The achievements of Tim Pallas are stained by rivers of red ink

On Monday, Victoria’s treasurer of 10 years, Tim Pallas, announced his resignation from politics. There will be a byelection for his seat of Werribee. There will also be a calling to account, already begun, of his time as treasurer, the longest standalone tenure of the position in Victoria.

The Age can say, by dint of its reporting on Victoria’s economy, that Pallas leaves a ledger upon which the achievements of his time are stained by the rivers of red ink.

Tim Pallas is leaving politics with Victoria as Australia’s most indebted state.Credit: Gus McCubbing

This is the legacy of Tim Pallas. Victoria is the most indebted state in the country. When the state government should have been showing prudence in what it could reasonably afford to do, it was embarking on projects, and signing contracts, which it did not have the means to support without going into more stratospheric debt.

The Age acknowledges the crisis years of COVID-19, which created challenges for the state but cannot be used to explain away the position in which Victoria finds itself.

It also acknowledges that Pallas was not the lone player in this. Daniel Andrews, the premier for most of Pallas’ time, was the driving force in the infrastructure spending splurge. It was Andrews’ Big Build agenda, but it was the treasurer’s job to keep that in check.

It is true that the Victorian people, for the most part, supported many of these projects. They showed that support by electing the Labor government to a position of commanding majority. Growth needs vision, as indeed Victoria does. It also needs insight into the consequences.

Pallas was sworn in as Andrews’ treasurer in 2014. He had previously been chief of staff to then premier Steve Bracks, who in reacting to his retirement said, “the biggest, longest-lasting legacy that he will leave the state” is that “it will be better off, better connected and much more liveable. That is a pretty good legacy to leave.”

We beg to differ. In 2014, the state’s net debt was $21.8 billion. In the budget update that Pallas gave last Friday, he said net debt would hit $155.2 billion by next July and $187.3 billion in a further three years.

Pallas believed Victoria had the capacity to grow out of its debt hole and avoid austerity.

That hasn’t happened, however, and Victorians are paying the price. A few days ago, the government announced it was slugging property owners by doubling the fire services levy rate, and motorists with a rise in the congestion levy. We recently revealed that the government had asked bidders for the first stage of the $35 billion Suburban Rail Loop to ease their spending until 2028. Premier Jacinta Allan asked the treasurer to find an extra $1.5 billion for our hospitals to alleviate their financial position.

Last month in an editorial, we noted the words of Auditor-General Andrew Greaves: “While strategies and objectives are in place, the state has not articulated a clear plan for long-term fiscal management. Current strategies are short term, reactive and do not address both the existing financial challenges and emerging financial risks ... a more comprehensive approach is needed to ensure long-term fiscal sustainability and proactive management of the state’s finances.”

While Pallas has made much of Victoria’s operating result, there is another side to the argument, enunciated by economist Saul Eslake, who believes the more important marker of a state’s finances is the cash surplus or deficit.

This month we reported that Victoria has had to refinance almost $2 billion in debt that was due to be paid off over the past two years. It has also been widely reported that business is loath to invest in the state because of its dire economic straits.

On his departure, Pallas said, “All the bad things that have come out of our budget position, they’re my responsibility and I take full responsibility for them.”

In evaluating his legacy, we end with this paraphrase of Shakespeare: Nothing in his life as treasurer became him like the leaving it.

Get a weekly wrap of views that will challenge, champion and inform your own. Sign up for our Opinion newsletter.