Victorian Treasurer Tim Pallas. Credit:Eamon Gallagher To make it worse, the Federal Government revealed in its budget that GST revenues are also well down. People are not as keen to consume when house prices tumble. This has cost Victoria another $200 million next financial year, adding more reasons for Treasurer Tim to cry poor. Which is exactly what he has done, warning earlier this month that today’s budget is to be one of “hard choices ... that we have to share ... collectively”. To cap it off, Saturday’s federal election cruelled any hopes that a new prime minister might come to the rescue. But Treasurer Tim can’t really complain. He has had a wonderful run of luck that lasted the whole of the first term. Everything that went sour for the Coalition when in government suddenly went sweet once Pallas took the reins. The property market went gangbusters after a mini-recession, GST revenues went through the roof and even the odd court case went in his favour, delivering a whopping $6 billion of additional revenues by the end of Labor’s term compared to what was expected when they surprisingly won in 2014.

Loading But are things really as grim as Treasurer Tim would have us believe? While some taxes are down, others are doing much better. Payroll taxes are a couple of hundred million ahead thanks to a surge in jobs. And land taxes for next year have been revised up by a massive $250 million, thanks to nicely timed property revaluations as well as a bigger property stock due to the last boom. After all the unexpected upward revisions, revenues as a whole will be down, but not by nearly as much as Treasurer Tim has suggested. So, what about all the warnings of gloom and doom? They are probably best understood as being part of the normal industrial relations argy bargy that accompanies the about-to-begin pay negotiations between the government on the one hand and the police, early childhood teachers and various public service unions on the other. The latter will have etched into their ambitions the eye-catching 12 per cent increase just won by the nurses’ union in a well-deserved deal.

Loading Increases of that scale would most certainly put a big hole in the budget and that’s exactly what Treasurer Tim is desperate to avoid. It’s called managing expectations, after a pretty generous first term which saw the public service grow by more than 10 per cent and a range of public sector enterprise agreements settled that were at the upper end of the scale. All in all, we can expect a less generous budget for new social initiatives than last year’s splendid one, but at close to $1.7 billion, that set a very high bar, not to mention a record on the generosity scale. A net $180 million for new social programs is what the Parliamentary Budget Office’s election costings suggest we should expect, including a Mental Health Royal Commission, universal kinder, free dental care for all government schools, subsidised solar, as well as more social housing. The big dollars will be in infrastructure, which is set to receive an additional net $8.4 billion over the next four years, made possible by the government’s decision to double the real value of borrowings. There’s the North East Link, the airport rail project and 75 more level crossing removals, with the massive outer suburban underground rail project not set to begin until the next term.

Stamp duty receipts for next year have a been written down by more than a half billion, courtesy of a longer and deeper property market tumble than was expected. Credit:Chris Hopkins That’s a lot of business for the growing list of private companies that win the long-term contracts to build, finance and run these major infrastructure projects. At last count, the state was already committed to $81 billion of future payments for these public-private partnerships, up from $41 billion in 2017, and that excludes all that money going to Transurban and EastLink for their private toll roads as well as payments to private bus and rail companies for delivering what used to be public services. These firms’ annual reports show at the very top they are typically run by men, receiving rather more than were they a departmental secretary or even a minister of the crown. Treasurer Tim might start setting them some equity targets every bit as tough as those Labor has imposed on the public service, including public sector boards and also local government. Expect today’s budget to be pretty much on par for a first budget of a second term of a government that is well organised, with a little bit for social initiatives and a record spend on much-needed infrastructure. That’s more than enough to make sure Monday should be another good one for Treasurer Tim. Whether public sector unions will believe that he has run out of luck is another matter altogether.