‘Financial catastrophe’: Andrews govt considering $250m bailout package for Homes Victoria

The state government is considering coughing up $250m in taxpayer funds to save Victoria’s new public housing operator from financial collapse.

The Andrews government is weighing up how to prop up the struggling Homes Victoria. Picture: Andrew Henshaw

A $250m bailout package is being considered to save Victoria’s new public housing operator from financial collapse ahead of May’s state budget.

In a move that would put further pressure on what is tipped to be a horror budget, the Andrews government is weighing up how to prop up the struggling Homes Victoria.

Senior government sources have confirmed for the first time that the agency, created in 2020 to oversee public housing, community housing and crisis accommodation, needs a $250m cash injection.

Ministerial briefings obtained by the Saturday Herald Sun show it reported an operating deficit of $117m in July 2020, and was facing a further deficit of $115m last financial year.

The Andrews govt is considering a $250m bailout package to save Homes Victoria. Photo: Daniel Pockett/Getty Images

Last year’s budget forecast the agency would continue to report an annual average deficit of $132m.

Homes Victoria has previously warned Treasurer Tim Pallas that without a significant cash injection it won’t have enough money to cover “core business expenditure”.

Its dire financial position has put the delivery of program services, infrastructure maintenance and compliance at high risk.

The agency has previously been propped up with cash from the Andrews Government’s signature Big Housing Build.

Shadow Special Minister of State, David Davis, described the situation as a “financial catastrophe”.

“Labor is incompetent and can’t manage money or large projects including Homes Vic which is a basket case,” he said.

“Homes Vic has allowed waiting lists to balloon as highlighted by my colleague Richard Riordan, while running into deep financial trouble; financial trouble that will hit the most vulnerable people.

David Davis has slammed the Andrews government, describing the situation as a ‘financial catastrophe’. Photo: Arsineh Houspian.

“Labor’s desperate effort to cover up the truth, starkly laid out in their secret briefing documents is outrageous; these show a clear underlying deficit of more than $117 million and a sneaky plan to cover the cost blowout by diverting Big Housing Build money.”

The ministerial briefings also detailed new and increased cost recovery on water charges.

“Victorians need to keep Andrews on close watch as many of these nasty tax and charge measures, hidden before the election, may be brought back in the state budget,” Mr Davis said.

“His financial mismanagement has racked up a massive debt now he’s been caught out planning to jack up rates and water charges hitting everyday families and the vulnerable to pay for it.”

Thousands of public service jobs are set to be axed and spending slashed in key areas as the government works to bring Victoria’s economic situation under control.

In recent weeks both Mr Andrews and Mr Pallas have tempered budget expectations, with the Premier saying it will be unlike any previous budget his government has handed down.

Victoria is now on track to a record debt level of $165.9bn by 2025-26.

A state government spokeswoman said it was “taking action to ensure Victorian’s most vulnerable renters have a roof over theirheads” through its $5.3 billion Big Housing Build project.