Opteon victoria 2011 victorian budget wrap


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A report from Richard Jenkins, Research Manager at Opteon Victoria, which summarises the Victorian budget for 2011

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Opteon victoria 2011 victorian budget wrap

  1. 1. 2011 Victorian Budget WrapIn a challenging financial climate, delivering $5.2 term trend growth projection down from 3% to 2.75%.billion in election commitments was the key Population growth has slowed in Victoria to 1.7% over the year tofocus when the Victorian Treasurer recently September 2010, compared with the peak of 2.2% growth achievedhanded down the 2011/12 State Budget. over the year to June 2009. The slow down in population growth reflects lower net overseas migration – a trend which is expected toThe Victorian Economy continue and dampen economic growth.The outlook for the international economy has improved largely driven Employment has continued to increase strongly in Victoria, withby growth in emerging economies. The outlook for emerging and 3.5% growth over the year to March 2011, representing close todeveloping economies remains strong, especially for Victoria’s major an additional 100,000 jobs. Over the past year, job increases weretrading partners in Asia, with the IMF forecasting 6.5% growth in both greatest in the health care & social assistance, construction and2011 and 2012. This should support growth in Victoria’s exports over professional services industries. Employment is likely to continue tothe medium term. grow over the rest of 2010/11 and into 2011/12, but the rate of growth is expected to moderate.Victoria’s divergent economic base has been a major factor in theresilience of the Victorian economy in recent years. Over the past As a result of falling GST revenue the Victorian Government is budgetingdecade, Victoria has largely relied on population growth to drive its for an operating surplus (net result from transactions) of $140 million ineconomic performance. According to the Coalition government, over 2011/12. Despite a cut in state spending from 8% a year to 3% per year,the same time productivity growth has declined from an average annual net debt will almost treble from $8 billion in mid 2010 to $23 billion ingrowth rate of 2.8% in the five years to 1999/2000 to just 0.7% in the 2015. Although debt is forecast to increase significantly, Victoria willfive years to 2009/10. retain its AAA credit rating with net financial liabilities peaking below review triggers. Overall, the outlook for the Victorian economy is positive; however, the State faces a number Victorian Economic Projections of short and medium-term challenges. 09/10 10/11 11/12 12/13 13/14 Indicator Actual Forecast Forecast Forecast ForecastThe sustained commodities boom provides significant opportunities forthe Australian and Victorian economies. Victoria is likely to continue to Real gross state 2.00 2.50 3.00 2.75 2.75benefit from interstate trade links with the resource-rich states and productterritories, particularly for services demanded by the mining industry. Employment 2.80 3.50 1.75 1.75 1.75However, the commodities boom has also resulted in a high Australian Unemployment 5.00 4.75 5.50 5.25 5.00dollar, reducing the competitiveness of Victoria’s exports sector. This, ratetogether with a prolonged and uneven recovery in the global economy Consumer price 2.10 3.00 2.75 2.50 2.50and higher oil prices, is already adversely affecting Victoria’s indexmanufacturing, education and tourism industries. Wage price index 2.80 3.75 3.75 3.50 3.50 Real GDP Growth Population 1.80 1.70 1.50 1.50 1.50 % Annual 2009/10 - 2014/15 Change Source: Australian Bureau of Statistics, Department of Treasury and Finance 5.0 Forecast Australia Victoria Planning 4.0 3.0 More than $34 million has been allocated over the next four years in 2.0 the 2011/12 Victorian Budget to Victoria’s planning system. Major planning initiatives include: 1.0 • $5 million over the next four years to revitalise the Frankston 0.0 Activities Area; • 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 $9.7 million over the next four years to plan for Melbourne’s Source: Department of Treasury & Finance growth, catering for the needs of growing regional communities and provide certainty for coastal communities;The Victorian economy is expected to grow more moderately thanpreviously forecast over the next four years as a result of weaker than • $6.9 million for the Changing Places Program which providesexpected business investment and the floods of early 2011. Forecast urban improvement grants for capital works and other strategicgross state product (GSP) growth in 2010/11 is now expected to be projects in metropolitan centres and regional cities and towns.2.5%, rising to 3% in 2011/12. The budget also revises Victoria’s long-
  2. 2. InfrastructureThe budget provides $6 billion of funding for infrastructure investment • $160 million over four years for country roads and bridges;in 2011/12 with a focus on public transport and regional areas. • $50 million for the Western Highway duplication between Burrumbeet and Beaufort;Public Transport • $3 million over two years to start planning a direct rail link to Avalon Airport;Major public transport projects include: • $2.5 million to re-open Talbot station;• $222 million for seven new trains – the first of 40 new trains for • $1 million to plan for new station at Grovedale; Melbourne commuters; • $700,000 for the plan to upgrade the Ballan Railway station;• An additional $100 million for maintenance over four years; • $500,000 to extend Bendigo trains to Epsom and Eaglehawk;• $16.5 million to begin removing level crossings at key locations; • $2 million to investigate reviving rail connections between• $11.9 million upgrade of Balaclava station; Geelong, Ballarat and Bendigo.• $2 million to plan for the upgraded Ringwood station;• $10 million over four years to establish the Victorian Public In addition to the Victorian Government’s infrastructure projects, the Transport Development Authority. The Authority will plan, co- Federal Government has also committed to spend $1.1 billion (for the ordinate and manage the public transport program. The second year running – a disproportionately small share of federal Authority will be a single public transport authority to infrastructure funding). Major projects include: $62.5 million to extend administer our trains, trams and buses, replacing the current the Geelong Ring Road, $52 million for two road, rail and port structure of multiple agencies and authorities; intermodal facilities and $120 million to strengthen the West Gate• $6.5 million over two years for the Doncaster rail link planning Bridge. study;• $2 million over two years for a feasibility study into a rail line to Housing Rowville; With Victorian housing becoming increasingly unaffordable, the• $4 million over four years for an inter-capital high-speed rail Victorian Government aims to continue to encourage first homebuyers planning unit within the Victorian Public Transport Development in the State. Authority;• $6.5 million for a two-year feasibility study into a Melbourne Stamp duty will be progressively reduced by 50% for first homebuyers Airport Rail Link. purchasing principal places of residence valued up to $600,000.Roads First Home Buyer Land Transfer Duty Reduction Schedule -10% -10% -10%The budget allocates $601 million to fund key road projects including: Cut -20% (30% in total) (40% in total) (50% in total)• $20 million for planning and early works for the Dingley bypass Timing 1 Jul 11 1 Jan 13 1 Jan 14 1 Sep 14 between Warrigal and Westall Roads (to link new residential growth areas to employment hubs; Source: Department of Treasury and Finance• $50 million for the Koo Wee Rup bypass;• $93 million for the next stage of the M80 upgrade (Edgars Road The budget also provides funding to maintain assistance currently to Plenty Road); available to first homebuyers through the First Home Owner Grant, and• $23 million to increase maintenance funding for arterial roads. extends the First Home Bonus (including the Regional Bonus) to 30 June 2012. Eligible applicants will receive the First Home Owner Grant ofRegional Victoria $7,000 when buying homes valued up to $750,000.This budget also includes significant investment in Regional Victoria by First homebuyers purchasing or building a newly-constructed homeproviding funding for: worth up to $600,000 can also access the First Home Bonus which• $1 billion Regional Growth Fund available from July 1, 2011. The provides $19,500 for a home in a regional area and $13,000 for a home fund will be used to create jobs, build and upgrade local services in metropolitan Melbourne. and infrastructure, and invest in local skills and industries in regional Victoria. The Fund’s first allocation of $500 million will Young farmers aged under 35 who buy their first farmland property be made over the next four years; valued up to $300,000 will be exempt from paying stamp duty. The budget also introduces a stamp duty concession for farmland properties• $20 million over four years for a Regional Aviation Fund. This valued between $300,000 and $400,000. fund will be used to upgrade aviation infrastructure at a number of regional public-use airports throughout Victoria;Contact us for further information-Contact Richard Jenkins– Research Manager richard.jenkins@opteonvictoria.com.au 757 Bourke St, Docklands VIC 3008Office Address Ph: 1300 786 022Website www.opteonvictoria.com.auEmail valuers@opteonvictoria.com.auDISCLAIMER- This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legalresponsibility can be accepted by Opteon Victoria for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Opteon Victoriain relation to particular properties or projects. Reproduction of this report in whole or in part is not permitted without prior consent of, and proper reference to Opteon Victoria.