On Tuesday 24 November, Victorian Treasurer Tim Pallas unveiled the most significant and ambitious State Budget Victoria has ever seen.
In a roadmap that will see Victoria’s Government spend $49 billion over four years and a goal to create 400,000 jobs by 2025, the 2020-21 State Budget promises a new dawn for Victoria; one that is fueled by local businesses, skilled workers, a new wave of large and small infrastructure projects and a plexus of world-class health and education. The Budget also delivers on many of the recommendations of the Victorian Chamber.
In his address to the State Parliament, Treasurer Tim Pallas said “this has been a year like never before. And it demands a budget like never before. Because if this pandemic has been a stark reminder of anything, it is that people matter more than the bottom line.”
“It has reminded us that our budgets, and our economy, must be built on one immutable truth: When everyone is valued, needed and nurtured, our future can be better, stronger and more resilient.”
The Victorian Chamber of Commerce and Industry (VCCI) has worked tirelessly on behalf of Victorian businesses in the lead-up to the State Budget. In our submission to the government, VCCI called for a focus on three key areas that will act as the bedrock of our economic recovery:
- A plan to protect and grow local businesses and jobs
- Strategies to reclaim our global reputation
- Investment in infrastructure to keep the state moving
Having now seen the 2020-21 State Budget, we are encouraged to see the State Government’s plans to implement so many of our recommendations, including alleviating payroll tax, the reinstatement of the Regional Tourism Infrastructure Fund and the Jobs, Skills and Pathways program.
“This is a once in a century budget for a once in a century pandemic. This is a high spending budget with a focus on infrastructure and jobs that will help the Victorian economy recover quickly and place it in a good position to take advantage of emerging opportunities in post-COVID world,” said VCCI Chief Executive Paul Guerra.
“With so many projects underway and planned, delivery risk now looms large, we will look to the Government to partner with the private sector to deliver projects on time, and that means creating an environment that is conducive to business with less regulation, less cost, more skilled, job ready workers and more university-industry connections.”
To download a full analysis of the 2020-21 Victorian Budget and the key outcomes for Victorian businesses, click the links below:
2020-21 State Budget Overview (PDF)
Budget outcomes for business (PDF)
The economic devastation that COVID-19 has imposed on our State has already come at a cost of $257 billion in State and Federal Government spending in Victoria, and an average loss of 1,200 jobs every day during the peak of infections in Victoria’s second wave.
As a result of the second wave of COVID-19 and subsequent lockdowns, total revenue to the State Government is currently down 4.2 per cent from pre-pandemic levels, while state tax revenue has fallen 11.3 per cent.
Due primarily to the global pandemic and its ramifications, the Victorian Government has witnessed an operating deficit of $6.5 billion in 2019-20. Treasurer Pallas projects the operating deficit to decline further to $23.3 billion in 2020-21, before being reduced to $6.8 billion in 2023-24.
The Government’s response to the pandemic and the impact of the economic downturn on the State’s revenue base means that net debt will rise from 9.6 per cent of GSP at June 2020 to 28.9 per cent by 2023-24.
While the State Budget shows a gloomy outlook for Victoria’s balance sheet, economic forecasts point to a strong rebound in economic and jobs growth as restrictions ease and consumer confidence grows. This rebound is expected to continue across 2021-22.
Jobs and employment
The 2020-21 State Budget includes a ‘Jobs Plan’ to create 200,000 jobs by 2022, and 400,000 new jobs by 2025.
As part of the State Government’s massive investment into infrastructure projects, $33.1 million will be invested to establish the Big Build Training Pathway Program that will see the employment and training of apprentices and trainees on major infrastructure projects.
The Government has also flagged the Jobs, Skills and Pathways Program, which VCCI had previously called for in our submission to the government as part of the review into Victoria’s post-secondary education and training system, led by Jenny Macklin.
The Jobs, Skills and Pathways Program will support school students with vocational and applied learning pathways and facilitate industry engagement.
The Budget also includes funding for a pilot scheme to provide up to five days of sick and carer’s pay (at minimum wage) for casual workers in some industries. The Government has committed to introducing a new levy on business to fund the scheme at the conclusion of the pilot.
When the proposed scheme was announced on 23 November 2020, VCCI Chief Executive Paul Guerra said “the Victorian Chamber will talk to members and government about the potential implications of this proposal, including the cost and complexity for business. The Victorian Chamber will not support any additional cost or impost on business, particularly as we are trying to restart the economy and incentivise the creation of more jobs.”
The budget provides substantial investment in infrastructure to meet the needs of our growing population while creating jobs for thousands of Victorians.
With an initial investment of $2.2 billion, the Suburban Rail Loop will transform Melbourne’s public transport network. Linking every major railway line from Frankston to Werribee, the Suburban Rail Loop will also include a station at the Melbourne Airport.
Both the Suburban Rail Loop and Melbourne Airport Rail are set to commence construction in 2022.
As Victoria’s fastest-growing regional city, Geelong’s rail network will also be getting a multi-billion-dollar towards upgrades. This builds on the $1 billion that has already been invested in upgrading services on the Geelong corridor, a further $2 billion has been slated for Stage 1 of the Geelong Fast Rail which proposes to increase travel times and frequency.
$1.4 billion has been set aside for 100 next-generation trams along with a new tram maintenance facility in Melbourne’s north-west to bolster the bustling tram network. Victoria’s roads will also be upgraded with a $341.2 million investment in a maintenance blitz.
Established in 1848, the Royal Melbourne Hospital (RMH) in Parkville will receive a much-needed upgrade and makeover, with the Victorian Government announcing a major medical infrastructure project.
Integrated with the new Metro Tunnel Project, the RMH will act as the focal point of Australia’s biggest health-building program, with new campuses to be established in the Arden Precinct in North Melbourne and the Royal Women’s Hospital.
Significantly, 12,000 new homes will also be created through the $5.3 billion Social Housing Fund, which aims to support more than 10,000 construction jobs.
123 schools across the state will be upgraded thanks to a $892.2 million State Government investment. In line with the Government’s commitment to open 100 new schools across the state by 2026, the government has allocated $122.4 million for the construction of new schools.
Regional Victoria and the visitor economy
With few industries impacted more severely from COVID-19 lockdowns than the tourism sector, VCCI called on the State Government to support our tourism economy and to reclaim our global reputation. As part of the $465 million Victorian Tourism Recovery Package, many of the measures put forward in the State Budget will go a long way to helping.
On top of the $110 million Included in the Regional Tourism Investment Fund, $170.6 million will expand the Regional Tourism Infrastructure Fund for new projects. Some of the Victorian attractions already earmarked include:
- $15 million to improve the Falls to Hotham Alpine Crossing trail
- $47.5 million for infrastructure on the Great Ocean Road
- $18.5 million for Gippsland including new accommodation and improvements to the East Gippsland Rail Trail
- $3.5 million for 10 ‘eco-pods’ at Cape Conron Coastal Park
Along with a $106.5 million investment to support the recovery of Victoria’s visitor economy, Visit Victoria’s marketing budget will also get a $58 million boost.
The State Budget has also revealed a $27.9 million Victorian Regional Travel Voucher Scheme which will provide 120,000 vouchers to encourage Victorian residents to travel within Victoria.
A further $1.5 billion has also been allocated to redevelop the arts precinct, including building NGV Contemporary, a new branch of the National Gallery of Victoria dedicated to contemporary art and design.
Innovation and technology
Innovation and commercialization feature strongly with $2 billion allocated to creating investment in research and innovation across health, agriculture, manufacturing, digital technology and clean energy.
$526.2 million will go to Victoria’s Digital Future – a multi-faced initiative including:
- Eradication of mobile blackspots and improve connectivity in regional Victoria
- Establishing a digital and innovation hub in Cremorne
- The delivery of digital short courses and industry internships
- Business-grade broadband to be delivered across suburbs and regional towns
To help Victorian businesses maintain cashflows and continue vital research and development (R&D) work, the State will also invest $12.9 million to provide R&D cash flow loans for SMEs to pay up to 80 per cent of their forecast refundable Federal Government R&D tax offset.
The State will also invest $60.5 million to establish start-up venture capital fund, plus a further $10 million for investment support for innovative early-stage start-ups founded by women.
A further $25.8 million will also be invested to establish a venture debt facility to inject more capital into the scaleup sector and support companies that do not meet the requirements of traditional lenders. The proposed debt will be short to medium-term in nature and will promote high value-added jobs growth for small and medium-sized enterprises and the start-up industry.
Tax and regulations
A payroll tax credit will be introduced to stimulate growth and increase employment for small and medium-sized businesses with wage bills of less than $10 million. Eligible businesses will be able to receive a non-refundable credit of 10 cents for every dollar of wages paid in 2020-21 and 2021-22 above the previous year’s wages.
As part of the recovery from COVID-19, this incentive is expected to provide relief for 14,000 businesses in 2020-21 and 21,000 businesses in 2021-22.
$74.8 million has also been put forward for a Regulatory Reform Package, which will include:
- Running a second round of the Better Approvals Program
- Establishing a Regulatory Reform Incentive Fund
- An Incentive Based Regulation Unit
- A Fast-Track Review Unit
Small businesses will also have an opportunity to reduce their carbon footprint thanks to an additional $45.9 million which has been put forward to expand the solar panel rebate and loans scheme.
VCCI advocacy and campaigns
For more information on the Victorian Chamber’s advocacy work and current campaigns, along with submissions and taskforces, visit the Policy and Advocacy section of our website.
If you have any questions or would like to be involved in our advocacy work, please contact email@example.com.