Victoria has recorded a deficit of $1.8 billion for the first half of the 2019-20 financial year.
But the Victorian treasurer says the state remains well-placed to handle the economic impacts of coronavirus.
The deficit for the six months to December was revealed in Victoria’s mid-year financial report released on Friday and is an improvement on a deficit of $4.8 billion for the same period the previous year.
Treasury says that’s largely due to stronger returns in the state’s investment portfolios during 2019, compared with investment losses in the first half of 2018.
The state added $38.7 billion in revenue to its coffers during the period, an increase of 2.4 per cent from the year before.
Among contributors to the rise was a 5.4 per cent increase in revenue for government-owned corporations, the largest of which provide services for water, housing and transport services, to $5.9 billion.
Consumption of water was up as a result of conditions being drier.
As Victoria’s revenue increased so too did its expenses, which grew by 7.7 per cent to $40.5 billion over the six months.
The bulk of them, $34.6 billion, came from government departments and public sector agencies.
Employee expenses were slightly above expectations for the first half of the year at $13.2 billion, amid increased service delivery in the health, education and community safety sectors and annual salary boosts.
Ultimately, treasury says the Victorian economy is performing well in the context of a subdued national economy.
Labor market conditions remain positive, with 90,700 new Victorian jobs the year to January 2020, the highest of any state.
Victorian Treasurer Tim Pallas says the jobs growth is a “strong buffer” against events such as bushfires and the spread of the coronavirus, COVID-19.
But he has reiterated his sentiment that crafting the 2020/21 budget won’t be easy.
“Now more than ever, it’s essential we make the hard decisions to ensure Victoria’s economy remains strong in the face of factors beyond our control,” he said.
The state’s shadow treasurer Louise Staley highlighted a $1.1 billion deficit in the general government sector – which includes government departments and public sector agencies – a decrease of $1.5 billion compared with the same period last year.
“We’re just not in a strong budgetary position,” she told reporters.
The treasurer on Wednesday backed away from his repeated assurance of a surplus in the state’s next budget on May 5, saying he would be neither “confirming or denying” its existence.