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Victorian Budget 2024-25
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  • 8 minute read
  • May 13, 2024

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The 2024-25 Victorian State Budget was delivered on 7 May 2024 by Treasurer Tim Pallas. The Victorian Government has positioned the Budget as one that relieves cost of living pressures, with a continued focus on improving the healthcare system, boosting education and prioritising infrastructure spending on certain projects in Victoria, and did not provide for any significant revenue raising initiatives that have not yet already been announced. 

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13 May 2024

In Brief

The 2024-25 Victorian State Budget was delivered on 7 May 2024 by Treasurer Tim Pallas. 

This year's Victorian Budget centres on relieving cost of living pressures, with a continued focus on improving the healthcare system, boosting education and focusing infrastructure spending on certain projects in Victoria. The Government expects to return to an operating surplus in 2024-25, stabilising net debt as a percentage of its Gross State Product (GSP) for the first time since the pandemic and says it is now focusing on reducing net debt as a proportion of GSP. 

The Victorian Government anticipates total revenue in 2024-25 will be $96.1 billion, which is expected to grow by an average of 3.6% per year up to 2027-28. Taxation revenue is forecast to be $39 billion in 2024-25 with annual growth of 5% per year up to 2027-28. 

Total general government sector expenditure is expected to be $98.3 billion in 2024-25 and is expected to grow by an average of 2.2% a year, reaching $105 billion in 2027-28. 

In Detail

Net debt and GSP 

The net debt to GSP ratio is a measure of the State’s debt compared with the size of the economy and provides an indication of the State’s ability to service its debt. The Budget focuses on reducing and stabilising the net debt to GSP ratio through what the Government refers to as ‘measured investments’ in education, healthcare, housing and transport infrastructure.  

Net debt is projected to be $156.2 billion at June 2025 and is forecast to increase to $187.8 billion by June 2028. As a proportion of GSP, net debt is projected to be 24.4% in June 2025 before reaching 25.2% by June 2027 and then declining to 25.1% by June 2028.  

Business

Starting from 1 July 2024, the Victorian Government will: 

  • Provide $555 million in skills support and TAFE to grow the future workforce 
  • Provide $40 million for LaunchVic to foster future innovators, creators and entrepreneurs including providing supporting capital 
  • Gradually abolish business insurance duty over a 10-year period (as announced in the previous budget) 
  • Support small business with an increase to the payroll tax-free threshold from $700,000 to $900,000 and then to $1 million from 1 July 2025. The Victorian Government predicts this will result in a reduction of 6000 small businesses paying payroll tax (this too was announced in the previous budget); and 
  • Implement the previously announced commercial and industrial property tax reform. 
Compliance Activity

The Budget provides increased funding to enhance tax compliance undertaken by the State Revenue Office, with $15.6 million allocated for the 2024-25 year, increasing to over $18 million for each of the following three years. 

Infrastructure and Transport 

The Budget provides $996 million towards Big Build transport projects, including funding to operate and maintain new transport infrastructure and preparing for the opening of the Metro and West Gate Tunnels. The Budget has also provisioned $130 million for the repair and improvement of Victoria’s road network. 

Healthcare 

Healthcare is a focus of the Budget, with an $11 billion, multi-year contribution to the healthcare system and $1.7 billion in hospital and health facility upgrades. This includes:  

  • $8.8 billion to provide long-term funding to hospitals; 
  • $1.4 billion to progress the delivery of three hospital upgrades, being the Austin Hospital Emergency Department Upgrade, Monash Medical Centre Redevelopment and the Northern Hospital Redevelopment; 
  • $755 million to open and operationalise new hospital facilities, including the La Trobe Regional Hospital’s expansion; and 
  • $146 million for Ambulance Victoria. 
Education

The Victorian Government will provide cost of living relief by supporting additional funding for early childhood education and schools. Education initiatives under the Budget include: 

  • $1.8 billion to build, maintain and upgrade schools across Victoria; 
  • $116 million in the Active Schools Program; 
  • $139 million for professional development, mental health and wellbeing support for teachers; 
  • $129 million in Free Kinder and Three-Year-Old-Kinder; and 
  • $280 million one-off School Saving Bonus (a one-off $400 payment for children at government schools and eligible families in non-government schools). 
Energy and Environment 

There is a continued focus on Victoria’s energy transition and the environment more broadly, including: 

  • $18 million for offshore wind generation and $17 million to further plan and design a renewable energy terminal at the Port of Hastings;
  • $38 million to help Victorians install electric heat pumps; 
  • $85 million to address biosecurity risks;
  • $116 million to the Future Forests program; and
  • $691 million for critical water projects. 
Revenue initiatives

Revenue initiatives in the Budget include:  

  • The previously announced commercial and industrial property tax reform, which aims to phase out stamp duty with a commercial and industrial property tax (for more information, see our Tax Alert). 
  • Standalone land tax exemption for land that is used to provide social and emergency housing. Additionally, the exemption will apply to charity owned land where social and emergency housing is under development. The exemption will commence in the 2025 land tax year.  
Other substantial investment initiatives
  • Early Intervention Investment Framework of $1.1 billion, comprising $167.5 million (for five initiatives) to fund services that mitigate and respond to family violence and $197 million (over 5 years) towards preventing homelessness. 
  • Housing - $700 million will be made available to expand the Victorian Homebuyer Fund and $107 million to progress the Victorian Government’s housing agenda.

The Takeaway

The emphasis on reducing the net debt to GSP ratio will see reductions in the average spending on Government infrastructure over the forward estimate period with the Government prioritising funding on certain projects. The Budget did not provide for any significant revenue raising initiatives that have not yet already been announced. 

Contact us

If you would like to further discuss this alert, reach out to our team or your PwC adviser.

Barry Diamond

Partner, State Taxes, Melbourne, PwC Australia

+61 (3) 8603 1118

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George Papadakos

Director, Tax, PwC Australia

+61 400 828 606

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