With Victorian Treasurer Tim Pallas, MP

This webinar is an informative discussion on how the coronavirus crisis has impacted Victorian business and the economy overall, what recovery is shaping up to look like and what role businesses will play in getting Victoria back to business. Joined by VCCI Chief Executive Paul Guerra, Mr Pallas also discusses how the government is working with industry to restart business and get the recovery underway quickly, in what is a special webinar not to be missed.
 

This session was originally recorded on 6 May 2020.


This information was correct at the time of broadcast. This does not constitute formal legal advice. The Victorian Chamber accepts no liability for actions taken as a result of this broadcast.

Questions for Treasurer Tim Pallas

 

Q. Federal Cabinet has now released the three-step “roadmap” intended to be rolled out between now and July. Businesses need more certainty on how and when Victoria will implement our own roadmap. How will you make sure business is back up and running by the time JobKeeper and JobSeeker start to wind down?

A. The Victorian Government understands the importance of providing certainty to businesses, and that many businesses will need time and support to get back up and running.

Whilst the strong measures that Governments around Australia took to slow the spread of coronavirus have been very successful by international standards, we know that coronavirus is not over and there is no room for complacency.

We have always known we must remain vigilant and agile in our response, and continue to make decisions guided by the latest health advice and the best economic advice.

Unfortunately, due to increased community transitions more recently, we have been required to implement local lockdowns in ‘hot zones’ to stem the further spread of the virus.

We know this will have a very real impact on local businesses trading in these communities. And to help them get through this we are providing an initial further $5000 in dedicated support for businesses previously eligible for a Business Support Fund grant or a payroll tax refund.

The Victorian Government is determined to do what we can to help Victorian businesses, households and workers to survive this crisis.

We have invested more than $8.5 billion responding to the economic crisis caused by coronavirus, including direct support for business and workers, and billions of dollars in fast-tracked infrastructure projects. These measures were developed following consultations with the National Cabinet, and complements the work of the Commonwealth Government.

We want to ensure that business can reopen and recover in a sustainable way. We want to lift businesses out of this negative economic environment so we can continue to thrive as a State on the other side of the pandemic. The Reserve Bank Governor has suggested the economy will need support from both monetary and fiscal policy for some time, noting there are “certain risks” in withdrawing support too early.

The Reserve Bank has said it will keep monetary support going for a long time, and it is hopeful fiscal support will be maintained too, especially if the economic recovery is drawn out.

Here in Victoria, we agree there is a clear case for extending support being provided to Australians – to avoid a fiscal cliff, and to provide businesses with the time and support to get back up and running.

And we will continue to work with the Commonwealth Government through the National Cabinet and the Treasurers’ Forum and to advocate for economic support that will help the Victorian and Australian economy recover from this crisis.

Q. Are you and your government thinking about innovative ways to recover the budget and economy beyond employment stimulus. Things such as asset recycling, reinsurance and accessible funding via super low interest loans for entrepreneurial innovation that can create future employment?

A. The Victorian Government is exploring all avenues to ensure businesses and households survive the pandemic, and to support the economic recovery on the other side of this crisis.

As well as the $1.7 billion Economic Survival Package and statewide building program, we recently launched the$250 million Victorian Business Growth Fund for small and medium enterprises to help them access capital and create jobs to grow the Victorian economy.

The Fund is the largest of its kind in Australia, seeking to create thousands of jobs by investing in established Victorian businesses with compelling potential for growth and jobs creation.

The Fund will complement the Labor Government’s programs which already support businesses, such as the Victorian Jobs and Investment Fund and payroll tax cuts announced in the Victorian Budget 2019/20. Government is actively considering other innovative ways to support growth, including both economy-wide and industry and region specific measures. Victorian businesses can expect further announcements in the lead up to the 20-21 budget.

Q. There is a lot of commentary and debate on the right reforms to fuel our recovery. What kind of tax and IR reforms are on the table? Replacing stamp duties with land tax is one example. What is the timetable for deciding such reforms?

A. The Government is proud of its record on tax reform, including initiatives such as increasing the payroll tax-free threshold, cutting stamp duty for first home buyers, and – in an Australian first – cutting the regional payroll tax rate to half of the metropolitan rate. The Government has already announced that it is building on this record, cutting the regional payroll tax rate to 25 per cent of the metropolitan rate and further increasing the payroll tax-free threshold to $700,000.

The Government is looking at the appropriate balance of taxes required to fund the services and infrastructure that Victorians expect and deserve, while supporting the economic recovery.

Consistent with our record of tax reform, we will continue to look for opportunities to enhance the State’s productivity and competitiveness – and to build a better future for all Victorians.

We expect to be able to say more in the lead up to the 2020-21 State Budget, which will be handed down later this year.

Q. In your presentation you mentioned the important role infrastructure will play in Victoria’s recovery. Is planning for the Suburban Rail Loop proceeding and can you provide a timeline for when projects, especially road projects, might be announced?

A. Yes, planning for the Suburban Rail Loop is proceeding – but that’s not all that’s happening.

The Andrews Labor Government is not wasting a moment getting thousands of people back to work.

Our Building Works package will deliver an extra $2.7 billion in shovel-ready projects.

It will create 3,700 direct jobs for construction workers, painters, plasterers, gardeners, engineers, plumbers, electricians, carpenters, maintenance workers, administration staff and more. Thousands more jobs will be created across our supply chains, including manufacturing, logistics, transportation, warehousing and retail – while also pumping extra dollars back into our economy.

This is one of many major economic stimulus investments being rolled out by the Victorian Government.

The Victorian construction sector has been the second largest contributor to employment growth in our state during the past five years.

Our Big Build transport projects such as the Level Crossing Removal Project and the Metro Tunnel are already delivering thousands of jobs and will cut transport congestion in this growing city.

Over the next few months we’re ramping up work on our Big Build, with our program to remove dangerous level crossings continuing at full speed, accelerated works on key roads such as the Monash Freeway, as well as initial early works and procurement continuing on Melbourne Airport Rail and the North East Link.

Because we know we need to think short term as well as long term.

Building these projects is more important than ever, as we revive our economy and get people back to work.

And it is a testament to our ambitious infrastructure agenda and Triple A rating that we continue to progress procurement and delivery of our key projects. 

Q. Will the state government provide support to businesses, schools and public facilities for making them coronavirus safe for example installing air filtration systems, partitions, performing temperature checks and other measures?

A. The most important thing that Government can do to support businesses, education institutions and other organisations to keep safe is to empower them with information and training.

The Victorian Government has developed both community-wide and situation-specific guidance materials and resources to ensure businesses are equipped to ‘bounce back’ safely.

Tailored guidelines, customer signage, and online training courses have been developed for a range of businesses, including those in hospitality, beauty and professional care and tourism.

All Victorian Government business guidelines can be found at: www.business.vic.gov.au

The Victorian Government has also distributed 4,800 thermometers for tourism and accommodation operators for temperature checking and to keep Victorians safe.

For schools, as students return to on-site learning, schools are implementing staggered drop-off and pick-ups to reduce the number of adults around school grounds at *any one time, as well as staggered break times to manage the number of students mixing across year levels.

All schools will implement physical distancing measures for their staff, and school staff have been prioritised for voluntary coronavirus testing in the lead-up to today’s return to on-site schooling. 

Q. Is there an opportunity to fast track the energy transition by funding large scale infrastructure investment and other industry specific assistance to create more jobs and help struggling households and businesses with energy costs? What role do you see for renewable and clean energy technologies in driving Victoria’s economic recovery?

A. The Victorian Government has announced (May 21, 2020) a suite of renewable energy projects that will create jobs, save Victorians money and help reduce emissions.

Minister for Energy, Environment and Climate Change and Solar Homes Lily D’Ambrosio unveiled a $15.3 million package of investments, that build on the Government’s Solar Homes program, which is installing solar panels on 700,000 homes across the state and saving households up to $890 per year.

Sports clubs and community halls will benefit from $10.3 million for energy efficiency and affordability improvements, including solar installations on public buildings on crown land.

A further $4 million will fund energy efficiency upgrades for hot water systems and lighting in public housing high-rise properties across Victoria.

The package also includes $1 million in grants to help regional communities deliver renewable energy projects – such as putting solar panels on child-care centres, community buildings or health facilities – through the New Energy Jobs Fund.

The Victorian Government is also investing up to $45 million for increased daily cleaning at every government school for the rest of Term 2 and 3. 

This fund will create jobs across the Gippsland, Loddon Mallee, Grampians, Hume and Barwon South West, as Victoria’s regions lead the charge in renewable energy.

Communities wanting to harness the benefits of renewable energy can learn from the experiences of Community Power Hubs. The Hubs were part of a recently completed pilot program, co-funded by Sustainability Victoria, that supported community-owned and operated energy projects.

The Community Power Hubs operated in Ballarat, Bendigo and the Latrobe Valley across 15 projects. They worked with 200 businesses, created local employment opportunities and produced an economic impact of $11 million. 

Q. The Federal Government has raised the need to support improvements to domestic manufacturing capability and strengthen supply chains. Is this a view shared by the State Government and if so what policy proposals are being considered and what is the investment plan for Victorian manufacturing?

A. The Victorian Government has always supported a strong local manufacturing sector.

The coronavirus pandemic has highlighted the importance of domestic manufacturing, particularly in sectors where sovereign capability is critical, such as MedTech and defence.

A Medical Equipment and PPE Supplies Taskforce was established in early March to facilitate the private sector commence or scale up domestic production and manufacture of medical equipment and PPE.

The Victorian Government will have more to say about initiatives to support Victorian businesses, including the manufacturing sector, in the lead up to the 20-21 budget.

Q. Can government increase efforts to purchase local goods and services across all sectors, and extend the Major Projects Skills Guarantee to other state and local government projects/contracts to provide additional training and employment opportunities for young people, particularly in rural and regional areas?

A. Through our Local Jobs First policy, the Victorian Government, as the largest procurer of goods, services and construction works in the State, uses our purchasing power to help develop local industries, create jobs and boost economic activity across Victoria.

The economic crisis has made this function more critical than ever before. We’re looking to further enhance and simplify Local Jobs First to increase our focus on identifying opportunities for local suppliers and manufacturers in project supply chains. We are also actively considering ways to provide additional training and employment opportunities for Victorians, including by examining settings for the Major Project Skills Guarantee.

Q. Many of us are watching our small towns shrink before our eyes with small and micro businesses going to the wall. What do recovery plans for rural and regional Victoria look like in terms of encouraging decentralisation and a fair share of infrastructure projects and stimulus? For example how many investment priorities from the nine Regional Partnership Groups will be supported by the Government to drive jobs and growth?

A. Regional Victoria is benefitting from the more than $6 billion we have invested to support business and workers through this crisis.

Our $2.7 billion Building Works package includes more than $1.8 million in statewide and regional projects. For example, to help our tourism sector bounce back bigger and better than ever, the package includes $382 million in upgrades, maintenance and new experiences at tourism destinations across the state. Many of these projects are in regional Victoria. From delivering 50 kilometres of mountain bike trails in the Ararat Hills to upgrades at the Gippsland Lakes, this investment will be particularly vital in creating and sustaining jobs in regional Victoria. The package delivers a $328 million boost to Victoria’s transport network, which includes around 300 kilometres of regional track improvements and critical regional road upgrades to increase connections throughout regional Victoria. From Ballarat to Gippsland, the packages invests in several school upgrades and new school builds— including those destroyed or damaged in this summer’s devasting bushfires — so that more students in regional Victoria receive the best education possible while also making regional Victoria a more attractive place for families and businesses.

We know the coronavirus pandemic is making it even tougher for young people to achieve their dreams of homeownership – that’s why we have extended the First Home Owners Grant for regional Victorians to the middle of next year. Since we first introduced this initiative in 2017, more than 8,800 regional First Home Owner Grants have been provided, saving Victorian families $176 million.

The Labor Government is making it easier to do business in regional Victoria – and in turn supporting local jobs – by cutting regional payroll tax to just a quarter of the metropolitan rate, phased in over three years. For the current financial year, it sits at 2.425 per cent – half the metro rate.

From 1 July, the regional payroll tax rate will continue to be cut by 0.4 percentage points until it hits a quarter of the metro rate in 2022-23 – the lowest payroll tax rate in Australia. In February 2020, we forecasted that more than 4,400 businesses in regional Victoria would share in $154 million in savings in the 2019/20 financial year. 

We have also expanded the eligibility requirements so that more businesses can access the regional tax rate even if their business is registered in the metro area. They now qualify as long as 85 per cent of their wages are paid to staff working in regional Victoria.

Our regional engagement has not stopped due to the coronavirus pandemic. The Government has held a series of virtual Regional Partnership roundtables to help us understand the local impacts of the coronavirus pandemic and pave the way for recovery. Regional and rural communities are best placed to tell us how we can help stimulate their economies, bring visitors back to the region and strengthen local communities. This ongoing advice we will receive from our local communities will be critical as we move to the other side of the crisis.

Q. International tourism will be impacted for some time, even as we move into recovery locally. What is the government’s thinking with respect to supporting businesses and communities that are highly reliant on international visitation and how will you support and promote the domestic tourism market and give people confidence to travel locally?

A. The Victorian Government is backing Victorian sport, tourism and creative industries, with $150 million to save jobs and ensure our best experiences are available on the other side of the coronavirus pandemic.

The Experience Economy Survival Package unveiled today will support sporting clubs and competitions across the state – from grassroots to elite – as well as major tourist attractions, galleries and museums, and the racing industry.

Together, these sectors contribute nearly $70 billion to the Victorian economy and support hundreds of thousands of jobs, but they have been hit hard by measures to slow the spread of the virus and save lives. The investment announced today will help these industries ride out the impacts of the pandemic and reboot, rebound and recover.

Q. Regional Tourism Bodies are yet to receive confirmation of funding for the FY21 period - when do you anticipate this being finalised so that regional areas can commence their planning to support local operators in their marketing efforts as travel restrictions are relaxed?

A. Regional Tourism Bodies will continue to be supported in the short term and further announcements will be made when the budget process recommences in a few months.

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