Debt plagues Andrews in recovery budget

However confident the Treasurer is of driving down debt, the budget fails to detail how it will be done. Today was all about recovery — vote-grabbers will come later.

Premier Daniel Andrews has set vote-grabbing aside for now in a recovery-based budget. Picture: Brendan Beckett

In the last budget of their second term Daniel Andrews and Tim Pallas seem to have a clear message for Victorians: we can do this.

Forget any notion of vote-grabbing measures you’d expect to see in a pre-election budget, today is almost entirely focused on repair and recovery. And spending.

A whopping $12bn thrown at the health crisis will fund thousands of new nurses, hundreds of new triple-0 staff, and help drive down out of control elective surgery waiting lists.

A Covid Catch Up Plan hopes to push through 240,000 surgeries annually by 2024.

The government will hope the massive investment will neutralise what has emerged as the key issue leading into the November election.

Thousands of new nurses will be funded by the Andrews budget. Head nurse of RMH's Covid ward, Grace Carroll. Picture: David Caird

The opposition has already promised to build a $750m hospital in Mildura and fix the state’s embattled triple-0 service if elected – but it will need a lot more to match the mammoth investment committed in today’s budget.

Regional Victoria will also benefit from $5.7bn in initiatives, as well as $2.6bn will be set aside to fund the 2026 Commonwealth Games.

Money well spent by a government that, polling suggests, is far less appealing to voters outside the city.

There’ll also be more cops on the beat, albeit it far fewer than what the government forecasts predicted would be needed, and investments to drive down court backlogs.

All of this without the introduction of a single new tax.

Last year’s $3bn mental health splurge was funded by a tax on big business.

This year, with voters set to go to the polls, the government has resisted the urge to bring in new taxes for quick cash.

Still, the devil is in the detail.

Victorian Treasurer Tim Pallas is confident the government can drive debt down, though no concrete details were provided. Picture: Andrew Henshaw

A sharp rise in tax revenue will see tax income rise to $34.6bn by 2025-2026, up $10.8bn since 2018-19, the last full financial year before Covid.

Signs of a strong economy perhaps, rebounding well from the pandemic.

That’s certainly the pitch the Treasurer was making, as he hammered home the point that the government was economically responsible and capable.

The real selling point of the budget: a return to surplus by 2025-26.

Again, the detail.

By then Victoria will reach record net debt level of $167bn, or 26 per cent of gross state product.

Before it quietly scrapped the target, the state aimed to keep net debt under 12 per cent.

The deficits over the forward estimates are expected to be smaller also, but spending will still outweigh income.

However confident the Treasurer is of driving that debt down, what the budget fails to detail is how the government will do it.

Matthew Guy will be forced to explain how the opposition plan on driving down debt before the election. Picture: Jake Nowakowski

A new Victorian Future Fund, established using proceeds from the VicRoads joint venture, is expected to be key to the debt stabilisation strategy.

It will start with a projected balance of about $10bn in the medium term, with interest earned used to pay down debt.

The debt issue will continue to plague the government.

No doubt the opposition will continue to hammer the government every chance it gets on how they plan to drive down debt faster.

Of course, before November, Matthew Guy will be forced to come up with an answer, too.

Today’s budget kept the government’s powder dry.

An election war chest will no doubt be unveiled much closer to November.

Today was all about dealing with the emergency.

The vote grabbers will come later.