The imposition of new taxes on property owners and big business will not stop Victoria’s debt from ballooning to $171b.
The Andrews government will continue to spend money it does not have for at least another year before promising an operational surplus of $1b in 2025-26.
The Victoria Labor Government brought down its ninth budget yesterday which will see Victorians face a decade of pain in order to start repaying the government’s enormous debt.
But even with the new taxes and 4000 cuts to public service jobs, ratings agencies have said the budget will do little to improve Victoria’s credit score which is the lowest of any state in the country.
Meanwhile employer groups insisted Victoria was now the worst place in Australia to do business.
Opposition leader John Pesutto slammed the budget as “nasty” and warned that it would worsen the cost-of-living crisis for people already hit by higher interest rates and inflation.
Dan Andrews blamed the state’s horrible financial position on Covid-19 but financial analysts said that was a lie.
UNSW economics professor Richard Holden said cost blowouts on major government projects as well as continued big spending had contributed.
“There was actually a lot of debt accumulation prior to Covid,” he said. “Framing it all as this is paying back Covid is maybe a bit too clever by half.”
As for Covid-related debt, Mr Holden said failures such as hotel quarantine had led to Victoria’s “bad situation”.
Treasurer Tim Pallas said taxes on property holders and on big employers would help the government pay off $30bn of Covid debt in 10 years.
“This is the start of a new era, the post-Covid era for the state and its finances,” he said.
“These measures are temporary, they are targeted, and above all they are responsible.”
Victorians with more than one property will pay a minimum of $5000 over the next decade, with more being paid by people whose land is valued at over $100,000.
Big businesses that have already been hit by a 42 per cent hike in WorkCover premiums as well as a mental health levy that they have had to pay since 2021 will bow be hit with a payroll levy as well.
The government announced that 4000 public service jobs would be cut, but the state’s wages bill would still increase by $5bn over the forward estimates.