Victoria’s net debt is expected to top $165 billion by 2026, and the interest bill is already $10 million a day.
Premier Daniel Andrews has told Victorians to brace for a tough budget on 23 May.
He says the state government borrowed an “enormous amount of money” to save jobs and lives during repeated COVID-19 lockdowns, and this debt has to be repaid.
“We borrowed money, an enormous amount of money, we had to, to save jobs and to save lives”, Andrews said.
“We weren’t elected to do the popular thing, we were elected, re-elected and then re-elected again to do the right thing”.
“You must pay this back, and that’s exactly what we will outline in just a couple of weeks time”.
Independent economist Saul Eslake recently blamed the Victorian Government’s debt blowout on its own profligate infrastructure spending.
“Victoria’s financial position is by most measures in worse shape than any of the other jurisdictions, except the Northern Territory”, Eslake told The AFR.
It largely “reflects conscious policy decisions ever since they came to office, to embark on very big, largely debt-funded infrastructure spending programs”.
“All of those projects have suffered from cost overruns, as big projects almost inevitably do”, Eslake said.
I agree that the Andrews Government has been fiscally reckless.
The Auditor-General of Victoria has regularly criticised the state’s infrastructure waste (e.g. here and here). And the $200 billion Suburban Rail Loop is one of the most inefficient projects I’ve ever seen, with the potential to bankrupt the state.
However, Victoria is also a victim of the federal government’s mass immigration program and the political system’s vertical fiscal imbalances.
Because the Commonwealth collects over 80% of total tax revenue in Australia, the states are always dangerously short of funding for social services and infrastructure.
This budget gap is exacerbated by the federal government’s mass immigration policy, which constantly increases demand for government services and infrastructure.
IMF Investors: Victoria suffers biggest debt blowout.
Victoria is the fastest growing state in terms of population, and it has struggled to build infrastructure and provide services to its growing population.
The problem will only worsen as the Albanese government floods the country (particularly Victoria) with record numbers of migrants.
Victoria will then waste countless billions on projects that wouldn’t be required without the said people-stuffing.
I’m sure the federal government would be less enthusiastic about immigration if it had to split the financial costs with the states.
