I wrote on Monday about how global ratings agency Standard and Poors has warned the Victorian government that it risks a credit rating downgrade and spiralling debt repayments if it proceeds with the $200 billion Suburban Rail Loop (SRL) boondoggle.
Moody’s Ratings also warned that Victoria is facing significant pressure of further downgrades unless it gets its budget under control.
A downgrade in Victoria’s credit rating from AA to A could increase borrowing by up to 0.5%, adding to the state’s already growing interest bill.
It is worth pointing out that Victoria’s debt woes extend far beyond boondoggle infrastructure projects like the SRL.
According to ABS data compiled by The Australian, Victoria’s public sector workforce expanded by 59% in the 15 years to 2022-23, well in excess of the 29% increase in the state’s population:
Source: The Australian
Victoria’s public service wage bill also soared by 152% over the same 15-year period, easily outpacing the other states:
Source: The Australian
Australia’s bureaucratic bloat continues to strangle the state budget.
According to the Herald-Sun, Victorian public servants have secured a one-off cost-of-living payment of $5,600 after the Fair Work Commission approved a new pay deal.
Public servants earning up to $240,000 a year will be eligible for the payments, as will those who have left the public service since 28 June:
A government spokesperson refused to say how many former employees would receive the payment.
Senior insiders said some of those had already regained employment within the public service.
“It’s like the wild west,” one bureaucrat said.
“The perversity is that we’re in a budget crisis and we have a situation where many public servants are exiting with packages, and then starting in another role the next week”.
The payments come as Treasurer Tim Pallas put his ministerial colleagues on notice over spending.
By 2027-28, Victoria is forecast to spend $40 billion a year on its public sector wages.
Former Treasury economist Stephen Anthony neatly summed up Victoria’s budget predicament as follows:
“Victoria is on a suicide mission to record borrowing, just as global interest rates are about to hit 5%”.
“Potholes can’t get filled, emergency departments can’t afford clean linen, primary schools can’t fix heaters”.
“Things are about to get very ugly”.
Victorians are facing decades of crushing debt and deteriorating services at the same time as the state’s population explodes:
It is a recipe for rapidly declining living standards.
I discussed these issues yesterday on Radio 3AW:
