Social engineering rife in Victoria’s deep-red budget

At a time of bargain basement interest rates, when the Reserve Bank of Australia is urging the states to borrow and build, the infrastructure projects in Tuesday’s Victorian budget will be sound investments. Premier Daniel Andrews and Treasurer Tim Pallas included the $10bn Melbourne Airport Rail Link in partnership with the Morrison government. The state also is contributing $2bn to the state-federal partnership to build fast rail to Geelong and $2.2bn for preliminary work on the Suburban Rail Loop. The Andrews government will pay for 100 new trams to be manufactured in Victoria.

A $4.7bn regional road and rail package and a 50 per cent stamp duty concession for commercial and industrial properties in regional Victoria will help businesses and workers outside the capital. So will the $200m to be spent to help farmers and food producers upgrade infrastructure and invest in new technologies, and the upgrades of agricultural colleges in Horsham, Shepparton and Geelong. The $9bn state health budget includes $2.8bn in regional health spending. More generally, an increase in the threshold for payroll tax will help about 7000 businesses, many of which have been decimated by the COVID-19 lockdown. Waiving 50 per cent of stamp duty on homes worth up to $1m will help the property industry and home buyers at the lower end of the real estate market. The $5.3bn to be spent on building more than 12,000 public and affordable homes will boost government involvement in the housing sector, which could dampen the market in the event of another unexpected downturn.

As Mr Pallas said: “A year like no other really does deserve a budget like no other.” And he delivered one. The state’s debt is projected to reach $87bn this financial year and blow out to $154.8bn by June 2024. That compares with $104bn in NSW, which operates a larger economy. As Victorians face years of paying it off, they are entitled to ask if the budget spending positions their state as effectively as possible for growth. Apart from the infrastructure and some limited tax concessions, much of it does not. As is Mr Andrews’ wont, much of the spending is about centrism, big government, pandering to public sector unions and social engineering. Victoria’s public sector wages bill is forecast to jump by 21 per cent over the forward estimates, when community wages growth will be about 1 per cent. The astonishing spike in the public wage bill will stem from wage rises and increases in the number of public servants. Public sector employee expenses will balloon by 9.5 per cent this financial year alone.

Even in the best economic times, governments using taxpayers’ money to pick winners and fund make-work schemes are on shaky ground. In a shameless throwback to the days when women were perceived as needing a hand out the door and into the working world, Mr Pallas is putting his hand deep into taxpayers’ pockets to fund the kinds of affirmative action programs socialist feminists demanded 50 years ago. Businesses will receive subsidies for hiring women over the age of 45 — a group of employees highly sought after in normal times. Women will be encouraged into male-dominated trades jobs and would-be female entrepreneurs will have access to a new fund. Those with viable business plans hardly need propping up. After-school care and free preschool will be expanded. The apparent justification for the one-sided approach is that more women (109,000) lost their jobs during the pandemic, from March to September, than men (70,000). That decline largely arose because more women work in the industries that were hardest hit — accommodation, arts and recreation, and hospitality. Economic recovery will revitalise jobs in those sectors. In the interests of jobs growth outside the public sector, governments do best when they step back and create the conditions for entrepreneurs — regardless of gender — to invest.

State governments love to spend and recovery from COVID has given them full rein. Victoria is the flag-bearer of “Covidnomics” in Australia, Adam Creighton writes today, “where debt doesn’t matter and feelings govern policy”. But that distinction may be short-lived. Queensland, which clocked up more debt than Victoria or NSW before COVID-19 was heard of, delivers its budget next week.