Victoria has run up a $10 billion (US$7.2 billion) deficit in the first six months of the 2021/22 financial year, although the Australian state witnessed a rise in economic activities after it relaxed COVID-19 restrictions.
However, the economic consequence suffered by the state in late 2021 was not as severe as when it shut down Melbourne for 112 days in 2020.
“While necessary restrictions associated with the Delta variant of COVID-19 led to a decline in economic activity in the September quarter of 2021, economic activity and employment remained stronger than during restrictions in 2020,” the report read.
Compared to September 2020, the number of employed Victorians recorded in October 2021 was higher by approximately 100,000, and the state’s final demand or total demand for final goods and services in late 2021 exceeded pre-pandemic levels due to rising household consumption.
At the same time, Victoria’s net debt rose by $16.8 billion to $89.6 billion from June 30 to December 31, 2021, as a result of government spending on pandemic measures and main infrastructure projects.
The state predicted that it would post a deficit of $19.5 billion for the entire 2021/2022 financial year, which amounted to 4.1 percent of the Gross State Product.
Meanwhile, the mid-year report did not fully include the adverse effects of the COVID-19 Omicron wave, which peaked in January and early February 2022, because it only covered the six months to December 31, 2021.
“Victoria’s choices through the pandemic have placed us in a frontline position for a sustained statewide recovery,” Victorian Treasurer Tim Pallas said in a statement.
Regarding the state’s revenue, Victoria collected $38.8 billion during the six months to December 2021, a growth of $7.8 billion compared to the previous year.
Taxation also went up by $13 billion from the same period last year due to increases in land transfer duty, payroll tax and in-person gambling.
Speaking of the latest state financial report, shadow Treasurer David Davis condemned the Labor government over Victoria’s rising levels of tax and debt.
“I note the government press release has a four-letter word that won’t be mentioned ... and that four-letter word is debt,” he told reporters.
“This is about the future of the state.”