Victoria’s fiscal disaster to cost every Australian

Victorian premier Daniel Andrews has gone cap-in-hand to Canberra seeking a bailout as the problems of 6.5m Victorians becomes pain shared by all Australians.

If it looks like a bailout and quacks and waddles like a bailout and above all smells – to high heaven – like a bailout; it’s a bailout.

At least, bailout request - seemingly rejected.

Victorian premier Daniel Andrews has gone cap-in-hand – and even more, empty (these days, digital) wallet-in hand – to Canberra for a multi-billion dollar federal bailout.

Suddenly the problems of 6.5m Victorians are also the problems of all 26m Australians as well. And, more potently, doubly so.

First, any federal money directed to Victoria would come from all Australians.

But secondly, is the impact that yet another downgrade of Victorian state debt would have on the interest rates paid by all the other state governments - and the federal government – on their debts.

Victoria has already lost its Triple-A rating, going down two full notches to AA. Soberly, a single-A beckons. If that happened, it would be the first time ever for any state government. So yes, Victorians will be living out the truth of the observation from famed American humorist HL Mencken, that they deserve “to get it good and hard” for re-electing the Andrews government last year.

But all other Australians will be sharing their pain.

Now, you’ve almost got to feel a tad sorry for Victorian treasurer Tim Pallas. He’s been a pretty solid fiscal fiend, among the better state treasurers of any in recent years – of both Labor and Liberal.

Treasurer Jim Chalmers (right) has reportedly rejected Premier Daniel Andrews pleas for a budget bailout for Victoria saying the federal budget is also “under pressure”.

Although not up to the gold standard of Queensland Labor’s Keith de Lacy, who had an absolutely iron-clad commitment to fiscal rectitude. But Pallas has to take the rap for not standing up to Chairman Dan’s insane, utterly uncontrolled ‘Big Build’, which was heading for a fiscal disaster that was going to make the Cain-Kirner ‘Guilty Party’ years look mild, before Covid.

Then add on the wild spending through the Covid years and the most savage and extended lockdowns in the world which so damaged great swathes of Victorian business.

Plus the Chairman’s mindless commitment to destroy Victoria’s cheap and reliable energy. Over the last 12 months Victoria has shared in the economic ‘sugar hit’ of the massive migration surge.

Their spending dollars come upfront – their cost in demand on public services and infrastructure will come at an accelerating pace.

This fake prosperity marginally improved the Victorian budget outlook numbers in the October update. But only very marginally. Net Victorian debt would be slightly lower at $165bn by 2025-26 – or more than the debt of NSW and Queensland combined. It would be net debt of $25,000 per Victorian as against $14,000 per NSW head and just $7000 per Queenslander.

If only.

That assumes the most optimistic projections of both the state and national economies. It also takes no account of the massive – and I mean Humungous – blowout in the ‘Big Build’ spend and in particular the crazy insane rail tunnel around Melbourne.

That’s headed for a blow out of at least $100bn - adding close to $20,000 per Victorian to debt. And don’t forget that ‘behind’ all this state debt is the $766bn of net federal debt.

At least it’s not the trillion that treasurer Chalmers keeps claiming. To stress, not yet.

Originally published as Victoria’s fiscal disaster to cost every Australian