The Victorian Government is set to spend $20 billion on major infrastructure projects over the next four years as it tries to keep the state growing through the downturn.
While Australia is certain to fall into recession in the coming months, Victorian Treasurer John Lenders believes the state can escape a similar fate, with growth in 2009-10 forecast to be a tiny 0.25%.
But unemployment is forecast to jump from 5% to 7%, which could tip the state’s economy into recession.
The splurge on major projects includes: $3 billion in transport infrastructure (including just over $2 billion across the train, tram and bus network); $402 million for schools and education staff; $2.6 billion in health spending; and $1.9 billion for the Victoria Police.
“Right across the state, as a result of this budget, you’re going to see projects in transport, in health, in education, in community facilities…generating and building jobs for today and tomorrow,” Victorian Premier John Brumby said yesterday.
The spending will be funded by a $31.3 billion increase in borrowing by 2013, although the budget is forecast to avoid slipping into deficit, with a $125 million surplus tipped for 2009-10.
But there was no tax relief for business, with payroll and property taxes likely to remain on hold for the duration of the downturn.
Steven Wojtkiw, chief economist for the Victorian Employers Chamber of Commerce and Industry, described it as a “solid, jobs-focused budget”.
“While Victorian business will be disappointed that there was no tax relief in today’s budget, it is clear that the Government are putting their eggs into the infrastructure basket this time around, and we are pleased that the Government is committing to resuming the tax reform process down the track.
“Putting money into infrastructure and training to counter the effects of the economic slowdown in a counter-cyclical fashion is sensible.”
ACT budget
The global downturn and a collapse in federal revenue is set to leave the Australian Capital Territory budget in deficit for at least seven years, starting with an $82.2 million shortfall in 2009-10.
The highlights of the budget were $742 million in construction spending and $272 million in health spending.
Northern Territory budget
The Northern Territory budget is also set to fall into the red, with a deficit of $200 million in 2009-10. Like Victoria, NT Treasurer Delia Lawrie has concentrated on infrastructure, with a $1.3 billion to be spent on schools, roads and housing.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
