State government’s building obsession could rob Peta to pay Paul

Last August, towards the end of her first year as premier, Jacinta Allan reached a fork in the road. A review of health services commissioned under her predecessor Daniel Andrews recommended the amalgamation of Victoria’s 76 providers into just 12 health services – six for Melbourne and six for the regions.

With the state confronting soaring government debt, forecast to reach $187.8 billion by June 2028, considering efficiencies must have seemed an obvious choice. After all, why does Victoria have 76 providers when NSW has 17 and Queensland 16?

Premier Jacinta Allan on Sunday.Credit: Luis Enrique Ascui

Yet when The Age revealed the proposal, Allan was spooked and it became the review’s only recommendation to be knocked back. Instead, as we reported later, she promised hospitals $1.5 billion in additional funding that the government didn’t have in its coffers. That marked a parting of ways for Allan and then-treasurer Tim Pallas.

This year’s state budget, to be delivered on Tuesday, will be the first for new Treasurer Jaclyn Symes, and for the first time Allan’s priorities in government are laid bare. Symes has promised to address runaway growth in the size of the public service. But the review commissioned into the sector, headed by former top bureaucrat Helen Silver, will not report back until June 30, too late to be incorporated into Tuesday’s announcements.

What is also clear is that both education and health will be squeezed as the budget focuses on big-ticket infrastructure projects and crime. In the end, healthcare providers have been rearranged into 12 “networks”, with individual services’ boards left in place. But that means a reckoning over funding – and cuts – must come.

The Age is concerned that the state budget will bring cuts made with the chief aim of robbing Peta the teacher or nurse to pay Paul the construction worker.

Nowhere is this problem clearer than in the treatment of our state schools. Our revelation that last year’s budget quietly delayed $2.4 billion in funding needed to meet the School Resource Standard set out in the Gonski reforms to state education, putting us years behind Queensland and NSW, strongly suggests that important contributions to our children’s futures are being diverted to keep the government’s Big Build above water.

The weekend’s announcement of free public transport for children over the weekend will no doubt be welcomed by school families but does not fill the hole being left in their education.

The Allan government calculates – with some justification, given recent election history – that its commitment to major transport projects such as the Suburban Rail Loop and North East Link is a vote-winner. But these ambitious projects should not come at the expense of front-line health services and the development of Victoria’s children today.

Spending on prisons is another area where we must question the premier’s priorities. It is no secret that Allan and her ministers have floundered in response to the electorate’s anxieties over crime, but what we still do not know is the cost of scrapping the government’s contract with private security company G4S to operate Port Phillip Prison.

The Western Plains Correctional Centre in Lara that will replace it – a $1.19 billion investment that has sat empty since 2022, with another $727 million on the way to it in this budget – could ultimately become a monument to the folly of trying to end crime through incarceration.

Allan has sought to claim Labor’s victory at the federal election two weeks ago as an endorsement of her agenda. But voters have shown time and again that they can distinguish between the party’s representatives in Canberra and those in Spring Street. It should be noted too, that the swing to Labor, an impressive achievement for Prime Minister Anthony Albanese, was weakest in Victoria.

The Age believes that another fork in the road is on the horizon for this government. With both the state’s auditor-general and global credit ratings agencies wondering whether it has a long-term fiscal plan, taxpayers facing a daily interest bill of $25 million, and hospitals and state schools struggling, state Labor needs to reassess.

Today we report that the government expects the budget it hands down on Tuesday will produce a surplus of $600 million by next June. That’s not yet an achievement; it’s a prediction of where the state will be in 13 months’ time and one that warrants at least a little scepticism given the scale and number of unheralded spending blowouts in recent years.

Allan and Symes should fund the Gonski reforms and vital health programs now and delay Big Build spending as necessary to do so. If they do not, the day of the backlash will surely come. But any political price they pay is likely to be dwarfed by the cost to ordinary Victorians and their families.

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