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Victoria Treasurer Tim Pallas.Credit:Eddie Jim

Friday’s figures show the government’s revenue surging past a record $77 billion but spending at almost $97 billion,with Treasury laying the blame for the significant deterioration in the state’s public finances squarely on the outbreak of the Delta variant of COVID-19.

The budget position downgrade comes despite expectations tax revenue will increase by 14.4 per cent to $27 billion in 2021-2022 and grow by more than 6 per cent,on average,for each of the next four years.

Revenue from the government’s two main property taxes,stamp duty and land tax,is tipped to soar this year by nearly 20 per cent to $7.7 billion and by 32.6 per cent to $4.3 billion respectively in 2021-2022.

The public sector payroll is tipped to grow again by more than 9 per cent,with employee costs for the government growing to $32.7 billion this year.

The report shows the government is due to spend more than $10 billion more than predicted earlier this year,mostly on the fight against the Delta variant outbreak and the various business and community support measures associated with the lockdowns.

The budget will be showing other damage from COVID-19 for several years to come. Treasury predicts the state’s share of Commonwealth GST money will decrease by more than $1 billion between 2022 and 2025,because of the dip in Victoria’s population,which shrunk by 43,000 people in the first 12 months of the pandemic.

Treasurer Tim Pallas said although the Delta outbreak had hit the budget bottom line,Victoria had emerged from the most recent lockdown “in a very strong position”.

“The economic upswing is well and truly under way. We are in an extremely strong position to recover,” Mr Pallas said.

“The state’s solid economic foundations and our substantial support for business will help us to rebound and we are seeing dramatic evidence of that already.

“The budget shows economic activity will return to the growth path predicted in the May 2021 budget,although the peak will happen about 12 months later in the next financial year as the government gears up to fight the election.”

Liberal shadow treasurer David Davis seized on Friday’s figures to accuse Mr Pallas of mismanaging the state’s economy and budget.

“This is a catastrophic position for Victoria,” Mr Davis said. “It’s very serious and it’s entirely of the state government’s making.”

The Liberal frontbencher said the government had already begun increasing the state’s debts and deficits even before the beginning of the pandemic. He blamed cost overruns on Labor’s signature Big Build infrastructure program.

“So this is further mismanagement,not only of major projects and cost overruns,but also mismanagement of the COVID pandemic itself.”

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