Putting People At The Heart Of Our Economic Recovery
The Andrews Labor Government is putting Victoria’s greatest asset at the centre of its economic recovery – its people.
The global pandemic has shaken economies right around the world – Victoria included. But our success in driving down cases means that we are in a strong position to rebuild, recover and grow.
As we do, every Victorian in every suburb, region and rural community will be at the heart of our recovery – with our success measured not only by the wealth of our economy but also the wellbeing of our people.
The centrepiece of the Victorian Budget 2020/21 is the Jobs Plan, which sets an ambitious target to create 400,000 jobs by 2025, and half of those by 2022 – because we understand a job means certainty and security for workers and their families.
The Labor Government’s Jobs Plan will help drive our economic recovery – helping businesses big and small create jobs across the state, while using the power of our projects to get more Victorians back into work.
By using the strength of the state’s balance sheet, we’re able to protect the budgets of households and businesses across Victoria. And we’re able to do it, thanks to the Labor Government’s sound financial management over the past six years.
We are well positioned not only to cushion the blow of the global pandemic but draw on the opportunities and options we need to see our state’s economy roar again.
The Budget lays bare the economic impacts of the global pandemic on our state. Total revenue is down 4.2 per cent compared with 2018/19, while state tax revenue has fallen 9.7 per cent this year alone.
Once again, Victoria has been short-changed by Canberra on GST at the worst possible time. Changes made by the Federal Government, costing Victoria almost $1 billion a year, have contributed to a $12.6 billion write-down over four years.
Despite these challenges, the Government has invested more than $13 billion to respond to the global pandemic, providing unprecedented support to households and businesses to make sure they see it to the other side.
These factors mean we project a deficit of $23.2 billion this year, forecast to reduce to $6.8 billion in 2023/24.
Like all jurisdictions around Australia and globally, governments are relying on the strengths of their balance sheets to protect household and business budgets by increasing net debt to manageable levels.
Both the Reserve Bank of Australia Governor, Dr Philip Lowe, and the Commonwealth Treasury Secretary, Dr Steven Kennedy, have urged jurisdictions to make use of record low interest rates to help stimulate the economy, creating jobs and protecting communities.
The interest rate on Treasury Corporation of Victoria three-year bonds is just 0.20 per cent.
The fastest way to repair the economy, reduce deficits and pay down debt is to drive growth, create jobs and help businesses grow. In short, by borrowing we can rebuild sooner and stronger.
This means debt will reach $86.7 billion in 2020/21 and grow to $154.8 billion in 2023/24. Interest expense as a share of total revenue remains more than manageable.
Despite the short-term costs to the state’s financial position, we know that driving economic recovery and growth is not only vital for business, workers and their families, it’s the surest way to reduce deficits and pay down debt.
While the immediate focus is getting Victorians back into a job and reducing the unemployment rate, the Government remains committed to strong financial management – including charting a return to surplus, and stabilising net debt as a percentage of GSP, over the medium term.
For now, the Government’s focus, and the intention of this Budget, is providing the jobs, support and economic opportunities for Victorians to recover – and for Victoria to rebuild stronger and fairer than before.
Quotes attributable to Treasurer Tim Pallas
“This is a Budget built on jobs and focused on people – supporting them to recover as we rebuild our state.”
“We’re following the blueprint of jurisdictions around Australia and the world, who are using their own budgets to protect household and business budgets.”
“You can’t address the economic crisis until you address the health crisis – and that’s what we’ve done. Our success in fighting the virus means we’re well placed to recover and grow.”