Victoria, debt and a state of business exodus

Victorian Premier Jacinta Allan. Picture: David Caird

Blackouts across Victoria on Tuesday afternoon because of a shutdown at the Loy Yang A power station in the Latrobe Valley underlined one of the state’s big problems – lack of reliable, affordable energy. Australia’s second-most populous state is too big to fail. Doing so would drag down the national economy. But the signs are ominous. The increased cost of doing business in the state is leading to an exodus, Rachel Baxendale reported on Tuesday. Victoria is the only jurisdiction in the nation that experienced a net loss of businesses last financial year. Australian Bureau of Statistics figures for 2022-23 showed a net decrease of 7606 businesses. The worst-affected local government areas were Brimbank and Maribyrnong in Labor’s western suburban heartland, and Frankston in Melbourne’s southeast, which is the focus of the Dunkley federal by-election.

Industry leaders warn that the Allan government’s gas policy could worsen the issue. Electricity bills are 17 per cent higher, on average, in Victoria than they were a year ago for businesses consuming 20,000kWh a year, compared with an 8 per cent rise nationwide. Gas bills are 31 per cent higher in Victoria than they were a year ago for businesses consuming 100GJ a year, compared with a 12 per cent rise nationwide. And, as Australian Industry Group climate change and energy director Tennant Reed warns, the Allan government’s push to force households to move away from gas will have unintended consequences for businesses still on the increasingly expensive gas network. Steep rises in taxes and charges such as WorkCover premiums also are taking a toll as state Labor struggles with the debt that has escalated under its watch.

The state is on track to owe by June 2026 more in net debt than NSW, Queensland and Tasmania combined. In May last year, Treasurer Tim Pallas’s budget imposed a “temporary” 10-year grab of extra land and payroll taxes. Such imposts would make Victoria Australia’s “least attractive state to run a business or buy an investment property”, warned the peak body representing accountants. Other taxes aimed at business, Robert Gottliebsen writes, “included a solar and wind tax on farmers; a container tax on importers and exporters; an education tax on private schools; a tourism tax via Airbnb homes, and; a health tax on general practitioners”. Rising prices for labour and raw materials and supply chain problems, exacerbated by the state government’s vast infrastructure agenda, have added to the problems. Years of bad management and big government ideology under Daniel Andrews and now Premier Jacinta Allan are taking a toll. Victorians need a competent opposition with cut-through to be a viable alternative.