The Age: State budget surplus takes $200 million hit. October 17, 2014. Richard Willingham and Henrietta Cook
This year’s state budget surplus has taken a $200 million hit, with the Coalition’s original estimate of $10 billion worth of surpluses over the next four years revised down.
However, an extra half a billion dollars has been taken from Victoria’s public corporations to help keep the state budget “stable”.
On Friday, Treasurer Michael O’Brien released a budget update that showed the Coalition’s coveted surplus had been revised down to $1.1 billion.
The budget had forecast total surpluses over the next four years to $10.8 billion, but Friday’s update brought the total over the forward estimates to $8.9 billion.
Mr O’Brien said the early receipt of $1 billon of Commonwealth money for the East West Link in 2013-14 had affected the state’s budget position. Another $500 million of road money was also pushed back to 2018-19.
The financial statement showed the government would take an extra $507 million in dividends from public financial corporations, such as the Transport Accident Commission, and public non-financial corporations, including Melbourne Water, this year.
The government will take $222.5 million more from the Victorian WorkCover Authority than it had budgeted for in May and an extra $64.5 million from the TAC.
Water corporations have also been raided, with South East Water coughing up an extra $33.3 million in dividend payments.
The money comes from the corporations’ profits and Mr O’Brien said it was a return for taxpayers. Governments are given an interim payment every year and can choose to take it.
“Once we knew what the federal government had done with their billion dollars, in terms of East West, there was a need to try and smooth out as much as possible the financial position,” he said.
“You don’t want to have huge peaks and drops in your finances; you want it to be stable and steady as much as possible.”
Tax for this year has also been revised down by $176 million, with the total tax revenue forecast declining by $600 million over the four years, mainly due to a $540 million drop in land taxes.
Mr O’Brien said this was due to the Valuer-General’s assessment of property value being below what Treasury had forecast for the May budget.
There was also a $22 million drop in stamp duty estimates for this year.
Despite the revision, the government says state taxation revenue is expected to grow by 5.7 per cent this year and an average of 4.7 per cent over the next three years on the back of land tax and stamp duty growth.
Gambling taxes are expected to grow by 8.3 per cent following changes to poker machine taxes announced last year.
Car taxes are also expected to provide a boon for the government, with growth expected to be 11.1 per cent this year due to a hike in registration fees.
The budget update also confirmed the existence of a “side letter” for the East West Link contract. The document said the side letter did not provide additional compensation for the consortium if a court deemed the project agreement invalid, and it was expected it would never be called upon.
“The letter merely commits the state to stand by the termination compensation in the contract,” it said.
Revenue measures include changes to Crown Casino’s licence, on-the-spot public transport fines and beefing up compliance activities at the State Revenue Office – particularly around land tax and payroll tax.
The Napthine government hopes to reap almost $180 million over the next four years by increasing State Revenue Office investigations into reported land ownership, which includes rolling out new technology to crack down on tax cheats.
More than $22 million is expected to be collected from on-the-spot fines handed to fare evaders over the next four years.
And after last week’s press conference in which Premier Denis Napthine and Mr O’Brien were unable to say how much new initiatives in the $33 billion jobs plan were worth, the government finally revealed the figure to be $109 million.
Mr O’Brien also renewed his call for a fairer share of GST.
Labor’s finance spokesman Robin Scott said the financial statement showed the government was a “chaotic mess”.
“Yesterday, Michael O’Brien was caught cooking the books by the Auditor-General. Today, he hands down a financial statement that shows next year’s surplus at $700 million less than forecast just six months ago,” Mr Scott said.