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Key posts
- Budget to include new taxes and $1b surplus within three years
- Stamp duty abolished for commercial property
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Editorial: Expect pain, not largesse, from a tough Victorian budget
While the Victorian government has given precious little away ahead of Tuesday’s state budget, the signs are ominous that there will be more cuts than handouts. Indeed, the near silence ahead of the parliamentary reveal by Treasurer Tim Pallas this afteroon, speaks volumes when compared with the deluge of hints, leaks and promises crafted to sell the federal budget ahead of its unveiling earlier this month.
What we do know is that the Andrews government has made strong warning noises about the need to start significantly paying down some of its ballooning debt, which ran out of control during the pandemic and is now expected to reach $166 billion by mid-2026.
Put another way, by 2025 an estimated 8¢ of every dollar raised by the government will have to be funnelled into making interest payments. Victoria now has the highest debt in proportional terms of all the states.
The burden has been ameliorated somewhat by judiciously locking in low borrowing rates through the sale of very long-term government bonds. But much like those millions of Australian home owners who took out a cheap fixed-rate mortgage in 2020 or 2021, Victoria will eventually have to tackle its own debt cliff. Sooner is better than later.
Read the full editorial here.
Budget to include new taxes and $1b surplus within three years
While we wait for the state budget to be handed down just after 1pm, here’s what we know so far.
Sumeyya Ilanbey, Annika Smethurst and Broede Carmody from our state politics team reported this morning that Victorians were expected to face new tax measures and lengthy infrastructure delays as a result of the 2023 budget.
Deputy Premier Jacinta Allan warned on Monday that the “time had come” to start balancing the books, with the government vowing to deliver a $1 billion surplus within three years – $100 million higher than forecast in the pre-election budget. The figure is predicted to grow to $1.2 billion in the year after.
With interest on the state’s debt starting to bite, Allan promised working families would be spared from any revenue measures introduced in Tuesday’s budget to tackle net debt, which was forecast to reach $116 billion at the end of this financial year.
Senior government sources have confirmed Pallas’ ninth, and most difficult, budget is likely to include revenue-raising measures aimed at big businesses.
The government will delay by four years construction on capital works and other infrastructure projects, as Pallas seeks to hand down a surplus in 2025-26, as promised in last year’s budget.
One senior government source said stalling the construction of projects would free up money to pay down debt in the short term and reduce the interest bill, which topped $1.8 billion during the final six months of 2022.
Read the full story here.
Data guru enters his ninth state budget lock-up
Our data expert Craig Butt is one of the many journalists and editors who headed into the Victorian budget lock-up at 9am on Tuesday.
More impressively, this is his ninth state budget – he’s been to every single lock-up for a budget handed down by Treasurer Tim Pallas.
He’ll be working on budget graphs and analysis with economics editor Josh Gordon. You can expect to read some of Butt’s work after the embargo is lifted at 1pm.
National data editor Craig Butt outside the Victorian budget lock-up on Tuesday morning.Credit: Daniella Miletic
Stamp duty abolished for commercial property
Commercial and industrial property buyers will soon no longer pay stamp duty, after the Andrews government announced today’s budget would abolish the lump-sum payment in favour of an annual property tax in coming years.
Making the announcement on Tuesday morning, Treasurer Tim Pallas said the significant tax reform would add $50 billion to the Victorian economy through enhanced business growth.
Victorian Treasurer Tim Pallas holding a copy of the 2023 state budget. Credit: AAP/James Ross
The changes do not impact residential property, despite economists warning stamp duty on housing was an inefficient tax which unfairly punished young home buyers.
The new annual tax will be set at a flat 1 per cent of a commercial property’s unimproved land value.
Properties bought from mid-2024 will transition to the system, with the annual property tax to be payable 10 years after the transaction.
“These landmark changes will enable businesses to be more dynamic and agile, and to grow and employ more workers,” Pallas said in a statement.
You can read the full story here.
Good afternoon
Hello and welcome to our live coverage of the Victorian state budget for 2023.
I’m Ashleigh McMillan and I’ll be helming the blog throughout the afternoon. Thanks so much for your company.
Our team of journalists is still in the media lock-up, so we will bring you what you need to know about the state’s bottom line once the embargo lifts around 1pm.
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