased the cost of infrastructure projects.

Increases to the cost of materials, labour and transportation have pushed up the cost of construction in Victoria by around 22% since 2021.

Change in Victorian building construction price index since June 2021

Source: Department of Treasury and Finance, Australian Bureau of Statistics

  • Download' Change in Victorian building construction price index since June 2021'

Workforce capacity

Not only are we facing cost pressures – we’re facing workforce pressures too.

Unemployment levels remain around the lowest they’ve been in nearly 50 years – and more Victorians are working than ever before.

That’s good news. But it also means we are constrained by limited workforce capacity.

Infrastructure Australia estimates that demand for workers is more than double the current public infrastructure workforce. Put another way, Australia is already 229,000 workers short of what we need.

It’s also impacting our caring and social sectors, too.

Nursing, mental health and teaching vacancies are significantly higher than they were before the pandemic and early childhood teacher vacancies are 3.3 times higher than in 2019.

COVID-19 era investments

We face these challenges from a position of strength, thanks to our economic management.

At the height of the pandemic, we stepped in – choosing to use the state’s balance sheet to protect household budgets.

Our decision saved jobs and saved lives, and has set us on the path for a strong recovery.

We’ve created more than 560,000 jobs since September 2020 – leading all states and territories in both absolute and percentage terms. More Victorians than ever before are in work, and business investment has surged to record levels.

Our economic recovery has been solid, inclusive and enduring.

But the truth is, during the pandemic – and because of the lack of Commonwealth leadership – the Victorian Government had to take on more than its fair share of responsibilities.

Three to four years on, and as we begin the next phase of recovery, a number of the policies and programs introduced in response to COVID-19 no longer provide the same value for Victorians as they once did.

Now is the right time for Government to recalibrate – ensuring our investments are the right ones for today and tomorrow.