Government releases mid-year financial report
March 17, 2020
The Victorian Government last week released its 2019-20 Mid-Year Financial Report, with the figures showing that there was stress on the economy before the recent bushfires and COVID-19 pressures.
The report presented the financial results for the State of Victoria, including the general government sector, for the six months to 31 December 2019. It showed that the Victorian economy is performing well in the context of a subdued national economy, but that expenses have grown more than revenue, with a resultant increase in borrowing.
This includes a transactions deficit of $1.1 billion, which was a decrease of $1.5 billion compared with the same period last year, with one of the primary reasons being increased employee expenses due to increased service delivery in the health, education and community safety sectors. Employee expenses have increased by $947 million compared with the same period last year.
In terms of healthcare and the Department of Health and Human Services (DHHS), there was nearly a $1 billion increase in operating expenses for DHHS. This was mainly driven by health, with the growth in expenses in this area roughly matching the department’s rise in expenses. The value of health assets also increased to over $20 billion. However, the revised expected payments from the consolidated fund to DHHS is only marginally higher than 2018/19, signalling that there has not been a great increase in health expenditure this year.
Due to factors such as the bushfires and COVID-19, and their likely flow-on impacts, it is not possible to extrapolate full-year results from these figures. The end-of-year results are likely to be very different from what was initially forecast or expected. While it’s too early to predict the full economic impact of COVID-19, the Department of Treasury and Finance has estimated that it will lead to at least a 0.5 per cent reduction in growth – or almost $7 billion – across the 19/20 and 20/21 financial years.
The 2019-20 Mid-Year Financial Report is accessible here.