Victorian Budget overview
On Tuesday, 7th May 2013, the Victorian Government handed down its 2013-2014 Budget.
The Victorian Government is expecting an improving growth story with state growth of 1.5% for 2012-2013, 2.25% the following year and trend growth of 2.75% for 2014-2015.
A surplus of $225 million is forecast for the 2013-2014 financial year increasing to $2.5 billion in 2016-17 which will support the government's infrastructure initiatives and assist it to pare back state debt from 6.4% of gross state product in 2013-2014 to 5.4% in 2016-2017. Unemployment is expected to peak in 2012-2013 at 5.75% returning to 5.0% by 2015-2016 and following years.
The budget's focus is on infrastructure development with the big ticket item being the proposed $6 billion to $8 billion East West Link to be undertaken as a Public Private Partnership, with an expected contribution of $1.5 billion by the Federal Government, $224 million current year commitment by the state government and substantial investment by the private sector. Other infrastructure announcements include $110 million for the development of a container port at the Port of Hastings and full funding for a new Monash Children's Hospital.
The state's taxation base is largely unaltered, with projected improving growth in the economy expected to generate a 5.3% increase in tax revenue in 2013-2014. Payroll tax, land tax and stamp duty make up more than 60% of this revenue with the payroll tax take increasing by 6.1% in 2013-2014 and the stamp duty take increasing by 9.1%.
The major source of the Victorian Government's revenue is its share of the GST revenue from the Commonwealth, which for 2013-2014 is expected to be $11.2 billion.
First Home Buyers
In an attempt to stimulate the housing market the government will apply the First Home Owners Grant at an amount of $10,000 for the purchase of new homes after 1 July 2013 replacing the old grant of $7,000 which applied to new and established homes. Additionally, the government is bringing forward its 40% stamp duty concession for first home buyers, for newly constructed or established properties, to have effect from 1 July 2013, rather than 1 January 2014.
The government is intending to undertake a data-matching exercise with external agencies focusing on Land Tax Principal Place of Residence exemptions. It is expected that the State Revenue Office will follow up anomalies and expects to raise $90 million over the next four years.
The scope of the Congestion Levy in the inner Melbourne area is to be broadened to incorporate short stay car parking spaces. The rate of the levy is to be increased from $900 per year to $1,300 per year from 2014.
Fire Services Levy
The Government is introducing a fire services levy to be applied to all owners of properties from 1 July 2013. This levy was previously only applied to property owners who had insurance.
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