Victoria has maintained its Budget surplus but will slash 4,200 public sector jobs, abolish the first home buyers grant and cut WorkCover premiums in order to balance the books.
Victoria’s Treasury cut its growth forecast for the coming year to 1.75% and predicted zero job creation and higher unemployment than previously forecast.
“The financial conditions that are being faced by this state are the worst in a decade,” Treasurer Kim Wells said.
In the Budget, released yesterday, Victoria scrapped its first home buyer bonus for new homes in favour of a broader market stimulus through stamp duty cuts.
The bonus for new homes valued at up to $600,000 will not be extended past June 30. It was worth $13,000 for a city dwelling and $19,500 for a country property.
A separate $7,000 grant funded by the Federal Government will continue.
Real Estate Institute of Victoria communications manager Robert Larocca told SmartCompany the institute was supportive of the “sensible” changes.
“REIV has been advocating for some time for the government to refocus its assistance for first home buyers so all can benefit, not just new homes,” says Larocca.
“We are pleased the government has found $69 million towards stamp duty.”
Larocca says it is “not a bad outcome” that the first home buyers grant has been cut.
“Ultimately it has done its job, it has helped lift construction, but at the same time it is not encouraging any new home buyers,” says Larocca.
The Budget also reduces WorkCover premiums by 3% from July 1 this year with premiums falling from 1.338% of employers’ remuneration to 1.298%.
“Victoria already has the lowest workplace insurance premiums in Australia and this cut will strengthen Victoria’s competitiveness to attract business investment, reduce costs for business and support economic growth,” Premier Ted Baillieu said.
The Victorian government claims the reduction will benefit almost 60% of Victorian businesses, of which nearly 59,000 will have their premiums cut by more than 10%.
Business groups have come out in support of the Budget but have expressed disappointment that the Budget did not reduce payroll tax.
Victorian Employers’ Chamber of Commerce and Industry executive manager Steven Wojtkiw told SmartCompany, “the devil is always in the detail” but VECCI’s initial take was that the Budget was responsible and well-rounded for business.
“There a number of pluses: responsible financial management with cuts to the cost and size of government, reduction in WorkCover premiums, support for manufacturing and exporters, and strong focus on new infrastructure investment,” says Wojtkiw.
“We would have liked to have seen funding for the extension of the Melbourne Exhibition Centre, as it is an important infrastructure project for the events industry.
“Also missing was an opportunity to outline a forward agenda for options to reform state taxation.”
Wojtkiw says VECCI wanted the government to develop the tax green paper published last year by the Victorian Competition and Efficiency Commission and hoped a reduction in payroll tax would feature in the amendments.
“That has long remained a priority for us in terms of the need to lower business costs.
“But we were cognisant that this Budget left the government little scope to reduce direct taxes such as payroll tax but hope there is room for that in the future.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
