Friday, March 16, 2012
The slump is certainly dramatic: an $823 million turnaround year on year, from a surplus of $482 million to a deficit of $341 million. But most of the fall was in only two areas.
The slump in house prices and clearance rates cut stamp duty on conveyancing by $360 million or 17.5 per cent year on year. And Treasurer Kim Wells says the Commonwealth has held back $230 million of funding for the regional rail link and the new cancer centre in Parkville.
Payroll tax collections remain buoyant, rising 8 per cent year on year, and raising doubts as to whether private-sector jobs are really falling as fast as job figures suggest. And Treasury remains confident that the budget will end up in the black, sticking to its estimate of a $148 million surplus by June.
We hope it's right. But Treasury concedes that employment and consumer demand have both "softened". Sift through all the recent data on the Victorian economy, and the conclusion is unavoidable: the state is either in recession or close to it.
That's not the Baillieu government's fault: it's the the fault of the high dollar, high interest rates, and the public sector passing the baton when the private sector is not in a position to run with it. But the government and its advisers are being strangely defensive about a problem they didn't create.
Why is Ted Baillieu quoting economic growth figures from 2010-11? The view looking back may be fine, but Ted, the issue is where we are now, and where we're heading.
The government should get on the front foot, admit the problem, and change policies to tackle it. Former Premier's Department head Elizabeth Proust suggests it bring forward infrastructure investment as a stimulus. That's good advice.