Budget Highlights
Earlier in May the Victorian and Australian Governments delivered budgets for fiscal 2025 and beyond.
Constrained by high debt and rising debt service costs the Victorian budget was short of new infrastructure initiatives and indeed announced the postponement or abandonment of previously announced big-ticket commitments, including the Airport Rail Link (delayed indefinitely) and the Arden hospital in North Melbourne (cancelled). Previously headlined as the largest hospital project in the whole country, the public hospital was planned to have opened in 2031.
Dr. Jim Chalmers presented the Commonwealth Budget last week, projecting 1¾% real GDP growth in 2023–24 affected by high inflation, higher interest rates, and global growth slowdown. The Australian economy outlook includes moderated inflation, stable labor market, real wage growth, and business investment. Budget measures like energy bill relief are set to reduce nominal inflation, with expected positive impacts on labor market conditions. Consumption will be supported by rising nominal wage growth and tax cuts, contributing to increased labor supply. Real GDP growth is forecasted to be 2% in 2024–25, 2¼% in 2025–26, and 2½% in 2026–27. Surpluses are expected in the upcoming years, with additional funding allocated for housing supply improvement in well-located areas, aiming to tackle housing supply challenges.
Streamlined Planning to expedite new housing
To help the planning system more effectively facilitate the number of new homes Australia needs, National Cabinet has agreed to the National Planning Reform Blueprint. The Blueprint brings state and territory planning ministers together to progress reforms to deliver more homes, including:
• Streamlining development approvals.
• Identifying well-located development ready land.
• Increasing housing density in target areas.
• Identifying how housing can be built faster on sites with development approval but where development has not commenced (i.e. activating ‘zombie’ approvals).
Planning and zoning restrictions can delay land development approvals, impacting costs and uncertainty for developers. Victoria and New South Wales face the longest approval wait times. Lengthy processes hinder housing supply responsiveness and push development away from high-demand areas. Medium- to high-density housing is crucial for efficient housing supply, enhancing resource usage and meeting preferences. Challenges in major cities hinder dense development in key areas, leading to cost gaps and development concentration on city fringes.
Victorian Infrastructure
Victoria spends $15.5 billion a year on new building projects and will now have most of the infrastructure it needs by 2051, according to Infrastructure Victoria. The agency wants the government to cease continually building new projects and instead maintain and maximise the benefits of what the state already has.
In its recently released 30year strategy Infrastructure Victoria favours two underground rail projects in the city and another road and rail corridor connecting Melbourne’s outer suburban suburbs to relieve pressure on the rail network.
Infrastructure Victoria advocates the government start planning for the Outer Metropolitan Ring Road linking Thomastown and Beveridge in the north to the western suburbs of Mickleham, Rockbank and west Werribee. The road would be built with railway tracks in the median. The semi-orbital project would improve connections to current and future industrial precincts, Melbourne Airport, the proposed new port in Bay West needed by 2055 and the new North East Link.
Tasmanian Planning Minister realigns Hobart’s Growth Boundary influenced by Choice Location Strategists’ report
Effective 17 May 2023 the Tasmanian Planning Minister amended the Southern Tasmania Regional Land Use Stragegy (‘STRLUS’) to incorporate additional sites within the Urban Growth Boundary and add flexibility in considering the planning merit of proposals to rezone land for urban purposes which are outside, but immediately adjacent to, the UGB.
The Minister’s initiative was influenced by a report prepared by Choice Location Strategists – The Southern Tasmanian Residential Land Study – that demonstrated that changes were required to the STRLUS and UGB to facilitate the release of more land for residential development, thereby alleviating an accute shortfall. This shortfall was constraining residential development activity and placing upward pressure on house and land prices, eroding housing affordability for Tasmanian households.
Luxury 145-suite Gorge Hotel approved in Launceston, supported by CLS economic assessment
On 4 March 2022 the Tasmanian Planning Commission approved the development of a luxury 145 suite hotel and conference facility near Launceston’s Catarac Gorge. The affirmative decision was supported by Choice Location Strategists’ assessment of numerous economic and wider tourism benefits accruing from the development commissioned by leading Tasmanian developer, JAC Group.