Industry Policy Matters

10 May 2022

On Tuesday 3 May the Victorian State Budget was handed down by the Treasurer of Victoria Mr Tim Pallas.

The 2022/23 State Budget provides $22.2 billion, over five years, in new output initiatives and $6.7 billion in new capital investment. It also predicts that net debt will rise from $101.9 billion (19.8 per cent of GSP) to $167.5 billion (26.5 per cent of GSP) by 2025-26 and this is all with an assumption of lower CPI (2.5 per cent) over the forward estimates. These figures do not factor in recent CPI and interest rate rises, which may affect these estimates over the medium to longer term. 

Not surprisingly, the budget was dominated by health and education spend as it was labelled a Pandemic Recovery Plan – dedicating $12 billion over the next four years to fund COVID-19 health support, rapid antigen tests and healthcare at home. The Government has also announced the establishment of the Victorian Future Fund with proceeds from the sale of the VicRoads Licensing and Registration arm (Modernisation Joint Venture), which will be used to pay down debt accrued during the pandemic.   

A suite of education and training packages was also announced, including $131.1 million over the forward estimates to lift student literacy and numeracy outcomes, targeting students who do not meet the minimum standards. Another $87.9 million over four years will be committed to excellence in vocational and applied learning to expand and support suitably qualified VET teachers and trainers.

While VACC supports the announced education and training measures, there is a missed opportunity to address emerging skills and training needs associated with the uptake of electric vehicles. VACC has consistently delivered this message to both State and Federal Governments via our pre-budget submissions and policy manifestos, arguing the time is now to be investing in the skills of the future.

VACC’s own modelling has shown there will be a likely shortage of approximately 6,000 skilled electric vehicle technicians by 2030 if the Federal Government’s forecasts of 1.7 million EVs on Australian roads is realised.

On the taxation front, VACC was relieved to see no changes to motor vehicle duty for the fifth year in a row. This is certainly a policy win for the Victorian Automotive Dealers Association (VADA, a division of VACC), which has successfully advocated for members, over a number of years, to not increase duties on an already heavily taxed sector. Additionally, from July 2022, the sale or transfer of wheelchair accessible commercial passenger vehicles that provide unbooked services will be exempt from motor vehicle duty. This will apply to eligible vehicles that are less than two years old. And whilst VACC has long lobbied for the removal of payroll tax (effectively a tax on jobs), the budget made no changes to payroll tax or any other business taxes, which can be seen as a somewhat positive outcome for members.

In terms of industry support and initiatives, the budget outlined the following commitments:

  • $120 million Victorian Industry Fund package to support sovereign capability, advanced manufacturing and attract business investment. This includes $40 million in grants to support growing businesses and a Low-Carbon Manufacturing Grant Program. $4.5 to fund 300 digital jobs for manufacturing internships.
  • Supporting small and medium businesses through the pandemic – $31.5 million in funding for 2022-23 only.
  • Transforming small business - $8.9 million (2022-23 only).
  • Victorian Innovation Industry Partnerships – $0.9 million (2022-23 only) 
  • Skills solutions partnerships - $9.6 million (until 2024)
  • Business Acceleration Fund - $10 million (2022-23 only)

As the November State election date draws closer (the official date is still to be announced), the VACC policy team is set to commence work on our state policy manifesto. This document will detail the policy priorities for the next Victorian Government, with a strong focus on future-proofing the automotive service, retail and repair industry. As always, I welcome members to get in touch with any policy issues you feel should be included.

Words: VACC Lead, Strategy and Policy, Dr Imogen Reid. 

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