There's a clear and simple message you get from reading the Victorian government's budget papers: don't panic.
Sure, there's a few numbers that will widen your eyes.
Money the government gets in (revenue) for the next financial year is $96.1 billion, which is less than projected it will spend (expenses) of $98.3 billion.
And yes, debt is $156.2 billion rising to $187.8 billion by 2027-28 – which by that time will be 25 per cent of the value of all the goods and services produced in the state in a year (called gross state product or GSP).
And OK, that means a daily interest bill on the debt of about $15 million, climbing to more than $25 million a day by 2027.
But why worry? This is Victoria. Get with the program.
The dream
That program — if you buy into the government's vision — is a rapidly-growing population that will buy property, find employment and get around on mega-transport projects due to open just before the next state election.
There are schools, tunnels, hospitals and roads to service this swelling growth, as Melbourne (where the vast majority of Victorians live) becomes the nation's largest city, overtaking a waterside resort for squillionaires to the north that also houses normal people.
All that needs to happen is for employment to stay strong, inflation and construction costs to keep moderating, interest rates to go no higher, workers to find housing that is being built at a far slower rate than people are moving here and a few other "risk factors".
Fingers crossed, eh?
The problems
With the immense debt and still unfunded mega-projects like a circular underground railway (the Suburban Rail Loop) about to start digging, you would expect a state government 2.5-years from an election would raise money and cut costs — hard.
There's a bit of that, but not much. It's more Facebook Marketplace than selling a kidney.
The government is making extra cash by:
- Shifting commercial and industrial properties from a stamp duty (cost when sold) system to one that kicks in 10 years after the sale and is then annual.
- People dumping stuff at the tip will pay more, bringing it into line with fees for New South Wales and South Australia.
- Lifting the Fire Services Levy from where it started a decade ago to a higher level.
The savings are also pretty minimal. There's things like ending the Sick Pay Guarantee, a COVID-era pilot of paying sick leave to casuals. With a more "worker friendly" regime in power federally (the government's words) the pilot is over for now.
The Jacinta Allan-led government will also trim in costs by:
- Ending some COVID-era employment.
- Reducing office space as work-from-home and those reduced numbers impact the desks required.
- Trimming in a program to expand state-funded pharmacy and care clinics.
- Making the money for Breakthrough Victoria, which funds speculative start-up tech businesses, stretch for 15-years rather than the original 10-years it was meant to.
It's not exactly ring all the alarms stuff is it?That's because they're not worried.
Get with the program and all cost is an investment. Public sector wages help pump private sector ones. Infrastructure unlocks value.
Remember the daily cost of that interest bill? Treasurer Tim Pallas calculates it as "1/4000th of one per cent of the economy" – an infinitesimal smidge of nothingness compared to the riches that await Victorians … if it all works out.
And there's a surprising group helping them get there.
Opposing forces
At the end of 2022 Victorians went to the polls.
After the painful repeated lockdowns in Melbourne — and with the exploding cost of keeping the state alive barely covered by a federal government accused of a lack of interest or care in the plight of the southern mainland state — there were a lot of predictions about the fate of the then eight-year-old government.
Plenty of interstate commentators had written Dan Andrews' political obituary, based on his bombastic personality, COVID-era decisions and ballooning debt.
But at the election the government didn't lose seats. It gained them.
By the time the next election rolls around Liberal-National opposition will have been in power for just four years between 1999 and 2026.
Some could say their show of unity, policy ideas and the cut-through they are making with the Victorian public show a resolute commitment to remaining in opposition.
What even is money?
Underpinning all of this are a few things that might not seem obvious.
One is the immense employment that's been delivered by infrastructure programs, public sector growth and things like "free TAFE".
Another is that the government has literally built credibility by starting and finishing big projects — new schools and hospitals, the removal of scores of level crossings — sprinkled in every corner of the state.
Adding to it is that COVID changed what people think about government, debt, and the role of the state in guiding the economy — we're seeing that federally too, as taxpayers invest billions in specific companies and industries.
If you think any government is going to leave the future to the invisible hand of the free market, you haven't been paying attention. That's gone.
A final element is that there's not a compelling competing vision about Victoria's growth and how it is being dealt with.
People can be unhappy about the untold millions spent on infrastructure, but when a new five-station underground rail line opens under the central business district next year, I don't expect a protest march out the front about the cost.
More likely is that people will use it, love it and ask a pressing question: When will there be one where I live?
Posted, updated
