Victoria’s economy has recovered to pre-pandemic levels: report

Jobs and investment have recovered to pre-pandemic levels, according to Victoria’s Annual Financial Report, revealing a resilient economy and speedy recovery from the effects of a once-in-a-100-year occurrence.

Victoria spent a record $18.7 billion on capital projects in 2021/22, with the state’s pipeline of public infrastructure projects a substantial driver of job development and economic activity. The state’s net assets increased in value by $31.6 billion to $219.8 billion. Net debt was somewhat less than $100 billion, $2 billion less than the revised Budget forecast.

In the most recent CommSec State of the States quarterly report, Victoria was ranked the nation’s top performer, highlighting the state’s job performance and rise in building activity. 

In 2021/22, growth in final state demand, a crucial economic indicator that includes public and private investment and spending, was 40% greater than the national average.

Treasurer Tim Pallas says: “Record support provided for families and businesses meant we were in the best shape possible to really bounce back after the worst of the pandemic had passed – and that’s exactly what has happened.”

“The jobs market is strong, businesses are confident, and the state’s financial results have improved from the forecasts that were updated just five months ago. We’re moving ahead, which is a credit to all Victorians.”

According to the Australian Bureau of Statistics, Victoria’s population increased by 0.6% in the year to March, reaching a total of 6.59 million people, and the Commonwealth Budget predicts that the state will grow faster than any other jurisdiction during the next four years. 

The 2021/22 Annual Financial Report published today shows an improvement of $3.8 billion in the State’s operating deficit compared with the estimate in the May Budget – the final deficit was $13.8 billion – in part due to lower than expected spending.

This included lower use of fast antigen tests and personal protective equipment (PPE) across the health sector, as well as lower-than-expected demand for COVID-19 testing as vaccination rates climbed and the pandemic’s impact lessened. Overall, operational health spending increased by 15% year on year to provide more Victorians with the treatment they require. Revenue was $1.2 billion greater than expected as the economy recovered and the labour market reached new highs.

The Labor Government used the state’s balance sheet strength to respond to the health crisis and protect Victorians from the economic impact of the pandemic while also establishing a medium-term budgetary strategy to return the Budget to surplus and stabilise the pandemic debt.

According to the NAB Monthly Business Survey, which was issued this week, business confidence in Victoria was the highest of any state, while business conditions improved significantly and were considerably above the national average.

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