Victoria racks up a $10.1b deficit in H1

Victoria has recorded a deficit of $10.1 billion for the first half of the 2020/21 financial year. 

The deficit, revealed in Victoria’s mid-year financial report released on Friday, was attributed to the impact of the coronavirus pandemic and subsequent slowdown in the state’s economy.

Net debt increased by $17.4 billion to $61.7 billion to pay for the government’s response to the pandemic as well as a suite of infrastructure projects.

Total revenue for the six months to December was $30.9 billion, about 46 per cent of the published full-year budget estimate and a decrease of $2.5 billion from the same period last year.

This was in part due to the closures of Crown Casino, hotels and clubs depriving the state of gambling taxes and the reduction in payroll tax, as Victorians worked fewer hours due to the pandemic and the government offered up payroll tax waivers and refunds.

Land transfer duty similarly declined due to a subdued property market. 

The state was forced into a second lockdown in July, lasting 112 days, after coronavirus escaped hotel quarantine and spread into the community, killing hundreds. 

Tough restrictions were also imposed on New Year’s Eve as the state battled a cluster linked to a Black Rock Thai restaurant.

Treasurer Tim Pallas said the state’s economy recovered strongly in the December quarter as restrictions eased. 

After a substantial fall in employment between March and September 2020, employment increased by 170 000 people between September and December – the highest increase in the nation.

The unemployment rate declined to 6.5 per cent in December compared with a peak of 7.5 per cent in June 2020.

Victoria’s state final demand rose by 6.8 per cent in the December quarter, led by a strong rebound in consumer spending, business investment and dwelling investment. 

“After all the sacrifices Victorians have made to get this virus under control, we are seeing the rewards in a rebounding economy offering more jobs, more investment and more opportunity,” Mr Pallas said in a statement.

“Victoria was the fastest growing economy in the nation before the pandemic and our strong fundamentals are on show now as we surge towards a healthy recovery.”

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