Victoria recorded a deficit of $10 billion for the first half of the 2021/22 financial year, despite increasing economic activity as COVID-19 restrictions eased.
The deficit, contained in the mid-year financial report tabled in parliament on Friday, was largely attributed to the state’s Delta wave and subsequent 77-day lockdown of Melbourne last year.
The result is almost identical to the first half of 2020/21, albeit the economic fallout was not quite as bad as when the city endured its 112-day shutdown in 2020.
“While necessary restrictions associated with the Delta variant of COVID-19 led to a decline in economic activity in the September quarter 2021, economic activity and employment remained stronger than during restrictions in 2020,” the report reads.
Roughly 100,000 more people were employed in October 2021 compared with September 2020, and the state’s final demand rose to above pre-pandemic levels in late 2021 fuelled by a household consumption.
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Net debt increased by $16.8 billion to $89.6 billion to pay for the government’s response to the pandemic, as well as major infrastructure projects.
Victoria’s full-year deficit for 2022/23 is forecast to be $19.5 billion, equivalent to 4.1 per cent of Gross State Product.
The mid-year report spans the six months to December 31 and does not fully account for the impact of the Omicron wave, which peaked in January and early February.
However, ABS data shows unemployment in Victoria hit a record low in January of 4.1 per cent – the lowest rate of any jurisdiction in the country – and the state’s final demand grew by 1.6 per cent to 3.7 per cent from September to December.
“Victoria’s choices through the pandemic have placed us in a frontline position for a sustained statewide recovery,” Treasurer Tim Pallas said in a statement.
Total revenue for the six months to December was $38.8 billion, 50 per cent of the published full-year budget estimate and an increase of $7.8 billion from the same period last year.
Taxation was also up in comparison to the same period last year at $13 billion, courtesy of increased land transfer duty, payroll tax and in-person gambling.
Shadow Treasurer David Davis criticised the government over the state’s rising levels of tax and debt.
“I note the government press release has a four-letter word that won’t be mentioned … and that four-letter word is debt,” he told reporters.
“This is about the future of the state.”