The Victorian Budget 2023-2024 What does it mean for Strata and the Property Sector?
The Victorian Government handed down its State Budget for 2023-24 in May which prioritised addressing debt generated by the Covid-19 pandemic, investment in healthcare and education, as well as energy and tax reforms intended to stimulate economic growth.
Looking back, and incorporating political responses and broader commentary, here’s everything you need to know about the State Budget in general – as well as what is most relevant to strata, property, housing and infrastructure sectors.
The Big Picture – Victoria’s economy in 2023-24
The key takeaways from the Budget include:
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A Budget cash surplus of $2.9 billion is forecast for 2023-24, but a $1 billion operating surplus is not projected to be achieved until 2025-26.
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The Budget focuses on addressing debt stemming from the State Government’s response to the Covid-19 pandemic, while also prioritising infrastructure and energy.
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Victoria’s net debt is estimated to rise from $116.7 billion in 2023-24 to $162.2 billion by 2025-26.
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Real Gross State Product (GSP) is expected to rise from 1.5% in 2023-24 to 2.75% in 2026-27.
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The unemployment rate in Victoria is projected to rise from 3.75% in 2023-24 to 4.75% in 2024-25.
The Top Line – The Budget’s Big Announcements
Revenue reform
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Implementation of a Covid-19 Debt Levy which will aim to pay down $31.5 billion of Covid debt over the next 10 years. Commencing January 2024, Victorians who currently pay land tax will pay an additional annual fee of $500 for landholdings worth between $50, 000 - $100, 000 and $975 for landholdings worth between $100, 000 and $300, 000. Landholdings worth more than $300, 000 will be charged $975 plus an additional charge of 0.1%.
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A temporary payroll tax surcharge will apply on wages paid by businesses with national payrolls over $10 million annually at a surcharge rate of 0.5%, while businesses with national payrolls above $100 million will pay an additional 0.5%.
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From 1 July 2024, stamp duty on commercial and industrial properties will be abolished and replaced with an annual property tax, with ‘first purchasers’ able to choose to pay the property’s final duty liability upfront as a lump sum or pay an annualised fixed duty payment/instalment over 10 years.
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The absentee property owners’ surcharge will increase from 2% to 4% in line with rates in New South Wales.
Abolition of business insurance duties over 10 years by 2033.
Energy and electric vehicles
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Victoria will bring back the State Electricity Commission (SEC) with a $1 billion investment intended to replace coal with renewable energy, with the goal to reach 95% renewable energy by 2035 and net zero by 2045.
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$400 million extension of the Power Saving Bonus scheme to provide another $250 to households that use the Victorian Energy Compare website to search for the cheapest electricity deal.
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A $42 million investment in neighbourhood batteries which will provide extra energy storage capacity for local communities regardless of whether they have solar panels, as well as a $16 million allocation to provide interest-free loans to eligible households to install solar battery storage systems.
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On 30 June 2023, the State Government will eliminate the $3000 rebate on eligible new Zero Emissions Vehicles purchased on or after 2 May 2021.
Housing
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A $141 million commitment to install air conditioners across more than 40 high-rise public housing towers.
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Continuation of the Housing First response as part of a broader housing and homelessness package with an overall investment of $134 million.
The Reaction – Coverage and Commentary on the Budget
Property sector
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The property sector responded positively to stamp duty changes which have been tipped to boost productivity and free up capital.
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However, concerns within the sector have been raised about changes to land tax which may discourage property investors, and payroll tax increases for big businesses which may disincentivise investment in Victoria.
Media
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Media commentary regarding the Budget has generally highlighted the State Government’s plans for health and education spending, while also drawing attention to the Covid debt levy.
Political parties
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The Budget has been met with concern by the Opposition regarding how the State Government will raise money to finance Covid-19 debt as well as fund future commitments.
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The Opposition also expressed disappointment with the withdrawal of the Zero Emissions Vehicle subsidy and argued Victoria’s 2030 emissions target would not be met as a result, while the Greens argued removing the subsidy was a backward step with calls to provide further incentives for Victorians to switch to electrical vehicles.
SCA’s Advocacy
Pre-Budget Submission
SCA submitted a Pre-Budget Submission to the State Government in March ahead of the Budget which included priorities for building confidence in strata communities and powering smarter, greener and more liveable strata communities to 2050. Key submissions included:
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Establishment of a Victorian Strata Owners Helpline to provide consumers with the information and advice they need about their owners corporation.
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Creation of a future co-regulation model for strata managers in Victoria led through Consumer Affairs Victoria.
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Development of a centralised base building information portal for the storage of building manuals for multi-unit dwellings, overseen by the Victorian Building Authority and made accessible to owners corporations and strata managers.
SCA will continue to advocate for the strata sector by meeting with members of government and opposition, stakeholders, undertaking media activities and member communication.
If you have any questions about the 2023-2024 State Budget, or would like to contact SCA about policy and advocacy activities, please contact Josh Karpin, Policy and Advocacy Officer (Vic) at josh.karpin@strata.community.