State Budget Briefing & Analysis Grant Hehir Secretary, Department of Treasury and Finance

1. State Budget Briefing & Analysis Grant Hehir Secretary, Department of Treasury and Finance Vince FitzGerald Chairman, the Allen Consulting Group

2. 2010-11 Victorian Budget IPAA presentation Grant Hehir Secretary, Department of Treasury & Finance

3. Victorian Budget 2010-11 • Victorian economy • 2010-11 Budget financial results • 2010-11 Budget initiatives

4. Victorian economy

5. Most severe global recession since 1930s Industrial production in the G7 during recessions Source: OECD

6. GFC impact more severe overseas Unemployment rate Sources: Sources: ABS; US BLS; Eurostat, ONS, Economist

7. Annual employment growth per cent Source: ABS

8. Victoria created 99 400 jobs in last 12 months Source: Australian Bureau of Statistics

9. Victorian and Euro Zone business confidence Points of std dev Net balance optimistic pessimistic Sources: National Australia Bank; European Commission

10. Victorian dwelling approvals increasing 000’s Source: Australian Bureau of Statistics

11. Annual population growth per cent Source: ABS

12. Victorian economic projections 2010-11 Budget projections (projections in parentheses are from 2009-10 Budget Update where different)

13. Risks

14. Sustained pressure on AUD Source: Reserve Bank of Australia

15. Annual inflation rates per cent Source: ABS

16. Economic reform strategy • In light of these risks there is an economic reform agenda in place: • prudent financial management • reducing business costs • improving competitiveness and productivity • education and skills • health • market design

17. 2010-11 Budget financial results

18. 2010-11 financial objectives and strategies Source: Department of Treasury and Finance

19. Maintaining a substantial operating surplus Net result from transactions $ million Short term $100 m target Source: Department of Treasury and Finance

20. Maintaining a substantial operating surplus Revenue and expense growth relative to nominal GSP per cent Source: Department of Treasury and Finance

21. Maintaining a substantial operating surplus- Discretionary revenue not fully recovered Discretionary Revenue (GST + State Taxation) Source: Department of Treasury and Finance

22. Maintaining prudent financial liabilities- Net debt reduced since 2009 General government net debt/gross state product per cent Source: Department of Treasury and Finance

23. Maintaining prudent financial liabilities General government sector net financial liabilities per cent Source: Department of Treasury and Finance

24. Deliver world class infrastructure Infrastructure spending $ billion Source: Department of Treasury and Finance

25. Deliver world class infrastructure Sources of funding for net investment $ billion Source: Department of Treasury and Finance

26. Improving business competitiveness • Payroll tax cut • Saving to business of $193 million • Seven cuts in 10 years • Workcover premiums cut • Saving to business of $240 million • Six cuts in last 7 years • Land tax cuts • Exemption of up to two years for construction of residential aged care facilities and retirement villages • Red tape reductions • Government has doubled target and now plans to cut regulatory burden by $500 million per annum by 2012

27. Payroll tax rate cut to 4.90 per cent per cent Payroll tax rate Source: Department of Treasury and Finance

28. WorkCover premiums cut by 3.5 per cent per cent ‘000 Source: WorkCover Authorities

29. Tax competitiveness per cent Taxation as a share of nominal GSP New South Wales Victoria Queensland Source: Australian Bureau of Statistics, Department of Treasury and Finance and various state publications

30. 2010-11 Budget initiatives - provide improved service delivery to all Victorians

31. 2010-11 Budget output initiatives Net impact of 2010-11 Budget new output initiatives Source: Department of Treasury and Finance

32. 2010-11 Budget asset initiatives 2010-11 Budget new asset funding Source: Department of Treasury and Finance

33. Investing in education • Victorian Schools Plan – First tranche exceeded • 553 school upgrades/refurbishments funded this term • Exceeded promise to fund 500 this term • Blueprint for education and early childhood development • 42 actions towards system improvement, partnerships with parents and communities and workforce reform • $287 million to support non-government schools • Support for disadvantaged students and students with disabilities • Building the Education Revolution • Delivering $2.6 billion of capital works in partnership with Commonwealth Government

34. Investing in lifelong learning • Early childhood development • 3,590 extra kindergarten places and 126 kindergarten teachers • Partnership with the Commonwealth Government to deliver National Quality Agenda for Early Childhood Education and Care • Establishing the Victorian Deaf Education Institute • Major upgrades to Glenroy Specialist School, Northern School for Autism and Eastern Autistic School • Support for TAFE sector • New infrastructure including new Teaching & Learning Centre for NMIT • Apprenticeship completion bonus and accommodation allowance

35. Putting patients first • $4 billion injection for Victoria’s health system in partnership with the Commonwealth, including; • 1,000 new health workers • $2.3 billion for Victorian health care facilities since 2009-10 Budget • $618 million for regional hospitals in Bendigo, Coleraine, Leongatha, Ballarat, Geelong, Wonthaggi and Healesville • $408 million for Box Hill Hospital • $91 million to expand Sunshine Hospital • $760 million for immediate service funding • 22,000 additional inpatient services in 2010-11 • 9,000 elective surgery treatments over two years • 32,000 additional outpatient appointments in 2010-11 • Expanding support for people experiencing mental illness • New Mental Health Bill • Boosting early intervention programs for young people including youth suicide prevention and youth and mental health outreach teams

36. Putting patients first • $935 million from COAG Agreement on health and hospitals reform • 150,000 more emergency departmental patients each year being treated • 34,000 more patients receiving elective surgery faster • additional 332 sub-acute beds enabling treatment of 5,000 patients annually • Making Victoria a leader in Cancer research and treatment • Parkville Comprehensive Cancer Centre • Olivia Newton-John Cancer and Wellness Centre - Stage 2a • Ballarat Regional Integrated Cancer Centre

37. A Fairer Victoria – strengthening the safety net • Helping households with rising living costs • Increasing the water concession for 669,000 households • Continuation of the Waterwise program for water audits & retrofitting • Looking after vulnerable children • Addressing out of home care service growth and enhancing quality services for traumatised children ($35 million) • Family services to better assist children at risk ($24 million) • Ongoing support for people with a disability • Increase in funding for Community Service Organisations • Better resourcing 24-hour shared support accommodation ($35 million plus $11 million in asset funding) • Supporting people with autism and their families ($7.5 million)

38. Retargeting the First Home Bonus • 69% of Victorians own their home • First Home Bonus created 19 000 jobs last year (HIA) • FHB takes pressure off the rental market • First Home Bonus refocused to newly constructed homes • Boost for housing and employment in CADs ($10 million) • Support for community infrastructure ($22 million) • NRAS - $237 million for up to 7 500 affordable dwellings

39. Delivering the Victorian Transport Plan • 50 new low floor trams and supporting infrastructure to move an extra 10,000 passengers at a time • 20 premium station upgrades including 100 additional station staff • Four new train stations in growth corridors • Cardinia Road, Williams Landing, Lynbrook and Caroline Springs • Transport connections program to assist regional and rural communities

40. Working with the community to tackle the causes of crime • Delivering the Respect agenda • Funding A Right to Respect tackling sexual and domestic violence against women ($14 million) • Fifty five additional youth workers to support young people ($22 million) • Launched the Knives Scar Lives campaign • Swifter access to justice • Managing court demand and legal services master plan ($64 million) • Boost to Victoria Legal Aid ($50 million)

41. Promoting community safety • Delivering 1,966 frontline police back on the streets • Biggest one-off boost in Victoria’s recent history • Building an effective corrections system • Increased capacity for women’s prison accommodation ($81 million) • Additional men’s prison accommodation ($46 million) • Continuation of Better Pathways strategy to reduce women’s imprisonment and re-offending

42. Bushfire reconstruction and preparedness • 2009-10 Budget: Immediate Response ($986 million) • 33 Community Recovery Centres • Over 200 case managers appointed • Clearing over 3,000 damaged properties • Interim Report response announced in 2009-10 ($61 million) • Improvements to bushfire information services • New funding in 2010-11 Budget ($254 million) • Preparedness and community education ($92 million) • Emergency response initiatives ($79 million) • Extra support for Victorian Bushfire Reconstruction and Recovery Authority

43. Our environment – continuing Victoria’s Leadership • Leadership in tackling climate change • Support for ETS • Climate Change White Paperto be delivered this year • Climate Change Bill • Land & Biodiversity package released in December 2009 • Jobs for the Future Economy statement ($175 million) • Improve the energy and water efficiency of the State’s hospitals, schools and government buildings • New research and industry partnerships in sustainable industries • Free entry to national parks • Estimated to boost visitation by 25-50% a year

44. 2010-11 Victorian Budget IPAA presentation Grant Hehir Secretary, Department of Treasury & Finance

45. State Budget Briefing & Analysis Grant Hehir Secretary, Department of Treasury and Finance Vince FitzGerald Chairman, the Allen Consulting Group