Public Accounts & Estimates Committee 2006-07 Budget Estimates - PowerPoint PPT Presentation

Public Accounts & Estimates Committee 2006-07 Budget Estimates Hearing The Hon. John Brumby MP Treasurer

Sound financial management 2006-07 2007-08 2008-09 2009-10 Budget estimate estimate estimate ($ million) Total income from 32 442 33 463 34 595 35 500 transactions ( % change ) 3.98 3.15 3.38 2.62 Total expenses from 32 125 33 158 34 263 35 188 transactions ( % change ) 4.47 3.21 3.34 2.70 Net result from 317 305 331 312 transactions Source: Victorian Budget Papers

Net financial liabilities at prudent levels “AAA” $ billion % of GSP 25 15 20 12 15 9 10 6 5 3 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 A-IFRS unfunded superannuation transitional adjustment (LHS) Net debt (excluding Growing Victoria) (LHS) Unfunded superannuation (LHS) Net financial liabilities to GSP (A-IFRS) (%) (RHS) Net financial liabilities to GSP (%) (RHS) Source: Victorian Budget Papers

Victorian economy going forward 2005-06 2006-07 2007-08 2008-09 2009-10 estimate forecast forecast forecast forecast (per cent) Economic growth 2.50 3.25 3.50 3.25 3.25 Employment growth 1.50 1.25 1.50 1.25 1.25 Unemployment rate 5.50 5.50 5.25 5.25 5.25 Source: Victorian Budget Papers

Terms of Trade index 130 120 110 100 90 80 70 Mar-60 Mar-68 Mar-76 Mar-84 Mar-92 Mar-00 Source: Australian Bureau of Statistics

Victorian economic growth in context GSP growth % 6 Estimate 4 2 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Non-resource States including Victoria Victoria Resource States Sources: Australian Bureau of Statistics, Budget Papers

Business investment growing New private business investment per capita $ per capita 1,900 1,800 1,700 1,600 Victoria 1,500 1,400 Australia 1,300 1,200 1,100 1,000 900 800 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Source: Australian Bureau of Statistics

Building approvals strong Value of building approvals ($ year ended) per capita 3,500 3,000 Victoria 2,500 Australia 2,000 1,500 1,000 500 0 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - r r r r r r r r r r r r r r r a a a a a a a a a a a a a a a M M M M M M M M M M M M M M M Source: Australian Bureau of Statistics

Non-residential construction pipeline* $ billion 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 * Year-end , Pipeline includes roads, non-residential building, heavy industry and other engineering Source: Australian Bureau of Statistics

Construction Activity $ million 2000 Engineering Construction 1800 Non-Residential Building 1600 1400 1200 1000 800 600 400 200 0 2 3 4 5 6 7 8 9 0 1 2 3 4 5 9 9 9 9 9 9 9 9 0 0 0 0 0 0 - - - - - - - - - - - - - - p p p p p p p p p p p p p p e e e e e e e e e e e e e e S S S S S S S S S S S S S S Source: Australian Bureau of Statistics

Record net infrastructure investment • $12.6 billion of investment over 4 years to 2009-10 $million 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 1 2 3 4 5 6 7 8 9 0 0 0 0 0 0 0 0 0 0 0 1 - - - - - - - - - - - 9 0 1 2 3 4 5 6 7 8 9 9 0 0 0 0 0 0 0 0 0 0 9 0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 2 2 2 Department of Treasury and Finance

Land tax rates compared Victoria’s Land Tax rates compared to NSW & Queensland 1999-00 to 2006-07 Land Tax Payable ($) $120,000 $3.425m VIC 2000 $100,000 VIC 2007 NSW 2007 $80,000 QLD 2007* $60,000 $1.541m $40,000 $0.380m $20,000 $0 $0 $1,000,000 $1,995,000 $2,995,000 $3,990 Unimproved Value of Landholdings Source: Department of Treasury and Finance *Using Queensland land tax rates on companies

Payroll tax rates compared • Reduces payroll tax rate to 5% over next two financial years – cuts costs by $533 million for over 20,000 businesses 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Qld Vic WA SA NSW Tas NT ACT Source: Department of Treasury and Finance

A further cut to WorkCover premiums • Third consecutive 10% reduction in WorkCover premiums ($170 million savings per year) Rate (%) 3 2004-05 cut 2 2005-06 cut 2006-07 cut 1 0 QLD VIC WA NSW SA Source: Victorian Budget Papers

Public Accounts & Estimates Committee 2006-07 Budget Estimates Hearing The Hon. John Brumby MP Treasurer

Historical infrastructure spending Infrastructure Spending (selected years) GG sector GG sector Total GG Total GG Year Infrastructure Infrastructure Infrastructure Infrastructure Spending (gross) Spending (gross) Spending (gross) Spending Nominal $m Real $m Nominal $m Real $m 1961-62 100 1075 131 1409 1965-66 134 1330 168 1667 1970-71 176 1504 248 2119 1975-76 414 2115 570 2913 1980-81 491 1538 654 2049 1985-86 935 1954 1168 2441 1990-91 902 1311 1196 1739 1995-96 1164 1512 1402 1821 1997-98 1392 1787 1690 2170 1998-99 1399 1780 1674 2130 2001-02 1904 2164 1954 2221 2003-04 2345 2527 2505 2698 2004-05 1966 2123 2524 2664 2005-06 (rev) 2372 2434 2892 2967 2006-07 (Bud) 2349 2349 3312 3312 Sources: ABS time series data to 2004-05; Treasury and Finance budget & forward estimates

Tax, revenue and GSP • Under this Government, strong economic growth has resulted in GSP growing at a faster rate than taxation and total revenue. 180 Taxation Revenue (incl. GST) 160 Commonwealth Revenue (incl. GST) Index (2000-01 = 100.0) Victorian GSP 140 120 100 2000-01 2002-03 2004-05 2006-07 2008-09

Tax as % of GSP 7.0 New South Wales 6.5 Victoria per cent of nominal GSP 6.0 Queensland 5.5 Australian average 5.0 4.5 4.0 3.5 3.0 1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08 Source: Victorian Budget Papers

Payroll tax rates compared • Reduces payroll tax rate to 5% over next two financial years – cuts costs by $533 million for over 20,000 businesses 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Qld Vic WA SA NSW Tas NT ACT Source: Department of Treasury and Finance

Victoria's 5% payroll tax rate (1 July 2008) - Difference from tax payable in Queensland 20,000 Difference between payroll tax payable ($) 15,000 10,000 $11.0 m 5,000 Business pay less tax in Victoria than in Queensland in this range. 0 -5,000 2,700,000 5,200,000 7,700,000 10,200,000 Payroll ($) Difference between Vic and Qld

Land tax rates compared Victoria’s Land Tax rates compared to NSW & Queensland 1999-00 to 2006-07 Land Tax Payable ($) $120,000 $3.425m VIC 2000 $100,000 VIC 2007 NSW 2007 $80,000 QLD 2007* $60,000 $1.541m $40,000 $0.380m $20,000 $0 $0 $1,000,000 $1,995,000 $2,995,000 $3,990 Unimproved Value of Landholdings Source: Department of Treasury and Finance *Using Queensland land tax rates on companies

A further cut to WorkCover premiums • Third consecutive 10% reduction in WorkCover premiums ($170 million savings per year) Rate (%) 3 2004-05 cut 2 2005-06 cut 2006-07 cut 1 0 QLD VIC WA NSW SA Source: Victorian Budget Papers

GST subsidies to other States 2006-07 $ million 2,000 1,500 1,000 500 0 -500 -1,000 -1,500 -2,000 -2,500 NSW Vic Qld WA SA Tas ACT NT Source: Department of Treasury and Finance

First Home Buyers - Victoria & NSW Monthly First Home Buyers - January 2005 to February 2006 4,000 NSW VIC 3,800 3,600 3,400 3,200 3,000 2,800 2,600 2,400 2,200 2,000 5 5 5 5 5 5 5 5 5 5 5 5 6 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - b r n g b n r y l p t v c n u a p c a u u o a e e e a e J A O M M J A N J F S D J F