Jeff Kennett: Suburban Rail Loop putting Victoria on track to financial ruin

Why, like lemmings, do we the Victorian community, remain silent as we are about to be pushed off a financial cliff by the infrastructure policy of the Andrews/Allan government?

It disappoints me that again I write about Victoria’s headlong charge towards a financial cliff, which we are going to feel through reduced services or increasing taxes.

As soon as the state government refocuses on what is affordable and its responsibility to Victorians, particularly our young people, I also will change direction.

The state government needs to be jolted out of its comfort zone, into the real world, and understand the implications of the policy the Andrews/Allan government is foisting on Victorians.

There are three ways that could happen.

The federal government should provide no more funds for the Suburban Rail Loop Authority. At worst, it should at least defer that project until a business case is done proving its value.

Victoria cannot afford to borrow for another $200bn-plus project.

Senator Bridget McKenzie, and all Victorian politicians, should support a seriously conducted Senate Inquiry into the Suburban Rail Loop. Picture: Martin Ollman

Second, Bridget McKenzie, a Victorian senator, is considering a senate inquiry into all aspects of how the Victoria government got to the point of commissioning an expensive piece of infrastructure without a robust business case.

Every Victorian federal politician should support such an inquiry, for if this project goes ahead it will affect those Victorians who rely on government services most – those on pensions, low incomes and the young. Why? Simply because more and more of the revenue the government receives each year will be spent paying the interest on our debt and not on basic services.

Third, one must question the role of ratings agencies that supposedly rate a company or government on its financial condition given their debt and the policies they are pursuing.

One of those agencies, S&P Global Ratings, last weekend said it had been warning the Victorian government since 2016 about its spending. Like the state ministers who are blaming Covid for much of the debt (rubbish, the biggest contributor to state debt is the badly managed infrastructure projects that are all running over budget and over time), S&P Global is doing the same.

The state government needs to be jolted out of its comfort zone and understand the implications of the policy the Andrews/Allan government is foisting on Victorians. Picture: David Geraghty

S&P Global downgraded Victoria’s rating by two points in December 2020 to a lowly AA. That was three years ago. One has to question S&P Global’s relevance as Victoria’s economic condition has continued to decline as our debt grows.

While every fall in our credit rating results in Victoria having to pay more interest on its debts, as happened to my government in early 1993 having just taken over from the Cain-Kirner government, it focused our attention on reducing debt and rebuilding the economy.

If S&P Global and the other ratings agencies were doing what they should be doing, they would have again reduced Victoria’s credit rating.

It might be enough to jolt the Allan government back into the real world where too much debt leads to insolvency, or at least administration.

Prime Minister Anthony Albanese is talking sensibly, saying subsidies only add to inflation and avoid facing the reality of the day.

The federal government should announce that it will not provide any more funds for the Suburban Rail Loop Authority. Picture: Getty Images

Federal Treasurer Jim Chalmers is also talking economic restraint, and having brought down one budget surplus might do so a second time as a result of royalties and taxes the government receives on high prices for our main exports, iron ore and coal. That is why the latest predicted tax windfall of $18bn should be used to reduce the national debt.

To be consistent, it is why the Prime Minister and Treasurer should say no to giving the state government any money for a project that is massively expensive, badly conceived and has not been proved – and the state and country cannot afford.

It is why Senator McKenzie and all Victorian politicians should support a seriously conducted senate inquiry into the Suburban Rail Loop.

Who suggested this project, who were the consultants used to prove the case for it, what if any are its benefits, how can Victoria afford such expenditure, and where is the money coming from?

Remember, Victoria’s debt is almost $200bn today. When the current infrastructure projects are finished, we will still have more than $200bn of debt, and any revenue collected from the projects will go to the private sector through the tolls we pay, so no reduction in state debt, and another $200bn to be borrowed to pay for the Suburban Rail Loop.

Am I the only person worried about where Victoria is headed?

Why, like lemmings, do we as a community remain silent as we are about to be pushed off a financial cliff? Time for someone to act!

Jeff Kennett is a former Premier of Victoria