The recent Victorian State Budget 2020 has winners and losers… more winners! Here’s our bird’s eye view of where the many opportunities lie for businesses.
After reading the mainstream media’s reviews of the Victorian State Budget 2020, you could be forgiven for thinking that it is a zero-sum game – winners and losers. However, when viewed through the lens of opportunities to win business with government or gaining business support from government, this year’s budget has winners and yet more winners among businesses.
Bear in mind that the Victorian State Budget 2020 is late this cycle and much of the spend is for work already completed or to be completed internally to government. Even so, as a COVID budget there are many incentives for businesses to increase their productivity and profitability.
This Victorian State Budget has a strong focus on economic development, with funds distributed across a seemingly full spectrum of government initiatives. All the usual suspects of Health, Infrastructure, Transport and Education are catered for, as would be expected. Funding has been expanded in Tourism, Culture and Arts, Sports, Agriculture and Bush Fire Programs. Plus there is a focus on regional and rural Victoria.
The Information and Communications Technology industry, often the poor cousin to big build infrastructure in Victorian budgets is also a winner this year. This is a huge shift and is perhaps a reflection on how the government found itself flat-footed in terms of the technological support needed to fight a pandemic and enable remote working.
Here is an overview of the funding by department or initiative over just the first year – 2020-2021.
Information and Communications Technology
The programs for investment in Information and Communications Technology range across all the departments, with the largest spends in the Departments of Justice and Community Safety, and Premier and Cabinet. See the graph below.
Within the Department of Justice and Community Safety, Victoria Police will receive funding in 2020-2021 for “a range of system enhancements and reforms to improve the efficiency and effectiveness of Police operations”. These enhancements and reforms are expected to have a total investment of $329.7M when completed.
The Emergency Services Telecommunication Agency (ESTA) will spend $42M upgrading their dispatch and communications systems in 2020-2021. A number of courts will undergo technology transformation projects and through Court Services Victoria will be an online courts pilot.
Under the portfolio of Department of Premier and Cabinet are Service Victoria and CenITex, the whole-of-government shared IT services agency. From this budget onwards there will also be a new government entity called Digital Victoria, along with significant technology funding. It is unclear from the budget papers how these three entities will interact and use the funding. There may be plans for a rationalisation and consolidation of all three under the one Digital Victoria banner over the coming years. Watch this space.
Regardless, the funding for Service Victoria and Digital Victoria will be $62.8M in 2020-2021 and these will have spent $236.5M by the time their respective systems investments are completed.
DPC also has technology budget for cyber security and COVID check-in and reporting platforms, shared with DHHS.
Significant spends are planned for the other departments, building on the systems needed to respond to the Coronavirus and the linking of information to be shared between departments to support economic development. This also includes data analysis and reporting systems to support major policy initiatives for disadvantaged Victorians, gender diversity and environmental sustainability.
ICT industry participants can expect a number of procurements to be completed within the next 12 to 18 months, with a focus on platforms, data and analytics, reporting and asset management.
This budget has a strong focus on rebuilding the economy. The Department of Jobs, Precincts and Regions (DJPR) and the Regional and Rural Victoria initiative are the big winners here.
DJPR will receive almost $4 Billion in services and asset spend in 2020-2021. It will cover projects under headings such as:
- Culture and Arts
- Local Government and Suburban Development
- Sport, Community Sport, Recreation and Racing
- Tourism and Major Events, and
- Trade and Global Engagement.
One line item called Business Support (funded to the tune of $2.2 Billion in 2020-2021) outlines a program that will provide a number of grant and assistance schemes including:
- Business Support Fund
- Sole Trader Support Fund
- First Peoples’ COVID-19 Business Support Fund
- Coronavirus Safe Business Fund
- CBD Small Hospitality Grants
- Commercial Landlord Hardship Fund, and
- Commercial Tenancies Relief Scheme.
To help businesses improve productivity and profitability there is boosted funding for:
- Coordination Centre to lead and coordinate industry engagement on COVID restrictions and support permitted industries to reach COVID Normal
- Access to digital adaptation workshops through the Small Business Digital Adaptation Program
- Increased resourcing for the Business Victoria Hotline
- An expansion of the Click for Vic campaign, encouraging Victorians to buy local and support local businesses and jobs, and
- Access to financial advice and mental health support services.
There is significant funding for the Department of Health and Human Services (DHHS) to ensure the COVID-19 response is robust and effective in all hospitals, aged care and general health facilities. The following spends are for 2020-2021:
- $862.8M Maintaining hospital capacity
- $162.5M Coronavirus (COVID‑19) mental health response
- $2,922.3M Coronavirus (COVID‑19) health response
- $224.6M Coronavirus (COVID‑19) social services response
In addition, some of the health spending will be on hospital construction and renovation, as well as clinical technology upgrades and an investment in telehealth.
On the Human Services side, the department will be spearheading the Big Housing Build with a little over $5.3 Billion over the next four years. Almost $2 Billion of this will be spent in 2020-2021.
As stated in Budget Paper no. 3 Service Delivery:
Funding is provided to deliver over 12,000 new homes throughout Victoria. This includes 9, 300 social housing properties replacing 1,100 old social housing dwellings. Funding will also develop 2,900 mainly affordable housing dwellings.
Affordable rental options will be integrated into projects to create vibrant, diverse communities and provide well‐located housing to moderate‐income working households. New social housing dwellings will be delivered, providing accommodation for some of the most vulnerable Victorians. The initiative will also create opportunities for small, medium and large building contractors across the state, creating jobs and supporting Victoria’s economic recovery.
The work packages that come from this program will be largely published through government channels such as Local Councils and the Industry Capability Network (ICN), as well as the DHHS website. Engagement with these channels will be critical to businesses monitoring the resultant procurements and work progress.
The Victorian State Budget 2020 is opaque in a couple of areas in terms of which federal funds will be applied where, and which assets are dependent on co-Commonwealth funding.
Budget Paper no. 4 has in the past listed Infrastructure spends and future budgets. However, as noted in the media, Budget Paper No. 4 is conspicuous by its absence from the Victorian State Budget 2020. As a result, we have no information about the major Rail and Road projects that are already underway and which will require funding in the future.
The absence of figures from Budget Paper No. 4 shows up in Budget Paper no. 3 Service Delivery as missing cashflows for the Department of Transport (DOT) and the Regional and Rural Victoria initiative. Estimates are made for significant funding to come from the Commonwealth; however, the cash flows for the next four years are not shown. This makes it difficult to assess which projects to focus on in 2020-2021. However, the numbers are so large that it will be difficult for businesses to ignore Road and Rail as a source of government work.
The first graph above shows only the cash flows known to come from state sources, so for regional and rural and DOT spends, the columns appear comparatively small against economic development and health. However, reading between the lines, we see some significant Rail infrastructure spends across the state for:
- Geelong Fast Rail – no figure for 2020/21 but an estimate of $2B for the entire project
- Suburban Rail Loop – $420M in 2020/21 and $2.2B over 4 years
- Regional Rail Sustainability – Vline – $158M in 2020/21 and $187M over 4 years
- Shepparton Rail Line Upgrade Stage 3 – no figure for 2020/21 but an estimate of $400M for the entire project
- Warrnambool Rail Line Upgrade Stage 2 – no figure for 2020/21 but an estimate of $260M for the entire project, and
- Waurn Ponds Track Duplication Stage 2 – no figure for 2020/21 but an estimate of $900M for the entire project.
Similarly, for Road projects:
- Bulla Bypass – $6.5M in 2020/21
- Henty Highway upgrade – $1M in 2020/21 and $4M for the entire project
- Great Ocean Road Renewal – $15M in 2020/21 and $255M for the entire project
- Princes Highway East Duplication Stage 3 – $0.4M in 2020/21 and $8.2 for the entire project, and
- Robinvale to Sea Lake Road upgrade – $1.5M in 2020/21 and $10M for the entire project.
These rail and road projects will be state spends coordinated by the Major Transport Infrastructure Authority within DOT and devolved to the various rail and road project authorities to run their own procurements.
The big infrastructure providers will be looking to small and medium businesses to supplement their responses to these procurements. They will invite subcontractors to participate in work packages through the Industry Capability Network (ICN). Be sure to be a member of the ICN and also look to your industry associations for support in engaging with the big players in rail and road.
There is so much more to talk about…
This is the tip of the budget iceberg, viewed through the lens of how businesses could engage and win government business. We encourage readers to download Budget Paper no. 3 Service Delivery and scan the allocations made to each department. These allocations and their descriptions reveal much about the projects that will be generated.
The Mia team will be meeting with clients to present where we believe their greatest opportunity to win government business will lie over the next 12 to 18 months.
We will know more in May 2021, when the next full year budget is due. In the meantime, be sure to contact us if you want help analysing the Victorian State Budget 2020 to find the low hanging fruit for your business. This budget has winners and more winners.
Also see our post: Federal Budget 2020 – What Victorian businesses need to know