Yahoo Finance Victorian budget 2021: state pledges to massively outspend commonwealth on mental health
The Victorian government has promised to massively outspend the federal government on mental health services, committing $3.8bn over the next four years – 65% more than the federal government announced in its mental health investment last week.
It’s part of a big-spending budget that also includes spending more than $10bn over the next four years on infrastructure including schools and hospitals, designed to drive Victoria’s economic recovery after the state bore the brunt of the impact from the Covid-19 pandemic.
The spending is powered by a rapidly recovering economy with gross state product expected to increase to 6.5% in 2021-2022.
Related: Optimistic, ambitious and a little bit snarky: Victoria’s treasurer serves up a 2021 rebound budget
But the budget papers say that recovery has so far been entirely driven by government spending, and warn that a protracted global recovery from Covid-19, and drawn out vaccine rollout, could cause further economic shocks.
And they set out a plan to increase stamp duty and land taxes on properties worth more than $2m and $1.8m respectively, and to introduce a new windfall gains land tax to capture up to 50% of the profits from developers benefiting from government rezoning decisions.
This will ensure developers make “a reasonable contribution back to the state” to help pay for infrastructure, treasurer Tim Pallas told reporters.
In his budget speech, the treasurer said that despite bearing the brunt of the pandemic, Victoria could claim substantial credit for the recovery.
“If the engine of the Australian economy is roaring, it’s because Victoria put a tiger in the tank,” he said.
The budget also includes $7.1bn in health funding over and above the mental health spend, including funding for paediatric zones in emergency departments and three new regional community hospitals, a second safe injecting room in the Melbourne CBD, and $9.5m for the trial program for a health-based response to public drunkenness.
It also includes $5.6bn in education funding including building 13 new schools, many of them in growth areas on Melbourne’s urban fringe.
Other spending includes a promise of 25 new trains for Melbourne’s over-crowded commuter rail system, at a cost of almost $986m over four years. The trains are to be built at the Alstom factory in Ballarat, with money to start flowing from 1 July.
However, the budget did not address the government’s promise to build a suburban rail loop, which would add tens of billions of dollars to an already bulging $144bn program of capital works. The government says it will deal with this separately later this year.
Pallas said the record mental health funding would pay for a systematic overhaul of the state’s stressed mental health system and was based on a commitment to implement all 65 recommendations of the state’s royal commission into mental health – including a controversial recommendation to introduce a new levy to pay for the changes.
Businesses with a national wage bill of more than $10m will be required to pay the levy, which Pallas said was a “fair” contribution, aimed at getting back the profits recorded by big businesses which benefited from government support during the pandemic.
“There is no doubt that there has been a very substantial, a very substantial benefit that’s been accrued through certain sectors of the community [during the pandemic],” he told reporters on Thursday. “So with regard to the mental health and wellbeing levy that the government is putting in place we have made a decision that it is not only appropriate but fair that big business make a substantial contribution”.
The levy is opposed by the opposition Liberal party and business groups
The mental health funding includes $310.8m in acute care, including more than 100 new acute care beds, and $1.5bn in community-based care with the establishment of 20 new local care services.
It is also expected to create 3,000 jobs. Pallas, in delivering his budget speech to parliament on Thursday, said every feelgood measure in the budget was also tied to creating jobs.
“That idea is at the heart of this budget – ensuring every dollar of investment drives a double benefit,” he said.
Asked how the Morrison government would respond to Victoria’s big cash splash, Pallas said the state had outperformed the federal economy in every year except 2019-2020.
“We don’t really need lectures from the federal government on how to run economies,” he told reporters. “Our economy, our state final demand, is now 100% – double – the rate of GDP of the nation. We’ve created almost 50% of all the jobs created in the nation since the September period. About 50% of all the construction industry jobs created in the nation have been created in this state.
“I think any government that prides itself on prioritising the welfare and the wellbeing of its population and that supports the idea of a growing economy could look no further than the state of Victoria for runs on the board.”
