In an election year, we could have reasonably expected a budget that delivered confidence and a pathway out of debt. Instead, what we were handed was set of documents that confirms the State’s finances continue to head south.
The most alarming element is the forecasts that show net debt climbing to $199.3 billion by 2029/30 (effectively $200b) or around $70,935 per household.
That figure alone should raise serious concerns about the State’s financial trajectory.
Even more troubling is the cost of servicing that debt. Within a few years, Victorians (us) will be paying $11.8 billion annually in interest – more than $32 million every day.
These figures are hard to get your ahead around such is their quantum.
It’s money that cannot be spent on (for example) hospitals, schools, roads or community services.
It is money simply lost to keep up with past decisions and waste like the $15 billion lost to corruption on the big build sites, the funds for cancelling the Commonwealth Games and the blowouts on major projects.
Post budget we heard commentators from various sectors, including housing, business and industry, and local government, to name three of many – all saying they have been grossly underfunded.
The simple answer is the level of debt is constraining the State’s ability to invest where it is needed and many sectors will continue to be underfunded until the debt is controlled.
That’s the biggest disappointment in this budget. It does not forecast that occurring – in fact it forecasts our debt continuing to increase. According to their own budget papers, since 2014:
– Net debt will increase from $21.8 billion to $199.3 billion in 2029-30.
– Interest repayments will increase from $2.1 billion to $11.8 billion in 2029-30.
– Total tax revenue we are paying will increase from $17.9 billion to $50.2 billion in 2029-30.
What makes this budget even more concerning is how the Government has managed to present a ‘surplus’.
The much-publicised small operating surplus is underpinned by a one-off $1.1 billion deal to extend the state’s lottery licence by 40 years – well beyond the typical 10-year arrangement. Without that, the budget would be in deficit.
It’s a government relying on short-term measures to mask deeper issues.
Some will ask, how can you have a ‘surplus’ but debt continues to rise?
A ‘surplus’ simply means the government is forecasting to bring in slightly more than it spent – in that year alone – while the State debt is the accumulated result of past deficits and borrowing.
So, while the Government is forecasting a small surplus for one year, overall debt continues to rise astronomically due to ongoing borrowing and the cost of servicing existing debt – in short, we go further down the tube.
At the same time, the Government’s own numbers show taxes continuing to rise to around $50 billion over the coming years, while the public sector wages bill continues to climb to a record $45 billion. This comes despite previous commitments to rein in spending and reduce the size of the public service.
They run out of money so take more of yours to pay for their mismanagement.
In defending the budget, the Treasurer described it as “disciplined” talk about spin! When debt is rising, interest costs are exploding, and as a result, new investment is lacking, it is difficult to see where the discipline is.
Blaming global events such as overseas conflicts or international politics is poor. These are pressures that have faced all jurisdictions, the reality is it is waste and mismanagement that has us where we are.
In an election year, this was an opportunity to reset the course and provide confidence for the future. It hasn’t achieved that.
The state needs to cut the waste and rorts, halt the cost blow outs, rein in spending and get Victoria back on track.
Victorians deserve better than what they are getting.
