State reveals brutal $8.4bn cuts

The Victorian government is stripping billions of dollars from infrastructure projects to tackle the state’s huge debt.

In releasing his 10th budget Tuesday, Treasurer Tim Pallas drew comparisons with this budget and Western Europe rebuilding their economies after World War II.

The government is slashing its infrastructure spend from a peak this year of $24bn to $15.6bn over the course of the next four years.

“We are shrinking the size and shape of the government,’’ the Treasurer said, descring the measures as sensible but disciplined.

State reveals brutal $8.4bn cuts

Cuts to government advertising, office space and guaranteed sick pay, plus savings on contractors at court are forecast to save more than $1bn over the course of the four year forward estimates.

Pandemic-era schemes are being scrubbed from the books, including the $245m sick pay for casual workers scheme.

The state’s $135.9bn debt loomed over many of the Treasurer’s comments to media on Tuesday.

Debt is forecast to reach $187.8bn in four years. By that stage the government will be paying more than $25,000 a day in interest.

“We’re facing up to the economic challenges faced around the world with sensible, disciplined decisions – we won’t shy away from reality,” the Treasurer said.

But the government expects to climb up into an operating surplus in the 2025/26 financial year.

Tax revenue is set to increase five per cent year-on-year over the forward estimates, from $39bn this coming financial year.

The increased tax take is driven by a competitive labour market driving payroll tax collection and land values forcing land tax revenues skywards.

While the infrastructure spend has been cut, Mr Pallas reiterated the state could not “sit around waiting for rain”.

Instead the government had to invest in roads and transport links, bringing construction jobs and more desirable housing locations.

The Metro Tunnel gets a $233m injection to get the underpass open in 2025. The money will go to training drivers, timetabling and final testing.

One of the key cost of living measures included in Tuesday’s budget is a $400 bonus for an estimated 700,000 Victorian students.

The one-off payment will be administered by schools later this year, and can be spent on education related expenses such as sporting events, uniforms or school camps.

More to come