Victorian election: debt to double, Pallas admits kids will pay

Victorian Labor will double the state’s debt levels to cover the $25.6 billion cost of three major infrastructu­re projects.

Victorian Treasurer Tim Pallas. Picture: AAP

Victorian Labor will double the state’s debt levels to cover the $25.6 billion cost of three major infrastructu­re projects, with Treasurer Tim Pallas saying both taxpayers and their children would end up paying for the promises.

Victoria’s net debt would increas­e from 6 per cent to 12 per cent of gross state product, as the government borrows billions over the next decade to fund the North East Link toll road, the Melbourne Airport Rail Link and the removal of 25 more level crossings.

The expanding debt was revealed as Labor retained its commanding lead in opinion polls with a Herald Sun Galaxy survey recording a primary vote of 53-47 over the Coalition.

Releasing the government’s costings yesterday, Mr Pallas said it was necessary to “borrow to build” and the “cost of inaction” would be too high for future generations. The debt was necessary to ensure Victoria remained the “world’s best place to live”, he said, while conceding that future generations would pay for much of the expenditure.

“By spreading the cost over more than a decade, it means we share the cost of the infrastructure across generations,” he said.

“We pay some, and our kids, who’ll be the principal beneficiar­ies of these investments, will also make a contribution to the project­s that are so vitally important to the continued economic resurge­nce of this state.”

 

The Coalition released its election costings yesterday, including a plan to lease Melbourne’s sewage system for 50 years, raising $5.4bn to pay for its infrastructure commitments. Opposition Treas­ury spokesman Michael O’Brien pledged no new taxes and fiscal prudence, and committed to keeping debt as a proportion of GSP to less than  6 per cent for four years.

A Coalition government would spend $17.6bn over four years deliver­ing its election promises, including a high-speed regional rail, construction of the East West Link and North East Link roads, extension of the metro rail lines to Clyde and Baxter, and upgrades for hospita­ls and police stations.

“Labor is completely reckless, they are prepared to mortgage not only our kids’ future but our grandkids’ future,” Mr O’Brien said. “They want to blow the state’s debt through the roof.

“This is the clear choice this election: vote Labor — higher taxes, higher debt — or vote Liberal and National, and we will give you tax cuts, cost-of-living relief and fully funded infrastructure that will make your life easier.”

The costings came as the major parties neared the end of an extrav­agant campaign in which infrastructure promises from both sides have been calcul­ated by the Grattan Institute to be approaching more than $170bn, covering existing and new commitments.

The huge cost of the promises, estimated as the highest since the 2007 federal election, has raised eyebrows and triggered criticism about a win-at-all-costs mentality, as the outcome of the poll sits on a knife edge.

The Liberal Party is still hopeful of winning several seats but must win eight for a majority. It believes it can win Carrum (which Labor holds by a 0.7 per cent margin), Cranbourne (2.3 per cent), Narre Warren North (4.5 per cent) and Wendouree (5.8 per cent).

Labor believes it can win the Liberal seat of Burwood (held by a 3.2 per cent margin). Labor is confident of remaini­ng in power, although possibly governing in minority with the Greens.

Labor has been outspending the Coalition 3-1 on TV advertising, as well as dominating display and online ad spaces. Former premier Jeff Kennett slammed the spending spree as unnecessary and disappointing, and accused Labor’s cabinet of being profligate with taxpayers’ money.

“I have never seen so much irrespons­ibility and lack of care, and a will to win that exceeds any semblance of decency or responsib­ility,” Mr Kennett said.

“I think the government has to understand that the money they commit is not theirs, it belongs to the public.”

The Victorian Chamber of Commerce and Industry said infrastructure was necessary to ease congestion and liveability challenges, which were a drain on productivity, but said the state needed to prioritise its AAA credit rating.

Moody’s ratings agency ­advised in June that the state’s debt level, which at the time was about 6 per cent of GSP, was manageable, but said a conservative approach to spending was needed to maintain its AAA rating.

A re-elected Andrews government would borrow to fund the $15.8bn North East Link road project, $10bn Airport Rail Link and $6.6bn level crossing removal project expansion. The federal government has committed a total of $6.75bn for North East Link and Airport Rail link, meaning $25.6bn will need to be borrowed.

Additional reporting: John Ferguson