The Victorian Budget 2018/19 maintains the Government’s investment in the services and infrastructure our state needs, while prudently managing our finances.
The 2018/19 operating surplus is estimated to be $1.4 billion, with surpluses averaging $2.5 billion over the forward estimates. The Government has maintained this strong financial position by ensuring average revenue growth over the next four years remains higher than average expense growth.
As with all the budgets delivered by the Andrews Labor Government, net debt as a proportion of the economy is projected to be lower than the level in the previous government’s final year in office.
The Government’s strong financial management, coupled with Victoria’s surging economy, is consistent with maintaining our triple-A credit rating.
But most importantly, this Budget is getting things done for Victorians.
Strong fiscal and economic management
- Victoria’s economic growth is the strongest of all the states. Over the past three years, growth has averaged 3.2% a year. This represents a return to the rates of growth last experienced before the global financial crisis.
- The clearest measure of the strength of the Victorian economy is the number of jobs that have been created – more than 333,900 since the Andrews Labor Government came to office, with employment growing at an above-trend rate for four years.
- Victoria’s finances are also in a very strong position. As a result of the Andrews Labor Government’s clear and responsible fiscal framework, Victoria remains one of only 10 sub-sovereign governments in the world to receive a triple-A credit rating by S&P and Moody’s.
|Victorian Economic Forecasts (per cent)||2016/17 actual||2017/18 forecast||2018/19 forecast||2019/20 forecast||2020/21 projection||2021/22 projection|
|Real gross state product||3.3||3.00||2.75||2.75||2.75||2.75|
|Consumer price index||1.9||2.00||2.25||2.50||2.50||2.50|
|Wage price index||2.0||2.25||2.50||2.75||3.00||3.25|
Sources: Department of Treasury and Finance, Australian Bureau of Statistics
|General Government Fiscal Aggregates||Unit of measure||2016/17 actual||2017/18 revised||2018/19 budget||2019/20 estimate||2020/21 estimate||2021/22 estimate|
|Net result from transactions||$ billion||2.7||2.0||1.4||2.0||2.7||2.9|
|Government infrastructure investment||$ billion||9.1||11.6||13.7||10.0||8.9||7.6|
|Net debt||$ billion||15.8||19.6||24.3||28.0||29.8||31.4|
|Net debt to GSP||per cent||3.9||4.6||5.4||5.9||6.0||6.0|
Sources: Department of Treasury and Finance
Investment of Snowy Hydro Limited proceeds
Following the success of the $9.7 billion lease of the operations of the Port of Melbourne, the Government recently agreed to terms for the sale of Victoria’s share of Snowy Hydro Limited to the Commonwealth for $2.1 billion. The Government has invested more than half the proceeds of this sale in various regional infrastructure initiatives including roads, public transport, and hospitals, to enhance the productive capacity of the state.
Table 1: Infrastructure projects funded from Snowy Hydro Limited proceeds
|Projects||Expenditure/Capital funding ($ million)|
|Road restoration blitz|
|Fixing country roads (a)||100|
|Regional road restoration and maintenance (b)||168|
|Shepparton Line Upgrade - Stage 2||313|
|Regional health services|
|Ballarat Base Hospital expansion and redevelopment||462|
|Wonthaggi Hospital expansion||115|
|Total regional specific investment||1,158|
|School capital investment|
|New schools construction||273|
|Planning for schools||17|
|Total school capital investment||929|
|Snowy Hydro Limited proceeds||2,077|
(a) Output funding in 2018-19 and 2019-20.
(b) Asset component.