Wednesday, 8 June 2022

Public Accounts and Estimates Committee

Report on the 2020–21 Financial and Performance Outcomes

Mr ANGUS (Forest Hill) (10:13): I am pleased to rise this morning to make a contribution on the Public Accounts and Estimates Committee report entitled Report on the 2020–21 Financial and Performance Outcomes. It was tabled in this place in April of this year. I want to look this morning particularly in relation to the net debt position of the state. I turn to page 17 of the report and look at figure 2.6 and finding 6. I note that we see there in figure 2.6 graphically represented a very clear picture of the debt situation of the state as it is up until that point in time. We can see under finding 6 it says:

General government net debt grew by $28.4 billion from 2019–20 to $72.7 billion in 2020–21, which was 15.6% of gross state product.

What we cannot see here but what we saw the other day with the release of the budget for the next financial year of course is the fact that the rate and the quantum of net debt here in Victoria are going to continue to accelerate at a dramatic rate and we are going to be heading towards about $167.5 billion of state debt by the 2025–26 year. So this graph will be completely off the charts in the next report that PAEC does. As I was going back through the numbers, that represents a 751 per cent increase over the 10 years of this Labor government right through to the end of the forward estimates. So that shows you what a dramatic decline we have got in the financial capacity of the state and what a dramatic increase we have got in the debt here in Victoria, and that augurs very badly for all Victorians in my view.

If we turn over to page 20 of the report, under section 2.3.2, it again talks about the net debt, and I want to read a quote from the report itself. It says:

The Committee notes that Moody’s Investors Service, one of the credit rating agencies, had raised concerns over Victoria’s increasing debt, stating that it’s ‘stand‑alone credit profile will deteriorate over the next four years reflecting a marked erosion in Victoria’s governance of its public finances, at a time when the state faces substantial operating deficits as it responds to coronavirus‑induced economic disruption and embarks on a significant capital spending program’.

So we can see there very clearly even at the stage when this was written and published earlier this year but relating back to those previous financial statements that I mentioned that the ratings agencies are cautioning the state government in relation to where they are heading regarding the quantum of debt. As I said a moment ago, it does not augur very well inasmuch as they are obviously getting nervous. We lost the state’s AAA credit rating quite some time ago under this government, and it looks like that will continue to deteriorate. Not only that but obviously the net results, despite being touted in the past as being surpluses, are again deficits, and we can see deficits out as far as we can see at the moment. That again augurs very badly for the state. If we look under section 2.4.1, it talks about gross state product. It says:

Victoria’s GSP fell 0.4% in 2020–21 as economic activity was impacted by COVID‑19 related measures.

It goes on:

The Committee notes that the 2020–21 fall in Victoria’s GSP is the first since 1992.

Right there we can see that the red lights were flashing even as long as go as these numbers and these results were in the frame. We can see that the red lights were flashing and there should have been caution, but what have we seen? We have seen just continued excess. We continue to see waste and mismanagement, and clearly that has been well identified on the major infrastructure building programs. We know that the budget blowouts in relation to those have already exceeded $28 billion, and that is just not sustainable. This government seems to think it is sustainable to keep blowing budgets and just spending, to quote the Premier, ‘whatever it takes’ to build infrastructure assets. That is not the way things work in the real world, and this government is heading—and all Victorians, indeed, are heading—for a financial disaster because the government is not constraining itself. It is not heeding the messages that are here from third parties particularly but also in terms of common sense, how you run projects and how you run the state budget. So there is some very sobering information within this report, and I commend it to all members.