Victorian State Budget Announcement

Overview

The second Andrews Labor Government Budget anticipates the state’s total revenue will climb to $60 billion by next year enabling it to spend on significant major projects. It forecasts that state taxes, including an increased $500 million in land tax to $2.2 billion  will generate $20 billion this year and rising to $21.6 billion in 2016/17 (an increase of $1.6 billion on this year), of which $2.3 billion will be in motoring charges. It was also announced that stamp duty will decrease by $400 million to $5.6 billion.

Stamp duty, land tax and royalties

The Budget confirms that the Andrews Government intends to dramatically increase the stamp duty and land tax surcharges imposed on foreign investors.

The stamp duty surcharge applicable to foreign purchasers of residential property will more than double from 3% to 7%, and the land tax surcharge applicable to absentee owners of all taxable property in Victoria will triple from 0.5% to 1.5%.

  • The increase in the stamp duty surcharge will result in the stamp duty cost for a foreign purchaser of a $650,000 off-the-plan apartment in Melbourne increasing significantly – to approximately $50,000. By contrast, if the same apartment is purchased by someone who is not a foreign purchaser their stamp duty cost will be approximately $5,000.

  • With foreign investors being imposed with higher stamp duty and land tax charges will, over time, reduce the level of investment into Victoria. 

A number of the commercial buildings within Melbourne’s CBD have foreign owners who are now subject to the 1.5% land tax surcharge. The surcharge has become an additional holding cost which those landlords are seeking to pass on to their tenants through increased rents. Many of those tenants are small and medium businesses owned by Victorians.  

  • Furthermore, Victorian-owned property developers who are in joint ventures with foreign investors may also be subject to the 7% stamp duty surcharge with respect to acquisitions of residential development sites. 

  • The cost any duty surcharge becomes a project cost that therefore impacts the local joint venture partner as well as the foreign joint venture partner investing in the development.

The Andrews Government also has announced it will extend the scope of the land tax primary production exemption to urban land owned by certain family superannuation funds. 

  • Currently, where land in an urban zone is owned by a trust, the land must be used solely or primarily for a business of primary production, and the principal business of the trust must be primary production.  

The result is that superannuation funds are not technically eligible for the exemption because their sole purpose must be to provide retirement benefits for their members. This is proposed to overcome this technicality, so that, going forward, a farmer conducting a primary production business through a superannuation fund will be eligible for a land tax exemption for urban land.  

In addition the Andrews Government has announced that it will triple the brown coal royalty rate from 7.6c to 22.8c per gigajoule of energy produced. This royalty rate into line with the New South Wales and Queensland regimes. The royalty is levied on production from Victoria’s brown coal mines. 

The measure is designed to support the transition to cleaner energy sources and ensure that Victoria receives fair value for its endowment of natural resource

Economy

With this Budget, Victoria’s triple-A credit rating will be maintained and 3 per cent growth is forecast.
Unemployment is falling, and infrastructure investment will rise to an average $7.4 billion a year. The Budget confirms an operating surplus of $2.9 billion and cuts payroll tax to help businesses grow.

Public transport

The centrepiece of its major projects is the new Metro Tunnel - a nine-kilometre rail tunnel under the CBD that will transform our public transport system and end train congestion in the City Loop at a cost of $10.9 billion. 

The state Budget funds it in full without federal input.

All up, the Budget provides more than $1.9 billion dollars of new investment to grow metropolitan public transport services, and more than $1.3 billion for better regional public transport. This includes:
 

  • $588 million to fully fund and deliver the Mernda Rail Project, extending the line from South Morang

  • $140.2 million to duplicate the single track bottleneck on the Hurstbridge line between Heidelberg and Rosanna

  • $518 million to duplicate the Ballarat line from Deer Park West to Melton, to increase the frequency of services

  • $875 million for 28 extra High Capacity Metro Trains, on top of the 37 in last year’s Budget      

Roads and infrastructure

Work will start on much needed road projects in suburbs and cities across the state.

The Budget provides $7 billion for road projects including duplicating Yan Yean Rd and Thompsons Rd, building the Western Distributor ($1.46 billion), upgrading the Monash Freeway, streamlining Hoddle Street, and for other projects to improve road safety and reduce congestion.

In regional Victoria, $107 million will be invested to build the Drysdale Bypass. The Budget also includes $130 million to repair unsafe and deteriorating road surfaces, $51.6 million for regional highways and $52 million to improve traffic flow and safety on some of the smaller local roads that people use every day.

The Monash Freeway will be widened and new technology installed to form Australia’s longest stretch of managed motorway, slashing travel times from Melbourne’s south east.

There will be major new road upgrades across the suburbs, with a $237.9 million package of measures, including:

  • $38.4 million to duplicate Hallam Road between Ormond Road and the South Gippsland Highway and undertake a major upgrade to the intersection of Hallam Road, Evans Road and South Gippsland Highway

  • $50.1 million to upgrade Dohertys Road in Laverton North to increase the road from two lanes to four lanes between Fitzgerald Road and Grieve Parade

  • Up to $139.4 million for Plenty Road in Mill Park to expand the road with an additional lane in each direction between McKimmies Road and Bridge Inn Road

As part of the package, planning will also start on duplicating and improving a range of other congested arterial roads around Melbourne, and work will get underway to investigate more efficient ways to deliver upgrades by partnering with the private sector on packages of suburban road upgrades.

Major local road upgrades include:

  • $154.5 million to complete the duplication of Thompsons Road between Frankston-Dandenong Road and Berwick-Cranbourne Road

  • $131.2 million to duplicate Yan Yean Road between Diamond Creek Road and River Avenue as well as upgrading the River Avenue, Kurrak Road and Diamond Creek Road intersections

  • Bolton Street in Eltham will receive $10.2 million to continue work to improve traffic flow on the busy road, between Main Road and Bridge Street

  • $82.2 million for the O’Herns Road Interchange project, assuming a 50 per cent contribution from the Federal Government

The intersection of Grange Road and Oakleigh Road in Carnegie will receive new traffic lights as part of the $8.7 million road component of the Road and Rail Minor Works Local Road Solutions Package.

Payroll tax

By increasing the payroll tax threshold to $650,000 (up from $550,000), up to 36,000 Victorian businesses will pay less tax and benefit from a $286 million payroll tax cut, with the incremental raising of the tax-free payroll threshold from $550,000 to $650,000. Once fully implemented, around 2,800 businesses will no longer pay any payroll tax at all.

The first increase to $575,000 will take effect on 1 July 2016, with incremental increases until the tax-free threshold reaches $650,000 in 2019-20.

By the time the measure is fully implemented, businesses with annual Victorian payrolls between $4.8 million and $31.5 million will have the lowest payroll tax burden anywhere in Australia.

The wages of a displaced apprentice or trainee will also be exempt from payroll tax from 1 July 2016.

Jobs

The Government is looking to attract some of the biggest international companies to our shores. This includes $116 million for investment attraction and assistance, $66 million to expand the network of Victorian Government Business Offices, and $34 million to promote Victorian tourism and business to the world.

The Budget also provides $111 million to help the state’s six fast-growing industries.  There will be $33.8 million invested in a strategy to drive jobs in creative industries, and $31.9 million to strengthen Victoria’s position as the leading destination for international students.

Regional communities will benefit from a $325 million jobs package, supporting the growth of the tourism industry, improving water security and infrastructure, boosting marketing programs, backing the strength and confidence of the Latrobe Valley, and turbocharging the growth of future industries across the state.

Workers in industries that are undergoing transition deserve certainty. That’s why the Government will establish Jobs Victoria, a $53 million project to bring the state’s employment programs into one system.

The Government’s $320 million TAFE Rescue Fund has reopened closed campuses across Victoria, and a $116 million plan to introduce 10 new Technical Schools, funded in this Budget.

Schools

The Government is investing $924 million to upgrade schools in poor condition, build new schools in growing areas, provide emergency relocatable classrooms to alleviate short-term pressure and remove asbestos from school buildings.

The Education Package includes:

  • $287 million to acquire land to build or complete 23 new schools, many in Melbourne’s growth areas, where they are needed most

  • $92 million to establish 10 cutting-edge Tech Schools at TAFEs and universities across Victoria, including four in regional Victoria

  • $68.5 million to upgrade 20 specialist schools in the poorest condition, including a $10 million boost to the Inclusive Schools Fund for students with a disability

  • $63.6 million for more modern relocatable classrooms to ease the pressure on growing Victorian schools

  • $50 million for the new Shared Facilities Fund to help more schools become thriving community hubs

  • $28 million to continue removing asbestos from school buildings

  • $16 million for the new School Pride and Sports Fund to help strengthen community pride in schools and build sporting facilities for students

  • $12 million to plan upgrades at 35 existing schools to accommodate growth and update old facilities. 

The Government is also spending $200 million to better maintain existing school facilities. 

Health

The Budget delivers a record $2.45 billion boost to our health system. This includes $168.5 million to redevelop Shepparton’s deteriorating hospital and $61.3 million for major works at Western Health’s Footscray and Sunshine hospital sites.

A $335 million boost helps to tackle the elective surgery waiting list, and a $21.3 million in health funding to implement Victoria’s medicinal cannabis access scheme.

Other key projects funded include:

  • $200 million for a Regional Health Infrastructure Fund

  • $168.5 million to redevelop Goulburn Valley Health in Shepparton

  • $135 million for Victoria’s first Heart Hospital

  • $70 million to provide new medical equipment, new IT hardware, and replace ageing engineering infrastructure in hospitals across the state

  • $40.8 million for Austin Hospital critical infrastructure works

  • $29.5 million to roll out a Real Time Prescription Monitoring system across Victoria

  • $27.3 million to rebuild and upgrade ambulance stations and purchase additional vehicles

  • $27.3 million to support the health and wellbeing of people in the Latrobe Valley

  • $19.8 million to support the forthcoming Victorian Government’s Health and Medical Research Strategy

  • $17.3 million to establish an elective surgery centre in Broadmeadows

  • $16.8 million to strengthen quality and safety across the health system

  • $16.6 million for cancer research and support services

  • $10.9 million to support health and well-being of newly arrived refugees and asylum seekers

  • $10 million for Better Care Victoria to establish a state-wide hospital innovation fund

  • $10 million for Maroondah Breast Cancer Centre

  • $6.6 million to improve Victorian women’s reproductive health

  • $5 million to progress an electronic medical records system for hospitals in Parkville

  • $3 million for planning to support the future of the Parkville Biomedical Precinct

Emergency Services

Emergency services workers will receive new facilities, resources and skills as part of a $228 million boost.

The Budget responds to the closure of CFA Fiskville by providing $46.2 million to establish a new firefighting training centre in the Central Highlands, and upgrade the training facility at Huntly.

An additional $80.7 million will be invested over four years to decommission and remediate the site of the former Fiskville training facility and conduct environmental audits and upgrades at six other operational emergency management training centres located across regional Victoria.

The state is also investing $37.1 million over four years to continue and expand the Emergency Medical Response (EMR) program so firefighters have the training they need to help save lives during medical emergencies.

$58 million in vital funding will help the Emergency Services Telecommunications Authority (ESTA) to respond to more than 2.4 million calls annually – an average of one call every 13 seconds.

The Budget provides $6 million to redevelop surf life-saving clubhouses at Edithvale, Anglesea, Portsea and Cape Paterson.

Domestic violence

The Government is taking action on family violence as a priority law and order issue. A record $572 million investment is its first step towards a long-term solution, and it will cater for more housing, refuges, programs, counsellors and support for women and children, as recommended by the Royal Commission into Family Violence. Work will also start on a 10-year Victorian Family Violence Plan.

Law and order

The Budget also supports the police by boosting the capacity of the force with an extra $596 million for more police officers and specialists, new, state-of-the-art equipment and upgraded stations.
This includes more than 400 new frontline and taskforce officers.
 
The Public Safety Package also includes $36.8 million to replace and refurbish police stations across regional Victoria and includes:

  • Funding to replace outdated facilities at Colac, Murtoa, Bright, Warburton, Mallacoota, Cowes and Corryong

  • $2.94 million to refurbish 15 police stations at Bacchus Marsh, Bairnsdale, Benalla, Churchill, Cobden, Geelong, Lakes Entrance, Maffra, Moe, Mount Buller, Portland, Rosebud, Sorrento, Warragul and Warrnambool

  • $3.9 million to replace and refurbish 10 police residences across Victoria        

The package will also deliver $19.4 million in funding for the Community Crime Prevention Program to help target the root causes of crime in local communities, while additional police prosecutors will support the extension of the drug courts.

A further $500,000 will provide more mental health and wellbeing support for police.

The Budget also delivers $401 million for Corrections Victoria to better protect the community from high-risk offenders, respond to growth in the number of offenders and reduce reoffending, and upgrade the Metropolitan Remand Centre to full functionality.

An extra $84 million will be committed over four years to strengthen the management of serious sex offenders.
 
Also, the Budget provides $95.3 million  towards improvements and infrastructure upgrades at the Metropolitan Remand Centre.

Housing, disability and ageing

The Budget supports major reform, including the rollout of the National Disability Insurance Scheme (NDIS), commencing 1 July. The measures to support Victorians with a disability include:

  • $45.3 million over the next four years to fund 398 packages for school leavers with a disability

  • $60.9 million for the first stage of the NDIS rollout, including funding to support the closure of Colanda Residential Services – Victoria’s last disability institution – and additional investment in supported accommodation facilities

  • $3.3 million to support the work of the 2017-2020 State Disability Plan, including greater civic participation, a stronger advocacy sector and building 15 changing rooms for people with a disability

  • $500,000 grant to Vision Australia to establish an indoor mobility and training centre for vision impaired Victorians

The Labor Government will also build crisis accommodation and new social housing to support victims of family violence and address a lack of affordable housing.

$10 million will be provided as part of the Rooming House Upgrade Program to improve the living conditions of some of Victoria’s most at risk and vulnerable people.

Also included is $500,000 for the Big Issue to establish their Homes for Homes program.

Sport

The Budget includes $22 million for the Better Indoor Stadiums Fund for indoor basketball and netball stadiums.

The Budget provides $8 million for the Country Football Netball Program, so that regional clubs can continue to build new facilities, install lights and complete ground or court resurfacing.

The Budget also includes $1.05 million for a new pavilion at Carrum Downs Recreation Reserve, $4 million for St Kilda Football Club’s Moorabbin venue, $3 millionto transform the VAFA’s Elsternwick Park into a state-of-the-art football hub and provides $14 million for the Kardinia Park Stadium Trust, securing the future of the precinct while helping deliver more world-class events for Geelong.

The Budget provides an extra $2 million to continue the Significant Sporting Events Program, which secures more than 70 events for Melbourne and regional Victoria each year.