The bill is in, the brakes are on as Victorian budget handed down
The Andrews Labor government has put the brakes on big new spending and building initiatives as it begins the task of paying for the huge policy agenda it took to last year’s election.
Monday’s state budget revealed a new squeeze on the Victorian public service, which is expected to save $1.8 billion in ‘‘efficiencies’’, increased taxes and the launch of a borrowing program that will bring the state’s net debt to $55 billion within four years.
Facing stamp-duty write-downs of $5.2 billion and without another $2.6 billion promised by the defeated federal Labor Party, Victoria will also let the Commonwealth do the early heavy lifting on the $15 billion Airport Rail Project.
Treasurer Tim Pallas conceded on Monday that it had been ‘‘hard’’ to bring down a surplus budget while keeping Labor’s election promises, with the budget papers showing large amounts of money being pumped over the coming four years into Solar Victoria, the North-East Link, free kindergarten for three-year-olds and other campaign commitments.
The public sector wage bill is set to grow again, by larger-than-forecast sums but Mr Pallas said the money will go to paying for more nurses, police and paramedics rather than generous wage rises for the existing workforce.
As Labor must work hard to find the money to meet its election promises, this year’s budget is sparse on new spending, although $2 billion has been found to upgrade the Sunbury rail line to allow it to take the new fleet of suburban trains.
Financial ratings agencies Moody's and S&P both indicated on Monday afternoon that they were comfortable with the state's borrowing plans and that the vital AAA credit rating was safe.
Mr Pallas said the triumph of the Coalition on May 18 had forced him to write off about $2.6 billion he had banked in the hope federal Labor was elected.
‘‘Most obvious was the $2 billion that federal Labor offered towards Melbourne Metro, which was not offered by the current Coalition government, so that would have gone straight onto our balance sheet,’’ Mr Pallas said.
But he said the Andrews government respected the decision the Australian people had made and would work ‘‘as constructively as possible’’ with the Morrison government.
‘‘But I’m not going to give up on the basic proposition that we’re [receiving] about 17.7 per cent of national infrastructure allocations, we’re about 26 per cent of the nation’s economy or population,’’ he said.
‘‘Effectively that means every year, about $200 is lost by every man, woman and child in this state and that money is spent elsewhere.’’
The recent $5.2 billion write-down in stamp duty revenue had made the balancing act of election pledges with surpluses tougher, but the government was determined to honour every promise, he said.
‘‘Governments have to make choices about whether they want to find excuses to exculpate themselves from honouring their commitments or whether they want to get on and deliver their commitments and certainly from our perspective the number one commitment was delivering on our commitments we gave,’’ he said.
‘‘Now it’s been hard.
"It’s required some very substantial efforts by government to ensure that we keep healthy surpluses going forward and make sure that we keep the faith of the Victorian people that we honour the mandate they gave us.’’