Victorian Premier Daniel Andrews

The Victorian government will fully fund the $10.9 billion Melbourne Metro Tunnel, it has announced as part of a 2016-17 state budget set to deliver a surplus of $2.9 billion.

The decision is a response to the failure of the federal government to redirect funding earmarked for the failed East West Link to Victoria’s key public transport project.

“While the government will welcome a partnership from any future federal government, this project simply cannot wait any longer,” a government media statement said.

The government today announced $2.9 billion over four years for the project, plus a commitment to fund the entire project beyond the forward estimates.

Other public transport announcements included an upgrade to the City Loop, an upgrade to the Ballarat line, an upgrade to the Hurstbridge line, as well as funding for extra trains.

“Funding the new Metro Tunnel in full, removing 50 level crossings, buying high capacity trains, duplicating the Ballarat line to Melton, fixing the Hurstbridge line, the list goes on. We’re getting it done,” Victorian Premier Daniel Andrews said.

There was also $9.3 million announced to support cycling, and $1.46 billion for the Western Distributor road project.

Funding for energy efficiency

The environment and energy efficiency was one of the smaller ticket items this year, with a modest $10 million program announced to retrofit public housing stock and homes of Victorians with complex health conditions.

The upgrades will include installing energy efficient hot water, heating and cooling systems, and insulation and draught proofing.

Small-to-medium-sized businesses are also set to benefit from a $3 million energy efficiency assessment program, while an additional $3 million will help roll-out the government’s new home energy efficiency rating tool.

“Our home energy efficiency rating tool will be an Australian first, and will help Victorians save,” energy minister Lily D’ambrosia said.

The programs are part of the Victorian Energy Efficiency and Productivity Strategy, which in total is receiving $24.3 million.

Another $12.4 million will go to the Driving Growth in Renewable Energy program, designed to help the transition to cleaner energy sources, which the government said would work to help transition the wholesale market to renewables, encourage household solar and storage, and incentivise community solar projects.

“The potential for growth in the renewable energy industry is just extraordinary,” Mr Andrews said. “The Liberals turned their back on wind farms and energy efficiency, but we embrace it – because it means more jobs for Victorians.”

UPDATED 28/4/16: One area though that seems to have slipped the government’s mind is public building efficiency, which has gone backwards since the removal of the Greener Government Buildings Program under the former government.

The Energy Efficiency Council released a statement expressing concern that hospitals, schools and public buildings – which they called “energy efficiency experts’ number one priority” – wasn’t included in the budget.

EEC chief executive Luke Menzel said the government’s energy efficiency policy would be “missing a major plank” if public buildings were not tackled.

“We look forward to the release of the Victorian Government’s strategy ‘Saving Energy, Growing Jobs’ and urge Dan Andrews and Lily D’Ambrosio to ensure that this strategy improves the efficiency of schools, hospitals and other public buildings,” Mr Menzel said.

Other climate and environment announcements included:

  • $222 million to improve river and catchment health
  • $74 million to strengthen Forest Fire Management’s capability with better resources and an upgraded digital network to improve safety and interoperability
  • $29.4 million to improve biodiversity and direct involvement by the community to help protect threatened species
  • $20 million for important works to refurbish parks
  • $40 million to the Latrobe Valley to prepare for a transition to renewable energy

Losers included the brown coal industry, which is being slugged with a tripling of royalty payments the government expects to raise $252 million over the next four years.

The news was welcomed by Environment Victoria, which particularly welcomed the funding for river health and transitioning the Latrobe Valley, though noted that there was only modest funding on efficiency, renewables and biodiversity.

“We are particularly pleased to see the Andrews Government commit to moving the state away from brown coal to renewable energy, and to provide $40 million to the Latrobe Valley to prepare for that transition,” Environment Victoria chief executive Mark Wakeham said.

“While there are some welcome and substantial funding allocations for environmental programs, particularly in river health and coal mine rehabilitation, overall this budget leaves the Andrews Government with a lot of heavy lifting to do with upcoming renewable energy, climate change and biodiversity policies.”

He said with limited funding the Renewable Energy Action Plan and Energy Efficiency and Productivity Strategy would need a clear plan to deliver results.

“The Energy Efficiency Strategy for instance will need to adopt minimum standards for properties at the point of sale and lease if it is to deliver significant environmental, jobs and cost of living benefits.

“Similarly the Renewable Energy Action Plan and Climate Change Framework will need regulation or off-budget measures to support investment in renewable energy and the phasing out of coal-burning power stations.”

Planning overhaul

The government has announced $25.5 million to introduce a “smart planning system”, which it says will “create a more straightforward approach to accessing planning applications and decisions”.

Online planning applications will now be allowed and there will be a reduction in the number of small projects that require permits.

“Whether you’re a homeowner or a property developer, Smart Planning will reduce costs and make it simpler to navigate the planning process,” planning minister Richard Wynne said.

“Homeowners will have access to clear, easy to understand information about what can be built in their neighbourhood and how they can modify their properties.”

Other related changes include stamp duty increases for foreign buyers – jumping from three per cent to seven per cent, expected to net $53 million. Speculators are also being targeted, with a tripling of absentee landowner surcharge from 0.5 per cent to 1.5 per cent, expected to net $28 million for 2016-17 and $84 million over the forward estimates.

“This is about making sure that everybody pays their fair share,” treasurer Tim Pallas said.

Property Council warns on over-taxing

The Property Council isn’t happy with the changes, however, with Victorian deputy executive director Asher Judah saying the government was “addicted” to property taxes.

“The Property Council is deeply worried about the government’s unwillingness to deal with its property tax addiction,” he said.

“Land tax is up 28 per cent, foreign investor taxes have been tripled and stamp duty is forecast to exceed $6 billion dollars for the first time. Melbourne cannot expect to remain Australia’s most competitive city for property investment when its property tax haul is surging.

“In light of the healthy status of the Victorian State Budget, we strongly encourage the government to reduce their unsustainable tax dependency on the property industry.”

New planning controls proposed

Elsewhere, the government this week confirmed it is pursuing additional planning controls as part of the Central City Built Form Review, including a site plot ratio (the ratio of a building’s total floor area to the size of the piece of land upon which it is built) of 18:1, which is stricter that the interim ratio of 24:1 imposed on Melbourne last year after concerns around amenity and liveability, though higher than cities like New York and Singapore.

Mr Wynne said modelling had shown that the city would have been overdeveloped and “degraded” if the government hadn’t intervened to stop the proliferation of high-rise residential.

Under former planning minister Matthew Guy, now opposition leader, site plot ratios up to 63:1 had been approved.

Developers will be able to rise above the 18:1 ratio, though only through planning agreements with councils to provide public benefits such as public open space, office use, public space in the building or social housing in the building.

Fixed tower setbacks and reinforced shadowing and wind controls are also being pursued.

Submissions are being taken on the proposals and are expected to be finalised in September 2016.