Victorian State Budget 2020-21 Dissected

On the 24 November the Victorian State Government announced its budget for 2020-21. This Policy and Advocacy update provides members with a detailed overview on the Victorian budget highlights. It was an important budget as the Victorian State Government has moved quickly to continue a raft of economic stimulus measures commenced earlier in the year, and in a situation where Victoria endured some four months of lockdown as a result of the second wave of COVID-19 that took root in the state.

A quick synopsis in comparison with NSW

Victorian Treasury has forecast a net deficit of $23.5bi in 2020-21 that will reduce to $5.9 bi by 2023-24 and a net debt forecast of $86.7bi in 2020-21 that will increase to $154.8 billion by 2023-24. In comparison, the NSW State Budget, handed down a week earlier, projected a budget deficit of $16 billion in 2020-21 and forecast to reduce to $0.5bi by 2023-24 and $53.2 billion net debt in 2020-21 increasing to $104.35 billion by 2023-24

Capital expenditure is similar in both states with a projected $19.4bi of infrastructure investment in in Victoria, during 2020-21 (up from 12.0bi in 2019-20) and remaining around this level through to 2023-24 when it is estimated to be $19.2bi. NSW funded $20.1bi of capital expenditure in 2019-20 which has increased to a projected $22.6bi in 2020-21 and will reduce to an estimated $18.5bi by 2023-24.

Benchmarking against Institute policies

Many of the measures deliver on our Institute policies. The Victorian government’s specific announcements to address energy efficiency and the transition to increasing reliance on renewable energy in Victoria to reduce greenhouse gas emissions (see Mitigating climate change, further below) and the inclusion of 7-Star NatHERS in the specifications for new social housing responds to the overall position of the Institute. This includes our longstanding Sustainability Policy, submissions to government and even the Institute National Council’s most recent endorsement of an ambitious target for the construction industry to achieve carbon neutrality by 2030 .

The response made by the Victorian Government to homelessness and housing affordability through its $5.5bi direct investment in Social Housing construction is likely to eclipse all other States and Territories budgets for the 2020-21 fiscal year. For example, NSW, in its State Budget presented to the NSW parliament a week earlier on November 17^th, announced $812 million for social and Aboriginal housing across NSW. However, Victoria’s announcement was also long overdue investment and time for catch up. The Australian Institute of Health and Welfare’ Housing assistance in Australia 2019 shows that of 436,213 social housing dwellings across Australia, 80,488 were in Victoria, representing less than one-fifth (18.45%).

In April this year, in response to the emerging COVID-19 pandemic the Institute released its Economic Stimulus 2020 paper. Principles for economic stimulus put forward by the Institute included a focus on what can be delivered quickly as well as what can also sustain communities over the longer term and create lasting public benefit. The Institute’s principles also included the delivery of a range of programs and projects of a variety of scales and locations, rather than large or singular projects, to help ensure spread of the dollar value across the different levels of governments, between regions, towns and cities, and in an equitable manner for small, medium and larger businesses. Many of the Victorian Government measures below would appear to do so. We note, for example, that immediately post-budget the early and rapid roll out of one element of Victoria’s Big Housing Build has waived the requirement for respondents to be listed on the Victorian Construction Supplier Register.

Social and Affordable Housing

Victoria’s Big Housing Build, that is being delivered by a new government agency, Homes Victoria, which sits within the Victoria Department of Health and Human Services was reported in our previous Policy and Advocacy update. This large scale budget measure was announced on November 15^th, nine days in advance of the budget.

We noted both the stimulatory and social impacts to end homelessness in our media release issued by the CEO on 16^th November.

Additional stimulatory measures within the housing sector announced in the budget included Treasurer, Tim Pallas’ own announcement of a stamp duty waiver of 50% for newly built or ‘off-the-plan’ homes, and 25% for existing homes (up to $1mi) for the remainder of the financial year. The Treasurer also announced a $500 million Victorian Homebuyer shared equity deposit scheme to enable Victorians to purchase a property with lower deposits. This builds off the previous pilot scheme that opened almost three years ago. See here.

Mitigating climate change

Measures to improve Energy Efficiency in homes and buildings. Minister Lily D’Ambrosio MP Minister for Energy, Environment and Climate Change had also announced a package of measures a week ahead of the Budget in the release, Helping Victorians Pay Their Power Bills. As with Victoria’s Big Housing Build, the Chapter also put out a media release in reply. The pre-budget announcement of $797 million included:

$335 million to replace old wood, electric or gas fired heaters with new energy-efficient systems targeting 250,000 low-income households,
$112 million to seal windows and doors, and upgrade heating, cooling and hot water in 35,000 social housing properties,
Introduction of minimum efficiency standards for rental properties. The standards are expected to impact around 320,000 properties,
Funding to help set Victoria up for the move to 7-star efficiency standards for new homes, supporting skills, training and jobs in the construction sector,
Direct bill relief for an estimated 950,000 Victorian households through a one-off $250 payment for concession card holders receiving JobSeeker, youth allowance or pension payments,
$14 million to expand the existing Victorian Energy Upgrades program for every Victorian household to be able to access rebates for more smart appliances and
$191 million to expand the Solar Homes program to deliver a further 42,000 additional solar rebates, over two years, for domestic solar panels, 15,000 new solar rebates for small businesses and 17,500 new household battery rebates over the next three years.

The Minister’s media release, Making Victoria a Renewable Energy Powerhouse includes the above $797mi in a total package of $1.6bi which additionally includes measures for renewable energy production, storage and distribution beyond single premises including:

$540 million to establish six Renewable Energy Zone across the state,
$12.6 million to procure more than 600 megawatts of clean energy through a renewable energy auction to power 100 per cent of the Victorian Government operations including public transport, schools and government buildings,
$108 million to prepare Victoria for innovative renewable energy and hydrogen projects including an offshore wind generator,
$27 million for local or community-owned renewable energy projects including microgrids, neighbourhood batteries, bushfire resilience programs,
$21 million will help community groups to install renewable energy systems, at community buildings, and support the ResourceSmart Schools program and
Funding to roll out a fast-charging network for electric vehicles at sites covering major highways and key tourist destinations.

A creative initiative that celebrates Australian Architects

A centrepiece of the Victorian State Budget for the architecture profession is $1.46 billion for the revitalisation of the Melbourne Arts Precinct, including the design and construction of the new NGV Contemporary gallery. These were announced by the Premier and the Assistant Treasurer and Minister for Creative Industries The Hon Danny Pearson MP in Backing Australia’s Cultural Capital and the Jobs It Creates. The gallery project set in 1.8 Ha of garden will create an estimated 5,000 jobs in construction.

Importantly, the government aims to bring to Melbourne a landmark design masterpiece designed by an Australian architectural team selected through a soon to be launched competition.

A further $34.7 million was announced for regional creative infrastructure projects in locations including a new exhibition space in Kyneton at the old primary school, upgrades to Benalla Art Gallery and further investments in the Castlemaine Goods Shed, Shepparton Art Museum, and Latrobe Creative Precinct.

Health Infrastructure

The Minister for Health, The Hon Martin Foley MP, announced in Building a Better Health System $2 billion over 4 years to build, expand and modernise hospitals and health services across Victoria including:

$384.2 million for the redevelopment of Warrnambool Hospital,
$4.5 million planning for the Angliss Hospital expansion,
$562 million expansion of Frankston Hospital,
$75 million for planning and early works for the brand-new Melton Hospital,
$10 million to start planning to redevelop the Royal Melbourne Hospital, including establishing a new site, and potentially another for the Royal Women’s Hospital at the Arden Renewal Precinct in North Melbourne,
$66.1 million to continue planning and purchase land for new Community Hospitals across Cranbourne, Pakenham, Torquay, City of Whittlesea, Eltham, Fishermans Bend and Point Cook,
$217 million to redevelop the Latrobe Regional Hospital,
$3.6 million tol continue planning for a new Women’s and Children’s Hospital at University Hospital in Geelong,
$7.6 million to fund the redevelopment of the Wangaratta Hospital,
$120 million support for rural and regional health services through Victoria’s Regional Health Infrastructure Fund and
$200 million to deliver a new Metropolitan Health Infrastructure Fund.

Of particular note is the extensive investment in planning, in many of these initiatives, which should engage the services of Victorian Architects.

Schools and early childhood building and development

The Minister for Education, the Hon James Merlino’s media release, Building the Future our Kids Deserve announced $3 billion in school upgrades (including $1.1 billion as part of the previously announced Building Works Package) delivered as,

$1.9 billion additional to roll out the next phase of the school building boom predicted to deliver 4,830 construction and supply chain jobs in metropolitan Melbourne and 1,570 in regional Victoria,
$1.28 billion for 162 schools upgrades – with architects to be appointed from January 2021,
$388.8 million for improving facilities at 39 specialist schools,
$85 million to expand seven existing schools,
$147 million to acquire land for 11 new schools,
$122.4 million for a new vertical primary school in North Melbourne opening in 2023, and a further four stages of new school projects, including Clyde North Station Primary School, Preston High School, the new Benalla Campus of Wangaratta District Specialist School, and the new San Remo Campus of Wonthaggi Secondary College,
$70 million for the Planned Maintenance Program to support upgrades and improvements at around 300 schools,
$50 million to fast-track shovel-ready projects at around 300 schools through the Minor Capital Works Fund and
an extra $20 million to build inclusive learning spaces and accessible playgrounds for students with disabilities through the Inclusive Schools Fund.

The education minister also announced jointly with the Minister for Early Childhood, the Hon Ingrid Stitt, in Helping Families Juggling it all, $38.5 million of funding in the Building Blocks grants program, for early childhood providers to assist building, expanding, improving and creating more inclusive early learning facilities.

Improving planning timing and efficiency

In the budget media release, Planning Revamp To Boost Economic Recovery And Jobs, Minister for Planning, The Hon Richard Wynne MP announced:

$4 million to help councils upgrade their digital planning permit systems making it easier to lodge and track permits online, speeding up the process and reducing the requirement to lodge paperwork in person,
$14 million to the Victorian Planning Authority, including funding the Streamlining for Growth program which provides support to local councils to fast-track local planning applications and
$2 million for the trial of an innovative new 3D spatial data program called Digital Twin Victoria. The trial will bring together currently disparate spatial data to develop digital models of Victoria – making it easier to accurately assess and plan projects remotely.

These measures also respond to one of the calls made in the Institute’s 2020 Economic Stimulus paper for governments to keep regulatory approvals flowing through State agencies and local government by improving efficiencies in the planning process.

Other budget announcements

$5 million was announced to support the Andrew’s Labor government’s ongoing Women in Construction Strategy to increase opportunities for women in construction roles. This is an important initiative. National Centre for Vocational Education Research (NCVER) VOCSTATS data shows that females, overall, represented less than 5% of either enrolments or course completions for VET Courses for the Construction Trades Workers in the period 2015-19, though they do have a higher completion rate compared to males (35.2% vs 22.3%).

$100 million was announced for the Sole Trade Support Fund and the Commercial Tenancy Relief Scheme which may be of benefit for some members’ practices/ studios.

The Policy and Advocacy Team will continue to track states and territories budget announcements as it ‘scorecards’ governments’ delivery of the types of economic stimulus measures that have been called for by the Institute this year.

HOME BUILDER EXTENSION

On November 29^th, the Prime Minister, Treasurer Josh Frydenberg and Assistant Treasurer, Michael Sukkar announced that the Australian Government Treasury HomeBuilder program will be extended to 31 March 2021.

Changes to the HomeBuilder program with the extension include:

A reduction to the grant from $25,000 to $15,000 grant for building contracts (new builds and substantial renovations) signed between 1 January 2021 and 31 March 2021, inclusive,
An extended deadline for all applications to be submitted, including those applying for the $25, 000 grant and the new $15,000 grant. Applications can now be submitted up until 14 April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4 June 2020,
An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 1 January 2021, but will also be backdated and apply to all contracts entered into on or after 4 June 2020 and
An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1 January 2021 and 31 March 2021, inclusive.

VICTORIA’S BIG HOUSING BUILD - RFP FOR IN PROGRESS AND READY TO BUILD DEVELOPMENTS

In response to a member enquiry whether respondents to this RFP are required to be listed on the Victorian Construction Supplier Register, the Institute sought clarification from Homes Victoria and was informed that RFP respondents do not need to be registered on the Victorian Construction Supplier Register. This information has also been provided in the “Responses to Questions” attachment that was uploaded to the Buying for Victoria (formerly known as Tenders Vic) website on Friday November 27th. We encourage members with an interest in this RFP to regularly check the Buying for Victoria website for updated Q&A information.

CLADDING TASKFORCE COMMUNICATION STRATEGY

On Friday November 27^th, the Victorian Chapter participated in a consultation on the further development of a communications strategy in relation to the State-wide Cladding Audit being undertaken by the Victoria Building Authority. This consultation has provided the Chapter with an opportunity to reposition its relationship with the important work of the Statewide Cladding Audit and Cladding Safety Victoria so that the Chapter is better able to improve information flows between both agencies and our members.