Bushfire relief burning hole in budget surplus

Bushfire relief burning hole in budget surplus

23 February 2009

published by business.theage.com.au

Australia — Victoria’s bushfires are prising at the State Government’s already tenuous grip on a budget surplus, but Premier John Brumby says the state’s first concern is to help the victims.

Mr Brumby said he “intended” to meet the state’s revised target of a surplus of at least $100 million.

“It’s my determination that we should stay in operating balance and we will stay in operating balance despite the very significant cost of these fires,” he said.

He would not say how much the state was spending on its emergency response, but said the figure was “significant”.

“To be honest, I don’t think, in these circumstances (that) people count the dollars,” Mr Brumby said.

“In these circumstances — the biggest natural disaster we’ve ever had — what the public wants is to get on with the job, to help families, to get into rebuilding and to rebuild these communities, and that is what we will do.”

Even before the bushfires, state and federal budgets across Australia were under mounting pressure from the global financial crisis.

Victoria’s is the only government in Australia that has yet to declare it will run into deficit over the next four years as a result of the economic downturn.

When John Lenders handed down his first budget as Treasurer last May, the state was targeting a surplus of $1.5 billion. It announced with some fanfare that the Government would change its eight-year-old tradition of targeting a surplus of $100 million and instead try for a surplus equal to 1 per cent of government revenue.

By December, the downturn had savaged the forecast surplus to just $382 million. The crisis was sufficient for Mr Brumby to suggest the state may revert to the $100 million target.

Since then, the state has announced more than $30 million in assistance for fire-affected communities, not counting grants that have been made available that are likely to add millions of dollars more.

Damages from the bushfires are expected to run into the billions of dollars, with insured losses estimated about $1 billion. Credit Suisse insurance analyst Arjan van Veen said it was reasonable to expect many people in the affected regions would have had no insurance.

Mr Lenders has announced land-tax and stamp-duty relief for those affected by the fires, but said the state had not yet begun to count its contribution.

“Once that’s done, we’ll start doing the other tallying — but they are truly second order issues at the moment,” Mr Lenders said.

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