The May 2006 State Budget represents an opportunity to position Victoria at a critical phase in its history, says VECCI.

"Victoria is very much at the crossroads in how it deals with its international future, particularly in light of the rapid rise of China, India, Latin America and the East Asian economies", says VECCI Chief Executive Officer, Mr Neil Coulson.

"The reality is that the world will not stop for Victorians to get off - a perfect example of this is the unnecessary delays in the Port Phillip Bay Channel Deepening Project, preventing a crucial enhancement to our main international trade gateway.

"While the Victorian Government may have little control over international factors affecting Victoria’s economic performance, its actions can have an impact on building competitiveness at home.

"It is for this important reason that we consider the 2006 Budget provides a timely opportunity for the Government to set both the direction and agenda for the State’s competitive future.

"Many of these issues require transformational rather than incremental changes. For example, with an extra million people living in Melbourne alone by 2030, the State’s infrastructure base requires a major overhaul rather than just tinkering.

"Recent National Accounts figures also show that Victoria’s growth is now outpacing NSW’s by a wide margin, and it is high time we pushed home our advantage with some long-term and visionary pro-business policies.

"The tax relief VECCI is seeking is affordable - it totals around $180 million per annum, a small figure beside the Budget surplus of nearly $800 million in 2004/05. Victoria will also receive a $751 million increase in GST payments from the Commonwealth in 2006/07.

"As we are now well into 2006, it is critical that the State Government recognises the important role the next State Budget has to play in facilitating improved business competitiveness by:

• Lowering business costs associated with WorkCover and State taxation
• Improving the quality of the State’s infrastructure, and the way it is used
• Accelerating the process of regulatory reform throughout the economy but particularly in those areas affecting trade-exposed businesses
• Ensuring that the State’s energy policies are conducive to business confidence and new investment, and
• Maintaining a significant investment in industry education, training and knowledge development.

"Specific measures sought by VECCI in the 2006/07 State Budget include:

• Expenditure restraint - keeping growth in the level of recurrent expenditure below inflation, to allow spending in more productive areas such as infrastructure and further business taxation relief
• A reduction in payroll tax from 5.25 percent to 4.95 percent on 1 July 2006.
• Relief to middle bracket land taxpayers.
• A flat 10 percent reduction in WorkCover premiums paid by employers
• A significant funding contribution to support channel deepening works, which must commence in financial year 2006/07.
• The bringing forward of the completion of the Dynon rail hub project to 2008, one year ahead of schedule.
• A guarantee that Victoria is well placed to meet anticipated future electricity demand with adequate capacity, including a new 1000MW power station.
• A new emphasis on technology-based solutions to the greenhouse problem, such as further funding for cleaner coal technologies, as opposed to the price-based measures such as carbon taxes, emission trading regimes and the mandated use of renewables.
• A new Victorian Government trade agenda that boosts the role of the private sector in trade promotion, for example, the appointment of honorary trade ambassadors and the promotion of partnerships between larger businesses and small to medium enterprises (SMEs) to build vital networks in overseas markets where we are competitive on price and quality.
• Measures to reduce the burden of regulation and red tape, including an annual regulatory budget and, working with the Federal Government, a commitment to reduce the number of regulators nationwide, and
• The reintroduction of payroll tax and WorkCover premium exemptions for apprentices and trainees in areas or occupations of identified skill shortage.

"The implementation of reforms in these interrelated areas will set the foundation for new investment and job creation in 2006/07 and beyond", says Mr Coulson.

For all media enquiries, please contact:
VECCI Strategic Communications
Ph:      (03) 8662 5226
email: media@vecci.org.au