The Victorian 2023 budget has been labelled by Treasurer Tim Pallas as his most difficult, with the budget bottom line, big business and property owners all taking a hit.
But concessions have been found for small business owners and flood-affected regions.
Here are the winners and losers from this year's budget.
Loser: Government debt
Despite the introduction of a new COVID levy, the state's net debt is projected to keep rising.
It is expected to sit at $116.7 billion in June 2023 and grow to $171.4 billion by June 2027.
It means net debt will be equivalent to 24.5 per cent of gross state product in 2027.
Interest rate rises have also caused debt repayments to balloon out since the government's last budget, with the Reserve Bank of Australia raising the cash rate from 0.1 per cent to 3.85 per cent over the course of the year.
Interest payments on government debt will total $5.56 billion in the 2023-24 financial year, rising to $7.98 billion by 2026-27.
Loser: Big business
A new COVID debt levy will apply to companies with a payroll greater than $10 million, which is projected to bring in $3.874 billion in revenue over four years.
Businesses with a national payroll of more than $10 million will pay an additional payroll tax of 0.5 per cent, or 1 per cent if their national payroll exceeds $100 million.
Mr Pallas said he expected the payroll increase would affect around 5 per cent of businesses in Victoria.
Winner: Small business
The payroll tax-free threshold will be raised twice between now and 2025 for small businesses.
That's classified as businesses with payroll expenses under $3.6 million per year.
The payroll tax-free threshold rises from $700,000 to $900,000 from July 1, 2024, and then again to $1 million on July 1, 2025.
Loser: Public service workers
Major job cuts are on the way for the public sector, which is set to lose between 3,000 and 4,000 workers.
Mr Pallas said the redundancies would come from sectors such as communications and marketing departments, as the government worked to move on from its "post-crisis" setting.
But Mr Pallas suggested the number of workers in other parts of the public service, such as frontline health, was expected to increase.
Loser: Private schools
High-fee private schools will lose their payroll tax exemption from 1 July 2024.
The measure is expected to affect approximately 110 schools in the state.
Budget papers estimate the measure will bring in $134.8 million when it takes effect in 2024-25.
Winner: Hospital infrastructure
The government has begun the first tranche of funding for its $320 million hospital infrastructure plan, which it promised ahead of last year's election.
It has allocated $78.5 million towards projects such as a new hospital in West Gippsland, a new Queen Elizabeth II Hospital in Melbourne's East, hospital plans for Melbourne's north and south-east, and a redevelopment of Wonthaggi hospital.
The remaining $241.5 million of the Hospital Infrastructure Delivery Fund is expected to be funded by 2026-27.
Loser: Property owners
The tax-free threshold for land tax is being lowered from $300,000 to $50,000.
It will not affect the family home, so will apply to investment properties and holiday homes.
But the government estimates the owners of about 380,000 properties will now pay land tax where previously they would not have.
The government estimates there will be an estimated additional cost of $1,300 a year for home owners hit by the land tax changes.
The absentee owner surcharge — which applies to foreign investors — will increase from 2 per cent to 4 per cent.
Winner: Flood recovery
The budget includes an extra $677m for ongoing flood recovery, on top of $1.8bn promised last year.
The government has allocated $45.9m for immediate response costs incurred by emergency services organisations, $7.1m to support councils to undertake impact assessments and more than $23m to repair VicSES Emergency Hubs at Rochester and Heathcote in Central Victoria.
Neutral: Timber Industry
While the phasing out of the native timber industry is being sped up by the government, it will provide new funding to support timber workers transitioning out of the industry.
The budget has earmarked more than $200 million in funding for workers in the industry to be retrained.
Neutral: Rail
The budget has provided more than $300 million in funding for 23 new VLocity trains, promised on the election trail by the Andrews government.
However other projects, such as the vaunted Airport Rail Link, will be put on hold while the federal government runs a review of major projects to which it has committed funding.
This pause hasn't come as a surprise, with questions raised over the Airport Rail Link's future in the wake of the federal budget.
Loser: Gambling industry
The government will raise the betting and wagering tax from 10 per cent to 15 per cent from 1 July 2024.
The move brings Victoria in line with all other states, except Queensland.
To offset the impact of the tax jump, the Victorian racing industry's share of tax receipts will jump from 3.5 to 7.5 per cent.
Credits:
- Illustration: Georgina Piper and Emma Machan
- Design: Ben Spraggon and Georgina Piper
- Development: Colin Gourlay and Andrew Kesper
