Victorian transport projects being boosted by cash set aside for state emergencies

Victoria’s transport projects are being boosted by billions of dollars of taxpayer cash, which had been put aside for emergencies.

Billions of dollars of taxpayer cash set aside for emergencies is being raided to pay for mega transport projects, including the $34.5bn Suburban Rail Loop.

The Sunday Herald Sun can reveal that more than $5bn was spent on infrastructure through a secretive government “credit card”, called a Treasurer’s advance, in the past financial year.

This includes $1.3bn for Suburban Rail Loop East major works, and an extra $184m for the SRL East’s early works — both of which are listed in the State Budget.

The move has been slammed by respected independent economist Saul Eslake, who said it was “inappropriate” and should be probed by the auditor-general.

Insiders say Victoria’s financial woes have contributed to a growing reliance on Treasurers’ advances, which also reduces parliamentary scrutiny of spending decisions and major projects.

It comes as a new Cabinet subcommittee is established for the Suburban Rail Loop, the first stage of which is set to cost $34.5bn for a 26km tunnel between Cheltenham and Box Hill, which Labor figures said would stifle broader Cabinet debate on project decisions.

It comes as a new Cabinet subcommittee is established for the Suburban Rail Loop. Cartoon: Mark Knight

The use of Treasurer’s advances to pay for infrastructure comes amid rising internal concerns about Victoria’s budget position.

Forecasts predict net debt reaching $187.8bn within four years, but quarterly data released on Friday shows debt is growing faster than anticipated.

The government is also struggling to secure funding for the SRL, which would pave the way for high rises in middle suburbs, with the federal government yet to hand over $2.2bn it promised to contribute to the project in 2022.

The Commonwealth has also refused to commit to contributing any further funding, dashing plans by the state government to split the cost between Victoria, Canberra and so-called “value capture” taxes.

One Labor insider said the SRL East was already facing financial pressures, and that contractors were relying on allocated funding to do early work. Picture: Supplied

It has prompted speculation the government is using the Treasurer’s Advance to keep the project’s timeline on track, with tunnelling schedule to begin in 2026 and the first trains to hit the tracks by 2035.

The government set aside $12.1bn last financial year for spending that is not scrutinised through normal parliamentary processes.

Before Labor came to office in 2014, the Coalition accessed just $364.6m in Treasurer Advance funds in its final year in office.

The use of Treasurer’s advances to pay for infrastructure comes amid rising internal concerns about Victoria’s budget position. Picture: Aaron Francis

The size of the fund, which the Victorian Auditor-General says was established to meet departments’ urgent spending requests, was inflated by $10 billion during the Covid-19 crisis because of emergency health spending, but has since been used by Treasurer Tim Pallas on major projects, courts, the health system and major events.

But past and former ministers, and economists, have questioned the shift.

Independent economist Saul Eslake said the use of advances on the SRL was “inappropriate”.

“It is clearly an inappropriate use of the Treasurer’s Advance, and one which ought to be investigated by the Auditor-General,” Mr Eslake said.

“It was fair enough to provide a substantial ‘contingency fund’ to meet urgent and unforeseen spending needs during the pandemic, but that ended more than two years ago.”

A 2020 review of the use of treasurer’s advances by the Auditor-General explains how the fund was traditionally used, including for “a natural disaster or a public health emergency”.

One Labor insider said the SRL East was already facing financial pressures, and that contractors were relying on allocated funding to do early works.

More than $5bn was spent on infrastructure through a secretive government “credit card”, called a Treasurer’s advance, in the past financial year. Picture: Supplied

“It’s because the government has no money,” they said.

Past and current ministers agreed, with one saying it was likely because coffers had run dry.

Opposition transport infrastructure spokesman David Southwick said Labor’s increasing reliance on Treasurers Advances was a deliberate attempt to keep Victorian taxpayers in the dark as to the true state of these projects.

“With $41bn and counting in major project cost blowouts, Victorians deserve full transparency over how these projects are costed, funded and delivered,” he said.

A government spokesperson defended the use of Treasurer’s Advances, saying they were used to allocate approved funding from a central contingency after Budget bills had passed.

“Treasurer’s Advances are routinely used by the government for urgent or unforeseen events,” he said.

“Funding in Treasurer’s Advance contingency is also for projects and programs that are funded in the Budget.”