The Victorian government’s attempt to blame the Reserve Bank for the growing state debt has been rebuffed by economists.
It comes before Victoria’s “tough” state budget, which will be unveiled tomorrow and include a hefty charge to pay off the state’s multi-billion dollar COVID-19 lockdown debt, is released.
According to the Nine tabloid The Age, Daniel Andrews’ administration would outline a $31.5 billion “COVID-19 Debt Repayment Plan” as part of the budget to pay back emergency money borrowed at the height of the global crisis.
Premier Daniel Andrews has argued in the past that Victoria’s debt is so large and expensive because the Reserve Bank has raised the statutory cash rate 11 times in the last 12 months.
Today, the government maintained its secrecy, with Treasurer Tim Pallas refusing to give his ninth budget a name or a catchphrase.
Premier Daniel Andrews has argued in the past that Victoria’s debt is so large and expensive because the Reserve Bank has raised the statutory cash rate 11 times in the last 12 months.
Earlier this month, Andrews claimed that state governments were instructed to “go and borrow” at a 2020 national cabinet meeting in order to avert a 25% unemployment rate.
He claimed that if he had been told otherwise, his administration would not have borrowed as much money at the time since “interest rates won’t be going up.”
The RBA cannot be held accountable, according to AMP economist Shane Oliver, as it is already too late.
“I think is a bit over the top at this point given Victoria does have a higher debt level than other states,” he said.
“I think we’re going to see a tough budget.
“In other words, there won’t be a lot of handouts. If anything there will be spending cuts.”
The Liberals are preparing for “an absolutely brutal budget,” according to Shadow Treasurer Brad Rowswell.
“We’re fully expecting Victoria’s tax take to increase … at a time when Victorians can least afford it,” he said.
“You think things are tough for Victorians at the moment? It’s only going to get worse.”
Transport and Infrastructure Minister Jacinta Allan today dodged questions about the possibility of new or increased taxes.
“The debt that was taken on at the urgency of the Reserve Bank,” she said.
“This will not be something that will be affecting hardworking Victorian families. They’ve already had enough.”
Mary-Anne Thomas, the minister of health for Victoria, vehemently defended the government’s actions when questioned about the impending budget on Sunday.
“We borrowed money in order to keep Victorians at work to keep small business thriving and of course to save lives,” she told media.
“But now is the time to commence the payback of that… money that’s been borrowed”.
According to the plan, funding for 372 programs that are about to expire, including ones for road repair, domestic violence, and disability support, will be reduced.
