Victorian Treasurer Tim Pallas quits politics, defends economic record

Tim Pallas says Victoria’s economy is “improving and sound” despite leaving behind a debt hurtling towards $188bn and the highest taxes in the nation.

• Debts, taxes, Big Build: Pallas by the numbers

Outgoing Treasurer Tim Pallas has tried to claim Victoria’s economy is “improving and sound” despite leaving behind an eye-watering debt hurtling towards $188bn and the highest taxes in the nation.

Mr Pallas, who will finish up later this week, on Monday called time on his 18-year political career, just days after delivering a “horror” mid-year budget update that outlined the state’s deficit had ballooned by a ­further $1.4bn to $3.6bn this ­financial year.

His departure comes just a fortnight after the Business Council of Australia declared Victoria the worst state to do business in, due to the amount of red tape and taxes.

He also leaves at a time when Victoria remains the highest taxed state in the ­nation, with data revealing ­Victorians handed over $5795 per person to the state government.

Mark Knight’s take on Tim Pallas’ decision to quit politics.

Now, Premier Jacinta Allan will be forced to undertake a major reshuffle of her cabinet and appoint a new Treasurer before Christmas. It also sparks a by-election in the seat of Werribee early next year.

Mr Pallas has been in control of the state’s finances for the past 10 years, making him the longest-serving stand-alone treasurer.

When he took charge, ­Victoria’s debt was sitting at about $22.3bn. It’s currently about $156bn and, by 2027-28, is forecast to reach a whopping $187.3bn.

Mr Pallas said he believed his departure came at a time when “the economy is solid, the fiscal position is improving and sound”.

Tim Pallas announcing his resignation from politics on Monday. Picture: Mark Stewart

But he added: “We’re not going to sugar coat this and pretend that everything is ­perfect.”

Mr Pallas said serving as Treasurer had been a “great honour and (the) privilege of my life” but it would be up to Victorians to determine whether he had succeeded in the role.

“My life in public office is now at an end and you’re right to eulogise whether my passing is a good or a bad thing,” he said.

“Be assured of this – at no stage ever did I lose sight of my responsibilities to look after the welfare of the Victorian people.”

Mr Pallas said serving as Treasurer was the privilege of his life. Picture: Mark Stewart

Prior to being elected to parliament in 2006, Mr Pallas served as a chief of staff to ­former premier Steve Bracks.

He served under four premiers across his political career including Mr Bracks, John Brumby, Daniel Andrews and Jacinta Allan.

Ms Allan said she first met Mr Pallas in 1999, when she was the newly elected Bendigo East MP.

“Over the next 25 years, we would work together as MPs, cabinet colleagues, collaborators and builders. Most importantly, as mates,” she said.

Sources say the relationship between Mr Pallas and Ms Allan’s respective offices have soured, despite the two putting on a public show of camaraderie.

Mr Pallas said: “Some of you may have noticed that there is a bit of tension between the premier and myself as we were landing these things (budgets). That’s what a good treasurer does. You’ve got to have creative tension, or you don’t create anything.”

Premier Jacinta Allan with Mr Pallas during question time. Picture: Ian Currie

While Mr Pallas has been widely considered as one of the “nicest” politicians on Spring St, critics said he would be remembered for the parlous state of the budget.

Opposition Leader John Pesutto said Mr Pallas’s legacy was not one to be proud of.

“Regrettably, on all key measures Tim Pallas’s legacy will be one of enormous debt that Victorians in the present generation, and in future ­generations, will be saddled with,” he said.

Nationals leader Danny O’Brien said Mr Pallas, while personable, was “one of the worst” treasurers in Victorian history.

“You’re only as good as your numbers, and Mr Pallas and Labor have failed dismally,” he said.

Mr Pallas at the launch of the Economic Growth Statement last week. Picture: Andrew Henshaw

Shadow treasurer Brad Rowswell described Mr Pallas as a “decent man” but said his resignation posed an opportunity for the Allan government to “take a different approach to economic management”.

Former Liberal premier Jeff Kennett called for Ms Allan to follow Mr Pallas and resign, and said the pair – alongside Daniel Andrews – should be “totally ashamed … for what they have done with the legacy they inherited”.

“Pallas is a nice guy but has been a disaster as a parliamentarian and Treasurer of Victoria,” he said.

Economist Saul Eslake said it was difficult to conclude that Mr Pallas left Victoria in better shape than he found it.

A fresh-faced Tim Pallas as a candidate ahead of the 2006 election.

But Victorian Chamber of Commerce and Industry chief executive Paul Guerra said Mr Pallas had been a friend to the business community and an “integral partner” in fostering economic growth.

“His belief in empowering Victorian businesses has had a profound and lasting impact on the sector,” he said.

Property Council of Australia Victorian executive director Cath Evans acknowledged Mr Pallas’s service and wished him well for future endeavours, adding: “We look forward to the appointment of a new treasurer and hope to work collaboratively with them to deliver economic growth and prosperity for our state.”

Assistant Treasurer Danny Pearson, Deputy Premier Ben Carroll and Public Transport Minister Gabrielle Williams are among those considered potential replacements as ­treasurer.

Health Minister Mary-Anne Thomas has also been named by some internally as a contender.

Mr Pallas’s exit also means a backbench MP will be promoted to cabinet.

Under Labor’s existing stability deal, Bentleigh MP Nick Staikos, who is in Mr Pallas’s Left-aligned National Union of Workers faction, is next in line to move into the ministry.

It’s understood, he was on Sunday night “doing the numbers” trying to sure up support.

However, it’s also understood that Narre Warren South MP Gary Maas, a former secretary of the now named United Workers Union – who was aligned with Mr Staikos when the factional grouping defected from the Right – could also be in the running.

From the Left, Frankston MP Paul Edbrooke is a contender, having narrowly missed out to Eltham MP Vicki Ward in the last vacancy decision. But, with factional deals at play he might struggle to find support, one union figure said.

Mr Pallas – who unsuccessfully put his hand up for deputy premier after Daniel Andrews’ resignation – had persistently denied rumours his resignation was looming, saying he would serve “for as long as my party … believes I can serve a useful purpose”. On Monday he said: “Quite frankly I don’t think my party needs me anymore.”

Pallas departure prompts reshuffle

Mr Pallas’s departure will trigger a shake-up in Ms Allan’s cabinet with assistant treasurer Danny Pearson and deputy premier Ben Carroll, and Public Transport Minister Gabrielle Williams all among those considered potential replacements as treasurer.

It’s understood Mr Pearson is the most likely, but Labor caucus is not confident he can do the job, and there’s also concerns over some previous conflicts of interest that have arisen over his personal financial dealings.

His exit also means Ms Allan must now find a new treasurer, and bring another backbencher into the ministry.

Danny Pearson is one of the favourites to fill Mr Pallas’ shoes. Picture: Mark Stewart

Under Labor’s existing stability deal, Bentleigh MP Nick Staikos, who is in Mr Pallas’s left-aligned National Union of Workers faction, is next in line to move into the ministry.

It’s understood, he was last night “doing the numbers” trying to sure up support for himself to take the position.

However, it’s understood that Narre Warren South MP Gary Maas, a former secretary of the now named United Workers Union – who was aligned with Mr Staikos when the factional grouping defected from the right – could also be in the running.

From the left, Frankston MP Paul Edbrooke is a contender, having narrowly missed out to Eltham MP Vicki Ward in the last vacancy decision.

But, with factional deals at play he might struggle to find support, one union figure said.

In recent months, Mr Pallas had persistently denied rumours his resignation was looming.

“I’ll be here for as long as my party and the state believes I can serve a useful purpose,” Mr Pallas said in March.

“I’m working hard to look after the economic interests in the state.”

But Labor insiders had considered his exit a certainty.

Some noted an “unusually long” address to last weekend’s ALP state conference may have doubled as a final farewell to rank and file members.