The Allan Labor Government has handed down its 2026–27 State Budget with a strong focus on cost-of-living relief, crime, infrastructure and workforce development — all of which carry implications for Geelong businesses and organisations. There’s no question that it’s a pre-election budget with billions set aside for “decisions made but not announced” that will take net debt to a record $199 billion. Across the board, there are big ticket items for voters like the 20% rebate on vehicle registration and free public transport, but what does it all mean for businesses and organisations operating in the broader Geelong region?
The Economic Backdrop
The State is navigating a tricky external environment. Rising fuel prices linked to the Middle East conflict and two interest rate rises in early 2026 have pushed inflation higher, adding to the cost of doing business.
The Government is forecasting Victorian GSP growth of 1.5% in 2026–27, rising to 2.5% by 2028–29. Unemployment is expected to stabilise around 4.75%, while wages growth is projected at 3.25% — useful benchmarks when you’re planning staffing costs and pricing strategies.
A CPI forecast of 3.5% for 2026–27 and wage growth of 3.25% means cost pressures on both inputs and labour will persist. Businesses should plan accordingly, with the government noting that net debt as a share of the economy is projected to fall from 2026–27, signalling improving fiscal stability.
Training, TAFE & AI-Ready Workers
Finding skilled workers is one of the most consistent challenges for Victorian businesses. This Budget directs $459 million into skills and training — and the structure of that investment is worth understanding closely.
The Budget funds approximately 59,000 additional training places, of which around 15,000 are Free TAFE. For businesses, the three new TAFE Centres of Excellence are particularly significant:
- Digital, AI and Technology Centre of Excellence — $30 million targeted at the AI workforce of tomorrow.
- Home and Community Care Centre of Excellence — $21 million responding to aged care workforce shortages.
- Victorian Renewable Energy Centre of Excellence — $50 million at TAFE Gippsland (Morwell), with hubs in Ballarat and Warrnambool.
- National Training Centre in New Energy Skills – $10 million to train plumbers and gas fitters in renewables, delivering Victoria’s contribution to the Commonwealth co-funded National Training Centre in New Energy Skills.
The $14 million AI Investment Package includes $8.2 million for the Digital Jobs – AI Career Conversion Support program, helping workers in AI-affected industries transition into new roles. Businesses facing disruption from automation will want to engage with this program.
The Skills Solutions Partnerships program ($3.3 million) funds new training approaches in AI, leadership and technology adoption — a potential resource for businesses looking to co-design workforce training.
The $5.8 million investment in safety and support for apprentices and trainees, and $49 million in teacher leadership training at TAFEs, means the pipeline of trade-qualified workers should strengthen over the forward estimates. Businesses in construction, energy, health and tech should actively connect with their local TAFE and RTO to co-design courses and pipeline talent.
Red Tape, Procurement & Small Business
The Budget allocates $19 million in new initiatives focused on cutting red tape and supporting business capability, aligned with the Government’s Economic Growth Statement. Key initiatives include:
- $12 million to prioritise Victorian workers and businesses in government procurement — a meaningful opportunity for local suppliers
- $1.2 million for the Small Business Activation Fund, offering targeted grants of $5,000–$100,000 to local chambers, industry associations and councils
- $400,000 to improve dispute resolution services for small businesses
- $1.6 million to continue the Drink Victorian program, backing the local beverage sector
- $2.4 million to strengthen international relationships and attract trade and investment
Businesses in border communities will benefit from $909,000 for the Office of the Cross Border Commissioner, focused on reducing regulatory and licensing barriers across Victoria’s border regions.
A $19.4 Billion Infrastructure Pipeline
Government infrastructure investment (GII) is projected at $21.4 billion in 2025–26 before averaging $16.5 billion over the forward estimates. This is substantial — but the Government is explicitly moderating infrastructure spending to free up market capacity for private sector investment, particularly in housing construction.
For construction and engineering firms, the $560 million additional road maintenance funding and $73 million in regional road upgrades represent near-term contracting opportunities. Tunnel works on the Suburban Rail Loop begin in 2026, and the project is expected to unlock around 70,000 new homes over 30 years — a major long-run driver of construction activity.
Businesses that move goods by freight will welcome the $127 million for regional freight rail infrastructure, designed to shift trucks off roads and reduce supply chain costs.
$422 Million for Bushfire & Flood Recovery
Businesses and communities affected by the January 2026 bushfires and floods have a dedicated recovery package of $422 million, including $62 million specifically for primary producers and agricultural businesses through grants, concessional loans and emergency fodder support.
For organisations in affected regions, the Budget also backs CFA and Fire Rescue Victoria with substantial fleet and station investment — including $147 million for aerial firefighting and $100 million for new CFA trucks — which should strengthen risk resilience for businesses in bushfire-prone areas.
Lower Energy Costs for Businesses
Victoria now consistently records the lowest wholesale electricity prices in the country, driven by significant investment in renewables. The Budget accelerates this, which directly benefits energy-intensive businesses.
The headline initiative is the Midday Power Saver — approximately 2.6 million households will be eligible for three hours of free power in the middle of the day due to solar surplus. Businesses with flexible operations during midday hours may be able to capture similar benefits.
Additionally, through Australia’s largest energy upgrades program, more than 180,000 businesses have already improved their energy efficiency. The Budget extends this with:
- $28 million for energy-efficient hot water system rebates (up to $1,400 for locally made products)
- $10 million for energy efficiency upgrades in the community housing sector
- $1.3 million for faster environmental approvals for renewable energy projects
- $5 million for farmers to improve energy efficiency on-farm
If not already, businesses should assess which programs or incentives they qualify for, including those beyond the headline announcements.
Industries with the Biggest Opportunities
HEALTH & COMMUNITY SERVICES |
With $32 billion flowing into health in 2026–27 alone and $5.5 billion in new education investment, providers in these sectors will see sustained demand. Health expenditure includes $95 million for the Werribee Mercy Hospital Emergency Department to help meet demand in the Western Growth Corridor.
Relevant to Geelong is the: · $75 million for the Regional Health Infrastructure Fund that will renew and upgrade infrastructure across rural and regional health services · $10 million to meet growing demand for Hospital in the Home beds operated by Barwon Health · $4.2 million to continue group-based parenting supports for parents whose children are being treated for mental illness across eight regional Infant, Child and Youth Area Mental Health and Wellbeing Services · $985 000 to continue mental health services and supports in regional and rural communities |
DISABILITY SERVICES |
This Budget allocates $2.5 billion for Victorians with disability, including $2.4 billion over five years for jointly funded Foundational Supports. This includes the Thriving Kids programme, helping children aged eight and under with developmental delay or autism, alongside their families and carers.
Further supports are being developed with the Commonwealth and other states. Additional investments include $42 million for advocacy services, $20 million for disability support outside the NDIS, $19 million to ensure specialist accommodation meets standards, and $17 million to improve wheelchair taxi access. Including education sector investments, total disability funding in this Budget reaches $4.7 billion. |
TECHNOLOGY & AI |
Victoria is positioning itself as a national AI leader. mRNA Victoria receives $3 million to continue its development work, the Critical Minerals Roadmap is backed with $2.1 million, and $154 million goes into cyber security and data protection across government — including $41 million for Victoria Police IT. Tech firms with capability in these areas should engage with the Digital, AI and Technology TAFE Centre of Excellence and the Government’s AI Investment Package. |
TOURISM, EVENTS & HOSPITALITY |
The opening of the Nyaal Banyul Geelong Convention and Event Centre in July 2026 — with 50 events already booked — directly benefits hospitality and events businesses in Geelong and surrounds. The $23 million for business events attraction and the $27 million screen incentive for international productions support the broader visitor economy. |
AGRICULTURE & FOOD
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Victoria’s farmers receive $84 million in support, including $5.9 million for health and wellbeing programs and free Rural Financial Counselling Services. Agribusinesses will also benefit from $7.6 million in biosecurity investment and a $146.5 million Drought Support Package carried over from previous budgets. |
HOUSING & CONSTRUCTION |
The Social Housing Growth Fund ($860 million over five years), changes to planning approvals, the Development Facilitation Program ($9.8 million) and greenfields planning ($16 million) collectively signal sustained housing construction activity. Off-the-plan concessions are extended — supporting both developers and buyers. |
REGIONAL TRANSPORT |
$481 million has been assigned for regional transport services to continue improving these connections. For Geelong, this includes:
· $318 million for upgrades that will reduce delays and improve reliability on the regional rail passenger rail network · $127 million to improve regional freight rail infrastructure across Victoria to support the efficient movement of goods and fewer trucks on regional roads · $3.9 million to continue passenger services on the Portarlington Ferry The Budget also boasts $73 million more into regional road upgrades across Victoria. In Geelong, these upgrades include: · Barwon Heads Road pedestrian crossing, Connewarre · Midland Highway and Geelong Road pedestrian safety improvements, Buninyong |
REGIONAL DEVELOPMENT |
In an effort to keep driving regional development, and tourism the budget includes:
· $23 million for the Future Regions initiative to boost productivity, liveability and investment in regional Victoria · $279,000 to continue the Rural Women’s Network’s Leadership and Mentoring Program. · $1.5 million for the Regional Business Events Program to incentivise event organisers to host their events in regional Victoria · $1.2 million to support regional audiences to access and experience more regional creative venues · $480,000 to support five Basketball High Performance Hubs in Ballarat, Bendigo, Geelong, Shepparton and Traralgon · $150,000 to strengthen the Country Women’s Association of Victoria’s capacity to deliver critical support services to regional communities. |
The Bottom Line for Victorian Business
This is a Budget shaped by cost-of-living pressure and is aimed primarily at families and voters ahead of an upcoming State Election, but its implications for businesses run deeper than the consumer-facing headlines suggest. The key takeaways:
- Energy costs should continue falling as renewable investment accelerates and wholesale prices stay low — plan your electrification and efficiency upgrades now to take advantage of available rebates.
- Workforce pipelines are being built through Free TAFE and the new Centres of Excellence in AI, energy and care — engage with TAFE now to shape the training that feeds your sector.
- Government procurement is opening up for local businesses — $12 million is earmarked to prioritise Victorian suppliers, and small business grants are available through local industry bodies.
- Infrastructure spending remains substantial — the $19.4 billion pipeline includes immediate opportunities in road maintenance, rail and housing construction.
If not already, businesses should unpack how this budget affects existing operations and if there are any opportunities for growth and change. If you need assistance unpacking what this budget means for your business in more detail, or workshopping how it influences your government relations strategy ahead of the November State Election, do not hesitate to reach out to the team at Banksia Strategic Partners or the Geelong Chamber of Commerce.
