Paul Starick analysis: Treasurer Rob Lucas borrows big ahead of 2022 election campaign

The state credit card is reaching its limit as Treasurer Rob Lucas borrows big ahead of next March’s election. Paul Starick analyses his last budget.

The state credit card has been all but maxed out by Treasurer Rob Lucas in this pre-election budget – his last – so he won’t be around for the drudgery of paying off the eye-watering debt bill.

Instead, Mr Lucas is going out with a bang – the financial fireworks of the $1.95bn new Women’s and Children’s Hospital and a $662m Riverbank arena position the Liberals for their shot at a second term in office next March.

Coupled with the $9.9bn North-South Corridor upgrade of South Rd into a six-lane freeway, the big build planned in this budget sends debt soaring to $33.623bn in 2024-25 – the last of the four-year forward estimates.

In his final budget of a 39-year political career, Mr Lucas is handcuffing future treasurers – Liberal or Labor. There’s no room for more big-spending projects without plunging the state further into debt, eroding all-important credit ratings and further increasing interest bills.

Treasurer Rob Lucas ahead of the 2021 Budget announcement. Picture: Tricia Watkinson

Crucially, Mr Lucas has declared there are no new taxes beyond a 1.9 per cent annual increase in fees and charges.

He is explicitly challenging Labor to declare, when complaining about health and other services, how much money would be spent to fix them and the subsequent impact on taxes and debt.

The cost of borrowing might be at historic lows but, already, the storm clouds are gathering about sooner-than-expected interest rate rises.

Future treasurers, as Mr Lucas points out, will have to continue to reap more revenue than they spend to pay off the record state debt.

A smiling Premier Steven Marshall with the 2021-22 budget papers. Picture: Mike Burton

Importantly, Mr Lucas has moved to cauterise a biting Labor campaign on hospital overcrowding and ambulance ramping, both of which have worsened across the country since Covid-19 hit.

The four-point plan to fix ramping and ease pressure contains some existing measures, such as increasing emergency department capacity, but adds a $163.5m, four-year program to improve mental health services.

But the intended hammer blow is committing to a construction timeline and cost for the 500-space new WCH, scheduled to open in 2027.

Building a new hospital is an extremely effective way to counter accusations of insufficient health spending.

With some evidence, Mr Lucas argues the state has a bright future, buttressed by thousands of naval shipbuilding jobs, plus burgeoning space and hi-tech industries. Future generations will rely on this uptick to pay off debt.

For a Treasurer whose first budget, in 1998, was a lethal weapon attacking the huge state debt burden imposed by the 1991 State Bank collapse, Mr Lucas will be inwardly grimacing at bowing out with a debt bill of more than $33bn.

But this is a budget for its time – designed to catapult the Liberals to election victory by riding out the pandemic, soothing political headaches and leveraging historically low-cost finances to build important infrastructure for the future.