Victorian Treasurer, Tim Pallas photographed
above was a guest speaker at The Asian Executive
2019 Lunar New Year Annual Gala Dinner held at
the Park Hyatt Melbourne.

Victoria’s Economic
Prospects in the Spotlight
The Asian Executive puts
the Victorian economy in
the economic spotlight with
the tough questions to the
treasurer, Tim Pallas. Mr Pallas
has attended as a past speaker
for events hosted by The Asian
Executive, and we welcome his
comments in this edition.

TAE: How would you sum up the state’s fortunes in this COVID-19 pandemic environment?

TP: My treasury and finance team have produced new modelling which shows that the impact of COVID-19 has put the state under considerable stress and that there is an anticipation of contraction through our June quarter 2020 in the order of 14% down from the comparable period last year. Our estimates show that job losses could rise to around 270,000 for the September quarter notwithstanding Victorian and Commonwealth Government support assistance. The size of our economy is expected to shrink from $455 billion to about half of that.

TAE: Has there been any good news at all from your data?

TP: We have seen several employment sectors grow
during the first quarter. The IT sector, remote support call centres, the health sector is seeing a shortage of skilled staff. Food delivery services and chain supermarkets are all thriving.

TAE: What does your modelling say about property prices?

TP: We are of the view that Victoria’s average property prices will fall to about 9% by the end of this calendar year.

TAE: What has been the state government’s immediate actions to ameliorate this economic devastation?

TP: Despite what you call “economic devastation”, the Government has already initiated programs to bring us out of our present situation. Under our Economics
Survival Package, we have already refunded more than

$440 million in payroll tax refunds to around 17,000 small and medium-sized businesses. Grants totalling $110 million have been paid to businesses. We have accelerated the payments of $2 billion to the state’s service providers and contractors.

If I may enumerate our actions to date:

  • We have activated a training and skills blitz – boosting TAFE and reskilling workers that need it.
  • We have fast-tracked new schools and 3-year old kindergarten construction, as well as a maintenance blitz for existing schools and kindergartens.
  • We have boosted the state’s pipeline of major infrastructure projects, including road and rail projects.
  • We are facilitating the revival of Victoria’s tourism and major events industries, including sport, art and music – to support our clubs, pubs and hotels.
  • We are creating more partnerships with the private sector, local governments, industry super funds on projects that create jobs, back businesses and help the economy recover.

TAE: How will the Government help the property sector?

TP: We have initiated legislation that will better regulate the relationship between landlords and tenants and help lift the property industry through a $500 million package

• $420 million in land tax relief for eligible landlords.

  • An $80 million rental assistance fund for residential tenants facing hardship due to coronavirus.
  • A 6-month moratorium on evictions from residential tenancies, except in some circumstances, and on evictions for non-payment of rent for commercial tenancies of small and medium-sized businesses.
  • A 6-month moratorium on rental increases for commercial and residential properties.
  • Government-supported dispute resolution mechanisms to help tenants and landlords renegotiate lease agreements, including rent reductions through waivers and deferrals.

TAE: Treasurer, how will the state’s AAA credit rating be at risk?

TP: Certainly, Standard & Poor’s has indicated that as the nation’s AAA credit rating is now under review, as is Victoria’s. The rating agencies have tended to take the
view that credit ratings are reviewed in the totality of a nation. The state can be no higher than its sovereign jurisdiction. This view is adopted because, essentially, they see that a substantial amount of the revenue base of the states is dependent upon the economic performance and the revenue base of the nation. In our case, almost 50% of the state’s revenue base comes either from direct and indirect grants from the Commonwealth.

TAE: Out of the projected 270,000 people your team expect to be jobless, how many of them will the Government try to help get back into meaningful jobs again?

TP: We, as a government, are not giving up on one of them, all 270,000. It might take time, and I’m not trying to be facetious because people will be feeling very nervous at the moment about the practical consequences of our data. I want to assure your readers; our objective is not just about revitalizing
our economy but establishing a longterm growth pattern.

The challenge for this Government is to establish fundamental reforms that will give our people and their children the opportunities and aspirations to enter the labour market now and the years ahead.