Victoria: State Budget 2014-15

The Victorian State Budget for the 2014-15 financial year was delivered on 6 May 2014 by the Victorian Treasurer. In his Budget speech, the Treasurer announced that the Victorian economy is expected to grow by 2.5 per cent in 2014-15. The Government has forecasted surpluses for each of the next four years, with an operating surplus of $1.3 billion in 2014-15 which is expected to grow to $3.3 billion by 2017-18.

The following is a summary of the major revenue and expenditure measures announced in the 2014- 15 Budget.

State Taxation

Abolition of life insurance duty - life insurance duty will be abolished from 1 July 2014.

Reduction in payroll tax rate - the payroll tax rate will be reduced from 4.90 per cent to 4.85 per cent from 1 July 2014.

Metropolitan  planning levy - a levy will be introduced on planning permit applications in metropolitan Melbourne with over $1million construction costs from 1 July 2015.

Increase in the rate of stamp duty on motor vehicle registrations - the stamp duty on motor vehicle registrations and transfer of registration of motor vehicles will rise by $0.40 per $200 or part thereof, commencing from 1 July 2014.The rate on motor vehicles will rise from 3.0 per cent to 3.2 per cent for new passenger cars valued below the luxury car threshold, and from s.o per cent to 5.2 per cent for those valued above the threshold. The rate on new non-passenger cars will rise from 2.5 per cent to 2.7 per cent and the rate on used vehicles will rise from 4.0 per cent to 4.2 per cent.

State expenditure

A major focus of the 2014-15 Budget is expenditure on infrastructure projects with an estimated $27 billion to be spent on new and existing infrastructure projects. New infrastructure projects include:

East West Link - Western Section: which will link Citylink to the Western Ring Road and through the Eastern Section to the Eastern Freeway. The Victorian Government will contribute $8-$10 billion in addition to the $6 - $8 billion investment in respect of the Eastern Section of East West Link as part of the 2013-14 Budget.

Melbourne Rail Link: which will link Melbourne's north and south with a new rail tunnel from Southern Cross to South Yarra via Fishermans Bend.The Melbourne Rail Link also includes the Airport rail link to connect Southern Cross Station to Melbourne airport. The Victorian Government will contribute $8.5-$11billion for this project.

Cranbourne - Pakenham Rail Corridor: which will deliver 25 new trains and remove four level crossings. This project will be delivered in partnership with the private sector and up to $2.5 billion will be invested for this project.

CityLink - Tullamarine  widening: which will add extra lanes in each direction between the Bolte Bridge and the Tullamarine Freeway. The upgrade is estimated to cost approximately $850 million, and will be financed by Transurban through uplifts in toll revenue.

Other new infrastructure projects include:

Rail projects, including the removal of four level crossings, with additional funding for the Metro Level Crossing Blitz Program, and the Murray Basin Rail Project to upgrade country rail freight in the Murray Basin.

Major road upgrades, including the duplication of the Princes Highway between Winchelsea and Colac, which will be co-funded by the Commonwealth and the Victorian Government, the Calder Highway redevelopment to rebuild the interchange at Ravenswood, and the Great Ocean Roadupgrade.

Sale of key State owned assets

The 2014-15 Budget also includes the divestment of two State owned assets, including:

Port of Melbourne: The Government will enter into a medium-term lease over the Port of Melbourne's operations, with the proceeds from the sale to be invested in the new infrastructure projects, including the Melbourne Rail Link and East West Link- Western Section.

Rural Finance Corporation: The Government will divest the Rural Finance Corporation, with the proceeds from the divestment to be invested in infrastructure.

Western Australia: State Budget 2014-15

The Western Australia (WA) Budget for the 2014- 15financial year was delivered on 8 May 2014. According to the Budget papers the WA economy is expected to grow at a more modest 2.75 per cent in 2014-15, following transitions from business investment to export based growth.An operating surplus of $183 million is estimated for 2013-14, and an operating surplus of $175 million is projected for 2014-15. Of particular interest is the fact that royalty revenue is expected to account for 21.5 per cent of the State's total projected revenue in 2014-15.

The following is a summary of the major revenue and expenditure measures announced in the 2014-15 Budget:

State Taxation

Stamp Duty/Land Tax

  • There are no significant stamp duty changes.
  • The transfer duty exemption threshold for first home buyers has been decreased from $500,000 to $430,000. The exemption will phase out between $430,000 and $530,000 (down from the current $600,000). This measure will commence from 1 July 2014.
  • Land tax rates will increase by 10 per cent across the board from 2014-15 to offset the impact of weaker than expected growth in property values. The top rate is now 2.67 per cent (above the $11million top rate threshold).
  • The Government intends to introduce legislation to replace the minor 'incidental purposes' concession for vehicle licence duty that is currently available for trading stock vehicles acquired by motor vehicle dealers.

Payroll Tax

The Budget confirmed that the payroll tax threshold will increase to $800,000 from 1July 2014 as announced in the 2013-14 WA State Budget.

Impact on charitable institutions

Legislation to exclude certain businesses, professional and industry organisations from accessing the payroll tax, transfer duty and land tax exemptions for charitable organisations is expected to be introduced into Parliament in the second half of the 2014 calendar year.

Other insights

The Budget included a range of new revenue and savings measures including:

  • Abolition of the $36 registration fee concession for private motor vehicles from 1 July 2014.
  • An increase of $365 in the Perth Parking Levy, to be phased in over the next two years. Additional revenue is to be used to support the Perth Busport.
  • An increase in the landfill levy rate on waste. Additional revenue is to go towards the implementation of initiatives to manage, reduce, reuse, recycle, monitor and measure waste.
  • From 2014-15, Port Authorities will be required to make an interim dividend payment of 75 per cent of each financial year's estimated dividend in the year that the profit accrues, with the balance to be determined in the following year.
  • Royalty for Regions expenditure is to be capped at $1billion annually.

Northern Territory: Budget 2014-15

The Northern Territory Budget for the 2014-15 financial year was delivered on 13May 2014. No significant Northern Territory tax related measures or incentives were announced. The only significant announcement was an amendment to the First Home Owner Grant. From 13May 2014, these amendments will increase the grant from $25,000 to $26,000 for first home buyers purchasing or building a new home and remove the $600,000 value cap. From 1January 2015, the scheme will be directed to new homes only, with grants for existing homes to cease from this date. The purpose of this is to encourage an increase in supply of housing, rather than just continued turnover of existing dwellings.

The estimated revenue in 2013-14 from taxes and royalties is expected to total around $708.2 million, compared to the forecast total of $598.6 million from the 2013 Budget. The increase from the original forecast is due to increases across all taxes and royalties reflecting improved economic conditions in the Territory. The most significant increases are in payroll tax and mining royalties as a result of growth in the employment market and both prices and volume growth for all minerals.

The projected revenue for 2014-15 from taxes and royalties for the general government sector is $732.7 million.