Shannon Deery: What will Allan’s call to stick with Pallas cost her?

Politics is so often shaped by sliding doors moments. The decision of Jacinta Allan to keep Tim Pallas on as treasurer when she took over as Premier may very well become her own.

Politics is so often shaped by sliding doors moments.

The infamous John Howard handshake that tipped the scales against Mark Latham in the 2004 federal election campaign.

Scott Morrison’s “I don’t hold a hose, mate” quip to defend holidaying in Hawaii while Australia burned.

The decision by John Pesutto to boot Moira Deeming from the Liberal Party for attending a women’s rights rally, which ultimately cost him the party leadership.

These are public and obvious, others may be private moments that drastically alter the trajectory of politics. All are realised with the benefit of hindsight.

The decision of Jacinta Allan to keep Tim Pallas on as treasurer when she took over as Premier 18 months ago might be her own moment.

It is a decision that is increasingly regarded within government circles as one that could cost Labor a fourth term in government.

When Premier Jacinta Allan decided to keep then-Treasurer Tim Pallas on, Victoria was projecting debt levels to peak at $171bn. Picture: NewsWire

When she decided to keep him on, in September 2023, Victoria was projecting debt levels to peak at $171bn. That’s from a starting point of about $22bn when Pallas took control of the purse strings.

Current official forecasts expect debt to hit $188bn by 2028 – unofficial estimates are that it will well exceed $200bn by then.

The government continues to blame the pandemic for the eye-watering debt. It’s a disingenuous misrepresentation of the fact that the state’s Covid bill was about $40bn.

The rest has been used to bankroll a massive infrastructure agenda that helped Daniel Andrews keep his grip on power. It was contingent on huge borrowings at low interest rates that did not last, so Allan, like Joan Kirner succeeding John Cain in the early 1990s, inherited an economic mess.

Her decision to keep Pallas on as her money man had two significant consequences.

First, it hampered efforts to significantly differentiate the Allan administration from that of the Andrews reign.

Secondly, it ultimately led to protracted and damaging disputes with emergency services and now the state’s public servants.

Bringing in a new treasurer when Jacinta Allan took the top job would have immediately differentiated the premier from her predecessor. Picture: Getty Imagess

Bringing in a new treasurer when she took the top job would have immediately differentiated Allan from her predecessor. It would have signalled that she accepted the state’s finances were in dire straits and that she was taking the job of fiscal repair seriously.

That’s not to say she is not, but the public perception is quite different. The Victorian public has woken up to the debt issue and what it means for the government’s ability to make good on its core responsibilities.

The latest polling, by SEC Newgate, showed more than half of Victorians – 53 per cent – rated the government’s efforts to address debt as poor or very poor.

A similar number, 51 per cent, said Victoria was losing its appeal as a great place to live.

Prominent economist Saul Eslake says that Labor has turned Victoria into a “poor state”.

Our per capita gross state product has fallen from 91.5 per cent of the national average when Labor took office to 88.5 per cent in 2023-24.

It is ahead of only South Australia and Tasmania, and well behind NSW at 98.2 per cent.

Per capita household disposable income has fallen from 92.4 per cent of the national average in 2013-14 to 90 per cent, ahead of only South Australia.

And real gross state income per capita has grown at an average annual rate of 0.9 per cent, the third-worst in the country.

Changing from former Treasurer Tim Pallas may have had zero impact on these figures and public perception for the premier. Picture: NewsWire

Changing from Pallas may have had zero impact on these figures and the public perception.

But it would have shown a propensity to try something different, to change tack and not simply resign the government to doing the same thing over and over again while expecting different results.

It’s widely accepted that Pallas had wanted to leave politics about the same time as Andrews, if not even earlier. He then tried his luck at becoming deputy premier, failed, and was even more keen on a swift exit.

Sources say Allan urged him to stay on as a steady pair of hands, but an increasingly fractious relationship between the pair ended in a cabinet room spat in the days before he quit.

The breakdown in their relationship made his position untenable, some believe.

New treasurer Jaclyn Symes has taken veiled swipes at her predecessor since taking the job.

Symes is now promising to make the cuts Pallas did not, including 3000 public servant jobs.

That sets the government up for a public feud with tens of thousands of public servants much later in the election cycle than it would have liked. It also neutralises its ability to campaign against the Liberal Party as a cuts squad when it is also wielding the axe.

Labor was soaring in the polls when Allan took over in September 2023, and it’s been downhill since.

The Premier might ponder whether changing Pallas early doors may have had some impact on that trend, and maybe even next year’s election.

Originally published as Shannon Deery: What will Allan’s call to stick with Pallas cost her?