Treasurer Tim Pallas advises ‘stellar rebound’ for Victoria in mid-year budget update

The May government’s budget forecast for the current fiscal year has been derailed by the Delta wave of COVID-19, which intensified from mid-year, causing a massive economic contraction. But Mr Pallas said the pandemic is unlikely to hit the economy hard for a third year.

Melbourne’s CBD was nearly deserted during this year’s closings.Credit:Paul Jeffers

He said he expected the budget to return to cash flow in the not-so-distant future, “well and really in the forecast”.

“The economy is in an extremely strong position to recover, and as the economy recovers, so does our balance sheet,” he said. “We have very solid economic foundations.

State unemployment is now expected to average 4.5% in 2021-2022, lower than the budget forecast of 5.75%. Regional unemployment is expected to fall to 3.3 percent.

The government’s political strategy for the 2022 elections relies heavily on current forecasts.

Lines outside of Centrelink when the pandemic hit last year.

Lines outside of Centrelink when the pandemic hit last year.Credit:Jason South

The budget update predicts net debt of about $ 142 billion by June 2024. This is a slight increase over this year’s budget, although it is still about $ 11 billion higher. the $ 155 billion expected a year ago, before the Delta wave derailed Victoria. recovery.

Mr Pallas also hit back at critics calling on the government to cut spending.

“We are not trying to balance budgets with austerity,” he said. “In many cases, they just limit your economic opportunities, and it [would] be felt quite deeply in communities that have already done things hard. “

The bottom line was also buoyant on the revenue side, as soaring house prices continued to fill government coffers with stamp duty revenue. Expectations for payroll taxes are also raised, as the unemployment rate is expected to continue to fall.

“The real estate markets are recovering and developing very solidly right now. As corporate employee payroll receipts start to improve and the government pulls out of the business of providing support to businesses or community groups, they naturally improve, ”Mr. Pallas.

But having already imposed a series of new taxes over the past seven years, the government is not ruling out imposing new ones to balance the books.

“We are not a government that sees that we should raise taxes just for the sake of free,” Pallas said. “And I think our record is pretty clear; we have reduced as many taxes as we have increased.

But he said the government’s approach was to “recognize where taxation can be best supported”.

“We are very [much] from the point of view that we must recognize from the point of view of the government, do not cut your options, but be prepared to use your balance sheet to support households and businesses.

Loading

Victoria already has one of the highest tax levies as a proportion of the country’s economy. Last year, he raked in about $ 23.6 billion in taxes on property, wages, land, gambling, and a host of other activities and transactions.

Analysis by Age found that this was equivalent to about 5 percent of the state’s economy. It was second behind NSW, which collected about $ 34.0 billion in taxes, or about 5.4% of the state’s economy.

In other states, tax levels are much lower. In Western Australia, for example, which benefits from billions of dollars in mining royalties, state taxes account for only 3.1% of the economy.


Source link