NEARLY $1.5 billion of tax cuts for home owners and businesses, and a "bush bonus" of $3000 to encourage young families to move from Melbourne's bulging outer suburbs to regional Victoria are the key features of yesterday's state budget.
Dubbing it a "baby boom budget", Treasurer John Lenders also announced $180 million of extra spending on maternity and child health services to cope with Victoria's highest birth rate since the early 1970s.
Mr Lenders gave business a welcome surprise: cuts to land tax aimed at helping the struggling manufacturing sector, a reduction in payroll tax to encourage employment and, for the fifth year in a row, a cut in WorkCover insurance premiums.
Victoria's stamp duty rates on home purchases — among the highest in the country — will be cut, with all thresholds lifted by 10%.
This follows a staggering one-year jump in stamp duty tax revenue of $913 million, or more than 30%, as a result of the boom in the property market. The cuts will reduce the stamp duty take by only $138 million next financial year.
The stamp duty relief is aimed at first home buyers. Mr Lenders said the saving for a family buying a median-priced first home for $317,000 would be nearly $2500.
The Opposition dismissed the tax cuts as illusory, saying the Government had "gouged" five times more in additional revenue from taxpayers since last year's budget than it was giving back in tax relief. Other features include:
■A $1 billion social justice package to help families with disabled children and "at-risk" communities such as Aborigines and new migrants from the Horn of Africa.
■Almost $800 million to increase capacity on the public transport network, including extra tracks at the Laverton, Westall and Craigieburn railway stations, and upgrades of Prahran and Windsor stations.
■Nearly $600 million to rebuild, renovate or extend 128 government schools, including new schools in Craigieburn, Caroline Springs and Wyndham.
■More than $350 million extra for capital works on hospitals, including Sunshine, Box Hill, Dandenong, Bendigo and Warrnambool.
Mr Lenders said the budget was aimed at helping the state cope with a population boom — Melbourne is growing by about 1200 people a week — and ensuring adequate provision of transport, education, water and health care.
"A growing population brings new joys — but it also brings new challenges," he said. "It places our infrastructure and services under much greater pressure. It makes it harder to maintain our liveability. And it puts a bigger strain on our natural resources."
To help fund future investment, the Government will increase the state's debt more than four-fold to almost $10 billion over the next four years.
While business applauded the budget, the Australian Medical Association said it did not do nearly enough to meet growing demand for public hospitals. Public transport and environment lobbies said it failed to tackle congestion and climate change.
Opposition Leader Ted Baillieu dismissed it as visionless, and ridiculed claims that it would enable Victoria to cope with the baby boom.
"Our babies will be paying the bills for the mismanagement of this Government," Mr Baillieu said. "There is a substantial increase in taxation in this state, and our babies will be paying the bills long into the future.
"When the people of Victoria wake up tomorrow, they will still struggle to get on a train or a tram, they will still struggle to get into a hospital bed, they will still struggle to get the fundamental services they deserve.
"This is maximum taxation, minimum delivery of services and no substantial infrastructure projects despite a bigger revenue take."
Mr Lenders conceded that economic growth was slowing, down from 3.25% this financial year to a forecast 3% for each of the next four years.
He said the budget surplus was expected to be $828 million next financial year and average $907 million over the subsequent three years.
This would give Victoria a buffer against "harder global times" caused by rising interest rates and inflation in Australia, an economic downturn in the United States and turmoil on the world's sharemarkets.
"It's clear that this budget comes at a challenging time: for Victoria, Australia and the world," Mr Lenders said.
"But it's equally clear that the Victorian economy has the resilience and diversity to meet these challenges and weather the risks ahead."
The Opposition attacked the Government's plan to fund future infrastructure projects in part by pushing the state further into debt.
Opposition treasury spokesman Kim Wells said Victoria was "on the path back to the bad old days of the Cain-Kirner Labor government's debt spiral".
"This will become a frightening legacy for the next generation," he said.
But Mr Lenders said net debt would stand at 2.9% of gross state product by 2012 — lower than the level Labor inherited from the former Kennett government in 1999.
"Worldwide, many governments carry a level of debt to drive their economies and invest for the future," he said. "They would be negligent if they did not."
International credit rating agency Standard & Poor's said last night that Victoria could easily afford the projected increases in net debt while retaining the state's triple-A rating.
