The Victorian Budget for 2022/23 has been handed down. The key points include:

  • One new, targeted, revenue measure announced

  • $12 billion in additional funding for Victoria’s Health systemhe Victorian Budget for 2022/23 has been handed down. The key points include:

  • Victoria expected to be back in surplus by 2025-26

Summary

The Victorian Treasurer, Mr Tim Pallas MLA handed down his eighth Budget this week. 

Although the threat of COVID-19 still looms large, Mr Pallas pitched this Budget as an acknowledgement to Victoria’s healthcare workers, with Health as its centrepiece.

Taxation revenue is forecast to grow only 0.1% in 2022-23 to $82.0 billion, after a forecast growth of 12.7% in 2021-22.  Over the forward estimates period, revenue is expected to grow at 3.7% per annum. 

This has led to the following economic projections:

  • Real Gross State Product (GSP) is forecast to be 3.25% in 2022-23, compared to a forecast of 5.5% for 2021-22 and an actual -0.4% in 2020-21.
  • A budgeted net operating deficit of $7.8 billion for 2022-23, and moving to a net operating surplus of $652 million by 2025-26.
  • Net debt will be $101.9 billion in June 2022 (19.8% of GSP), increasing to $167.5 billion by 2025-26 (26.5% of GSP).
  • Employment is expected to increase by 1.75% in 2022-23, with the unemployment rate expected to be 4%.

Revenue Measures

Gambling Tax Rates for Electronic Gaming Machine Operators

Electronic gaming machines operated by “the casino licence operator” will be subject to the same tax structure as electronic gaming machines operated by clubs around Victoria. 

This is expected to increase the maximum marginal tax rate for electronic gaming machines from 31.57% to 60.67% (plus the 1% Community Benefit Levy).  There is no change to commission-based play on gaming machines. 

This measure is expected to commence on 1 July 2023 and provide an additional $85.6 million over the forward estimates period.

Tax ReceiptsElectronic gaming machines operated by “the casino licence operator” will be subject to the same tax structure as electronic gaming machines operated by clubs around Victoria.

Estimated tax receipts in 2022-23 are $30.5 billion.  Significant contributors to this figure include:

  • Land Transfer Duty - $8.2 billion
  • Payroll Tax - $6.8 billion
  • Land Tax - $4.8 billion
  • Motor Vehicle Registration - $2 billion
  • Duty on Vehicle Registrations and Transfers - $1.1 billion
  • Mental Health and Wellbeing Payroll Tax Levy - $819 million

In the forward estimates, the new Windfall Gain Tax is slated to raise $37m in 2023-24 and $81m in 2025-26.

Key Spending Measures

Health

The cornerstone of this Budget is the Victorian Government’s health package.  This involves $12 billion of funding for:

  • Training and hiring of an additional 7,000 healthcare workers.
  • More paramedics, 000 call-takers, and dispatchers.
  • $2.3 billion for upgrading and building new hospitals.
  • Increased surgical capacity - in an effort to prevent people presenting at the State’s Emergency Departments as well as tackling the lengthening elective surgery waiting list.

2026 Commonwealth Games

As previously announced, Victoria will host the 2026 Commonwealth Games.  These will be spread across several ‘hubs,’ which include Melbourne, Ballarat, Bendigo, Geelong, and Gippsland. 

The 2022-23 Budget provides $2.6 billion in funding for the 2026 Commonwealth Games. This funding is expected, in time, to have a flow-on effect on Victorian jobs and housing, to name some elements.

Education

The 2022-23 Budget invests $1.8 billion intoThe 2022-23 Budget invests $1.8 billion into Victoria’s education system.  Victoria’s education system.  This includes funding for additional teachers, as well as funding to build new and upgrade existing schools.

Housing

With much speculation in the lead-up to the Victorian Budget regarding interest rates (which coincidentally the Reserve Bank of Australia lifted on the same day the Victorian Budget was handed down), the Budget is light on housing affordability measures (or even housing measures, more broadly). 

The main measure in the 2022-23 Budget is an additional $1 billion in funding for low interest loans and government guarantees for community housing organisations to facilitate the provision of social and affordable housing. 

This is expected to create an additional 6,000 social and affordable houses.  This is in addition to the Victorian Homebuyer fund announced in October 2021, which provides a shared equity scheme for eligible homebuyers.

Other housing measures announced include:

  • $40 million for building sector reforms and projects to speed up the delivery of land supply, housing, and infrastructure projects.
  • $6 million for precinct planning and approvals for 95,000 residential lots in metropolitan growth corridors, and approximately 44,000 lots in regional locations.

RoadsThe Victorian Labor Government has spent considerable amounts on road and infrastructure upgrades throughout its 7 years in office. 

The Victorian Labor Government has spent considerable amounts on road and infrastructure upgrades throughout its seven years in office. 

This Budget announced an additional $780 million in road funding for the coming year.  This includes:

  • $263 million for safety upgrades, specifically targeted at motorcyclists, cyclists, and pedestrians.
  • $227 million for 'high priority road and intersection upgrade projects'.
  • $187 million for road rehabilitation, drainage renewal, and bridge works. 

With Victoria headed to the polls in just under seven months (Saturday 26 November), this Budget was a true pre-election budget.  There is plenty of cash for popular sectors (Health and Education), however only one very targeted revenue measure. 

Please contact your local RSM adviser to discuss the implications of this Budget for you.