Jac the Knife: New treasurer signals major budget surgery

Victoria’s finances are under new management.

This is the clear message from Treasurer Jaclyn Symes, who has moved to bring government spending under control in three ways.

The first is to acknowledge that the current rate of spending, and particularly the government sector wages bill, is a problem.

The second is to admit that the government’s previous attempts to reduce a bloated and inefficient public service haven’t worked.

Premier Jacinta Allan and Treasurer Jaclyn Symes (left) announce an independent review into the Victorian Public Service.Credit: Justin McManus

The third is to bring a hired gun, Victoria’s former top bureaucrat Helen Silver, to help pull the trigger on some difficult and overdue decisions.

“It’s the sort of thing which, though painful, needs to happen and should have happened once it was clear the pandemic was over,” economist Saul Eslake says. “I have high confidence in Helen Silver to get this right – as long as government listens to her advice.”

Eslake’s misgiving is that the Silver review will only scrutinise operating expenses and not the government’s massive capital building program.

Bob Officer was the auditor brought in by Jeff Kennett to provide a blueprint for Victoria’s fiscal recovery after the Cain and Kirner administrations and was later asked by Daniel Andrews to assess the campaign costings of his incoming government.

He said Silver would not have accepted the job without a broad mandate to make necessary changes. “She is a strong-minded person and knows government well,” he said.

A senior public servant who worked closely with Silver, a Department of Premier and Cabinet secretary for Labor and Coalition governments, also welcomed the appointment. “I am not sure what savings she can get out of it, but something has to be done about the state of the state budget,” said the public servant, who was not authorised to speak publicly.

Ultimately, whether the Silver review achieves what Victoria needs it to will come down to the preparedness of Premier Jacinta Allan to cop the backlash from the Community and Public Sector Union and ministers worried about cuts to programs in their portfolios.

Symes was sworn in as treasurer six days before Christmas. Since then, she has been head down in meetings with Department of Treasury and Finance officials – and some independent advisers – to gain a better understanding of how bad the books are.

Her comments on Thursday suggest she is deeply troubled by what she has found.

The Victorian government is not only spending more money than it earns, it is spending money on the wrong things. Symes has commissioned Silver and her independent review team to identify duplication and overlaps in government programs, inefficiencies and areas where public funds are being put to poor use.

Symes made clear this was her decision. For now, she has the vocal backing of Premier Jacinta Allan, who called for a “laser focus on every dollar of expenditure in the Victorian government budget”.

Now for some caveats.

Symes is not the first treasurer to announce cuts to the Victorian Public Service. Tim Pallas repeatedly promised to return the public service to its pre-COVID-19 settings and never did.

The size of the public service ballooned in response to the pandemic when, between 2020 and 2021, the equivalent of 8340 full-time positions were added, bringing the total payroll to 55,735 employees.

In 2024, there were 54,839 full-time employees in the Victorian public service, which largely comprises bureaucrats working in government departments. The broader Victorian public sector, which is not subject to the Silver review, includes teachers, nurses, police and other government employees.

Throughout Pallas’ 10 years as treasurer, the size of the Victorian Public Service reduced only once – from 55,735 in 2021, the final year of the COVID-19 crisis, to 53,639 in 2022. In every other year, the number of public servants either increased or held steady.

In all but one of the 10 years (2018-19), the government spent more on wages than it budgeted for.

Shorty before Pallas quit as treasurer and retired from parliament, he updated his budget forecasts for the current financial year. His last set of numbers was far from beautiful.

They revealed that in the seven months between the budget being handed down last May and the December update, the government wages bill had blown out by nearly $1 billion.

Asked what had changed from the government’s previous promises to show fiscal restraint and Thursday’s announcement of the Silver review, Symes said the buck now stopped with her.

“I’ve changed. I’m the new treasurer of the state.”

Victoria, meet Jac the Knife.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.