Sensitivity to average weekly earnings A rise in the level of economywide wages results in higher payroll tax revenue, contributing to an increase in the net result from transactions. All government enterprise bargaining agreements are assumed to be unchanged over the projection period. Sensitivity to enterprise bargaining agreements In the shortterm, enterprise bargaining agreements are fixed. Enterprise bargaining agreements can pose a substantial risk to Victoria’s budget position in the longerterm. If funded, an across the board increase in wages arising from an enterprise bargaining agreement, which exceeds the wages policy guideline rate, results in a decline in the net result from transactions. The increased employee entitlements increases the value of the superannuation liability and flows through to an increase in the superannuation expense in the remaining out years. Sensitivity to domestic and overseas share prices A rise in share prices increases the net result of the State’s public financial corporations (PFCs). The associated impact would be an increase in the income tax equivalents (ITEs) of the Transport Accident Commission (TAC) and Victorian WorkCover Authority (VWA). However as there have been substantial decreases in share and other asset prices in recent years, accumulated carry forward tax losses mean there is little or no impact of share prices on ITEs paid until the losses have been fully used. There is no immediate impact on dividends payable to the State. An increase in domestic and international share prices also reduces the value of the superannuation liability due to the associated increase in superannuation fund assets. This then reduces the superannuation interest expense beyond the budget year, thereby improving the net result from transactions in these years. Sensitivity to property prices and volumes Higher property prices have an immediate impact on the net result from transactions through increased collections of land transfer duty. At the same time, the value of the superannuation liability decreases, due to the increased value of property holdings in superannuation funds’ investment portfolios. In later years, higher property prices continue to raise land transfer duty and land tax revenues, while the previous reduction in superannuation liability reduces ongoing superannuation expenses. All of these increase the net result from transactions. Higher property transaction volumes increases land transfer duty receipts, leading to a rise in the net result from transactions.
A AASB 119 Employee Benefits, 3, 44, 48, 49–50, 64 Agricultural production, 9, 15 Asset Asset investment, 31 Investment, 31 Australian dollar, 1, 15, 17, 19, 23, 29 B Bendigo Hospital, 1 Box Hill Hospital, 1, 35 Budget and forward estimates outlook, 45 Business confidence, 31 Business investment, 14 C Capital expenditure, 31 Capital investment, 1 Commodity prices, 21 Commonwealth – State financial relations, 27–30 Commonwealth’s fiscal stimulus, 14 Concessions, 6 Consumer price index, 13 Consumer sentiment, 4, 13, 82 Consumer spending Household spending, 81 Consumption, 29 D Debt, 31–32, 32 Net debt, 3, 44, 54, 57–58, 68–69 Demographic change, 27 Department of Business and Innovation. See Department of State Development, Business and Innovation Department of Environment and Primary Industries, 54, 56 Department of Planning and Community Development. See Department of Transport, Planning and Local Infrastructure Department of Primary Industries. See Department of Environment and Primary Industries Department of State Development, Business and Innovation, 5, 35, 42, 54, 56 Department of Sustainability and Environment. See Department of Environment and Primary Industries Department of Transport. See Department of Transport, Planning and Local Infrastructure Department of Transport, Planning and Local Infrastructure, 54, 56 Dividends, 47, 51 ITEs and interest, 79 Dwelling investment, 11, 13 E Early childhood. See Education East West Link, 1, 34, 44, 56 Economic conditions, 12 Australia, 21 Global, 1, 2 Victoria, 11–17 Economic downturn. See also Global financial crisis Economic growth, 1–4, 6, 11, 19, 22, 23, 27, 28, 34, 39 Australia, 27 Gross state product, 11, 12, 13, 21, 80, 81 Victoria, 25, 26 Economic outlook, 25, 26 Economic projections, 13–17 Education, 15 Reforms, 36–39 Schools and Early Childhood, 36–37