The Victorian Baillieu government’s first budget has focused on meeting election promises, with hefty spending combined with a major cut in GST revenue resulting in net debt blowing out by $7.5 billion.

 

The budget was hit with $4.1 billion cut in GST revenue and deferral of $550 million in infrastructure payments from the Federal government,  and the government will need to borrow funding to meet its election promises.

 

Treasurer Kim Wells said the debt would be $11.9bn for 2011, rising to $16.8bn in 2012 and  $23.1bn by 2015. Growth in government spending for 2011-12 has been cut back to 3.2% from an average of 8% under the Labor government. 

 

The surplus for 2011-12 will be $140 million, and projected to average  $164 million over the forward estimates.

 

The budget overview emphasized the government’s policy of limiting wage increases to 2.5% unless they are funded by productivity gains.

 

Major components of the budget include:

  • Additional $2.5 billion over the next four years for health services and infrastructure;
  • $602 million to fund 1,700 additional Victoria Police by November 2014 and $212 million to recruit and train 940 Victoria Police Protective Services Officers (PSOs)by November 2014 for railway station security;
  • $601 million for road projects.