MEMBERS BRIEF ON THE 2017-18 VICTORIAN BUDGET
The Victorian Budget was delivered on 2 May 2017. The focus of the State Government’s
budget is a significant investment in family violence prevention, an increase in police
numbers as part of a major anti-crime initiative and a doubling in annual capital investment
across the over the forward estimates.
Significant announcements within the Budget for local government include:
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The centralisation of the municipal valuation functions with the Valuer General and a
movement to annual property revaluations. It is understood that issues such as
councils’ continued financial contribution to the valuation data, whether it will also be
compelled to update its valuations used for rating purposes on an annual basis and
other consequences of this decision for local government is yet to be determined and
will be subject to consultation with the sector.
$81.2 million over four years for the MCH program
$87.1 million for kindergarten services, with a particular emphasis on support
vulnerable children
$14.9 million for the operating costs of the SES. This figure is not easily identified in
the budget papers but was announced in a government press release.
$50m over two years for a continuation of the Growing Suburbs program, which
halves the previous annual funding contribution
MAV PRIORITY ISSUES
The following table reviews the funding issues sought by the MAV from the State
Government against the budget allocations
Measure
MCH program
Pensioner rate rebates
continued
Kindergarten and early years
funding
Regional and rural road and
bridge infrastructure
Budget Response
$81.2m over four years for
the Enhanced MCH program
and other MCH initiatives
Budget paper 5 appears to
confirm continued provision
of pensioner rate rebates
$87.1m for kindergarten
services, particularly for
vulnerable families
MAV Comment
The MAV welcomes the
funding commitment
$556.4 million provided over
four years for regional
funding
The MAV welcomes the
major increase in
maintenance and renewal
funding for VicRoads’ assets.
The MAV welcomes the
continued provision of
pensioner rate rebates
MAV welcomes the
significant investment in
early years education.
It is disappointed that no
provision was made for local
roads and bridges.
Measure
Roadside weeds and pests
Budget Response
$5.4 million allocated over
two years
MAV Comment
While pleased with this
funding allocation, MAV will
continue to advocate for
long-term funding for
councils for these roadside
responsibilities
MEASURES OF RELEVANCE TO LOCAL GOVERNMENT
Local Government Reform
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$1m in 2017-18 for the Regional Sustainability Reform Fund, which will explore the
financial sustainability challenges facing rural and regional councils.
Family violence
$1.9 billion for family violence prevention, including:
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$448m for the creation of 17 support and safety hubs
$270.8 million for victim assistance, after-hours crisis support, counselling and
therapy, including for children
$269.4 million to enhance the response of Victoria's legal system to family violence
$76.9 million to hold perpetrators of family violence to account and to change
perpetrator behaviour
$133.2 million for housing
$95.4 million to strengthen our family violence workforce
$33.5 million to provide greater support for Aboriginal Victorians and Aboriginal
organisations and communities
Road safety
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$6.8m over three years for the implementation of the Australian Disability Parking
$4.9m School crossing supervisors in 2017-18. It is understood that further funding
will be determined following the review of the program in the first half of the 2018
year.
$556.4m for rural and regional roads
Infrastructure
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$50m over two years for the Growing Suburbs Fund
$45.2m over four years for the Connecting Regional Communities program to
support mobile and broadband coverage in rural and regional areas.
$1.458b for the Regional Rail Revival Program, which will upgrade rural passenger
train lines. This includes an upgrade the Ballarat line previously funded in the 201617 budget and an allocation to the Gippsland line in the 2017-18 budget. A large
proportion of funding ($485m) remains contingent on the Commonwealth providing
funding under the Asset Recycling National Partnership Agreement.
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$1.1m over three years for the development of a rural drainage strategy.
Sport and recreation
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$20.1m over two years for the Sports Infrastructure Fund for local sporting clubs’
facilities, including an expansion of the Female Friendly Facilities Program
$1.1m over four years for the public swimming pool safety program to develop a code
of practice for Victorian public swimming pools
Environment
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$141.9m over five years for the implementation of the reforms to EPA – funded from
the landfill levy and sustainability fund
$30.4m over four years for waste and resource recovery in Victoria, funded from the
sustainability fund
$5.4m over two years for the continuation of roadside weeds and pests funding
$12.5m over four years for the Taking Decisive Action on Climate Change program,
funded from the Sustainability Fund.
$12.8m over four years for the Understanding and Adapting to Climate Change
program, funded from the Sustainability Fund.
Planning
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$3.1m over three years for the Smarter planning for permits program
$16.6m over four years for the Speeding up local government planning decisions
program
$1m in 2017-18 for the City Deals seed funding, to develop proposals under the
related Commonwealth Government program for metropolitan and regional cities.
Human services
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$10m over four years for early childhood development facilities
$87.1m over four years for the Education State Reform program to provide high
quality learning and development for three and four-year olds, including programs to
provide support for vulnerable children
$81.2m over four years for the MCH program, including funding for the enhanced
program, MCH nurse training and scholarships
$7.2m over two year for early childhood intervention services
$6.2m over two years for the Early Start Kindergarten for vulnerable children
$5m over two years for children with significant disabilities to participate in
kindergarten
$4.9m in 2017-18 for the State Disability Plan 2017-2020
Emergency management
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$7.4m over four years for SES unit funding and $26.9m in the 2017-18 year for the
new SES headquarters and other critical assets
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$14.9m for the operating costs of the SES. This figure is not easily identified in the
budget papers but was announced in a government press release
$273.3m over four years for bushfire risk reduction
Economic development
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$110m over four years to establish a timber plantation in the Latrobe valley to
support the timber industry. This initiative has been funded from the Sustainability
Fund.
$171m reduction in payroll tax for rural and regional businesses through the
introduction of lower payroll tax rates for eligible rural and regional businesses.
Taxation and efficiency measures
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$80m additional revenue will be collected through the introduction of a Vacant
Residential Property Tax
$1.2b over four years in whole-of-government efficiencies
OVERALL ECONOMIC POSITION
The underlying financial position of the Victorian Government has remained very strong, with
an underlying surplus of $1.15 billion forecast in 2017-18 and averaging $2.1b over the
forward estimate period.
Economic conditions are expected to remains strong, with above trend performance forecast
for the current year before most indicators return to trend performance. The unemployment
rate is expected to return to the trend rate of 5.5 per cent in 2017-18 and remain stable
despite employment growth expected to trail population growth. Consumer prices and wage
growth is expected to remain at moderate levels before returning to trend by 2020-21.
It is expected that historically high population growth will continue across Victoria.
Table 2: Victorian economic projections
Real gross state product
Employment
Unemployment rate
Consumer price index
Wage price index
Population
Source: Budget Paper 2, p26
2015-16
Actual
2016-17
Forecast
2017-18
Forecast
2018-19
Forecast
2019-20
Projection
2020-21
Projection
3.3
2.4
5.9
1.6
2.3
2.1
3.00
3.25
5.75
2.00
2.00
2.00
2.75
2.00
5.50
2.00
2.25
1.90
2.75
1.50
5.50
2.25
2.75
1.80
2.75
1.50
5.50
2.50
3.00
1.80
2.75
1.50
5.50
2.50
3.25
1.80
VICTORIAN GOVERNMENT BUDGET
In light of the Victorian Government’s decision to introduce a rates cap on the local government
sector commencing 1 July 2016, the MAV has undertaken a review of the Victorian
Government’s budgetary position over the following 12 months. There are a number of
interesting observations that can be made:
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Overall expenses are expected to increase by 4.9 per cent in 2017-18, after an
increase of 9.8 per cent in 2016-17
Taxation revenue is expected to decline in 2017-18 by 1.6 per cent, following an
increase of 11.5 per cent in 2016-17, and
Employee expenses are budgeted to increase by 4.3 per cent following a 10 per cent
increase in 2016-17.
The following table outlines the change in land taxes collected by the Victorian Government:
2014-15
($m)
Land tax
2015-16
($m)
2016-17
($m)
% Change
% Change
2017-18
($m)
% Change
1753
1771
1.0%
2499
41%
2366
-5.3%
588
674
14.6%
669
-1%
674
0.7%
4938
5839
18.2%
6020
3%
6164
2.4%
Total
7279
8284
13.8%
9188
Source: Budget Paper Number 5, p211-12; 2015-16 Financial Statements
11%
9204
0.2%
Land transfer duty
FSPL
GRANTS AND TRANSFERS TO LOCAL GOVERNMENT
As shown in the table below, total grants and transfers to local government are expected to
be relatively stable in 2017-18. Some caution should be exercised in interpreting these data
however, as it incorporates a range of funding programs including the Commonwealth
financial assistance and road grants. HACC and MCH funding programs are excluded from
these figures.
Table 3: Grants and transfers to local government ($ thousand)
Department of Economic Development, Jobs, Transport and
Resources
Department of Education and Training(a)
Department of Environment, Land, Water and Planning
Catchment Management Authorities
Environment Protection Authority
Parks Victoria
Department of Health and Human Services (b)
Department of Justice and Regulation
Country Fire Authority
Department of Premier and Cabinet
Department of Treasury and Finance
Total grants
2016-17
budget
140 534.2
2016-17
revised
158 266.2
2017-18
budget
149 630.9
10 576.0
668 024.6
153.2
21 036.8
684 023.2
153.2
14.3
49 500.8
12 650.6
308.0
3 452.5
12 890.6
898 104.8
14.3
37 865.4
9 748.0
308.0
11 333.8
87 597.2
1 010 346.2
30 798.2
662 362.4
148.2
1 491.0
14.3
67 093.4
3 836.0
315.0
9 649.6
76 288.6
1 001 627.5
Source: Budget Paper 3, p377
FURTHER INFORMATION
All State Budget papers and media releases listed by Ministerial responsibilities are available
on the Victorian Government’s budget website.
For further information about the members brief, contact Owen Harvey-Beavis.
Website link: www.budget.vic.gov.au