Victoria's 'shock-and-awe' election budget
Promising a bit of "something for everyone", Victoria's 2014-15 budget focuses heavily on infrastructure to support the state's rapidly booming population, says state political editor Josh Gordon.PT2M16S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-37u71 620 349 May 6, 2014
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This is a shock and awe budget designed to blast Labor into electoral oblivion. Odds on, it will succeed.
Indeed, the Napthine government’s infrastructure program is so broad, so grandiose, that if the Coalition can’t get an electoral bounce out of this, nothing will save it.
Premier Denis Napthine's government has an unprecedented $72 billion worth of infrastructure projects on its books.
The Napthine government has an unprecedented $72 billion worth of infrastructure projects on its books, much of it funded through private-sector investment.
Of that, a whopping $27 billion has been announced in this budget, including a new city rail tunnel, an airport rail link, the second stage of the East West Link, a significant upgrade to the Cranbourne/Pakenham rail corridor, numerous level-crossing removals and new schools.
The biggest chunk of spending is targeted next financial year, with $7.1 billion being unleashed in 2014-15 to coincide with the November 2014 election.
This budget is about good old-fashioned retail politics, albeit with a new theme. It has taken a while, but the government has finally woken up to the idea that voters are smart enough to make a connection between booming population growth and the need for better infrastructure. Since 2000, Melbourne’s population has increased by about one-quarter, while the infrastructure needed to accommodate it has grown at a much slower pace.
Rather than appealing directly to the hip pocket – or fears about public safety – the government is promising to protect quality of life through better roads and public transport.
Michael O'Brien's overarching political message is that three years of tough budgetary decisions have allowed the government to deliver changes that will lead to tangible quality of life improvements.
O’Brien may shrink from the comparison (for obvious reasons), but the argument is reminincent of Paul Keating’s claim that the 1988 budget would “bring home the bacon” for voters after a series of tough decisions.
The accepted wisdom seems to be that the punitive measures set to be included in the Abbott government’s first budget, including deep cuts to services and the so-called deficit levy, would undermine the Victorian Coalition’s efforts to win the November 2014 election.
I’m not so sure. O’Brien and Napthine can boast that they have delivered the strongest financial position in the nation, with a AAA credit rating and a string of surpluses tallying to a record $11 billion over the four-year budget period. That’s quite a war chest.
The contrast between the Commonwealth’s anaemic budget position and Victoria’s robust finances arguably does much to bolster the state government’s credibility – particularly if Victoria can now demonstrate results.
But O’Brien’s claims about three years of fiscal austerity and tough love are only partly true.
Government spending is expected to grow at an average pace of 2.6 per cent over the four-year budget period. But on the other side of the ledger, tax revenue is forecast to boom, rising at a much faster annual average pace of 3.7 per cent, thanks largely to strong stamp duty collections linked to the resurgent property market.
The tax revenue surge partly explains the extraordinary increase in the size of Treasury's surplus predictions, with the budget windfall rising from $1.3 billion next financial year to $3.3 billion by 2017-18.
And despite much whinging from the state government about Victoria’s share of the GST, state Treasury is predicting that Victoria’s revenue from the tax will rise by about $1 billion a year as the state’s share gradually creeps back up from 88 cents in the dollar to 94 cents.
The Coalition has been lucky at a critical point in the political cycle.
The one piece of the puzzle missing is significant spending from the Coalition on health and hospitals. This is strange, given public and private opinion polls show this is the area of biggest concern for voters, highlighting a critical vulnerability for the Coalition.
Napthine, still lagging in the polls and beset by internal and external problems, isn’t yet in the clear politically. But as things stand now, Labor’s transport vision – to eliminate 50 level crossings and build an off-ramp on the West Gate Bridge for trucks – seems myopic and threadbare by comparison.