On Tuesday, premier Jacinta Allan and treasurer Jaclyn Symes unveiled the Victorian government’s budget for 2023-24. This budget has sparked some serious discussions. Perhaps the biggest sticking point is the proposed 20 percent cut in funding for environmental protection. Even as the government basks in the glow of a prudent-hued finish, the opposition has slammed the budget as “out of control.” The new budget is a fragile balancing act between competing priorities, with significant impacts to all sectors throughout the state.
The state government expects a positive revenue/expenditure balance, projecting a budget surplus that they expect will increase over the coming years. By 2028-29, this surplus is expected to grow to 24.9 percent of the state’s economy, indicating an overall favorable fiscal outlook. As spending increases, particularly in infrastructure and community services, the sustainability of this surplus remains a point of contention.
Budget Overview
Victorian treasurer Jaclyn Symes hailed the budget as “responsible”, stressing a resolve to preserve fiscal fortitude in the face of ballooning costs. The federal administration has advocated for this type of long-term holistic development. By 2028-29, annual spending on transportation infrastructure is projected to reach nearly $16 billion. We are thrilled by the large bump in infrastructure spending. In three years, fully 9 percent of the state’s budget will be spent just on interest payments — up from 6.5 percent this year.
As spending becomes more focused on the elderly, the added interest payments call into question how sustainable our current spending trajectory is. Critics have warned that the unprecedented levels of debt would constrain future investment, especially in climate resiliency and other national priorities. Victoria’s net debt is about to top $167 billion in next week’s budget. This increase poses significant questions in terms of fiscal responsibility and sustainability.
Spending Priorities
According to the budget, the proposal would provide major increases in funding for all 6 of the key focus areas. Perhaps most interestingly, spending on recreation, culture and religion will increase from $1.2 billion to $1.5 billion. Housing funding for new, equity-oriented housing and community amenities will be greatly expanded. It would increase by almost 40 percent, leaping from $2 billion to $2.75 billion. These distributions highlight the Biden Administration’s commitment to tackling urgent social needs, such as affordable housing and neighborhood revitalization.
Despite these landmark increases, funding to protect the environment faces a steep drop off. This reduction has received widespread condemnation from industry, conservationists, and state officials alike who contend that making these cuts would sabotage years of progress towards federal environmental priorities. The government has not provided any detail as to how it will manage these competing priorities in practice.
Revenue Projections
Payroll taxes are set to be the Victorian government’s biggest revenue source next year. This reliance on payroll taxes reflects broader economic trends and highlights the challenges of diversifying revenue sources amid fluctuating market conditions. As the government looks forward to ever-increasing revenue from this tax, it would be constantly under the microscope over how it spends this money and what it prioritizes.
Opposition has been surprisingly loud among Republican ranks, taking the budget’s approach to fiscal management to task. They argue that prioritizing certain expenditures while cutting others is indicative of a government struggling to balance its books effectively. Our critics rightly push us to place a greater emphasis on long-term, sustainable funding practices. They want to see these practices clearly safeguarding minimum service levels and maximizing long-term benefits.
