State Labor’s secret loan debacle

Given Victorian Treasurer Tim Pallas’s failure to manage a secretive investment slush fund operated by his office, his inability to pay down Victoria’s soaring debt and fix problems that have made the state the worst place in the nation to do business is no surprise. Eleven loans authorised by Mr Pallas from the fund are in potential default, leaving taxpayers $7m out of pocket, Victorian editor Damon Johnston reports. That is a drop in the ocean alongside Victoria’s overall debt, which is projected to hit $228bn by 2028. But the secrecy surrounding the Treasurer Guaranteed Loan is emblematic of Labor’s bad management and lack of transparency, which has made our second-largest state an economic basket case since Daniel Andrews was elected in 2014 and Mr Pallas was appointed Treasurer. At a time when Victorians most needed the pragmatic economic rationalism of the Labor Right, he joined Mr Andrews’s and Premier Jacinta Allan’s Socialist Left faction two years ago.

The identity of the TGL recipients at risk of defaulting are secret. So are the identities of organisations and individuals that have borrowed from the fund since 2017. Until then, the entities that received backing from the fund were published. That detail is now a state secret. But TGL’s loan book has expanded from $178m in 2017 to more than $1.6bn. Details about interest rates charged and repayment terms are also secret.

Victorian taxpayers are entitled to wonder if the projects they are being forced to finance are an electoral boondoggle for Labor. All that Mr Pallas’s office would tell The Australian is that most of the 70 loans made through the fund have been “guaranteed to get social housing and community sports infrastructure built sooner and more easily in partnership with community organisations’’. In which electorates, and where, are also a state secret.

The excuse offered by Mr Pallas’s staff for the secrecy does not pass the pub test. They said the loans were an “insignificant” amount of overall Treasury Corporation of Victoria loans, which in 2023-24 totalled $157.5bn, and there was no need to provide a breakdown. Yet releasing recipients’ details would clear any suspicion of something to hide. But such scandalous conduct pales alongside the horror of the “debt bomb’’ facing Victorians as $86bn of state debt, borrowed at around 2.4 per cent, falls due for refinancing over five years from 2029. With borrowing costs double or more, the state will fall into a more dangerous sea of red, with essential services harder to pay for and living standards harder to maintain.