Analysis: Labor risks being booted at the next general election if Jacinta Allan can’t reduce state’s debt

Like Victoria’s first female Premier, the late Joan Kirner, Jacinta Allan risks her party being voted out, if she can’t work fast to rein in the financial shambles she inherited.

Gough Whitlam and Joan Kirner in 1991. Jacinta Allan has inevitably been compared with the state’s first female Premier. Picture: Supplied

Hold on tight, Victoria’s money troubles are showing no signs of slowing.

Since Labor came to office in 2014 the government has racked up a staggering $155bn of debt.

The $22bn of debt it inherited is now projected to hit $177.8bn by 2027.

We’ve added about $1bn a month to that projection since May’s budget, and Treasurer Tim Pallas is not confident that trend will stop.

Which means we could add another $6bn by next May’s budget, and so on and so forth.

And yet, Mr Pallas insists the government is on track to start reducing debt.

He is nothing if not consistent.

He is continuing to blame the $30bn in unexpected Covid-related expenditure and the worsening cash rate for the state’s dire economic position.

Premier Jacinta Allan faces a battle to rein in debt. Picture: David Caird

And he is confident his four-step plan to drive down debt is working – but admits that seeing a reduction in debt is some time off.

New land taxes and a Covid levy targeting big employers were introduced in Victoria’s May budget in a bid to curb the state’s spiralling debt.

Time will tell if it works.

In the meantime, the debt drama is a nightmare for new Premier Jacinta Allan.

Since becoming Victoria’s second female Premier, Ms Allan has drawn inevitable comparisons with the first woman to hold the job, Joan Kirner.

Specifically, their shared inheritance of a state in financial ruin in the third term of a Labor government.

If Ms Allan can’t rein in debt, fast, she could share something else with Kirner: losing government at her first general election as Premier.

Former Victorian premiers John Brumby, Joan Kirner, John Cain and Steve Bracks in 2014.

Ms Allan’s problems are compounded by her history of managing billion-dollar cost blowouts on major projects, and her refusal to slow the government’s Big Build agenda.

Just last week the government signed a $3.6bn contract to kickstart the $35bn first stage of the Suburban Rail Loop, all while knowing about worsening economic conditions.

It offers a narrative that the Andrews/Allan government, and Ms Allan specifically, can’t manage money.

As it stands, Victoria’s debt burden is double that of NSW.

Although NSW’s net debt is now projected to peak at 12.6 per cent of Gross State Product by 2026-27, Victoria’s is on track to hit 25.1 per cent in the same time.

That’s $38,000 for every NSW household, and almost $70,000 for every Victorian one.

When interest rates were low and money was cheap, state debt wasn’t an issue worrying the electorate.

But amid a cost-of-living crisis it’s sure to capture the electoral imagination a little more.