Victoria’s budget: O’Brien’s infrastructure spend boosted by revenue from property

The strong run enjoyed by Melbourne’s property market has given the Victorian Coalition a big leg up for the 2014-15 budget.

In the state budget papers released yesterday, the Department of Treasury and Finance stated that land tax and land transfer duty will be key drivers for the 7.2% increase in tax revenue expected for 2014-15.

With the latest land revaluation cycle covering 2012-2014, the increase in Melbourne land values over the last year has provided a push for land tax revenue. Earnings from land tax are expected to increase by 16.9% in 2014-15 to $1.90 billion.

Stamp duty also makes up a significant proportion of overall revenue, with land turnover set to contribute $4.44 billion to the total $18.07 billion of tax revenue. Following last year’s sharp increase in transfer duty, the Department of Treasury and Finance has forecast moderate 6.0% per annum growth in forward estimates, with $5.29 billion in land transfer taxation revenue estimated for 2017-18.

A total of $7.47 billion in property tax revenue has been estimated for this year’s budget, including a new tax on planning permits for properties valued over $1 million. 

An increase in transport infrastructure spending has been the main focus in the election year state budget. The Napthine government has earmarked $11 billion for the Melbourne Rail Link which is set to connect South Yarra to the Melbourne Airport via underground stations at Domain and Fisherman’s Bend.