Big federal commitment to Victoria

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May 2018  This month’s 2018 Federal Budget confirmed announcements from recent weeks about big Federal Government commitments to Victorian infrastructure. But there’s a catch.

Long timeframes 

The budget papers revealed that the commitment is over 10 years, with relatively modest amounts committed in the forward estimates to be spent by 2021-22. That means the big promises will need to be honoured by future Federal and State Governments; which creates significant uncertainty.

Should the new commitments be honoured, and differences over the projects resolved with the State Government at the time, then Victoria will see:

  • Rail electrification and Melbourne Metro services extended from Frankston to Baxter on the Mornington Peninsula, completed after 2021-22
  • Building additional rail track between South Geelong and Waurn Ponds
  • Rail to Monash University (Clayton) and Rowville, completed after 2021-22
  • Rail to Melbourne Airport, completed after 2021-22
  • A small Federal contribution to North-East Link, as well as honouring the existing commitment to East-West Link 
  • Further funding to accelerate making the Princes Highway four lanes with a median strip from Traralgon to Sale
  • Continued contributions to make the Princes Highway four lanes with a median strip to Colac, and the Western Highway four lanes with a median to Stawell 

Disappointingly, there's no commitment to extend rail to the fast-growing community in Cranbourne East, or for the new link from Werribee to Wyndham Vale. Cranbourne East, in particular, seems to be a major oversight.

Helping older Victorians 

For Victorians wanting to stay in their homes longer, the budget is expanding the reverse mortgage scheme and making it more accessible for pensioners. 

This may be attractive to asset-rich but cash-poor pensioners who have seen the value of their family home increase dramatically but have not been able to access it for fear of losing the pension. 

How reverse mortgages work

With a standard mortgage, you borrow a lump sum and pay it back over time. With a reverse mortgage, small amounts are paid to you and the balance is paid back when you either sell the house or it becomes part of your estate. 

This allows asset rich but cash poor pensioners to access the capital equity in their home.

While it will not suit everyone, having the government provide reverse mortgages will allow pensioners access to reverse mortgages at a lower interest rate than other commercial operators, with the interest rate on offer currently 5.2 per cent fixed compared to more than 6 per cent in the commercial market.

For more information on reverse mortgages, visit MoneySmart

In addition, seniors will be able to earn an additional $50 every fortnight without triggering a reduction in their pension.  

Aged care

The Budget also announced 14,000 additional high-level home care places in 2021-22. While this is welcome, it is only a first step in addressing the shortfall in aged care. 

It is also good to see acknowledgement of the difficulties involved in navigating the aged care system, with $60 million dedicated to making the myagedcare website more accessible for seniors. 

In addition, the budget identified that a new Aged Care Quality and Safety Commission will be introduced to address abuse of senior citizens. 

Affordable housing 

The Budget is also committing $1 billion to the National Housing Finance and Investment Corporation to improve housing affordability. 

The National Housing Finance and Investment Corporation will use tailored financing to partner with local governments in funding the infrastructure necessary to unlock new housing supply and lend to not-for-profit community housing providers to help build new homes for those on low incomes. 

Find the RACV media release on the budget here.

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