Victorian Treasurer Tim Pallas continues to defend state’s debt levels
Victorian Treasurer Tim Pallas has tried to justify the state’s skyrocketing debt levels, and says some debt could help generate economic activity.
Victorian Treasurer Tim Pallas has attempted to justify the state’s skyrocketing debt levels, forecast to reach $190bn by 2027-28, saying some debt could help generate economic activity.
After handing down his 10th budget, Mr Pallas told business leaders at a Victorian Chamber of Commerce and Industry lunch that the government had made sensible and disciplined decisions to reduce expenditure.
“We’re going to have, I’m pretty sure, a discussion about debt and whether or not the state debt is manageable,” he said on Wednesday.
The Allan Labor government is under political pressure over its debt strategy, which the budget revealed will cost $25.6m a day to cover the interest bill, with the opposition arguing generations of Victorians will bear the burden.
Mr Pallas defended the budget, as he also pointed to the government’s decision to abolish stamp duty on commercial and industry sectors, and instead replace it with a new annual property tax.
“When the Victorian chamber came to me and said we would really like government to look at a much more effective system of advertising the impost of stamp duty on commercial industrial property, because it’s a dead weight and anchor on economic decisions, we got it, we accepted,” he said. “It adds $5bn to state debt … we could have a discussion about whether that’s good debt or bad debt.”
He added that the burden taken on by the government was “an investment in the future”. “So when you look at debt, think about what purpose that debt is being put to.”
Mr Pallas said a business advisory group to provide ideas to government on its economic outlook strategy would be established, and was later pressed on what he would do if the body asked for the Covid debt levy, mental health levy and other taxes to be wiped.
“I’d probably say, what’s your view on state debt?” he said. “It’s my responsibility … to think about making sure that everyone is catered for adequately … and making those policy interventions are important.”
Opposition Leader John Pesutto said the budget delivered no relief and that Victorians would be going “deeper into the black hole of debt”. “All we see are mounting debt … interest will approach $10bn a year, which will overshadow areas like housing,” Mr Pesutto said.
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