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.
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.