UNPACKED: Victoria's 2022 state budget unveiled

By Doctor John Humphreys, Australian Taxpayers’ Alliance Chief Economist

Considering the quality of recent budget reveals across the country, Victoria’s budget could be worse - even if it is boring.

To its credit, the Victorian Government has mostly allowed its temporary stimulus spending from 2020 and 2021 to end. It should go without saying that temporary stimulus spending is supposed to end but sadly this isn’t always the case, as famously captured in Milton Friedman’s witticism that, “nothing is so permanent as a temporary government program”.

Further, this budget does not include a string of tax increases, like we saw in the 2021 Victorian budget. The only new tax policy this year is an increase in gambling taxes paid by Crown Casino, estimated to bring in $0.03 billion per year. While we would prefer no tax increases, this small change is better than recent rampant tax-hiking behaviour.

Perhaps unintentionally, Victorian bureaucrats may see their incomes shrink slightly under this budget. When quizzed, the government confirmed public service wages were relatively fixed for the next couple of years. In the context of Australia’s spike in inflation, public servants’ sticky wages may manifest as real wage cuts for the bureaucracy. We would have liked to credit the Victorian Government for this sensible and much needed reform, though when this situation was pointed out to them they seemed to be surprised and embarrassed by accidentally cutting wages.

READ MORE: ANALYSIS: 2022 federal budget a lost opportunity for smaller deficit, lower taxes

Once again, this budget represents a lost opportunity to restore balance quickly. The Victorian Government points to a hypothetical surplus out in 2025/26, but budget projections that far into the future are nearly meaningless. If the government had the discipline to avoid introducing new policies during the past year, the balance would have been significantly better, leaving a small deficit this year and a projected surplus in 2023/24.

One of the most striking things about this budget is the total lack of savings measures. Back in the long-forgotten days of Hawke, Keating, Howard and Costello, it was normal practice to identify a string of savings measures that decreased government spending in some areas, with the savings often used to pay for new spending projects. No more. The idea of a savings measure seems to have fallen out of fashion, with the Victorian Government releasing a 420-page document on new policies that didn’t include a single saving.

In summary, there is little to be excited about in this budget, the Victorian Government adhering to the national trend of dodging difficult decisions. But it is a step forward from last year. Sometimes boring is better than letting tax-and-spend politicians indulge in their version of exciting.