Integrity experts call it a $12b slush fund. Now the new treasurer is asking questions

Victorian Treasurer Jaclyn Symes has questioned her government’s use of treasurer’s advances after integrity experts described the use of the “slush fund” holding $12.1 billion as manifestly out of step with other Australian jurisdictions.

In her first public challenge to the budgetary approach and financial management of her long-serving predecessor, Tim Pallas, Symes revealed she had sought advice from the Department of Treasury and Finance on how the contentious advances were being used.

Victorian Treasurer Jaclyn Symes, pictured with Premier Jacinta Allan, has sought advice about her government’s use of treasurer’s advances. Credit: Jason South

Symes took the step in response to national figures, compiled by the Centre for Public Integrity, showing that in the three years since the end of the COVID-19 crisis, the state government has put $39.9 billion – nearly 15¢ of every dollar appropriated by government – into treasurer’s advances.

This is more than twice the money the Commonwealth and all other state governments combined have put into similar contingencies. In the current financial year, the federal government set aside $1 billion for treasurer’s advances and NSW just $20 million. Queensland, South Australia and Tasmania do not use them.

While not all public money held in treasurer’s advances is necessarily spent, in Victoria, most of it is.

Department of Treasury and Finance secretary Chris Barrett confirmed to parliament two months ago that Victoria had significantly expanded the purpose for which it used advances.

Traditionally, they have been a means of meeting unforeseen and urgent costs arising after a budget is handed down. The Victorian government now also uses them to pay for large capital works projects and other non-urgent expenditure.

Barrett, in his evidence to a public estimates and accounts committee hearing shortly before Symes replaced the retiring Pallas as treasurer, said the shift in policy, although largely unpublicised, had taken place several years earlier.

Centre for Public Integrity director and University of NSW law professor Gabrielle Appleby, an expert in government integrity and constitutional law, said the effect was further obfuscation of the budget process and how public money was being spent.

“What has happened in Victoria is they have used the ambiguity and lack of limits on the advance to put in a whole new system that no one was aware of,” Appleby said. “This is just a slush fund for the government to use as it will.

The use of treasurer’s advances expanded 10-fold under former long-serving treasurer Time Pallas.Credit: Gus McCubbing

“It demonstrates that parliament has lost control of the purse strings.”

Economist Saul Eslake said the change in practice appeared to be a “derogation from the conventional means of accountability to parliament” for expenditure of public money.

A government spokesperson said Symes had sought advice from her department on how treasurer’s advances were being used.

“Our major projects provide significant value to Victorians and the public deserve to know that public funds are being used for public benefit,” the spokesperson said.

“While we have improved transparency via annual reporting, the treasurer has asked the Department of Treasury and Finance for advice about the ongoing use of treasurer’s advances to ensure Victorian taxpayers have certainty in how their money is being spent.”

This masthead previously revealed that in 2023-2024, treasurer’s advances were used to provide $1.36 billion for the Suburban Rail Loop, a $1.45 billion top-up to public hospitals and $380 million to meet the contractual penalty of dumping the Commonwealth Games.

In total, advances were used to funnel $9.6 billion into 161 projects. This is a 10-fold increase since the first year of the Andrews government, when $991 million was held in treasurer’s advances.

At the start of the pandemic, advances were used to cover an additional $10 billion for Victoria’s emergency public health response. A similar approach was taken by the federal government, which put a combined $35 billion into treasurer’s advances during the two financial years most impacted by COVID-19.

Centre for Public Integrity director Professor Gabrielle Appleby.

The auditor-general examined Victoria’s use of treasurer’s advances in November 2020 and gave the government a clean bill of health, finding that all advances were used to meet urgent expenses.

The Centre for Public Integrity, in an issues paper provided to this masthead, is alarmed at the mission creep since the COVID-19 crisis eased.

“The practice that is developing in Victoria sees the parliament appropriating amounts of money for no stated purpose, available to government to use as it sees fit and increasingly with no evidence that the expenditure was unforeseen and urgent, as should be the strict conditions for its use,” the paper warned.

“Victoria is manifestly out of step with other jurisdictions in a way that fundamentally undermines the principle that parliament should authorise the moneys to be spent for specified purposes.”

Shadow treasurer James Newbury said the government approach increased the risk of misused funds and corruption.

“Taxpayer money should not be transferred into private slush funds where there is no proper oversight,” he said. “The Centre for Public Integrity has exposed that Victorian Labor is nation leading in their improper financial behaviour.”

Barrett, a former chief of staff to former federal treasurer Wayne Swan, told the estimates hearing that treasurer’s advances were used to hold public funds for large infrastructure projects in a central contingency, rather than by government departments or agencies managing the projects, as a way of exerting tighter control over the expense of public funds.

He said the Victorian government had introduced more reporting requirements for treasurer’s advances to provide greater transparency and more information about what advances were used for.

The explanation did not convince Eslake, who pointed to Victoria’s difficulty in delivering infrastructure projects within budget and restraining government spending.

“It would only hold water if Barrett were able to show that doing it the way they are now doing it resulted in greater discipline over spending and demonstrably showed there was a reduce risk of cost overruns,” he said. “I didn’t read anything in what Chris Barrett said that led me to think that would be the case.”

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