Tough Decisions Ahead
The upcoming Victorian budget, due on May 7th, is expected to be a challenging one for the Labor government. With ballooning state debt and the need to rein in spending, Premier Jacinta Allan faces difficult decisions about taxes, cuts, and infrastructure projects.
Net debt is set to hit $135.5 billion this year, significantly higher than NSW's $94.8 billion. To address this, the government plans to cut spending and axe jobs, particularly those related to pandemic programs. This will avoid further burdening Victorians with additional taxes.
Experts agree that the state needs to slow down its capital spending, which has overheated the construction sector and contributed to rising building costs. This means delaying some major projects, freeing up workers for building new homes.
The government's priorities will be evident in this budget. Premier Allan has a small window to demonstrate her leadership and willingness to make tough calls. This includes forging a path distinct from her predecessor, Daniel Andrews, while maintaining key aspects of his agenda.
With debt remaining a significant concern, further tax increases are unlikely. The government has already implemented several new taxes, including on property, payroll, and private schools. This has weakened the Victorian property market compared to other states.
To provide some relief to Victorians facing rising cost of living, the government may offer sweeteners like the power saving bonus. However, the details will be revealed in the budget itself.
The government faces the challenge of managing its fiscal position without placing undue burden on households. This requires running a more efficient government and making tough decisions about spending.
Despite the challenges, there are opportunities. The extra $3.7 billion from the Commonwealth in GST payments should help deliver a surplus next year. Additionally, the government can focus on productive debt, such as infrastructure projects, to stimulate the economy.
Overall, the upcoming Victorian budget will be a test for the Labor government. It must balance the need to address debt with the need to provide relief to Victorians facing economic hardship. The decisions made will have a significant impact on the state's future.