Victorian-era budget deficit explodes to $ 23.3 BILLION

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the coronavirus the pandemic and the 112-day Victoria lockdown wiped out state coffers, with Treasurer Tim Pallas showing a $ 23.3 billion deficit and more than $ 150 billion in net debt in Tuesday’s budget.

But it’s not all bad news, with the budget also set to include tax cuts and incentives to attract global businesses to the state, as well as previously announced increases for mental health and social housing.

Details obtained by the AAP show that the Andrews government will undertake a record borrowing that will bring net debt to $ 86 billion in 2020/21, before reaching $ 154 billion by 2023/24.

The state was already borrowing billions for large infrastructure projects before the pandemic hit.

Interest rates are at record highs, so increasing borrowing is one of the best ways to jumpstart the economy and support the Victorians, Pallas said.

Victoria was already borrowing billions for major infrastructure projects before the pandemic hit. Credit: PAA

“This is a budget that puts the Victorian people first, with the support they need to recover and rebuild,” he said in a statement on Saturday.

“We are following the model of jurisdictions across Australia and the world, which use their own budgets to protect household and business budgets.”

With the fall in economic output and the skyrocketing unemployment following the pandemic, much of the borrowed money will be spent on job-generating infrastructure projects and social and business supports.

Government infrastructure spending is expected to average $ 19.6 billion annually over forecast, which the treasurer said is four times the 10-year average before 2014.

The government has already spent $ 13 billion to fight the coronavirus crisis, with funds allocated to the health system and direct economic support to help businesses survive and rebuild.

Some of the money will return to the coffers with a new distance-based levy for drivers of zero and low-emission light vehicles to offset losses in excise duties on fuel.

But more than $ 45 million is earmarked in the budget to incentivize and accelerate vehicle adoption.

While this budget will be $ 23.3 billion in the red, deficits are expected to narrow over the forward estimates to $ 13.1 billion in 2021/2022, then to $ 6.7 billion in 2022/23 as the economy recovers.

Pallas says Victoria is not the only one running a large deficit, with no jurisdiction safe from the economic ruin caused by the pandemic.

The federal government forecast an operating deficit of $ 213 billion, while the New South Wales government predicted a deficit of $ 16 billion.

“We cannot fix the economy until we solve the public health crisis,” Pallas said.

“We are now in a better position than so many jurisdictions in the world and our economy can return to a position of growth – and this budget gives it the boost it needs.”


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