Rising up from the ashes? Unpicking the Victorian Treasurer’s “baptism of fire”

Victoria’s new Treasurer, Jaclyn Symes has handed down her first budget.

18 months out from the state election, and with the state in a substantially more difficult financial situation than in previous years, this was a baptism of fire.

It is clear from the budget documents the government recognises that the cost of living is still biting. At the same time, the state's record debt — projected to be $194 billion by 2028/29 — is limiting the Government’s ability to make big funding announcements that have been the hallmark of the Allan (nee Andrews) Government.

Treasurer Symes had her work cut out for her balancing a range of competing priorities.

While the analysis continues, it's clear that the Treasurer has made the political calculation that voters care more about the delivery of projects and services than they do about reducing debt. This is clear in the continuation of the government’s traditional approach to economic management, as set out in last year’s Economic Growth Statement.

The budget confirms the government will maintain its approach and level of taxation, leave untouched the growing net debt, and post a small surplus (largely due to the taxes from the property market rebounding and GST windfalls), while cutting some expenditure and deferring some capital spending.

Symes said when she became Treasurer that she would be different. Yet this budget continues in both form and substance as those from her predecessor, Tim Pallas.

Symes said when she became Treasurer that she would be different. Yet this budget continues in both form and substance as those from her predecessor, Tim Pallas.

While the Treasurer attempts to limit the red ink, the budget includes a massive health funding injection, as well as cost of living support the Government feels is necessary to improve its position in the polls – such as free travel for under 18s and for seniors (weekends only).

Further, the budget signals that the Government is not stepping away from its major infrastructure commitments such as the Suburban Rail Loop. Instead, it will look to demonstrate how investments in 'Big Build projects' pay off for the broader community. For instance, providing extra funding for an increase in rail services across a number of suburban lines when the Metro Tunnel opens later this year.

In a year when a range of transport infrastructure projects are set to open, particularly the West Gate Tunnel and Melbourne Metro, Symes will be hoping this budget calms Victorians' concerns about financial management ahead of what Spring Street is hoping will be transformational change.

This budget highlights the Government’s focus on shorter horizons and resetting the expectation that every problem can be solved with a big and expensive piece of infrastructure – commensurate with both the state’s financial position and the impending 2026 election.

In coming months, the Opposition will likely continue its focus on Victoria’s debt and rising interest repayments, as well as the impact of this on Victoria’s ability to fund essential services. Already the Opposition is running a damaging line that Victoria’s debt bill of “$29 million a day” could instead be building “a new early learning center every day”. Debt and deficit are often intangible for voters, so it’s clever to explain the issue in terms that will resonate around kitchen tables.

For the Government, the fiscal and electoral environment will likely see three areas of focus over the remaining 18 months of its term of office:

1. Finding ways to 'do more with less'
2. Facilitating private sector investment to underpin economic growth, and
3. Selling a compelling narrative that stitches together the achievements of the past decade with more modest plans for Victoria’s future.

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This article was originally published on LinkedIn:

https://www.linkedin.com/pulse/rising-up-from-ashes-unpicking-victorian-treasurers-baptism-veulc/