Shannon Deery: Big Build jobs equal votes as Victoria overlooks worrying debt

Victoria’s debt has soared to $100bn but despite facing a campaign about economic mismanagement, the Allan government is still relying on major projects bringing jobs — and votes.

With the next state budget two weeks away, the Allan government is under pressure to rein in spending and reverse Victoria’s horror debt trajectory.

But while the government waxes lyrical about being fiscally responsible and wanting to drive down debt, we probably shouldn’t expect any miracles.

Because until now there has quite literally been zero political consequence for the reckless abandon with which net debt has grown in this state. The truth is, despite the risk it carries, punters don’t really seem to care about debt unless it’s hitting their own pockets.

So whether it’s $50bn, $100bn, or the projected $178bn by 2026-27, many simply don’t know, or care.

To put that $178bn figure into context, Victoria’s tax burden will be double that of NSW. It will equal $68,300 per household or $26,600 per person and account for 25.1 per cent of the state’s total economy.

When Labor won office in 2014, state debt was about $22bn.

Pollster and former Labor strategist Kos Samaras believes debt is no longer politically poisonous. Picture: Aaron Francis

It managed to keep that level steady during it’s first term of government, going into the 2018 election with about $600m less debt than it inherited. Labor picked up eight seats in a thumping election victory. Fast forward to the 2022 election: state debt has soared to $100bn and despite facing a campaign about economic mismanagement, Labor wins more seats still.

We can safely deduce that debt level, at least until now, has had little to no impact on electoral success.

Pollster and former Labor strategist Kos Samaras believes debt is no longer politically poisonous.

“Debt is this thing that kind of saps confidence and bites into personal anxiety that everything is tough at the moment,” he says. “Politically it’s a problem, but not fatal.”

Quite the contrast to the 1990s when debt levels under Cain-Kirner coincided with both rising interest rates and rising unemployment.

Last week, job numbers hit a record high with ABS data showing an additional 5800 Victorians found jobs in March. That propelled the total working population to more than 3.7 million and a near record workforce participation rate of 67.3 per cent.

Regional employment also hit a record high 822,000, with the 3.5 per cent regional unemployment rate the lowest in the country.

Tim Pallas has long argued Victoria must spend its way out of its debt woes through a huge infrastructure pipeline that creates jobs and opportunities. He’d say it’s working.

Tim Pallas has long argued Victoria must spend its way out of its debt woes through a huge infrastructure pipeline that creates jobs and opportunities. Picture: Luis Enrique Ascui

This, of course, also translates directly to votes. An estimated 20,000 people are working directly on the state’s Big Build projects, with more than double that employed indirectly as a result. At the last election the CFMEU urged construction workers to vote Labor or risk losing their jobs.

They did this in spite of a vehement anti-Daniel Andrews sentiment with ads that told members: “Dan might be a p---k, but he’s a p---k who’s delivering for construction workers”.

And that is what it essentially comes down to. Why does debt matter when unionised labourers and junior stop-sign holders working 36-hour weeks on construction sites can earn $120,000 a year.

An opposition promise to reintroduce a construction watchdog to monitor blowouts on the project pipeline will only strengthen union ties to Labor. It’s no wonder the government is so happy to keep swiping the state’s credit card to the tune of $20bn in infrastructure spending. Sure it stimulates the economy and creates jobs, but it’s a pretty handy vote winner too.

It’s not just the 50,000 Victorians pocketing from the Big Build, or those benefiting from new and improved train lines and tunnels, Labor has on side. What about the 50,000 public servants, who have each just been guaranteed thousands of dollars in perks under a new wage deal.

It’s any wonder the government’s ballooning wages bill increased from $24.2bn in 2014-15 year to $38.5bn in 2021-22. The government might also be at war with ambos, police and firies but they have most of those in their corner too.

The Allan government knows one thing for sure, in major projects there’s jobs, and votes. Picture: David Caird

There are of course good reasons to be very concerned about growing debt. We are currently paying more than $10m a day in interest payments alone. That same money would buy 52 ambulances, a breast cancer centre, a fire station or 200 or so Victoria Police recruits. That’s daily.

There’s also the risk of future revenue shocks or interest rate rises and their impact on the budget, as well as the impact debt has on funding programs and services.

Credit agencies will be watching closely come Budget Day, and have warned Victoria faces further downgrades which could make it harder to borrow money.

The government could ease its debt woes somewhat by shelving the contentious Suburban Rail Loop, which will ultimately cost more than $100bn. But it has shown no interest in doing so, doubling down on the need for the state’s most costly ever infrastructure project.

Because it knows one thing for sure, in major projects there’s jobs, and votes.

Shannon Deery is State Politics Editor