It’s raining mid-year Budget Updates with Victoria’s also released today:
- The general government sector operating surplus is estimated to be $618 million in 2019-20, with annual operating surpluses averaging $3.3 billion a year across the forward estimates.
- Compared with the 2019-20 Budget, the net result from transactions has been revised down by an average of $193 million a year over the budget and forward estimates. This largely reflects the funding of new initiatives in priority areas and a reduction in expected GST revenue from the Commonwealth due to the weaker macroeconomic outlook.
- Revenue growth is expected to average 4.4 per cent a year over the budget and forward estimates, exceeding average expense growth of 3.3 per cent a year.
- Net debt is projected to be $57.8 billion by June 2023. As a proportion of gross state product (GSP), net debt is projected to be 8.5 per cent at June 2020 and increase to 10.5 per cent by June 2023.
- Government infrastructure investment (GII) is projected to average $13.9 billion a year over the budget and forward estimates.
The most interesting bit is the upwards revision in stamp duty receipts following the strong bounce in Melbourne property values:
Land transfer duty revenue is forecast to be $6.0 billion in 2019-20 and grow by an average of 6.3 per cent a year over the forward estimates. Following downgrades of $5.2 billion to land transfer duty in the 2018 Pre-election Budget Update and the 2019-20 Budget, residential property prices, auction clearance rates and housing sentiment have improved earlier than expected. However, below-average housing turnover, high levels of household debt and elevated global uncertainty are still weighing on the property market.
Indeed, Victoria’s stamp duty receipts have been revised up by $731 million over the forward estimates, from this in the May Budget:
To its credit, the revisions look conservative given the strength of the rebound taking place in Melbourne.