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

Source: Victorian Budget Papers

Net financial liabilities at prudent levels “AAA”

5 10 15 20 25 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3 6 9 12 15

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) $ billion % of GSP Source: Victorian Budget Papers

Victorian economy going forward

2005-06 estimate 2006-07 forecast 2007-08 forecast 2008-09 forecast 2009-10 forecast (per cent) 2.50 1.50 Economic growth 3.25 3.50 3.25 3.25 5.50 Employment growth 1.25 1.50 1.25 Unemployment rate 1.25 5.50 5.25 5.25 5.25

Source: Victorian Budget Papers

Terms of Trade

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

Victorian economic growth in context

2 4 6 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Non-resource States including Victoria Victoria Resource States

GSP growth

Estimate % Sources: Australian Bureau of Statistics, Budget Papers

Business investment growing

New private business investment per capita

800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 $ per capita

Victoria Australia

Source: Australian Bureau of Statistics

Building approvals strong

500 1,000 1,500 2,000 2,500 3,000 3,500 M a r

• 9

2 M a r

• 9

3 M a r

• 9

4 M a r

• 9

5 M a r

• 9

6 M a r

• 9

7 M a r

• 9

8 M a r

• 9

9 M a r

• M

a r

• 1

M a r

• 2

M a r

• 3

M a r

• 4

M a r

• 5

M a r

• 6

Value of building approvals ($ year ended) per capita

Victoria Australia Source: Australian Bureau of Statistics

Non-residential construction pipeline*

2 4 6 8 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 $ billion

* Year-end, Pipeline includes roads, non-residential building, heavy industry and other engineering Source: Australian Bureau of Statistics

Construction Activity

200 400 600 800 1000 1200 1400 1600 1800 2000

S e p

• 9

2 S e p

• 9

3 S e p

• 9

4 S e p

• 9

5 S e p

• 9

6 S e p

• 9

7 S e p

• 9

8 S e p

• 9

9 S e p

• S

e p

• 1

S e p

• 2

S e p

• 3

S e p

• 4

S e p

• 5

Engineering Construction Non-Residential Building $ million Source: Australian Bureau of Statistics

Record net infrastructure investment

• $12.6 billion of investment over 4 years to 2009-10

500 1,000 1,500 2,000 2,500 3,000 3,500 1 9 9 9

• 2
• 1

2 1

• 2

2 2

• 3

2 3

• 4

2 4

• 5

2 5

• 6

2 6

• 7

2 7

• 8

2 8

• 9

2 9

• 1

$million

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 ($)

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

$0 $1,000,000 $1,995,000 $2,995,000 $3,990

VIC 2000 VIC 2007 NSW 2007 QLD 2007*

$0.380m $1.541m $3.425m

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

4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 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)

1 2 3 QLD VIC WA NSW SA Rate (%)

2004-05 cut 2005-06 cut 2006-07 cut 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)

Year GG sector Infrastructure Spending (gross) Nominal $m GG sector Infrastructure Spending (gross) Real $m Total GG Infrastructure Spending (gross) Nominal $m Total GG Infrastructure Spending 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.

100 120 140 160 180 2000-01 2002-03 2004-05 2006-07 2008-09 Index (2000-01 = 100.0) Taxation Revenue (incl. GST) Commonwealth Revenue (incl. GST) Victorian GSP

Tax as % of GSP

3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08

per cent of nominal GSP New South Wales Victoria Queensland Australian average

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

4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 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

• 5,000

5,000 10,000 15,000 20,000 2,700,000 5,200,000 7,700,000 10,200,000

Payroll ($)

Difference between payroll tax payable ($)

Difference between Vic and Qld

Business pay less tax in Victoria than in Queensland in this range. $11.0 m

Land tax rates compared

Victoria’s Land Tax rates compared to NSW & Queensland 1999-00 to 2006-07

Land Tax Payable ($)

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

$0 $1,000,000 $1,995,000 $2,995,000 $3,990

VIC 2000 VIC 2007 NSW 2007 QLD 2007*

$0.380m $1.541m $3.425m

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)

1 2 3 QLD VIC WA NSW SA Rate (%)

2004-05 cut 2005-06 cut 2006-07 cut Source: Victorian Budget Papers

GST subsidies to other States 2006-07

• 2,500
• 2,000
• 1,500
• 1,000
• 500

500 1,000 1,500 2,000 NSW Vic Qld WA SA Tas ACT NT $ million

Source: Department of Treasury and Finance

First Home Buyers - Victoria & NSW

2,000 2,200 2,400 2,600 2,800 3,000 3,200 3,400 3,600 3,800 4,000 J a n

• 5

F e b

• 5

M a r

• 5

A p r

• 5

M a y

• 5

J u n

• 5

J u l

• 5

A u g

• 5

S e p

• 5

O c t

• 5

N

• v
• 5

D e c

• 5

J a n

• 6

F e b

• 6

NSW VIC

Monthly First Home Buyers - January 2005 to February 2006