Victorian taxpayers seem to be unable to catch a break.
The state is grappling with the nation’s highest per capita debt loads.
Victoria’s net debt is forecast to soar over the budget forward estimates.
As a result, interest payments have soared, draining billions from the state budget.
Central to Victoria’s financial demise is poor management from the Labor state government.
A prime example of this mismanagement was revealed this week with the final parliamentary report into Victoria’s withdrawal from hosting the 2026 Commonwealth Games.
The report concluded that the government’s multi-city project was overly ambitious, lacked sufficient planning and consultation, and should have been cancelled sooner.
It pinpointed inadequate planning and consultation, poor ministerial oversight, a lack of appropriate infrastructure in the regions, and logistical issues with the multi-city model.
It listed former Premier Daniel Andrews, current Premier Jacinta Allan, former Major Events Minister Martin Pakula, and former Treasurer Tim Pallas as senior ministers who shared responsibility for Victoria’s $589 million withdrawal from hosting.
“A hasty political decision was made by the then-Andrews Labor government to support the Commonwealth Games in the proposed multi-city model, but the government did not undertake proper due diligence”, the report says.
Similar concerns can be raised about the Labor government’s $200 billion Suburban Rail Loop (SRL) project, where Premier Jacinta Allan signed contracts despite the advice of infrastructure experts.
Victoria’s independent Parliamentary Budget Office (PBO) estimated that for every dollar spent on the first two stages of the SRL (60 km), only $0.60 to $0.70 of social benefits would be derived, meaning the project would be value-destroying.
An investigation by the Australian National Audit Office (ANAO), which is responsible for ensuring that all federal government funds are spent legally, also stated that the SRL’s first stage (SRL East) did “not present a reasonable investment”.
Now, Victorians have been left with a massive project that offers poor value for money and lacks funding.
The 2023-24 Victorian Budget stated that it expects the federal government to provide an additional “matching contribution” to the first stage of its Suburban Rail Loop (SRL) project.
Source: Victorian Budget 2023-24
However, the Albanese government has committed only $2.2 billion. Infrastructure Australia’s harsh evaluation of the project has effectively blocked additional federal funding for the SRL.
Worse still, the Coalition has pledged to cut the earmarked $2.2 billion in funding if elected.
As a result, Victorians are facing a funding black hole of $9.3 billion. It is also unclear how the proposed $11.5 billion expected to be raised from value capture will materialise.
Moreover, if the federal government refuses to fund SRL East (stage 1), how will Victoria fund the final two stages of the project?
Last year, S&P and Moody’s warned that the SRL might result in a rating downgrade if Victoria does not secure matching federal funding.
Victoria’s credit rating, therefore, faces a downgrade from AA to AA-, which could require it to pay an additional 0.5% in interest on its debt.
The above are just two examples of the Victorian government’s waste and mismanagement.
To these, we could add the blowout in costs of other infrastructure projects and the bloated number of bureaucrats.
The state’s taxpayers will ultimately pay the costs through higher taxes and degraded infrastructure and services.
