Public asset sales on the cards as Victoria moves to shore up budget

More public assets are set to be sold off by the Andrews government in a bid to keep the state's budget in check after a year of big spending.

After the $9.7 billion Port of Melbourne lease deal, however, it remains unclear what big public assets remain in state hands.

The TAC and WorkCover are among the few remaining assets that could be earmarked for sale, although such a move would be likely to infuriate the union movement.

Victoria owns a stake in the Snowy Hydro business, but selling this would be complicated as the asset is also owned by the NSW and federal governments. The state also owns various water authorities, although legislation makes these difficult to sell.

The Hazelwood power station in Victoria is to close by the end of March 2017.

Photo: Eddie Jim

Having rushed forward a raft of spending initiatives during the past 12 months, Treasurer Tim Pallas is now laying the groundwork for a "leaner budget" to shore up the state's finances - the government's position - ahead of the 2018 state election.

In a speech to the Committee for the Economic Development of Australia, Mr Pallas will on Wednesday warn that the government must maintain spending "discipline", partly to leave a buffer to respond if the economy slows.

"It will be a leaner budget, a budget that consolidates the investments and commitments we've made since coming to government," he says in the speech.

Mr Pallas says the government will continue to explore new opportunities for "asset recycling" - which means selling remaining assets still owned by the Victorian public.

"As the successful long-term lease of the Port of Melbourne demonstrated, asset recycling is recognising the limited resources available to state government and the importance of applying these resources in a forensic, pragmatic way," he says.

He also says the state will need a "more sensible, competitive tax mix".

His comments will come after several major policy announcements in the wake of last year's budget, including a $266 million rescue package for the Latrobe Valley after the closure of Hazelwood power station, $109 million for extra homelessness services and a $500 million package to improve ambulance response times, including 450 more paramedics.

The government has also announced $405 million for taxi industry reforms and $133 million for a new myki ticketing regime. That's before factoring in the cost of thousands of extra police and a big increase in the wage bill for public servants.

Taxi drivers and licence holders protesting at parliament.

Taxi drivers and licence holders on Monday protested state government reform plans for the industry. Photo: Penny Stephens

The government is also poised to announce a major housing affordability package, although the impact this might have on the bottom line is unclear.

Budgets in the third year of a four-year political cycle are typically more austere, given a tendency to save cash for the following year's election campaign.

Even so, the surplus has already been dramatically reduced. In December last year, State Treasury predicted a $1.7 billion surplus for the current financial year, down from $2.9 billion forecast in the April 2016 budget.

A big increase in the public wage bill partly underpinned the precipitous writedown since the budget, with so-called employee expenses, which soak up about 42 per cent of ongoing spending, expected to jump by 6.9 per cent in 2016-17 to $24.6 billion.

The story Public asset sales on the cards as Victoria moves to shore up budget first appeared on The Age.

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