The Daniel Andrews led Labor State Government handed down its first Budget yesterday, Tuesday 5 May 2015.

Victoria’s economic outlook is positive and the State has maintained its triple-A credit rating. The headline items from the Budget are:

  • an operating surplus of $1.2 billion in 2015-16, growing to $1.8 billion by 2018-19
  • expected economic growth of 2.5% (up from 2.25% in 2014-15)
  • reduction in net debt to 4.4% of Gross State Product by June 2019
  • reduction in unemployment from a forecasted 6.5% in 2014-15 to 6.25% in 2015-16
  • growth in total taxation revenue by 4.1% to $19 billion in 2015-16

Major announcements

Major announcements from the Budget included:

  • investment of $9 - $11 billion in the Melbourne Metro Rail Project that will include two nine-kilometre underground rail tunnels (construction to commence by 2018)
  • commitment of $5 - $6 billion to remove 50 of Victoria’s most dangerous level crossings over eight years
  • $574 million to relieve road congestion 
  • $560 million to build and rebuild hospitals in fast growing areas throughout Victoria 
  • investment of $2.9 billion in schools, including $688 million to deliver new schools as well as renovate and refurbish 67 schools

Social responsibility

Social responsibility measures included:

  • $250 million to strengthen the child protection and family services systems
  • $81.3 million to support the work of the Royal Commission into Family Violence and to strengthen response services’ capacity and capabilities
  • $45.5 million to fund the Ice Action Plan to reduce the supply, demand and harm caused by ice
  • $148.6 million on 400 custody officers to guard prisoners at police stations across Victoria, freeing up 400 police officers for front line police duties

State taxes

State taxes measures included:

  • a 3% surcharge payable by foreign buyers of residential property in addition to stamp duty (applicable to contracts entered into on or after 1 July 2015) 
  • a 0.5% absentee landowner surcharge, payable by landowners who do not ordinarily reside in Australia, in addition to any other land tax payable (applicable from the 2016 land tax year) 
  • an exemption from stamp duty on vehicles classified as mobile plant (under 4.5 tonnes) and plant-based special purpose vehicles (over 4.5 tonnes), such as excavators, bulldozers and tractors (applicable from 1 July 2015)

Tony Windle, National Head of Indirect Tax, E T +61 7 3222 0381