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The Hon Ted Baillieu MLA
before our budget. We have had a very signi cant
reduction in our share of GST compared to other
states. We also faced stamp duty and land transfer
writedowns. That's our budget position and our
revenue shortfall. To give you an idea, this has
been a bigger hit to Victoria's revenue than what
occurred during the global nancial crisis in 2008;
only this time, there's no bucket of money from the
Commonwealth to make up.
Faced with those challenges, we have taken
a very clear path, with four key streams. We are
going to rebuild budget capacity and we are going
to run a responsible budget in this state: that is rst
Secondly, we're going to focus on productivity.
Thirdly, we're going to try to do whatever we can
to grow our markets internationally and locally.
Fourthly, we're going to assist industry that is
When it comes to a responsible budget, that
means containing expenses, it means getting debt
under control, it means a responsible wages policy,
and we're sticking to it. It means maintaining a
Critically, at this point, it's about building budget
capacity, over time, to have the funds available to
provide services and get the balance of infrastructure
right over time.
We're not alone in that challenge. To illustrate
that, we carried out an exercise: we looked at the
net operating balance of the states and, indeed, New
Zealand and the Commonwealth.
We looked at the net operating balance over the
four years of our term. Yes, if you're wondering about
the federal gures, they're adjusted to be on the same
accrual basis as the states. It shows quite clearly, in
2011--12, only two states showing a surplus. If you
aggregate the net operating balance over four years,
only two states -- only two jurisdictions -- are showing
an aggregate operating surplus, and a modest one at
that: Victoria and Western Australia.
The days of plunging states into debt and being
bailed out by the Commonwealth are simply over.
We're going to spend money wisely, but while as a
state we can play our part, we're heavily dependent
on Commonwealth nancial support for particular
The Commonwealth raises more than 80 per
cent of revenue in Australia, but the states are
responsible for 40 per cent of the expenditure. That's
a fundamental imbalance. To put it another way,
the Commonwealth's revenue is seven times that of
Victoria's, and that is obviously signi cant and gives
them greater capacity.
In Victoria, there is absolute clarity about what
needs to be done in terms of infrastructure. I don't
think there is a project that we haven't looked at.
The challenge is to nd a way of nancing those
projects and funding them, and we've seen some of
the problems with that recently.
We've laid that out in a detailed submission to
Infrastructure Australia. Our priority projects are
identi ed under four themes: major city-shaping
projects; getting the most out of the infrastructure that
In Victoria, there is absolute
clarity about what needs to be
done in terms of infrastructure.
I don't think there is a project
that we haven't looked at
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