Victoria’s treasurer has backed away from his assurance of a surplus in the state’s next budget, as the impact of the coronavirus widens.
Tim Pallas says he is neither “confirming or denying the existence of a surplus” in the budget he will hand down on May 5.
“We’re still working through the process at the moment,” he told reporters on Wednesday.
“These are very uncertain times and we are seeing high levels of volatility in terms of many economic settings at the moment.”
As recently as a week ago, Mr Pallas said Victoria will “remain in surplus”, noting it was part of the Andrews government’s “brand”.
The treasurer said his changed position comes as the state faces a “major public health crisis” from COVID-19 and as prices have dropped significantly on the Australian share market.
“My No.1 priority at the moment is the health and welfare of Victorians and putting whatever resources are necessary into that crisis,” he said.
The state budget is also under pressure from the impacts of the bushfires and the lesser GST revenue it’s likely to receive due to a weaker national economy and lower consumer spending.
Mr Pallas said the challenges mean he will have to deliver a “smarter budget” that does more with less to keep delivering for Victorians.
“Make no mistake, this budget will be extremely difficult, due to circumstances beyond our control,” he told a Committee for Economic Development of Australia event in Melbourne.
He reiterated treasury is reviewing every line of Victoria’s expenditure.
“There will not be one lazy dollar in this budget,” he said.
Federal analysis shows coronavirus is expected to shave at least 0.5 per cent off growth this financial year and the next, meaning the Victorian economy could be worth about $7 billion less than expected.
The Morrison government will on Thursday announce a stimulus package aimed at guiding Australia’s economy through a potential recession.
Mr Pallas said Victoria has been calling for national stimulus since before the bushfires and coronavirus outbreak, and is glad to see the federal government is now willing to “come to the table”.
Victoria will have a “package of stimulus” of its own, he said, but it will largely be focused on continuing the government’s infrastructure spend.
“It’s about focusing on hardware – getting people and keeping people in jobs,” he said.