Victoria is spending big on mental health, schools and transport, but big businesses and property investors will be slugged with tax increases to help pay for the budget.

Winner: Mental health services 

The government is spending $3.8 billion on a dramatic overhaul of the state’s mental health system, which a royal commission earlier this year found had “catastrophically failed”.

It includes:

  • $264 million for the first 20 of up to 60 new adult mental health and wellbeing services
  • $954 million for 22 “reformed” adult and older adult area mental health and wellbeing services
  • $266 million for Victorians aged 12-25 for ongoing care through Youth Area Mental Health Services, expanding after-hours support
  • $218 million in mental health support for primary and secondary students
  • $116 million into Aboriginal mental health
  • $46 million housing for adults and young people living with mental illness
  • $31 million improve mental health people in contact with criminal/youth justice system
  • $350 million to upgrade the Thomas Embling Hospital, which houses the state’s most acute mental health patients and prisoners

Loser: Big businesses

An illustration of skyscrapers in the city.

To pay for a large portion of the new mental health spending, businesses with more than $10 million in national wages will pay the levy through a payroll tax surcharge for their Victorian employees.

About 9,100 companies operating in Victoria, or about 5 per cent of businesses, will be hit with the surcharge.

The levy means businesses that pay more than $10 million in national wages will now be hit by a 0.5 per cent increase, but only from their $10 millionth dollar.

It means an organisation paying $10 million in national wages will pay an extra $5,000.

A further 0.5 per cent levy will also be applied to every dollar in wages spent above $100 million.

The Mental Health and Wellbeing Levy will begin on January 1, 2022. It is expected to raise $378 million that financial year, with $843 million forecast in following years.

Smaller businesses will benefit from a payroll tax reduction, which has been brought forward in the budget.

Winner: Education

An illustration of a school hat on top of a pile of books.

There is $1.6 billion being poured into building new schools and updating existing classrooms across the state.

It builds on spending seen in previous budgets and includes $492 million to build 13 new schools. Twelve are due to open in 2023 and one in 2024.

A further $340 million will be spent on upgrading facilities in 52 schools, including 17 in regional Victoria. Another $188 million goes towards maintenance across the state school system.

Over the next three years, about $276.4 million will be spent on acquiring land for the new schools.

It’s expected the construction work will create about 3,500 jobs.

Another pre-budget announcement is the $148.2 million being spent to create the Victorian Academy of Teaching and Leadership, a new statutory authority. It will provide professional development for working teachers.

In higher education, $383.8 million is being invested in TAFE.

This includes $85 million for a new Victorian Skills Authority and $10.2 million for a new TAFE trade training centre in Lilydale. 

Loser: Property investors

Illustration of a factory, a block of apartments and a house.

A premium stamp duty will be introduced across the state, with property transactions above $2 million attracting a $110,000 duty plus 6.5 per cent of the dutiable value in excess of $2 million.

There will also be an increase to land tax for taxable properties worth more than $1.8 million.

The changes will see the land tax increase by 0.25 per cent for taxable landholdings between $1.8 million and $3 million, and 0.30 per cent for taxable land holdings in excess of $3 million.

The land tax increase is expected to rake in $4.2 billion in 2021-22, a number forecast to grow by 9 per cent over the forward estimates.

The Treasurer says the “modest” increase will only affect a fraction of the 10 per cent of Victorians who pay land tax, which is not paid on owner-occupied homes.

A new windfall gains tax will be introduced for properties whose value is boosted by a council rezoning.

The tax will only apply to properties where the value is boosted by more than $100,000, with a 50 per cent tax on windfalls above $500,000.

The government expects to raise $2.7 billion from the suite of measures.

The move was announced last week and has been met by fierce backlash from the property sector and some business groups.

Victoria and New South Wales had last year agreed to look at ways to scrap stamp duty, but the Treasurer says the changes make the tax system “fairer and more progressive”.

Winner: Transport

An illustration of a train moving down the tracks.

There will be $986 million spent on building 25 new trains for the Craigieburn, Upfield and Frankston lines by 2026.

The new X’Trapolis 2.0 trains will increase capacity from 760 passengers per train to 1,200 and will be built at the Alstom factory in Ballarat.

Another $265 million is set aside to plan, upgrade and maintain roads across the state, including $42 million towards improving the road freight network.

A further $386 million will be spent on a new Road Safety Strategy.

And $21 million is being spent on improvements to the state’s walking and cycling network.

Winner: Health

An illustration of a hospital bed.

In a year marked by the pandemic, it is no surprise the budget includes a total of $1.3 billion on coronavirus-related programs.

There is a $50 million pledge to establish an mRNA production site, which could be the first in the southern hemisphere to manufacture the Pfizer and Moderna-style COVID jabs.

There is $15 million put aside for designing a 500-bed quarantine hub on Melbourne’s northern fringe. The government is still in talks with the Commonwealth about federal funding for the facility’s build.

A total of $1.4 billion will be spent on hospitals, including funding allocated in previous budgets.

That includes a total of $94.8 million being spent over the next four years on a new hospital in Maryborough.

There will be $759 million allocated to fund more paramedics, more triage care and support staff for Ambulance Victoria and targeted funding for emergency departments.

It follows concerns about stretched emergency departments, major ambulance delays and worrying stress issues amongst paramedics.

People seeking IVF treatment will benefit from $70 million being spent on fertility services in Victoria, which includes $3.5 million on a public sperm and egg bank.

There is $18.7 million for safe injecting rooms in the next financial year, and $21.4 million in 2022-23.

Neutral: Regional Victoria

Illustration of the state of Victoria.

Numbers contained in the budget show that the economy and population is growing in regional Victoria, with a 65 per cent increase in building approvals in rural areas. 

But much of the budget is focused on Melbourne, which bore the brunt of extended lockdowns last year.

There will be five new acute mental health beds for Warrnambool hospital worth $10.8 million over four years, with $4 million to be spent next year.

But this is a small percentage of the 99 new beds funded in Melbourne, and leaves other regional hospitals without any new beds for severely mentally ill people, despite increasing demand.

There is $700 million promised for mental health services specifically for young people who live outside Melbourne.

In a win for the regions, a planned payroll tax reduction for regional businesses has been brought forward.

From July 1, 2021, businesses outside the city will get a full reduction to the regional employer payroll tax to 1.2 per cent, making it one quarter of the metropolitan rate.

Loser: Future taxpayers

An illustration of an open wallet with several notes sticking out.

The government continues to borrow to pay for major infrastructure and the COVID recovery, with net debt expected to reach $102.1 billion by June 2022.

That number is expected to grow to $156.3 billion by June 2025, which would be 26.8 per cent of the entire economy.

But it is a better outlook than last year’s budget, with a net debt of $138.3 billion now forecast for 2022-23, compared to the $154.8 forecast for that financial year in the last budget.

Neutral: Electric vehicle industry

Illustration of an electric car at a charging station.

The budget includes confirmation of a $46 million subsidy scheme for electric vehicles, as part of a goal to get more zero-emission cars on the road.

Another $15 million will be spent on 400 electric vehicles for the state government’s fleet.

The government says this is made possible by the electric vehicle road user charge which was introduced in last November’s budget.

At the time, it was dubbed the “worst electric vehicle policy in the world” amid fears it would dissuade people from buying electric cars.



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By EDONS