Victoria State Budget: strong revenue growth to be funnelled into infrastructure and increased spending

The Victoria State budget has earmarked $712 million for the second stage of the upgrade to the Monash Freeway

The 2018-19 Victorian Budget focuses on using strong revenue growth from the state receiving a larger GST share and a robust property sector to fund new infrastructure spending.

According to the Budget papers handed down 1 May, Victoria is expected to remain in a strong financial position over the next four years with a projected budget surplus of $1.4 billion in 2018-19 and $2.0 billion in 2019-20.

This solid financial position is being driven by an 8.6 per cent increase in revenue in 2018-19 from the previous fiscal year. This is due in large part to a significant increase in the state’s GST revenue share in 2018-19 (due to strong population growth relative to other states).

Growth in land transfer duty, land tax and payroll tax are also contributing to this growth in revenue.

The Government states that it is investing a record $13.7 billion in government infrastructure in 2018-19. Following that peak, infrastructure spending is expected to decline to $7.6 billion by 2021-22.

The Victorian economy is forecast to grow 2.75 per cent in 2018-19 and each of the following three years.

Victoria’s unemployment rate is expected to fall from a forecast 5.75 per cent in 2018-19 to 5.5 per cent in 2019-20, with the construction industry and retail trade contributing most to employment growth.

Wages growth is also expected to pick up, with the Wage Price Index expected to increase from 2.5 per cent in 2018-19 to 3.25 per cent in 2021-22.

Victoria’s population growth is expected to remain strong at 2.2 per cent in 2018-19 before declining to 2.0 per cent by 2021-22.

Victoria’s net debt to gross state product is expected to be 4.6 per cent at June 2018 (net debt of $19.6 billion) and increase to 6.0 per cent by June 2021 (net debt of $29.8 billion). 

Major announcements in the Victoria Budget include:

Transport infrastructure

  • $2.2 billion to upgrade 13 key arterial routes across the northern and south-eastern suburbs of Melbourne, including Epping Road, Childs Road, Narre Warren-Cranbourne Road and the Healesville-Koo Wee Rup Road. The upgrades are planned to be delivered over the next five years
  • $941 million for repairs, maintenance and safety upgrades of roads in regional Victoria
  • $712 million for the second stage of the upgrade to the Monash Freeway
  • $572 million to plan for the duplication of the Cranbourne rail line, signalling upgrades on the Cranbourne and Pakenham rail lines, and improvements to the Sunbury rail line
  • $313 million to upgrade the Shepparton rail line
  • $110 million for the completion of detailed design and planning for the North East Link in Melbourne
  • $104 million to purchase five X’trapolis trains

The Victorian Government, Dairy Australia and the Gardiner Dairy Foundation will provide $54 million over six years to a new research partnership aiming to improve pasture performance, animal nutrition and the cost-competitiveness of the Australian dairy industry Business and tax measures

  • The Government is proposing to reduce the payroll tax rate for regional businesses from 3.65 per cent to 2.425 per cent. This measure is expected to cost the revenue $167 million over four years and assist around 4000 employers. It applies to regionally-based businesses with payrolls that comprise at least 85 per cent wages associated with regional employees.
  • The payroll tax free threshold increases from $625,000 to $650,000 on 1 July 2018 (announced in previous budgets)
  • $55 million for the government’s Investment Attraction Assistance Program
  • The Victorian Government, Dairy Australia and the Gardiner Dairy Foundation will provide $54 million over six years to a new research partnership aiming to improve pasture performance, animal nutrition and the cost-competitiveness of the dairy industry 
  • $51 million for tourism marketing and attracting business events
  • $14 million for small business mentoring and support, with a key focus being assisting business owners understand how they can benefit from the digital economy.

The Victoria State Budget has earmarked $120 million to upgrade TAFEs in Morwell, Bendigo and SaleEducation and training

  • $613 million to build new schools and acquire land for new schools
  • $483 million for repairs, renovations and upgrade to 130 state schools
  • $304 million to create 30,000 new training places
  • $172 million to make 30 priority TAFE courses and 18 pre-apprenticeship courses free. Courses that will be made free include the Certificate IV/Diploma and Advanced Diploma in Accounting, the Diploma of Nursing, and the Diploma in Building and Construction.
  • $136 million in additional spending in early childhood education to help prepare children for kindergarten and school
  • $120 million to upgrade TAFEs in Morwell, Bendigo and Sale
  • $22 million to provide specialised support to long-term unemployed


  • $462 million to rebuild and redevelop the Ballarat Base Hospital
  • $396 million to build a standalone heart hospital
  • $124 million to introduce digital records system for the Peter MacCallum Cancer Centre, Melbourne Health and Royal Women’s Hospital
  • $115 million to expand the Wonthaggi Hospital Emergency Department
  • $101 million to establish six emergency department crisis hubs for those dealing with mental health or addiction issues

Other major announcements

  • $689 million to expand the prison in Lara
  • $242 million to upgrade sporting facilities including $65 million to upgrade the State Netball and Hockey Centre, $60 million for community sporting grants and $20 million to redevelop Princess Park into the home of the AFLW
  • $231 million to redevelop Docklands Stadium
  • $226 million to expand the government’s child protection workforce
  • $129 million over four years to improve the efficiency of the Victorian court system, including hiring additional magistrates and judges, and establish a new Bail and Remand Court
  • $11 million to enhance mobile coverage in regional areas
  • Australian Defence Force personnel will no longer be required to reside in their home for 12 months to benefit from the first home buyer stamp duty exemption/concession
  • The young farmer land transfer duty exemption/concession threshold will be increased from $300,000 to $600,000.

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