(Apologies for the lack of posting over the last couple of days. I have been in Canberra on a work conference. If you have never been to Canberra, but lived through the 70's the two are probably much the same.)
But whilst I was away the biggest spending Victorian budget in history was handed down by Steve Brackswards and John Bumble. And they have done a u-turn from spending our money on public servants towards cranking up capital investment. (Big new buildings and stuff are handy around election time...)
To understand
Victoria's budget and balance sheet you need to go back to what Treasurer John
Brumby inherited from Jeff Kennett 1998-99, when total budget sector employee
costs were only $7.4 billion. The Kennett government slashed the public sector
workforce from 260,000 to about 160,000 in an exercise that largely remains
unprecedented anywhere in the civilised world over the past 50 years.
When elected the Bracks government set about restoring some of the slashed services
and billions of extra dollars were poured into police, teachers, nurses and the
like. This explains the 67% surge in employee costs to $11.8 billion over the
six years to 2004-05. That's an extra $4.7 billion a year hit on a budget that
was in surplus to the tune of $1.5 billion in 1998-99.
However, there
was a major shift in the rhetoric yesterday with no more talk about extra nurses
and teachers – they've already more than got their whack. Nup, now we're going on
a $10 billion infrastructure spending gorge over the next four years to improve the
facilities that all these newly employed public servants work in. New schools, cop shops and
hospitals will be popping up all over the place.
But the only problem is that
Victoria is going back into debt to fund it. I have no problems with debt, and I think that chasing massive surpluses when debt is cheap is a bit silly. But debt isn't so cheap anymore, and it is getting more expensive. So why the Bracks and Treasurer Brumby would launch us into debt is anyones guess. They can't manage a surplus, so fagged if I know how they figure they can keep a grip on a balance sheet that is in the red.
Remember, the Bracks government inherited the strongest finances of any incoming
state government over the past 30 years, with the exception of
Queensland. And Queensland retains a balance sheet about $20 billion stronger than
Victoria.
Our money has been slowly eroded by big spending programs
and the best evidence of the squandered inheritance being its admission there
was no room left in the budget to fund the Mitcham-to-Frankston freeway, despite the $600 million Canberra was prepared to kick in.
It's all a bit scary when you think about it. The Victorian ALP Government haven't proven themselves to be great financial managers (although they have done a reasonable job) any economic downturn would send our budget soaring towards a $1 billion deficit in no time at all....