Stamp duty bust triggers Victorian budget austerity

By Leith van Onselen

The impending stamp duty bust in Victoria is already crimping public spending, with the Andrews Government forced to tighten its belt ahead of pay negotiations with the public service. From The ABC:

Several public sector workplace agreements expire this year with negotiations on many, including for 4,000 paramedics and ambulance support staff, set to begin soon.

Treasurer Tim Pallas met with union bosses recently and senior sources said he offered them 2 per cent a year for new enterprise bargaining agreements, which is below the current cost of living increase…

The 2 per cent offer is due to the slump in house prices, which have dropped by more than 9 per cent in the last year...

“The Treasurer has already foreshadowed a reduction in stamp duty revenue following a cooling of the property market — that will not stop the Government honouring all of its election commitments in full.”

Stamp duty and property taxes are the biggest tax revenue for the state, while public sector wages are the biggest expense.

Last December’s mid-year budget update revised stamp duty taxes down $604 million to just under $6.5 billion, since then the property market has continued to slow.

The mid-year Budget Review for Victoria was hopelessly optimistic with regards to stamp duty receipts, forecasting only a minor and temporary slowdown:

Since then, the crash in both housing transaction volumes and prices has deepened:

As the Victorian property market deteriorates even further, this inevitably means that stamp duty receipts will crash, wiping billions in revenue a year from the State Budget.

Thus, the Victorian Budget is facing a possible meltdown as crashing stamp duty receipts meet massive population-related spending commitments. This will likely then crimp infrastructure and public spending as austerity arrives.

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Comments

  1. LOL. Labor just literally rammed through the Firefighter’s enterprise agreement which is profilgate in extremis and has a shelf life of a few short months before being up for negotiation again. One set of rules for their “mates” and a whole other set of rules for the rest of the public sector. There will be no better barometer of budget melt-down than to keep an eye on the MFB’s (or soon to be FRV’s) financial reports.

      • I hope they’re soon eating pitchfork. But this is Australia. People love being Battlers, and just love being shat upon to really get the full Battler experience.

  2. It’s well worth watching some of these interviews Martin North has done with people familiar with the Ireland property bust. The way the situation played out over there and what we are seeing now here goes to show that we’re not special, following in the footsteps of earlier fools, and will likely end the same way.

    Worth a watch: https://youtu.be/1hi7gV9uyK8

    Put up yesterday I believe.

    • CaptainFeatherSwordsGhost-TheHaunting3

      If history tells us anything, its that socialists governments are much more altruistic and trustworthy with budgetary spending…..I mean just look at Cambodia, USSR, China, Venezuela.
      But to be fair, your observation is very correct. I just find your ideology laughably naive.

      • JaduongMEMBER

        Not to mention Norway, Sweden, Denmark, Estonia, Netherlands, Germany, which can’t be socialist because they are altrustic and trustworthy with budgetary spending.

      • DominicMEMBER

        Yes, those countries have paved the way for the adoption of MMT in our own — based on their roaring success.

      • Think you might look at venezualian history, last few decades and sanctions for a start. Libya was a paradise with oil moneynspent on people and country….taps in the desert for 1500 miles, cold pure water. Literacy went from 5% to 95% with Gaddafi. USSR was not socialist. Marxism separated people from the fruits of their labour’s, and, as Marx and his Rabbi mate agreed let “us” take it.

  3. As predicted. Most of the infrastructure promised will not get built esp the ring rail.

    Going to be interesting watching Andrews and Pallas backpedal over that.

  4. Surrounded by Pedophiles

    More garbage stamp duty went down but everything else went up, land tax, council rates, Ato hounds are chasing every cent they can get. Why don’t they cut Government wages, council wages if things are getting tough

    • DominicMEMBER

      You can bank on one thing in these situations and cutting costs is not one of them.

      When Govts run out of money they simply go back to the tax cow and give it another squeeze. Simples!

  5. Why do we give permanent resident non-citizens access to welfare if we are running out of money? Seems the easiest area to cut, they can’t vote after all.

    • Too right. I’ve heard of New Australians giving up jobs because the work is too much trouble and it’s better to be on the dole.