State programs at risk over federal shortfalls, Victorian Treasurer warns

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The Age: State programs at risk over federal shortfalls, Victorian Treasurer warns. May 3, 2014. Farrah Tomazin. The Sunday Age’s state political editor.

Victoria could lose hundreds of hospital beds and be forced to scale back kindergarten hours, with Treasurer Michael O’Brien warning Tuesday’s state budget will not make up for anticipated shortfalls in federal funding.

Despite repeated attempts to secure more money from Canberra for a range of national partnerships that will expire soon, Mr O’Brien admits Victoria has not yet had funding certainty from the Abbott government, and therefore “we need to assume it’s not coming”.

This means that several state-federal agreements are at risk, including a $100 million-a-year deal on health – which involves the expansion of 326 sub-acute beds – and a $158million deal that gives children access to 15 hours of kindergarten a week. Without continuing federal money, hospital beds could be lost and kindergarten access may reduce to 10 hours a week.

“That’s in the hands of the Commonwealth,” Mr O’Brien told The Sunday Age. “Our financial position is relatively strong amongst the states, but we don’t have the capacity to fill in any gap that is created.

“Our budget will have to reflect what we know is available to us, and where future federal funding isn’t confirmed we obviously can’t put that in our budget.”

The loss of national partnership funding is likely to punch a massive hole in the state’s coffers, which already faces GST revenue losses of $286 million. It also comes despite Premier Denis Napthine writing to Prime Minister Tony Abbott earlier this year to warn him that, without continuing funding, “the Victorian government would have little choice but to pass such cuts directly through to the Victorian community via frontline service delivery reductions”.

But as fears emerge over service delivery, Tuesday’s budget will involve, on the other hand, record spending on infrastructure as the government attempts to seize the momentum ahead of November’s state election.

Billions of dollars worth of projects are in the pipeline, including accelerated plans for a Metro rail tunnel to complement the City Loop, both stages of the East West Link, a rail link to Melbourne Airport and dozens of level crossing upgrades.

On Saturday deputy premier Peter Ryan also used the Victorian Nationals’ state conference to announce a $220 million package to upgrade country rail and build a standardisation rail system between Mildura and Geelong.

The first stage of the project would include an initial $41 million to upgrade the Hopetoun and Mildura rail lines, while the main component – which involves narrowing the Mildura tracks from broad to standard gauge, and then linking it to Geelong – would be guided by a business case to be delivered by the end of the year.

Mr Ryan said he expected the so-called Murray Basin Rail Project to be completed by 2018.

“By converting the existing broad gauge tracks to standard gauge, the Murray Basin Rail Project will deliver modern rail infrastructure and transform Victoria’s freight network to meet the increasing demand for freight services,” Mr Ryan said.

Victoria’s budget in the mix

Money for the western section of East West Link, including $1.5b from Commonwealth.
Expected money for Melbourne Metro rail.
Money for Airport Rail Link
Sale of the Port of Melbourne

$550m for new ambulance helicopters, beginning 2015, paid over 10 years.
$73m for Latrobe Regional Hospital upgrade, including extra 30-bed ward and doubles emergency department.
$34m ice support program and $4m for drug-addicted mums.
$4m capital and $5.6m a year recurrent for five new neonatal intensive care cots.

Free CBD Trams.
Zone 1 fares across the network.
$457m for three level crossings.
$200m St Albans level crossing removal and station upgrade ($151m from Commonwealth).
$130m in road upgrades.
Car registration up at least $25, car stamp duty up.
$40m to fix mobile blackspots and deliver free Wi-Fi on a number of V-Line train services.
$2.5b for Cranbourne-Pakenham rail upgrade.
$220m for western Victoria rail upgrade.

$191m to build 11 new schools in growth suburbs.
$142.3m so far and the money will be shared among 30 schools.
$20m for new secondary school in Prahran.
$5.5m for new year 9 campus of Albert Park College.
$6.3m to begin Sunshine College rebuild.

$14m to close Oakleigh institution.
$190m upgrade to disability service.

$29m for 78 new CFA trucks.
$13.5m for Tasers in regional police.

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