Victoria faces mounting debt crisis as key efficiency report kept secret
Not surprisingly, NDIS and the Victorian government were among the early cost explosion announcements.
The latest Victorian $4bn blowout must surely make the New York credit rating agencies think seriously about the way they calculate the state’s rating.
But there is a new twist to the Victorian saga: new Treasurer Jaclyn Symes has attempted to isolate public service waste using a person who has the knowledge to do it – a dangerous strategy for a government in trouble.
However, earlier this year the appointment helped the state avoid a well-deserved credit rate downgrade, aided by Symes’s bold declaration that she planned to bring a fresh approach to the role of Treasurer.
It appeared she had not forgotten the declaration she made on joining the parliament. “This is the start of my opportunity to do some really big things, to make changes for the better,” she said.
Symes’s “really big thing” was announcing last February that Helen Silver would head a committee to conduct an independent review of the Victorian public service to zero in on waste and inefficiency to make sure the public service “provides good schools, good hospitals and safe communities”.
Politicians in all governments use lame-duck committees to mask their misdeeds, but Symes, with only two months’ experience as Treasurer, looked to have broken the cover-up rule by appointing Silver, who is one of Australia’s top experts on public service efficiency systems.
After being a senior executive at NAB, in 2008 Silver joined the ALP Victorian government, then headed by John Brumby, first as a deputy secretary and then secretary of the Department of Premier and Cabinet as the state’s most senior public servant.
When, two years later, the Coalition’s Ted Baillieu became premier, he retained Silver.
And so, under both ALP and Coalition governments, she revamped Victorian public service systems and put top people in key posts, giving Victoria one of the best public administrations in the country, including a brilliant major projects team.
After five years in the job, Silver stepped down in 2013. A year later, Daniel Andrews became premier.
Over time, Andrews effectively destroyed much of Silver’s public service work by setting up mission structures that meant Andrews was in full control.
Most of the public servants Silver had assembled went elsewhere, and the state of Victoria was left with public service structures, including major projects, that didn’t work run by inexperienced people. Staff numbers and inefficiencies exploded.
Because of Silver’s deep knowledge of how to fix the public service, her committee could report quickly. Symes declared that the committee’s final report would be provided to the government by June 30, 2025 – just over four months after the appointment.
Symes declared the Silver report would “then be released along with the government’s final response”.
We do not know what Silver has recommended because the report has not been released. She may have modified what needs to be done with political reality.
If Silver has made proper recommendations to cut public service waste, it will have contained recommendations that will cause horror among many of those who are being very well paid.
The delay in telling the public what Silver recommended is the first indication that Silver may have done what she was asked to do. On the other hand, she may have modified what needs to be done with political reality
If the rating agencies finally start to do their job, they will ask for Silver’s June 30 report (not one that has been watered down) and ask what actions have been taken. It is likely there has been some progress, but Victoria is still unable to control costs.
When Symes next goes to the rating agencies, she will not only have to confess the state’s continued overspending, but reveal the prospect of another big rise in expenditures because Victoria is setting up what is in reality a separate parliament to represent those who declare they are of Aboriginal and Torres Strait Island descent.
This second parliament will have the power to not only review the decision-making on bills bought before the first parliament, but to quiz public servants annually on their intentions and submit questions to public servants on almost any subject which must be answered within 60 days.
Not only will the existing bureaucracy need to be expanded, a second must be created for the second parliament.
Two parliaments and two sets of public service has the potential to make the state ungovernable.
Although the second parliament’s powers do not come into operation until next May, the combination of a potential failure to implement Silver’s recommendations and then the setting-up of a second parliament with wide powers and bureaucratic commitments may give the rating agencies the courage to do what they should have done many years ago.
But Daniel Andrews may not leave his replacement, Premier Jacinta Allen, without a paddle. At the recent Chinese military parade, Andrews stood behind China’s President Xi Jinping, Russian President Vladimir Putin and North Korea’s leader Kim Jong Un.
Under Andrews, Victoria was an original member of the Chinese Belt and Road program but pulled out under pressure from the commonwealth.
Victoria may not formally rejoin, but in the absence of commonwealth aid, Victoria will need money. Chinese loans in exchange for contracts may be the way out – a virtual island of Belt and Road in Australia.
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Australia now enters the time of the year when public services and government bodies are forced to reveal their overspending and then concoct false stories as to how it will be fixed.