The Victorian Government is already drowning in debt with the nation’s lowest credit rating.
Victoria has the nation’s largest state debt (Source: Alex Joiner).
Victoria’s debt is projected to explode over the coming years on the back of massive infrastructure spending and poor financial management.
Moody’s recently projected that Victoria’s debt would increase by 85% in only five years to surpass $226 billion by 2026, from $122 billion in 2022.
In turn, the state’s already precarious credit rating will face another downgrade.
Last month, the Victorian Auditor-General similarly warned that Victoria’s debt could soar to $256 billion by June 2027, with no plan in place on how to reduce the burden.
Independent economist, Saul Eslake, believes the Victorian Government’s mounting debt is attributable to its decision 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 remarked in May.
The Auditor-General likewise warned that “Victorian state debt is historically high and expected to grow as the government continues to borrow to fund its significant planned infrastructure program”.
“An unsustainable and rising level of debt can pose a significant risk to future prosperity”.
One of the major threats to Victoria’s finances is the $200 billion Suburban Rail Loop (SRL) boondoggle, which was announced without consultation or analysis by former Premier Dan Andrews.
This 90 kilometre rail tunnel has been slammed by infrastructure experts, the state’s Auditor-General, and the Parliamentary Budget Office.
Observers are, once again, calling for the SRL to be scrapped before it is too late, according to The ABC:
“On the eve of the Victorian government’s signing of a multi-billion-dollar contract for Melbourne’s Suburban Rail Loop, experts are calling for Australia’s biggest and most expensive infrastructure project to be scrapped”.
“The Victorian government is on the brink of signing a contract worth an estimated $3-4 billion with a consortium of Australian and overseas construction and engineering contractors to carry out tunnelling works between Cheltenham and Glen Waverley”.
“The contract would likely attract a penalty if the project was scrapped”.
“You can always pull the pin and you can always walk away, but the more you commit, the more expensive it becomes to walk away,” Transport and Cities program director at the Grattan Institute Marion Terrill told 7.30…
“This project has never stacked up because no one seems to be clear about what problem that’s trying to solve, but it is blowing a generation’s worth of infrastructure money,” Ms Terrill said…
“If I were in charge of cutting back on infrastructure, I think I’d have started with the biggest and baddest infrastructure program we have; again, that Suburban Rail Loop, a lot of dollars, not a lot of benefit”, [economist Chris Richardson said]…
“Head of progressive think tank Per Capita and former federal Labor policy adviser Emma Dawson, supports more investment in rail transport but said the project did not follow usual planning processes”.
However, the Victorian Government is forging ahead regardless arguing that Melbourne would become the size of London by mid-century, meaning about 9 million people living here.
“SRL (Suburban Rail Loop) will transform our public transport network, building the critical wheel on our hub and spokes train network. It will connect communities and create thousands of jobs, making it easier for people to get where they need to go – to work in the suburbs, to hospitals and universities,” a spokeswoman for the Suburban Rail Loop said in a statement.
The net benefits of the SRL are estimated to be 60-70 cents for every dollar spent, according to the Parliamentary Budget Office, or 51 cents according to the Auditor-General.
The $200 billion SRL will syphon enormous sums of money from Victorians while crowding-out critical infrastructure and services across the state.
Victorians will be saddled with debt that will cripple future generations simply to meet the diabolical infrastructure dreams of the former Premier and the mass immigration of the federal government, which will see Melbourne balloon to 9 million people mid-century – something few Melburnians actually want.
