Budget blunder to hurt Victorian Labor

A $1 BILLION budget blunder has exposed Victorian Labor to months of pre-election questioning over its financial credibility.

A $1 BILLION budget blunder has exposed Victorian Labor to months of pre-election questioning over its financial credibility after it falsely claimed the 2013-14 state budget was in “tatters’’.

Opposition Treasury spokesman Tim Pallas has wrongly claimed that the Victorian budget this financial year was being propped up by a $1bn commonwealth payment to help build a $20bn road and tunnel project. Mr Pallas claimed that without the federal grant, Victoria would have been in deficit by $65 million rather than in surplus by $935m.

However, The Australian has established that the $1bn grant was never included in the 2013-14 budget calculations and if it were, the final surplus figure would be close to $2bn.

Despite this, Mr Pallas said this week: “Denis Napthine’s budget is teetering on the edge — his claims of a surplus are in tatters.’’

The mistake has the potential to be extremely costly for Labor because there is expected to be an updated account of Victorian ­finances during the November 29 election campaign, which will show the true picture of the budget.

The budget surpluses are forecast to rise to $3.3bn by 2017-18.

Mr Pallas yesterday refused to accept that he had erred, arguing that the Victorian budget papers from earlier this month provided contradictory evidence of what was happening with the federal roads money.

But a careful reading of the ­papers actually supports Treasurer Michael O’Brien’s position, suggesting Mr Pallas was confused about when the federal money would be factored into the accounts.

“Is Michael O’Brien seriously suggesting that the commonwealth dropped $1bn into the current year’s budget without him knowing?’’ Mr Pallas said.

The Abbott government is ­expected to provide Victoria with the $1bn payment before the end of the financial year.

However, uncertainty about when and how the money would be paid meant that Victorian Treasury did not want to factor the $1bn into the 2013-14 budget estimates in the most recent budget. Instead, the $1bn and a further $2bn for both stages of the $20bn East West Link road and tunnel project are accounted for over the forward estimates period up to 2017-18. This is clearly stated in the budget papers.

Mr O’Brien said the only ­potential major revision for the budget surplus was that, depending on the timing of the payment, the surplus this financial year could in fact soar to nearly $2bn.

“The claim made by Mr Pallas that the 2013-14 state budget surplus would actually be a deficit without $1bn funding for East West Link is not just wrong, but hopelessly wrong,’’ he said.

“This is the same Mr Pallas who could not spell the name of his own electorate on advertising material, so it comes as no surprise that he cannot read or understand budget papers.’’

Controversy over the budget came as the government faced further pressure over rebel independent Geoff Shaw, who yesterday again lashed out at MPs opposed to abortion law reform.