1. 2011 Victorian Budget Wrap
In 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 to
focus when the Victorian Treasurer recently September 2010, compared with the peak of 2.2% growth achieved
handed 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 to
The 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, with
by growth in emerging economies. The outlook for emerging and 3.5% growth over the year to March 2011, representing close to
developing economies remains strong, especially for Victoria’s major an additional 100,000 jobs. Over the past year, job increases were
trading partners in Asia, with the IMF forecasting 6.5% growth in both greatest in the health care & social assistance, construction and
2011 and 2012. This should support growth in Victoria’s exports over professional services industries. Employment is likely to continue to
the 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 the
resilience of the Victorian economy in recent years. Over the past As a result of falling GST revenue the Victorian Government is budgeting
decade, Victoria has largely relied on population growth to drive its for an operating surplus (net result from transactions) of $140 million in
economic 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 in
growth 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 will
five 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 Forecast
The sustained commodities boom provides significant opportunities for
the Australian and Victorian economies. Victoria is likely to continue to Real gross state
2.00 2.50 3.00 2.75 2.75
benefit from interstate trade links with the resource-rich states and product
territories, particularly for services demanded by the mining industry. Employment 2.80 3.50 1.75 1.75 1.75
However, the commodities boom has also resulted in a high Australian Unemployment
5.00 4.75
5.50 5.25 5.00
dollar, reducing the competitiveness of Victoria’s exports sector. This, rate
together with a prolonged and uneven recovery in the global economy Consumer price
2.10 3.00 2.75 2.50 2.50
and higher oil prices, is already adversely affecting Victoria’s index
manufacturing, 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 than
previously forecast over the next four years as a result of weaker than
• $6.9 million for the Changing Places Program which provides
expected business investment and the floods of early 2011. Forecast urban improvement grants for capital works and other strategic
gross 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. Infrastructure
The 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 of
Regional 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 home
providing 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 3008
Office Address Ph: 1300 786 022
Website www.opteonvictoria.com.au
Email valuers@opteonvictoria.com.au
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responsibility 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 Victoria
in 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.
