Wednesday, May 02, 2007

Victorian State budget

I didn’t have strong views on the Victorian State Budget but would be interested to hear those of readers. The $3.6 billion expenditure on infrastructure (schools, hospitals, transport) is welcome as is the decision to provide more public housing and the cuts to payroll tax, WorkCover premiums and land tax – the latter a consequence of the property boom. These are achievable because, despite the drought and bushfires, there is a strong, growing Victorian economy – doing much better than NSW.

The expected budget surplus will be $300-$400 million over each of the next few years.

Some in the press and the Liberal Party described the budget as ‘unexciting’ – that has never seemed much of a criticism to me. Spending only $280 million on water projects – and deferring decisions on new water supply technologies until 2008 has come under criticism but rushing to judgement on these important issues might not be sensible in the midst of a drought.


Francis Xavier Holden said...

I'm not sure where the idea that state (or any) budgets should be exciting came from. Probably from journos.

If there is any frisson at all for me (aside from the self interest of lower workcover costs and one or two capital projects that got up) it's in the emphasis on infrastructure. I hope this is a trend for all states and the Feds.

The big surprise is public housing and it's about time. If it's all about building though it won't help with the tradie shortage.The public housing policy needs an overhaul - I'm a fan of the Hugh Stretton model myself.

Keep in mind that Brumby still has $2.9 billion in "unallocated" capital.

The water spending has been on talkback in the car today but most of the callers were kneejerkers or Lib stooges.

The budget does cement the general trend to Treaurers staking ownership of the whole budget and details rather than the spending Depts and Ministeries in general. In will end in some tears as Treasury, despite their confidence in their own ability, simply have bugger all idea of knock on effects in most areas and also bugger all experience of how to implement anything.

hc said...

I tried to respond cto this while interstate but could not get on!

I just wanted to say that Treasury needs to point out the opportunity cost implications of funding different projects but cannot be an expert on particular fundings.

I liked Ken Henry's comments to his staff on this - I posted on this a few weeks ago.

Francis Xavier Holden said...

I agree I thought Ken Henry's stuff made a lot of sense, but I'm talking here of a sense that Treasury is *controlling* a lot of the funding more than ever before.