Victorian election: Raid on future funds poll pledges

Daniel Andrews and Matthew Guy will raid contingency funds to balance the books as they pledge billions in election promises.

Daniel Andrews and family cast their votes at a pre-poll booth on Thursday night.

Daniel Andrews and Matthew Guy will raid Victoria’s contingency funds to balance the books, with both parties committing billions of dollars in extra spending ahead of Saturday’s state election.

As polls point to the likelihood of a significantly reduced majority or even a hung parliament for the Andrews government, Treasurer Tim Pallas vowed there would be no tax increases to pay for $11.1bn of election promises in the state, which is headed for $165.9bn of debt by 2025-26 – higher than the combined total for NSW, Queensland and ­Tasmania.

While making no mention of ­Victoria’s debt crisis, Mr Pallas promised a budget surplus of $1bn by 2025-26 but confirmed he would draw down on the contingency fund to deliver it.

As the raids on the contingency funds were revealed, the Premier cast his vote early on Thursday night, declaring on Twitter that “like so many other Victorians, we’ve got a few things happening on Saturday so we voted early”.

Unveiling the Coalition’s costings on Thursday, opposition treasury spokesman David Davis was unable to quantify the total cost of its election commitments at his 3.30pm press conference. “I can’t give you the top figure, but I can get that for you,” Mr Davis said. “We haven’t added it all together in a single figure like that. I will get you a figure within an hour or two. We can get you the exact figure. We’ll do that.”

Shortly before 6.30pm, after most evening news bulletins had gone to air, a spokesman for the Liberal campaign confirmed the Coalition was “saving, drawing down and reprioritising around $38bn, while spending around $28bn on new commitments”, meaning “Victoria’s bottom line will be around $10bn better off under a Liberals and Nationals government”.

Both major parties plan to ­divert money from Victoria’s contingency reserve – established as an emergency fund to be used in the event of economic shocks and natural disasters – the Coalition to the tune of $7.6bn over five years, and Labor $2.6bn over the forward estimates.

While the Coalition has vowed net debt will be $10.4bn lower under a Guy government – at $155.6bn in 2025-26, $10.2bn of that figure comes from raiding Victoria’s Future Fund – a measure Mr Davis said would save $775m in interest repayments over the forward estimates.

However, Mr Davis was unable to offer a figure when asked six times to quantify the cost in lost investment earnings from taking the $10.2bn out of the ­Future Fund.

The Coalition plans to deliver a $2.1bn surplus in 2024-25, a year ahead of Labor, before delivering a surplus of more than $11bn in 2025-26.

In addition to the cash from the Future Fund and contingency ­reserve raids, some of the ­Coalition’s savings come from ­reprioritising an estimated $10.2bn otherwise set aside for Labor’s Suburban Rail loop, with this cash diverted to building hospitals.

Mr Davis confirmed the ­Coalition also plans to privatise parts of Victoria’s sewage system via a 50-year lease, reaping $6.7bn over four years.

Labor’s costings show $400m will be drawn down from output contingencies starting in 2023-24, followed by $700m in 2024-25 and $1.1bn in 2025-26.

The government also intends to find $50m in savings per year over the forward estimates by ­reducing their spend on hiring consultants in the public sector.

Another $300m in savings are set to be recouped by reallocating discretionary grant funding, while $3bn beyond the forward estimates will come from delaying payments to recipients of the public service defined benefits superannuation scheme.

Mr Pallas said no new taxes or charges would be introduced to deliver election commitments worth $11.1bn if Labor swept into power for a third term on ­Saturday.

“Because all our investments are more than fully funded, the surplus in 2025-26 will now be more than $1bn,” Mr Pallas said.

“That’s an $11bn turnaround in just three years.”

Despite promises to build or improve hospitals and medical services this election campaign, Labor’s costings – which have been independently reviewed by the Department of Treasury and Finance – revealed most of the spending for those pledges is beyond the forward estimates.

The key pledges that do not have money allocated to them for builds in the next four years ­include a new hospital in West Gippsland in Victoria’s far east worth up to $675m, the Queen ­Elizabeth II Hospital in Victoria’s inner east worth up to $1bn and hospital plans for the northern and southeastern suburbs worth $1.4bn together.

Mr Pallas said “it does take substantial time” to complete hospital builds.

The state is expected to record a $10.1bn deficit this financial year, followed by $3.5bn in 2023-24 and $534m the year after that.