State aiming for surplus

Treasury's financial update revealed the budget was in deficit by $171 million during the first three months of the 2011-12 financial year, compared with a surplus of $491 million for the corresponding period last year.

Although Treasury cautioned the figures should not be seen as a sign that the budget was in trouble because Commonwealth payments and tax revenue tended to flow more strongly later in the year, the report showed it cost almost $4.1 billion to pay the wages of government workers during the September quarter $239 million more than in 2010-11.

It follows figures from the State Services Authority showing the number of Victorian public-sector workers swelled by 3165 to 264,233 during 2010-11.

The report also revealed that global sharemarket turmoil slashed $4.2 billion from the government's pool of superannuation assets

Mr Wells, who will deliver a budget update in early December, said the economy was continuing to perform well and Victoria remains on track to achieve the forecast of a $140 million surplus for 2011-12.

"The European debt crisis continues to cause uncertainty, and slower economic growth in other key international economies has been a challenge for all states and the national economy," he said yesterday.

"The high Australian dollar continues to affect the international education, manufacturing, and tourism industries, and in addition a weaker overall national economic outlook is challenging all government budgets."

The figures show the state government is expecting to collect more than $1 billion from poker machines this year.

The government is expecting to collect a total of $15.4 billion in tax revenue, about 25 per cent of it from land stamp duty. But the figures come amid concerns that the property market has been more sluggish than first thought, suggesting stamp duty collections could be weaker than expected.

Collections of land tax revenue tend to be stronger from January to March.