The cost of coronavirus delays to major Victorian projects won’t be known until 2021

Premier Daniel Andrews is being grilled over the eye-watering debt bill forecast in Victoria’s budget.

Premier Daniel Andrews has been grilled over the massive debt bill outlined in Victoria’s state budget, telling an estimates hearing it was not clear how long it would take to pay down the unprecedented borrowings.

Mr Andrews has fronted the Victorian Parliament’s Public Accounts and Estimates Committee as it probes the 2020 state budget.

Net debt in Victoria is set to climb to $154 billion in 2024 and the government expects to record consecutive deficits as it borrows to fund a range of initiatives to restimulate the state’s economy.

Operating deficits are then expected to taper off to $5.9bn over this time as tax revenue increases and government spending falls down from record levels.

Premier Daniel Andrews in state parliament. Picture: Ian Currie

When asked by Polwarth MP Richard Riordan on Friday when the government would start to pay down its net debt, Mr Andrews said he was not able to provide a long-term repayment plan.

“We will service our borrowings and we will be best placed to not only service the cost of that capital, but to repay the principal once we have the economy growing,” he said.

“I’m more than happy to concede to you Mr Riordan that the repayment of these borrowings and the repair from this pandemic will be a long-term project.

“This is an unprecedented year and we’ve had no choice but to access borrowings at an unprecedented level.

“There are repayment schedules that are well known and well understood in relation to borrowings that preceded the pandemic event.

“What’s most important Mr Riordan is that we borrow when we can borrow at the lowest cost so we can get the economy growing ... As well as surpluses, so more revenue than expenditure.”

Mr Andrews said it was up to ratings agencies to determine whether Victoria would maintain its credit score but stood by the government’s financial management and the state budget.

“I don’t know if there is a credible alternative,” he said.

Mr Andrews said Treasury had advised the government that it could not provide the typical Budget Paper 4, outlining the state’s capital finance program, in the timeframes required.

He said the document would be provided in May at the next state budget, with work now underway to detail how significantly major projects were impacted by delays and overruns because of the pandemic.

“For instance, construction projects whether they were running at 50 per cent or 75 per cent in order to be safe workplaces,” he said.

“There have been very significant impacts, I think more in time than in costs, although that is yet to be determined.

“This is not anything other than an exercise in diligence.”

The Premier was also asked about cost blowout negotiations on the Metro Tunnel and was asked to detail how much the government was expected to pay.

“The government is engaged with the proponents of the project ... in a good faith negotiation around some cost pressures in that project,” Mr Andrews

“It is not simple, it is not a small project, it is a very, very big undertaking.

“Those negotiations, while progressing well, are not yet included (and) I’m not in a position to provide you with a definitive answer on what the outcome of that process is.”