2012-13 Victorian Budget Overview www.budget.vic.gov.au

Victorian Budget 2012-13 Budget Overview The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne, Victoria, 3002 Australia Telephone: +61 3 9651 5111 Facsimile: +61 3 9651 5298 Website: www.budget.vic.gov.au Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002 Printed managed by Finsbury Green, Level 9, 124 Exhibition Street, Melbourne 3000 This publication makes reference to the 2012-13 Budget Paper set which includes: Budget Paper No. 1 – Treasurer’s Speech Budget Paper No. 2 – Strategy and Outlook Budget Paper No. 3 – Service Delivery Budget Paper No. 4 – State Capital Program Budget Paper No. 5 – Statement of Finances (incorporating Quarterly Financial Report No. 3) © Copyright State of Victoria 2012 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. ISSN 1440-6969 If you would like to receive this publication in an accessible format Published May 2012 please telephone 9651 0909 or email [email protected]. Printed on recycled paper This document is also available in PDF at www.budget.vic.gov.au. Treasurer’s message Victoria faces challenges – a high • a number of important road upgrades The 2012-13 Australian dollar, weaker global and including the Ballarat Western Link Budget drives national economic conditions and Road and the Koo Wee Rup Bypass. a substantial reduction in GST and These are in addition to the major other revenue. Revenue from GST and economic growth, upgrade of Webb Dock to increase stamp duty has fallen by $7.6 billion capacity and competition at the generates jobs over four years – or almost $2 billion Port of Melbourne, and the Northern a year – relative to the levels predicted Victoria Irrigation Renewal project and productivity, in late 2010. which is jointly funded with the focusing on record In the face of these challenges, the Commonwealth. The budget also takes Government is taking decisive action the next step in relation to a number of infrastructure, to strengthen the State’s finances, major transformational projects including frontline services boost state-funded infrastructure the East West Link, Melbourne Metro rail to record levels (with a focus on and the Port of Hastings. productivity-enhancing infrastructure) and protecting To further drive economic activity and while protecting the most vulnerable. jobs, the budget keeps taxes competitive the vulnerable. We can only do this by keeping and cuts WorkCover premiums for spending growth in check. Over the employers. This will maintain Victoria’s decade to 2010-11, state government average workers’ compensation premium spending grew by an average of rate as the lowest in Australia. It also 7.3 per cent per annum, outpacing invests heavily in skills and funds a revenue growth of 6.9 per cent. $58 million manufacturing package, This left the budget exposed to falls a new agriculture and food industry in revenue. plan and a $50 million international The 2012-13 Budget constrains engagement strategy to expand Victoria’s spending growth to an average export markets. 2.9 per cent over the forward estimates Despite significant financial constraints, period. Had spending continued at the budget includes additional funding 7.3 per cent growth, the budget to keep pace with demand in our public would now have a $4 billion deficit hospital system. in 2012-13 and net debt would have risen to completely unsustainable levels. In addition, the budget reflects the Government’s focus on protecting the By keeping recurrent spending growth most vulnerable in our community. in check, the 2012-13 Budget delivers The budget makes a $336 million surpluses in every year and is able investment to assist vulnerable children to fund a strong infrastructure spend. and families, combining additional There are currently $41 billion worth family services, maternal and child of projects across the public sector. health funding, extra child protection A strong infrastructure program is workers and a less adversarial, necessary to boost Victoria’s productivity, more child friendly court process. the competitiveness of our industries, A strong economy and strong and to maintain liveability. government finances are fundamental This budget funds: to Victoria’s ongoing prosperity. Without economic growth and a strong • delivery of three major congestion budget, important services and capital initiatives in metropolitan Melbourne investments become unaffordable. to cut travel times; For this reason, the 2012-13 Budget • construction of the Dingley Bypass focuses squarely on reversing the legacy to improve traffic and freight of excessive spending and project cost movements in south east Melbourne; blow-outs, and addresses Victoria’s current economic and fiscal challenges. • purchase of new rolling stock for the regional rail network to improve the Victoria has strong economic prospects level of services across regional and in the years ahead. The 2012-13 Budget rural Victoria; is a key step in meeting that potential. • major new periodic rail maintenance Kim Wells across the regional passenger and rail Treasurer freight network; and

2012-13 Budget Overview 1

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 1 28/04/12 2:04 AM The Victorian economy Victoria has significant economic Victorian economic projections (a)(b)(c) strengths, including a diverse industry base, competitive business environment, 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 skilled workforce and liveable cities and Actual Forecast Forecast Forecast Forecast Forecast regions. These strengths, together with the Government’s economic strategy, Real gross state product 2.5 1.50 1.75 2.75 2.75 2.75 positions Victoria to capitalise on the Employment 3.5 0.00 0.25 2.00 1.75 1.75 economic opportunities of the future, (d) especially the unprecedented growth in Unemployment rate 5.1 5.50 5.75 5.50 5.25 5.00 the Asian middle class. Consumer price index 3.3 2.25 2.75 2.50 2.50 2.50 However, Victoria faces significant Consumer price index 3.3 2.25 2.25 2.25 2.50 2.50 immediate challenges. These include (excluding carbon price) a high Australian dollar, the euro Wage price index (e) 3.8 3.50 3.00 3.25 3.50 3.50 area recession and their impact on (f) consumer and business confidence. Population 1.5 1.60 1.60 1.60 1.60 1.60 Commonwealth policies like the carbon Sources: Australian Bureau of Statistics, Department of Treasury and Finance. price will also impose new costs on the Notes: Victorian economy. Sectors including manufacturing, tourism, agriculture and (a) Year-average per cent change on previous year. All economic projections are rounded to the nearest 0.25 percentage point, except population projections, which are rounded to the international education are feeling these nearest 0.1 percentage point. challenges acutely. (b) All economic projections, except where otherwise indicated, include the impact from the Currently, output and employment Commonwealth Government’s carbon price scheme commencing in 2012-13. growth are subdued, but are forecast to (c) Key assumptions underlying the economic projections include interest rates following the forecasts prepared by the Treasury Corporation of Victoria up to the December quarter 2012 and held pick up beyond 2012-13. constant thereafter, constant exchange rates and oil prices follow the path suggested by oil futures. Despite current economic challenges, (d) Year-average, per cent. claims about a ‘two-speed economy’ (e) Total hourly rate excluding bonuses. are too simplistic. The mining boom (f) June quarter, per cent change on previous June quarter. has boosted demand for Victoria’s knowledge-based industries, such as insurance and professional services. Agricultural prices and production Dispersion of growth within federations (a)(b) volumes are high, and Victoria still leads Australia in dwelling investment and 5 overall building construction activity. Range of sub-national 4 growth rates

3 Victoria

2

1 Average annual growth rate (per cent) rate annual growth Average 0 National average -1 growth

-2 Australia Canada US Euro area Spain Germany

Sources: Australian Bureau of Statistics, Statistics Canada, Bureau of Economic Analysis, Eurostat. Notes: (a) Dispersion of gross product growth rates at the sub-national level for a number of federations over 1999 to 2009. (b) Highest growth and lowest growth regions shown, along with the national average.

2 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 2 28/04/12 2:04 AM A plan to strengthen the economy Economic reform agenda The Government’s economic strategy The Government’s economic reform agenda is founded on four pillars that focuses on strengthening Victoria’s will boost Victoria’s economy. underlying economic fundamentals. Over the last decade, Victorian Creating significantly stronger budget capacity productivity growth has been falling, and Strengthening the State’s finances is vital to fund a substantial program of became negative over the period 2005-06 high quality infrastructure and deliver better quality frontline services to 2009-10. Having exceeded the national without accumulating unsustainable levels of public debt and safeguarding average growth rate in the second half against future adverse financial shocks. of the 1990s, Victoria’s productivity performance lagged Australia as a whole Improving productivity over the period 2000-01 to 2009-10. Productivity growth is the long-run determinant of economic prosperity and The 2012-13 Budget delivers on the improved living standards. The Government’s reform agenda promotes sustained Government’s plan by: productivity improvements through a more competitive business environment, • generating stronger surpluses to more highly skilled workforce, and better delivery of infrastructure. fund major productivity-enhancing infrastructure; Growing export markets • cutting WorkCover premiums for International engagement is increasingly important and will enable Victorian Victorian employers by 3 per cent businesses to capitalise on emerging global opportunities. The Government’s to drive down business costs; economic strategy includes increasing trade engagement and expansion into new markets to create jobs and investment. • delivering a $58 million manufacturing strategy focused on lifting individual Supporting industries and employees in transition firm productivity and investing in technological innovation; Structural change is inevitable in Victoria’s open and dynamic economy. The Government’s role is to create an environment for existing and emerging • funding a new international businesses and industries to take advantage of opportunities provided by engagement strategy to expand structural change. The Government will provide assistance geared towards Victoria’s export markets, particularly helping companies and workers transition and adjust in response to changes in rapidly growing Asian economies; in consumer demands and industry structures. • investing in programs to boost agricultural industries, focusing on productivity and biosecurity; and • driving large investment and Victorian and Australian average annual multifactor reform of the skills sector to boost productivity growth apprenticeships and encourage students into high productivity, 3.0 skill-shortage qualifications. 2.5 A strong budget is fundamental to these efforts. Without a strong 2.0 budget position, these vital investments – in infrastructure, skills and key 1.5 industries – would be unaffordable. 1.0

0.5

Average annual percentage change annual percentage Average 0.0

-0.5

-1.0

-1.5 1990-91 to 1994-95 1995-96 to 1999-2000 2000-01 to 2004-05 2005-06 to 2009-10 Australia Victoria

Sources: Victorian Competition and Efficiency Commission, Department of Treasury and Finance.

2012-13 Budget Overview 3

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 3 28/04/12 2:04 AM Strengthening Victoria’s finances Revenue shocks Budget surplus State revenue has fallen significantly due to weaker economic conditions, ($ million) 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 combined with a flawed system of GST revenue distribution between the states. Revised Budget Estimate Estimate Estimate Weak national consumption and a fall in Net result from transactions 126 155 861 1 076 2 528 Victoria’s share of GST have meant that Source: Department of Treasury and Finance. total GST revenue to Victoria has been downgraded by $6.1 billion over the four-year budget period, relative to when the Government came to office. Changes to GST revenue for 2012-13 to 2015-16 (since 2010-11 Budget Update) Revenue from property stamp duty has fallen by $1.5 billion over the same 1.0 period. This means that revenue has

been reduced by $7.6 billion over four $ billion 0.0 years – or almost $2 billion annually – from these two sources alone. -1.0 This is a larger revenue write-down than occurred during the global financial -2.0 crisis of 2008. In addition, from 2008, the Commonwealth’s stimulus package -3.0 -2.9 added significant revenue to Victoria. -4.0 By contrast, the current revenue impacts -1.3 are compounded by expiring stimulus -5.0 programs and a lack of Commonwealth commitment to the renewal of expiring -6.0 National Partnership payments. -2.0 -6.1 -7.0 Need for action 2011-12 Budget 2011-12 Budget 2012-13 Budget Total downgrade (Share) (Pool) over 18 months Victoria was not well positioned to deal with these revenue shocks. Over Source: Department of Treasury and Finance. the decade to 2010-11, average annual expenditure growth (of 7.3 per cent per annum) outstripped annual revenue Annual expenditure growth (2001-02 to 2015-16) growth (6.9 per cent per annum). Debt was rising and the operating surplus was 15 artificially boosted by temporary stimulus 2012-13 Budget and payments from the Commonwealth. forward estimates per cent 12 If spending were to keep growing as it did over the past decade, this year’s

budget would be in deficit by $4 billion. 9 In response, the Government has constrained expenditure growth to an average of 2.9 per cent each year from 6 2013-14 to 2015-16. The Government’s restraint is driven by a further round 3 of savings. Since late 2010, the Government has put in place almost $9 billion in measures to support a 0 more sustainable budget position. 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 These measures will deliver projected Annual change in expenditure: 2001-02 to 2009-10 operating surpluses of $155 million in Annual change in expenditure: 2010-11 to 2015-16 2012-13 rising to $2.5 billion by 2015-16. Source: Department of Treasury and Finance.

4 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 4 28/04/12 2:04 AM Funding infrastructure Capital expenditure funded from available sources

Operating surpluses provide a source of 8 4 funding from which the Government can

deliver necessary infrastructure without $ billion % of GSP unsustainable borrowing. In 2010-11, only 44 per cent of the 6 3 Government’s infrastructure spend was funded from the operating surplus. If this trend continued, debt would rapidly become unsustainable. 4 2 With the actions taken in this budget, the proposed infrastructure spend funded by debt will decrease over the forward estimates. 2 1 The Government’s fiscal strategy will see net debt peak at 6.5 per cent of

gross state product (GSP) and fall to 0 0 6.0 per cent by the end of the forward

estimates period. Strong ongoing 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 operating surpluses will allow further Capital expenditure funding through cash surpluses (LHS) debt reduction over the longer term. Capital expenditure funding through debt (LHS) Had the Government not taken Excess cash surpluses (LHS) corrective action, net debt would have Capital expenditure % GSP (RHS) risen to almost $60 billion or nearly Source: Department of Treasury and Finance. 15 per cent of GSP by 2016.

Net debt with no government actions (a)(b)

70 000 16 % GSP

Medium-term fiscal $ million 60 000 14

strategy 12 50 000 The Government’s actions will meet or progress towards the 10 following medium-term fiscal 40 000 strategy and parameters: 8 30 000 • Infrastructure investment of 6 1.3 per cent of GSP (calculated as a rolling five-year average). 20 000 4 • General government net debt reduced as a percentage of GSP 10 000 2 over the decade to 2022. 0 0 • Fully fund the unfunded superannuation liability by 2035. 2011-12 2012-13 2013-14 2014-15 2015-16 • A net operating surplus of at Net debt (LHS) Net debt no action (LHS) least $100 million and consistent Net debt to GSP (RHS) Net debt no action to GSP (RHS) with the infrastructure and Source: Department of Treasury and Finance. debt parameters. Notes: (a) Expenses assumed to grow at 7.3 per cent a year (this corresponds to the average annual historical growth from 2000-01 to 2010-11) from 2011-12 to 2015-16. (b) Revenues, capital expenditure, finance leases, other investment activities and non-cash income and expenses are assumed to be the same as in 2012-13 Budget.

2012-13 Budget Overview 5

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 5 28/04/12 2:04 AM Infrastructure and productivity The Government is delivering a Road and rail upgrades substantial capital program to boost Cutting congestion productivity and improve the quality The budget funds significant new road of life of all Victorians. and rail infrastructure including: Up to 39 trains travel through the Springvale Road level crossing • eliminating level crossings at Victorian general government sector during the morning peak, Springvale Road, Springvale, infrastructure expenditure is expected approximately 4 300 vehicles and Mitcham and Rooks Roads to reach record levels in 2012-13, approach the intersection, in Mitcham; after excluding extraordinary capital and around 1 000 pedestrians expenditure associated with the • constructing the Dingley Bypass; cross the railway. The boom gates Commonwealth Government’s are closed for approximately • purchasing regional rolling stock; fiscal stimulus. 50 minutes of the two-hour peak The total value of public sector capital • funding the Koo Wee Rup Bypass period (around 40 per cent). and duplication of Narre Warren- projects underway in 2012-13 is expected Boom gates are closed for Cranbourne Road; to exceed $41 billion. approximately 45 per cent of the The Government is commencing new • funding the Ballarat Western Link time at the Mitcham Road level projects worth $2.7 billion. Road and extending the duplication crossing during peak periods and of the Western Highway between are often down for up to seven The quality, performance and capacity Beaufort and Buangor; minutes at a time (or around of the road, rail and port network will 54 minutes during the two-hour • funding for Stud Road duplication from be improved to reduce bottlenecks in morning and afternoon peaks). the transport supply chain, including: Boronia Road to Mountain Highway; Elimination of these level crossings • $171.9 million in rail renewal for • the Port Capacity project at the will relieve congestion delays and the regional freight and passenger Port of Melbourne, which will reduce individual road user’s trip rail network; increase stevedoring capacity times by up to 25 per cent. and competition in the sector by • additional maintenance funding redeveloping Webb Dock as an for the West Gate bridge; and international container terminal; and • land acquisition for the new • development of the Victorian Grovedale railway station and Better regional Freight and Logistics Plan to improved passenger access to rail services identify options to manage current Warragul Station. and future freight demand, and to Patronage on V/Line services promote efficiency and minimise has grown by 100 per cent the environmental and amenity over the past six years and this impacts of freight movement. growth is expected to continue. Procurement of additional carriages to be delivered between General government capital program 2014 and 2017 will reduce overcrowding and allow more 7 000 passengers to travel on each train service.

$ million 6 000

5 000

4 000

3 000

2 000

1 000

0 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Infrastructure investment excluding Commonwealth fiscal stimulus Infrastructure investment associated with Commonwealth fiscal stimulus (Building the Education Revolution and Social Housing) Source: Department of Treasury and Finance.

6 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 6 28/04/12 2:04 AM Long-term major • $49.7 million to progress the planning Value for money and and development of the Melbourne infrastructure projects Metro rail project; and infrastructure funding A key element of the Government’s • $4 million for the Port of Hastings To ensure the best value for money and fiscal strategy is to constrain recurrent Development Authority to commence improve its ability to fund infrastructure, expenditure growth and build stronger preparations for the expansion the Government: surpluses to fund future infrastructure. of the Port of Hastings to handle • has introduced a high degree of The Government is committed to a international container trade within rigour into the planning and delivery medium-term infrastructure investment 10 to 15 years. of infrastructure projects to promote parameter of 1.3 per cent of GSP cost certainty; and (calculated as a rolling five-year average). In addition, the Government is continuing to progress a number of • has established a Construction Code The 2012-13 Budget progresses a feasibility studies commenced in Compliance Unit to implement, number of major projects which have last year’s budget. These include the monitor and uphold the new the potential to transform Victoria’s Doncaster rail study, the feasibility study Implementation Guidelines to transport and freight network, including: for the Rowville rail link and the airport the Victorian Code of Practice for • $15 million to deliver the rail link study. the Building and Construction business case for the East West Link. All of these major projects form Industry, which will be effective The Government will immediately part of Victoria’s submission to from 1 July 2012. commence engineering surveys and Infrastructure Australia, and the preliminary geotechnical drilling Government will continue to seek to inform development of the Commonwealth contributions business case. The business case will to reflect the macroeconomic consider funding options, including significance of these potentially private sector involvement, and transformational investments. the Government will continue to seek a significant Commonwealth contribution to the project;

Projected infrastructure investment

7 000 2.1 2012-13 Budget and Projections forward estimates

$ million 6 000 1.8

5 000 1.5

4 000 1.2

3 000 0.9 % of GSP over a rolling five-year period five-year a rolling % of GSP over 2 000 0.6

1 000 0.3

0 0 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 five-year average infrastructure investment (budget and forward estimates) five-year average infrastructure investment (projection) % of GSP over a rolling five-year period (budget and forward estimates) % of GSP over a rolling five-year period (projections) Source: Department of Treasury and Finance.

2012-13 Budget Overview 7

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 7 28/04/12 2:04 AM Growing Victorian businesses Supporting and Unfortunately, over the past decade, 4. $9 million for Building Innovative labour productivity in Victoria’s Small Manufacturers, including more growing manufacturing manufacturing industry has lagged specialised workshops and improved Manufacturing is a vital contributor behind other states. access to government information and programs; and to Victoria’s economy. It remains The 2012-13 Budget funds a $58 million our single largest full-time employer. manufacturing strategy to address 5. $3 million over four years to In the face of significant challenges – these challenges. The strategy has deliver support and information including the high Australian dollar five components: to employees in transition. and the impact of the carbon tax – the Victorian Government is acting 1. $13.7 million over four years for the The Government will continue to to secure a stronger future for Specialist Manufacturing Service to support local manufacturing through manufacturing. work with medium-sized firms to its local content policies. achieve world-class service standards, In addition, the cut to WorkCover In December 2011, the Government including through certification of premiums and the Government’s released its manufacturing blueprint, efficiency and supply reliability; A More Competitive Manufacturing infrastructure agenda will help boost Industry, outlining new policy directions 2. $24.8 million over four years to the competitiveness and productivity based on raising productivity at the provide incentives for firms to invest of Victorian manufacturing. For example, individual firm level, including through in leap-ahead technologies to make the construction of the Dingley Bypass stronger grassroots business engagement. their businesses more competitive; will complete the arterial link between the manufacturing hubs of Moorabbin 3. $7.5 million over four years to support This more direct model of business and Dandenong. engagement will see new Victorian business-to-business networks to assist Government Business Offices open transfer of knowledge, information in Ringwood and Tottenham. and technology;

Dingley Bypass – connecting manufacturing hubs

Moorabbin Manufacturing (2009)

No. of Businesses

20 to 100 Dandenong 100 to 150 150 to 250 250 to 350 350 to 1,280 N

Dingley Bypass 2012-13 Budget funded section

052.5 10 Kilometres Source: ABS Cat No.9165.0 Sources: VicRoads, Department of Business and Innovation.

8 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 8 28/04/12 2:05 AM Driving productivity and • deliver enhanced technologies Supporting small business to improve yields and quality of profitability in agriculture cereal, oilseed and pulse crops, The 2012-13 Budget reinforces the Higher prices and better climatic and establish a National Genetics Government’s strong commitment conditions have helped boost Victorian Resources Centre in Horsham; to small business. Despite fiscal challenges, the budget keeps Victoria’s agricultural production and exports. • increase the supply of red meat The Government’s Agriculture and business taxes competitive, and cuts by improving livestock fertility Workcover premiums for employers. Food Industry Program will focus on and lamb survival, establishing maximising these opportunities. on-farm participatory research The budget funds new programs for The budget provides additional and demonstration trials to apply small business including $9 million for assistance to support and improve the research findings in a commercial Building Innovative Small Manufacturers productivity of Victoria’s agricultural environment, and establish a and continued funding for Business industries, including to: National (Southern) Red Meat Victoria Online and SuccessMap for Innovation Centre in Hamilton; and Small Business, which help small • increase the rate of genetic businesses become more resilient, improvement in dairy cattle, develop • support the development of new competitive and productive. new feeding systems and improve varieties and orchard production water use efficiency; systems for pears, stonefruit and The Government will continue to almonds, to enhance access to priority reduce red tape and regulation, as well • build industry capability in livestock markets in North and South East Asia. as oppose national measures such disease surveillance, strengthen as the carbon price which increase community-led action on the costs for Victorian small businesses. management of wild dogs The Government will continue to push and established weeds, provide back against any move to nationally enhanced traceability systems harmonise occupational health and for horticulture industries and safety laws which penalise Victorian improve forestry biosecurity; small businesses.

Top five markets for Victorian food and fibre exports International 1 800 Engagement Strategy 1 600

$ million Through the Victorian 1 400 International Engagement Strategy, the Government will 1 200 support a larger number of businesses to engage with 1 000 overseas markets, increase export

800 sales and increase investment. Victoria has already strengthened 600 its trade and investment relationships with India through 400 a SuperTrade Mission in 2012 involving more than 200 Victorian 200 companies and organisations, and 0 will undertake a mission to China 2006-07 2007-08 2008-09 2009-10 2010-11 in the second half of 2012. China Japan New Zealand Building on the successful trade Indonesia US mission to India, the strategy Source: Department of Primary Industries. is a key response to significant challenges facing the Victorian economy and will increase the competitiveness and productivity of Victorian firms.

2012-13 Budget Overview 9

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 9 28/04/12 2:05 AM Skills and education Victoria’s future economic growth will The hourly funding rate provided In addition, the Government is: be underpinned by a better educated to many courses that offer the largest • strengthening pathways into training and skilled workforce, increasing benefits to Victoria will increase, both for with an expanded entitlement productivity and workforce participation. Technical and Further Education (TAFE) to allow Victorians of any age and private providers. Subsidy rates will The State has the most employer- whose highest qualification is a rise for Certificate III and IV courses responsive and market-driven training Victorian Certificate of Education in areas like carpentry, bricklaying, system in Australia, with expenditure or Victorian Certificate of Applied engineering, plumbing, aged care, on training subsidies up by 50 per cent Learning, to access a training place children’s services and disability services. over the past four years, and enrolments at Certificate II and above, and the growing strongly. Funding rates for a number of other continuation of funding for courses will fall, reflecting the need to pre-accredited training through A strong and sustainable vocational achieve more sustainable outcomes in the Learn Local provider network; education and training (VET) system response to significant demand growth. is vital for Victoria’s future. The • protecting students by requiring Government is driving a more dynamic, All apprenticeship courses will see providers to disclose prices upfront innovative training system, with better an increase in hourly rate funding. and establishing the new market quality oversight and stronger targeting monitoring unit to review prices; and TAFE funding rates will be brought of investment to tackle skills shortages in line with private sector providers, • working with providers to make sure and fuel economic growth. boosting competition and choice. VET FEE-HELP loans are available The 2012-13 Budget invests a further to reduce upfront costs for students. The Government will work with TAFEs $1 billion in the skills sector. The Government will continue to develop new business models and to provide additional assistance The Government is ensuring that leverage their established strengths in for Indigenous students, regional funding returns to a sustainable level a more competitive training market. students, vulnerable young people and is targeted to areas of greatest New models of industry engagement and people on low incomes to public benefit and future jobs growth. are being implemented to ensure that access training. VET is driven by and responsive to These reforms will ensure enrolment industry needs. This will include better growth is financially sustainable and information for employers about government subsidies better target training providers. productivity-enhancing training.

Examples of increases in VET hourly subsidy rates for selected high benefit skill areas ($)

Increase Course Private Sector Public Sector New rates (for Public Sector) Certificate IV • Children's services (outside school hours care) 6.16 6.93 8.00 15% • Disability 6.16 6.93 8.00 15% • Home and community care 6.16 6.93 8.50 23% • Electrical 8.47 9.53 10.50 10% Certificate III • Plumbing (Apprentice) 10.01 11.26 12.50 11% • Bricklaying/blocklaying (Apprentice) 9.24 10.39 11.50 11%

Source: Department of Education and Early Childhood Development.

10 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 10 28/04/12 2:05 AM Growth in government funded VET enrolments Modernisation and regeneration includes: (excluding pre-accredited training) • Ashwood Secondary College • Bairnsdale Secondary College 700 • Belvoir Wodonga Special 600 Developmental School thousand • Birralee Primary School 500 • Boronia K-12 College

400 • Castlemaine Secondary College • Dingley Primary School 300 • Galvin Park Secondary College

200 • Gisborne Secondary School • Golden Square Primary School 100 • Laverton P-12 College

0 • Mirboo North Secondary College 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Mount Waverley North Actual Projected Primary School Source: Department of Education and Early Childhood Development. • Northern Bay P-12 College • Ouyen P-12 College • Phoenix P-12 Community College Schools In addition to funding provided under the Protecting Victoria’s Vulnerable • Ringwood North Primary School The Government is embarking on a Children package, $30 million over • Seaford North Primary School reform program that empowers school three years will: • Seaford Primary School leaders and teachers to work with their communities to drive improvement in • strengthen languages education • Templestowe College through teaching scholarships and education outcomes. • Wandin Yallock Primary School start up grants for schools; and The 2011-12 Budget started this reform • Wodonga Senior Secondary College • increase funding to support program with a range of initiatives • Woolsthorpe Primary School including increased funding for primary students with disabilities, maths and science specialists, primary including for the students with Source: Department of Education welfare officers and additional school a disability transport program. and Early Childhood Development. maintenance funding. Fairer funding for The budget also provides total school non-government schools was delivered capital works worth $200 million to support the choices of families and (total estimated investment). This the sacrifices parents make. investment will fund a new school at The Government has built on these Doreen South, land acquisition in growth investments with a reform plan to areas, feasibility and planning studies, devolve more decision making to and a number of modernisation and principals and school communities rather regeneration projects across metropolitan than head office. A key component of and regional Victoria. this agenda is an effort to boost teacher quality through school-level performance management recognition and reward for excellence and flexibility in employment arrangements.

2012-13 Budget Overview 11

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 11 28/04/12 2:05 AM Protecting Victoria’s vulnerable children The budget strengthens Three year old children who are known to child protection services Protecting vulnerable protection for Victoria’s will continue to receive free access most vulnerable to kindergarten as part of the Victorian children Government’s commitment to support The Government will respond to $80 million over five years to improved outcomes for these children. growing demand for child protection strengthen the child protection The Government will also continue the services and improve support for all system including: Access to Early Learning program that vulnerable children and their families. is trialling a more intensive approach to ✓✓ an additional 42 child Reforms to the child protection system engaging vulnerable children and their protection workers; aim to prevent child abuse, reduce its families in early childhood education impact on children and deliver the best ✓✓ workforce reform to free and care programs. possible outcomes for children in the up workers for more direct care of the State. Ensuring that pregnant women receive assistance to children; and the assistance to maximise their own A comprehensive strategy – Victoria’s ✓✓ Principal Practitioners to guide and their baby’s health and wellbeing, Vulnerable Children: Our Shared workers with challenging cases. will be achieved through the Healthy Responsibility – is being developed in Mothers, Healthy Babies program which $52 million over five years to response to the findings of the Protecting offers community-based support, health increase support for families Victoria’s Vulnerable Children Inquiry. education and care coordination. by expanding: This strategy will be released in 2013. It will be a comprehensive step forward ✓✓ Child FIRST and Family for improvements to Victorian child Timely and effective Services; and protection services, from prevention intervention ✓✓ Stronger Families to two and diversion, to early intervention, further sites. the courts, care, support and the The Government will expand the transition to independence. Child FIRST and Integrated Family $48 million over four years for Services programs to assist an additional services in the early years: A newly released Directions Paper 1 400 families each year to better meet ✓✓ free access by Child outlines the Government’s planned year a range of parenting challenges. one reforms and activities that will form Protection clients to part of this strategy, including a range These programs continue to work in 3-year old kindergarten; partnership with child protection services of new initiatives being specifically ✓✓ continuation of the Enhanced to ensure that problems are identified funded in the 2012-13 Budget. Maternal and Child Health and remedied early and children can service for high risk children; The Government’s additional investment remain safely with their families. of $336 million over five years together and The Stronger Families program with a comprehensive range of other ✓✓ support for programs that (formerly known as Family Coaching) reforms outlined in the Directions Paper, engage vulnerable families will continue to provide additional will improve frontline services in the in their child’s early intensive support to families who have education, health, human services, and learning experience. justice sectors, focusing on prevention, come to the attention of the child early intervention and response. protection system and whose children $41 million over four years to are at imminent risk of being placed reform child protection court in out-of-home care. The Government processes to be less adversarial Assisting in the early years will also expand this program into two and more child friendly: additional sites. The Government recognises the ✓✓ statewide roll-out of the New importance of children’s participation Reforms to student support services will Model Conferencing service in universal services during their include devolving funding to principals as an alternative to adversarial early years. Funding will support in government school clusters to allow court hearings; and and strengthen early home learning services to be provided where they are ✓ and parenting through preventative most needed, and responding more ✓ new Children’s Court at interventions including supported quickly to the most vulnerable students. Broadmeadows Court. playgroups and parenting groups, $70 million over four years to and the Smalltalk literacy and The Government investment will also increase capacity and improve learning program. improve outcomes for victims of sexual abuse. Three new Multi-Disciplinary outcomes for children in state Centres, bringing the State total to care including: six, will be established where police, ✓✓ additional residential care child protection workers and specialist placements; and counsellors will be co-located and work ✓ closely to address the needs of victims ✓ expansion of Therapeutic of sexual abuse. Residential Care.

12 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 12 28/04/12 2:05 AM Child protection Improving outcomes workforce for children in Vulnerable children For those children requiring the out-of-home care in Victoria involvement of child protection Increases in demand for residential Victorians made 55 000 reports services, the Government is reforming care will be addressed with a further of suspected child abuse and the way in which the workforce 34 placements. This will help ensure that neglect to the Department of operates. The new model will placements are more stable and children Human Services in 2010-11. increase the number and experience in residential care are less likely to move This represents an increase of practitioners working directly with around the system. This provides more of 49 per cent from 2000. vulnerable children and their families. stable access to peer groups as well as Every week nearly 60 young This will allow more experienced child health and education services. Victorians are removed from protection professionals to pursue their parents and placed in promotion and career advancement In recognition of the need for improved out-of-home care. while remaining on the frontline with and more specialised assistance for worker continuity to benefit children. children and young people who have On average, these children stay experienced trauma, the Government in the care of the State for about Greater focus will be put on will support a phased expansion of the 18 months and some will move delivering services on a local area therapeutic residential care program between three or more separate basis, strengthening links between to boost the total number of places. placements in a single year. local communities, child protection Trials of this model have demonstrated services and other key service key benefits for young people involved For those children who will never providers. In addition, 42 extra child including significant improvements be reunited with their parents, protection workers will be funded to in school success, social skills, and it takes an average of five years support the child protection workforce reducing anti-social behaviour and from the time of a child’s first and meet growth in demand. substance abuse. report for a permanent care order to be granted. Recognising that timeliness is essential A child-friendly in establishing a permanent arrangement Over the past decade, the number court system for those children unable to return to of children and young people in live with their families, dedicated teams out-of-home care has increased The Government is committed to by 44 per cent, an annual growth reforming the way child protection will review the circumstances of children aged under 10 who have been in care of around 4 per cent a year – matters are handled in the Children’s bringing the total number of Court to ensure that it operates in a for extended periods and resolve barriers to permanency. children and young people in child-friendly way. The budget provides care to approximately 5 700 at funding for: June 2011. • expanded New Model Conferencing Source: Protecting Victoria’s Vulnerable services across Victoria that provide Children Inquiry Report 2012. a non-adversarial forum to resolve complex disputes on child protection matters; and • establishing an additional Children’s Court facility at Broadmeadows Court that will implement less adversarial trial models and address pressures at the Melbourne Children’s Court.

2012-13 Budget Overview 13

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 13 28/04/12 2:05 AM Health and hospitals The Government is continuing to Health services Capital investment deliver on its election commitments and to meet demand for health Fulfilling an election commitment, in hospitals and services in the context of challenging the Government will continue and health services economic conditions. expand the Vision 2020 initiative which raises awareness of eye health Health assets are critical in enabling and vision care, and aims to prevent and supporting the effective delivery Investment in the avoidable blindness and reduce the of health services. Strategic asset health system impact of vision loss for all Victorians. investment helps drive innovation in health care, meet demand in health The 2012-13 Budget provides The Government will provide more services and facilitate the attraction $13.7 billion to Victoria’s hospitals funding for the home and community and retention of health workers. and health system. The Government’s care program to enable older people investment in the health system will be and younger people with a disability These investments in our health delivered efficiently and in a manner to remain living in their home. infrastructure are also critical to increase that best meets the community’s needs. Residential aged care facilities at Victoria’s long-term productivity and Swan Hill District Health will also be economic growth. Treating additional redeveloped to provide 45 residential The 2012-13 Budget provides a broad patients aged care beds in a purpose built and range of health investments from the upgraded facility. Victorian health infrastructure fund, Despite the fiscal challenges faced country hospital fund, and other general in this budget, significant new money Mental health services health investments. will flow to public hospitals to treat Key health projects include: more patients. This will include: Mental health service capacity will be boosted through: • $93 million to expand Geelong • $883 million in increased funding Hospital by 64 beds and to increase for acute care services; and • the opening of short-stay beds in a new Psychiatric Assessment and its capacity to provide palliative • $364 million in total estimated Planning Unit at Sunshine Hospital, care, and also care for patients investment for health and aged care which will provide accelerated access with cancer and older patients with asset investments across Victoria. to specialist psychiatric assessments complex needs; To boost child health services, and short-term treatment; • $46 million for an additional the budget includes: • funding for new acute adult mental 60 beds at Ballarat Hospital to expand acute capacity and provide • the new intensive day patient health beds to ease demand pressures additional ambulatory care services. program at the Royal Children’s on emergency departments and the The redevelopment includes Hospital for young people shortage of inpatient beds; and provision of a helipad on a new with severe eating disorders, • funding to modify, refurbish and decked structure; preventing prolonged or repeated redevelop community-based mental inpatient care and improving health infrastructure, with priority • $15 million towards further treatment outcomes; and given to works that support service development of the Sunshine Hospital to deliver critical care services and • ongoing testing at the Royal delivery reform and innovation. expand maternity services; Children’s Hospital for primary ciliary dyskinesia. • $23 million for a new purpose-built facility to replace the Charlton Health sciences Hospital that was extensively damaged in the January 2011 The Government will continue floods; and to support research infrastructure including for cancer research through • $40 million to expand and re-configure the Victorian Cancer Agency. the Frankston Hospital Emergency Department to improve its capacity.

14 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 14 28/04/12 2:05 AM The Government is providing funding Supporting families A $63 million over four years in the budget for the following country investment for Victoria’s maternal and hospital initiatives: The 2012-13 Budget underscores the child health services will ensure that Government’s ongoing commitment Victorians continue to receive high • $10 million for Castlemaine Hospital, to providing strong, responsive frontline levels of support into the future. to relocate and refurbish the urgent services to families. This commitment, This year’s budget also protects the care department, construct a second together with the Government’s most vulnerable, responding to growing theatre and redesign the current day focus on strengthening the economy, demand in child protection services surgery ward and recovery area; will help Victorian families to meet and boosting support for all vulnerable their full potential. • $20 million for the redevelopment children and their families. The and expansion of Kilmore and District During challenging times, the Government is $336 million over five Hospital with 30 new acute beds and Government has worked hard to years for immediate frontline initiatives a dedicated outpatients service; maintain critical health services. In this to focus on prevention and early • $5 million for a new radiotherapy budget, the Government is providing intervention. This will complement service in Warrnambool and the an additional $364 million in capital a comprehensive future strategy south west of Victoria; and spending for hospitals and public that responds to the Protecting health services, including key regional Victoria’s Vulnerable Children Inquiry. • $2 million to introduce chemotherapy services in Geelong, Ballarat, Seymour, Additionally, the Government is services at the Seymour Hospital. Kilmore and Charlton. In 2012-13 the preparing for the introduction of a The Government will continue rolling Government has allocated more than National Disability Insurance Scheme out the Victorian health infrastructure $9.3 billion to maintain hospital service to improve support to Victorians with fund including: delivery. In addition, $59.6 million over a disability, as well as their families four years will support the Victorian and carers. • more than $7 million total estimated Cancer Agency, including its work to investment (TEI) to enable further translate cancer research into treatments The Government will continue to planning and development for the for patients. support low-income families that new Monash Children’s Hospital; are most vulnerable to cost-of-living The budget continues high expenditure pressures. This year’s budget provides • $2 million TEI to progress on education and skills, in recognition additional concessions funding for planning and development for of their vital importance to Victorian energy, water and municipal rates. the Royal Victorian Eye and Ear youth. Significant additional spending Hospital Redevelopment; of $1 billion over four years has been Families have a fundamental right to feel safe. Central to this is the • $6 million TEI for Regional Mother allocated to refocus the vocational Government’s commitment to and Baby Units; and education and training sector to meet the strong demand for training. deliver the largest increase in police • more than $7 million TEI for Together with ongoing reform in this numbers during a single term of the second stage of New Mental sector, this investment will support government in the State’s history. Health beds. further growth in enrolments and a The budget also provides significant more responsive sector for students. additional investment to assist police and emergency services The Government is also committed to with much-needed infrastructure. ensuring that schools meet the needs of each family. As well as strengthening The Government is also continuing local decision-making in government to strengthen the justice system, schools, the Government is creating through investments in new prison an ongoing 25 per cent link between capacity, reforms abolishing suspended government and non-government sentences for all serious crimes and school funding so that families are tougher punishments to send the treated fairly regardless of their school message that crime will not be tolerated. choice. So children can attend schools close to home, the Government is committing $200 million to building and modernising schools including in our fastest growing communities.

2012-13 Budget Overview 15

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 15 28/04/12 2:05 AM Justice and community safety Community safety Capital works to support delivery of Corrections police and emergency services include: The budget includes a range of This budget provides funding to measures to maintain a viable and • a co-located 24 hour police station strengthen Victoria’s correction system, sustainable volunteer firefighting and Victorian State Emergency Services including through: force in rural areas, and safeguard headquarters at Waurn Ponds; • an additional 395 permanent prison communities from bushfires, including: • a new 24 hour police station beds at existing correctional facilities • additional Country Fire Authority at Emerald; across Victorian prisons; (CFA) vehicles including pumpers, • a new police residence in Axedale; • a new 500 bed medium-security tankers and specialist appliances; • the replacement of the Operational male prison; • construction or upgrade of CFA Tactics and Safety Training complex • strengthening security systems at rural fire stations; in Essendon; Barwon Prison to better manage • support for individuals and • planning and development for a new high security prisoners; communities affected by the police station at Mount Waverley; and • increased capacity and improved 2009 Victorian bushfires through security infrastructure across continuation of the Fire Recovery Unit; • police station upgrades to accommodate the additional Victoria’s youth justice centres • non-compulsory acquisition of 1 700 frontline police and and establishment of supporting properties in high-risk bushfire areas; 940 protective services officers infrastructure at the Parkville site; and • works and upgrades to ensure fire funded in the 2011-12 Budget. • strengthening the management of safety in supported accommodation serious sex offenders with more facilities for people with a disability, Improving access than $113 million over four years children living in out-of-home care to justice to continue specialist response and Youth Justice Centres; and activities, increase capacity to Funding will strengthen access manage and monitor registered • staged replacement of high risk to the Victorian justice system by: sex offenders within the community, powerlines with insulated cables and and to manage the increased installation of enhanced network • funding to Victoria Legal Aid workload of the Adult Parole Board. protection and control equipment. to provide casework and duty lawyer services; The budget provides $54.2 million to further meet the recommendations • maintaining access to language of the 2009 Victorian Bushfires Royal services for Victorians from diverse Commission. The Government will cultural and linguistic backgrounds; expand the planned burning program • continuing support for non-adversarial to reduce fuel load and offer greater resolution of disputes that also protection to communities and assets. alleviates pressure in Victorian courts; The planned burn in 2012-13 will be 250 000 hectares. • continuing efficiency reforms in the Court of Appeal that have resulted in Budget funding will also provide reductions in the number of pending mapping data free of charge to criminal cases; and emergency response agencies and assist local governments to identify • establishing the Victorian Inspectorate and maintain a list of vulnerable people and the Public Interest Monitor to who would be at risk in emergencies. oversee the Independent Broad-based Anti-corruption Commission. Communications in emergencies will be enhanced through upgrades to computer-aided dispatch infrastructure to manage high demand for emergency call responses, and enable the Victorian State Emergency Service to interface into incident control centres.

16 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 16 28/04/12 2:05 AM Rural and regional Victoria The Government is strongly committed The Government is also delivering the In addition to economic infrastructure to rural and regional Victoria, from Regional Rail Link project, which will the Government is committed our small towns to our larger regional provide improved rail services from to investing in important social centres. It is important to understand Geelong, Ballarat and Bendigo into infrastructure to improve the liveability and acknowledge the very significant Melbourne. The 2012-13 Budget funds of Victoria’s regions. The Government contribution which rural and regional the purchase of additional rolling is progressing the procurement of Victoria is making to Victoria’s stock to increase the capacity of the the new Bendigo Hospital which economic performance, particularly regional rail network. In addition, will be a major new health asset for through strong agricultural exports. $171.9 million is committed to regional central Victoria over the decades to rail maintenance for both passenger and come. This budget is committing Victoria’s food and fibre exports freight infrastructure. The mode shift $199 million towards redeveloping were worth $8.1 billion in 2010-11, incentive scheme is being continued to rural and regional hospitals. accounting for a quarter of the State’s encourage more freight onto rail and off exports. Victoria is responsible for In the 2012-13 Budget, further school, the road network. 86 per cent of Australia’s dairy exports. hospital, and aged care upgrades The 2012-13 Budget delivers significant are being delivered across rural and The Government’s vision is for regional new economic infrastructure including regional Victoria. Community safety communities which are driven by road upgrades and the Northern Victoria will be improved through police thriving and resilient local industries, Irrigation Renewal Program, funded station upgrades to accommodate strong local networks and served by with the Commonwealth. the additional 1 700 police across high quality services and infrastructure. Victoria, and a new police and SES The centrepiece of this strategy is station at Waurn Ponds. The budget also the Government’s $1 billion Regional upgrades CFA stations and equipment, Growth Fund announced in the and funds further planned burning to 2011-12 Budget. This fund is investing reduce the risk of bushfires. in better infrastructure, services and facilities through programs like the Local Government Infrastructure Program. This program provides councils with certainty to plan for and build new infrastructure or renew assets. In addition, a further $160 million was allocated to 40 local councils to maintain roads and bridges.

Barwon South West Grampians Loddon Mallee Geelong Hospital Ballarat Hospital and helipad Castlemaine Hospital South West Radiotherapy Ballarat Western Link Road Charlton Hospital Geelong Performing Arts Centre Phoenix P-12 Community College Golden Square Primary School Grovedale Station Western Highway: Beaufort to Buangor Malmsbury Youth Justice Precinct Waurn Ponds police station Ouyen P-12 College Hume Woolsthorpe Primary School Robinvale P-12 College Belvoir Wodonga Northern Bay P-12 College Special Development School Swan Hill residential aged care Hume Freeway rest area upgrades Gippsland Kilmore and District Hospital Bairnsdale Secondary College Seymour Hospital chemotherapy chairs Mirboo North Secondary College Wodonga Senior Secondary College Warragul Station car park

2012-13 Budget Overview 17

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 17 28/04/12 2:05 AM Communities and natural assets Environment and water Community investment Zoos Victoria – Funding of $179.3 million will promote The Government continues to support Asset Management Strategy the sustainable management of water community services and facilities to get Building on the 2011-12 Budget and address adverse water-related more people, more active, more often initiative providing free entry for environmental impacts as part of the by providing: children to Victoria’s Melbourne Zoo, Government’s urban water reform • funding for the State Sport Centres Healesville Sanctuary and Werribee agenda in the Coalition’s Plan for Water. Trust to support the operations Open Range Zoo, the Government The budget provides: of the State Athletics Centre at is providing $13.7 million towards Lakeside Stadium, and to maintain the upgrade of Zoos Victoria assets. • $100 million to take practical steps to the Melbourne Sports and Aquatic This funding will: improve the environmental health of Centre at Albert Park, and the Victorian rivers and wetlands, through • build a new entry display including State Netball and Hockey Centre a ‘whole of catchment management’ a rainforest exhibit at Melbourne at Royal Park; approach to support social, economic Zoo, commemorating the zoo’s and environmental values; • grants to sporting, community and 150th year of operations; event organisations to assist in the • $50.4 million to provide mechanisms • begin an upgrade of the lion display delivery of significant sporting events to fully understand and manage at Melbourne Zoo; and in Victoria; Victoria’s water resources and provide • upgrade arrival facilities and information that will underpin project • funding to upgrade and develop procure additional vehicles to cater and policy outcomes; soccer facilities across Victoria; for increased demand for the safari • $10 million to establish an Office • funding for the initial design and tour at Werribee Open Range Zoo. of Living Victoria to promote scoping work for Stage 2 of the improvements to Victoria’s urban Melbourne Park Redevelopment Puffing Billy water usage; to keep the Australian Open in Melbourne until 2036; and The Government will improve the • $8.6 million to improve water quality and safety of infrastructure security for food producers and • further funding for public libraries. on the Puffing Billy railway, which reduce the adverse environmental has become one of Victoria’s major impacts of irrigation; Anzac Centenary tourism attractions. • $7.3 million for initiatives that strive Strategy and the Shrine: to maximise water efficiency and coordinate Murray Darling Basin Plan Galleries of Remembrance activities; and The Government will expand facilities • $3 million to improve recreational at the Shrine of Remembrance including waterways in Ballarat and Mordialloc. a new Gallipoli Boat display, temporary exhibition space, an auditorium and The Government is committed to the additional education space. The facilities security and reliability of Victoria’s will meet growing interest in war history energy supply and to the development and increased demand from schools of cleaner coal technology that for education programs. This will also promotes economic development, enhance capacity for commemorative while managing Victoria’s response activities ahead of the Centenary of to the Commonwealth’s Clean Energy Anzac and World War I during the Future reforms. period 2014 to 2018. The 2012-13 Budget provides almost $4.5 million over three years (including $1.5 million in 2011-12) to meet Victoria’s contribution to the Australian Energy Market Commission.

18 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 18 28/04/12 2:05 AM Standing up for Victoria Australia’s federation is characterised The Victorian Government strongly Business costs of by the Commonwealth Government’s opposes any proposal to use the GST significantly greater revenue raising distribution to influence state policy and Commonwealth capacity and the states’ role as primary service delivery. Converting any part Occupational Health providers of essential services and of the GST to any form of tied revenue and Safety laws (OHS) infrastructure, known as vertical fiscal would impinge on states’ autonomy, imbalance. As a result, Victoria relies and severely reduce their capacity Any moves to harmonise OHS laws on the Commonwealth for almost to undertake reforms, plan future should adopt best practice in delivering half of its revenue. These financial investment and respond to changing a safe work environment while reducing transfers come in two broad forms – conditions and local priorities. costs for business. tied (Specific Purpose Payments and Victoria has the safest and most National Partnership Payments) and National Partnerships effective OHS system, the lowest rate of untied (GST revenue). workplace injuries, illnesses and deaths, National Partnership agreements (NPs) and the lowest workers’ compensation Victoria supports a federation that have allowed the Commonwealth premiums in Australia. Transitioning recognises states as the primary service and Victoria to jointly deliver projects to the proposed new Commonwealth providers, and balances competition and reforms of Victorian and system would cost Victoria $812 million, and cooperation across governments national significance. to promote innovation and sharing of while businesses would face ongoing best practice. The system of federal A number of these agreements are costs of $587 million a year in the first financial relations should support these approaching expiry, and ongoing five years. objectives by minimising the conditions funding is required to embed these attached to tied funding and ensuring successful reforms. National Disability the distribution of the GST does not Without an ongoing funding punish efficient states like Victoria. Insurance Scheme commitment from the Commonwealth Since Federation, Victoria has been the for expiring NPs, Victorians will miss Victoria is supportive of the proposed only state to have received less than out on the types of services that they National Disability Insurance Scheme. its population share of Commonwealth have come to rightfully expect. The Government is working with transfers each and every year to support the Commonwealth and other states NPs which justify ongoing financially weaker states – the principle and territories to implement such a Commonwealth funding include: of horizontal fiscal equalisation (HFE). scheme in a way that does not expose • Digital Education Revolution; Victoria to unreasonable budget risks. Victoria recognises that these states The Commonwealth’s revenue raising need to be supported, but Victorians • Low Socioeconomic School capacity means that it is best placed have been paying over and above Communities; to fund the additional costs of the their share for too long. In recent years, • Improving Teacher Quality; scheme as recommended by the HFE has involved more redistribution Productivity Commission. to a smaller share of the population, • Literacy and Numeracy; despite the growing fiscal maturity of • Homelessness; and the Federation. • Hospital and Health Workforce Reform. The Commonwealth’s comprehensive review of the system used to allocate the GST revenue between the states is a critical opportunity to redress the Cumulative redistribution of Commonwealth grants inefficiencies in the current system. 60 On 23 April 2012 the Commonwealth Government released the interim report 40 of the GST Distribution Review. The interim report identifies some positive 20 areas for investigation and establishes 0

a useful base for further discussion. 2011 dollars $ billion, -20 Victoria is seeking a distribution of GST that ensures every Australian -40

gets an equal share of the GST and -60 the Commonwealth plays its role in taking targeted action to address -80 entrenched disadvantage in some -100 states and territories. 1901-02 1921-22 1941-42 1961-62 1981-82 2001-02 NSW VIC QLD WA Source: Department of Treasury and Finance.

2012-13 Budget Overview 19

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 19 28/04/12 2:05 AM Better public services The Government, drawing on many These measures seek to protect and • wider adoption of best practice of the recommendations of the strengthen frontline service delivery in all parts of service delivery, Independent Review of State Finances, whilst moderating growth in the size of including increasing the use of open is changing the way public services are government and reducing its share of the tenders for the delivery of results, planned, governed, commissioned and economy to levels more consistent with well-defined services, and greater delivered to ensure Victorians benefit the long-term average. The Government use of price signals and other market from choice of and access to high will continue to develop options for approaches; and quality, lower cost services. reform of services by: • reducing duplication with Strong government finances are a • streamlining non-departmental entities Commonwealth responsibilities. major pillar of the Government’s to improve their governance and the The Government’s Better Services economic reform agenda. services they deliver to Victorians; Implementation Taskforce, comprising Since coming to office, the Government • removing barriers to decision-making experienced executives from the public has implemented savings rising to and efficient operations by service and private sectors, will oversee a range $2 billion annually by 2015-16. providers, and helping them to of improvements to give Victorians account for delivery to Victorians of better services, without extra strain the services they use most often, such on taxpayers. as transport, schools and hospitals; Reforms will ensure that the Victorian public service is positioned to provide quality services into the future. In turn this will provide capacity for the Government to invest in infrastructure to support Victoria’s growth.

Election commitments

The Government’s election Government Funding Funding Progress as at commitments included expenditure election provided prior to provided in 2012-13 and revenue initiatives of more than commitments (a) 2012-13 Budget 2012-13 Budget Budget (b) $5 billion, and capital investments of more than $2 billion to strengthen all Output and Victorians’ quality of life. revenue initiatives Funding ($ million) 5 213.1 5 001.6 183.3 5 184.9 The 2012-13 Budget builds on the previous year’s achievement through a Asset initiatives $1.2 billion investment in asset election Funding ($ million) 2 403.6 1 040.1 1 154.6 2 194.8 commitments. A further $183.3 million is provided to deliver the Government’s Source: Department of Treasury and Finance. output election commitments, building Notes: on the $5 billion output and revenue (a) Government election commitments refers to Liberal Nationals Coalition 2010 Election initiatives funded prior to this budget. Commitments document. (b) Total includes adjustments for changes to policy parameters.

20 2012-13 Budget Overview

6784 DTF 2012-13 Budget Overview_V39ƒ PRESS.indd 20 28/04/12 2:05 AM The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne, Victoria, 3002 Australia Telephone: +61 3 9651 5111 Facsimile: +61 3 9651 5298 Website: www.budget.vic.gov.au Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002 Printed managed by Finsbury Green, Level 9, 124 Exhibition Street, Melbourne 3000 This publication makes reference to the 2012-13 Budget Paper set which includes: Budget Paper No. 1 – Treasurer’s Speech Budget Paper No. 2 – Strategy and Outlook Budget Paper No. 3 – Service Delivery Budget Paper No. 4 – State Capital Program Budget Paper No. 5 – Statement of Finances (incorporating Quarterly Financial Report No. 3) © Copyright State of Victoria 2012 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. ISSN 1440-6969 If you would like to receive this publication in an accessible format Published May 2012 please telephone 9651 0909 or email [email protected]. Printed on recycled paper This document is also available in PDF at www.budget.vic.gov.au. 2012-13 Victorian Budget Overview www.budget.vic.gov.au

Victorian Budget 2012-13 Budget Overview