Wednesday, 31 May 2023

Victorian Future Fund Bill 2023

Second reading

Debate resumed on motion of Tim Pallas:

That this bill be now read a second time.

Brad ROWSWELL (Sandringham) (15:10): It has been a big week. Just to flag it with the house, I do not anticipate doing my full 30 minutes on this bill, but with a bit of encouragement and a few interjections I might give it a crack. We will see where we land.

Similar to the State Taxation Acts Amendment Bill 2023, the opposition was informed of the government’s intention for this bill to be second read and brought on immediately for consideration in this place just last Thursday. We made an urgent request of the Treasurer’s office to provide the opposition with the customary briefing that the opposition is entitled to as part of the ordinary course of bringing bills before this chamber. I am grateful to the Treasurer’s office for accommodating that request at 3 pm on Friday. As I expressed concern during my contribution on the State Taxation Acts Amendment Bill 2023, I also now express concern that, in sharing the bill with the opposition, the Treasurer’s office said the following:

As these have not yet been second read, they are still Cabinet-in-Confidence, so please don’t share with stakeholders.

I again make the point, as I did during the State Taxation Acts Amendment Bill contribution, that we are very, very uncomfortable about that circumstance on this side of the house because of the detail within these bills – many, many pages of legislation – and we think that those pages of legislation should be considered and should be scrutinised in an appropriate fashion. If I am getting a direction from the government to keep them in a close hold because they are still considered cabinet in confidence, that is an unacceptable circumstance because it means that those Victorians that may be affected or may be impacted by the bill, the legislation that is being considered, before it becomes law do not have the opportunity to engage in that conversation, which is the usual process which is the foundation of our democracy – engagement with those who are affected by decisions we make here. So I just from the outset want to acknowledge that that is not the ideal circumstance for this bill to be second read and made available to others for their consideration and scrutiny.

We on this side of the house largely agree with the principle that we should be establishing a Victorian Future Fund. We think that that is a very good idea, and we do have a debt problem in this state. We have got a massive debt problem in this state, climbing from $168 billion this year through to $171 billion at the end of the forward estimates. By admission or by omission – one or the other; I am not entirely sure at this point in time – the government’s introduction of this bill into the Parliament I think is a massive concession, actually, by the government of this and an acknowledgement that they do have a debt problem. We are in a debt crisis in this state at the moment. As I have said previously, daily interest repayments are $10 million each and every day, climbing to $15 million a day on 1 July this year, each and every day, climbing to $22 million each and every day just in interest payments alone at the end of the forward estimates. We do have a debt problem in this state, and the government actually bringing forward this legislation, the Victorian Future Fund Bill 2023, to my mind is an acknowledgment and an admission by the government that we do have a debt problem and we are in a debt crisis.

My understanding is that this Victorian Future Fund will firstly be in receipt of about $8 billion, maybe just over $8 billion, after this government decided to privatise the licensing division of VicRoads. It is just an interesting point. Those on the government benches pillory those in the opposition. They like to take us back – they like to do a revisionist view of history – to the days of Kennett, Stockdale and others, and they say that the Liberals guys are the cuts guys, that we are the people who privatise, that we are the people who rid the state of any state assets. But it is actually those on the government benches who do just that, and as part of the bill we are considering – the Victorian Future Fund Bill 2023 – that is exactly what the Andrews Labor government has done in order to have the $8 billion or so to put into the Victorian Future Fund. Now, they have got to start somewhere. It is just curious that they pillory this side for privatising things when they do exactly the same thing themselves.

My understanding is that the Victorian Future Fund can also be in receipt of the proceeds of the sale of Crown land – not all sales of Crown land. The bill enables the proceeds of the sale of Crown land to be received by the Victorian Future Fund – and also future surpluses. As I am sure you know, Acting Speaker Settle, the government is anticipating an operating cash surplus in the outward years of the current budget – in the last two years – in the third year $1 billion, in the fourth year $1.2 billion. Call me cynical, call me what you like –

A member: You’re cynical.

Brad ROWSWELL: I was wondering when you would pipe up.

Frankly, I will believe it when I see it, but at a principles level I think it is actually a good thing to do with any future surpluses that the state of Victoria may have for the future fund to be in receipt of those surpluses in order to top up the fund and grow the fund, which is there to offset our debt.

A couple of other points: I do have a concern with the model that the government has chosen to use for our Victorian Future Fund. I would have preferred the Canberra model of a future fund as opposed to the New South Wales model of a future fund. I think that the Canberra model of a future fund, under the leadership of Australia’s longest serving Treasurer, Peter Costello, has done great things for our country. In fact the Future Fund, through the federal lens, is the largest investment fund in the Southern Hemisphere, managing something like – I am going to misquote the total of the fund, but it is a rather large amount – hundreds of billions of dollars, from memory. I think that is a proven model that is very well resourced and focused on generating decent, profitable returns, which can only benefit the liabilities of the federal public service, which it was initially set up to offset. So I am concerned that we are potentially missing the opportunity to have that beefed up.

Just to give one example, the Treasurer is responsible for the fund. Under this legislation the Treasurer has discretion to appoint a person to manage the fund. The terms of the appointment are at the discretion of the Treasurer. By contrast the Commonwealth Future Fund is governed by a board of seven, six members and one chair – sure, appointed by the Treasurer, but separate to the Treasurer – and the Commonwealth Future Fund legislation refers to risk and return considerations as well, which are not mentioned in the Victorian Future Fund legislation, as I read it.

I make just a final comment in relation to the reason why the government is doing this, the reason why the government is establishing this Victorian Future Fund through the Victorian Future Fund Bill 2023. I would like to give them credit, and I would like to say that they are doing it because they recognise it is an opportunity to manage our economy in a more appropriate way, in a more measured and reasonable way that gives consideration to, quite frankly, the risk environment, the fiscal environment, that many state governments, many jurisdictions, find themselves operating in at the moment. I would like to give them some credit, to say that they recognise that the way they have managed the economy over the last nine years has not been the best way to manage the economy – look at the increase in taxes in this budget, look at the projections in this budget in terms of real wage growth, in terms of unemployment, in terms of our net debt position and our daily interest repayments. But I cannot say with any certainty, in fact I cannot say at all, that that is the motivation behind the government establishing the Victorian Future Fund. It is under pressure from ratings agencies, so let me go into that in a little bit of detail. One of the ratings agencies, Moody’s, has said the following:

Sustained inflationary pressures, delivering on pre-election commitments and cost-of-living support measures combined with various new and existing capital spending initiatives – such as decarbonising the electricity grid and social housing investment – will elevate execution risk in relation to the state’s fiscal repair drive.

Victoria’s debt burden will continue to climb over the forward estimates … we do not expect Victoria’s debt burden to stabilize before the end of fiscal 2028, maintaining negative pressure on the state’s rating.

…

Although debt affordability is currently adequate with interest payments at an estimated 4.9% in fiscal 2023, higher interest rates will significantly constrain Victoria’s operating profile over time …

We expect underlying inflation pressures and interest rates remaining higher-for-longer, combined with more volatile global economic growth and elevated geopolitical volatility will increase cost pressures for the state and make the budgeted expenditure savings challenging to achieve.

Now, why does this matter? Well, this matters because ratings agencies, whether it be Moody’s or Standard & Poor’s (S&P), review after a state budget our credit rating. As has been noted in previous contributions today on these budget bills, it is under this government and the economic circumstance that they have overseen and perhaps even created that our credit rating has dropped from where it was when the last coalition government left office to where it is today.

It was just interesting, actually, ahead of the budget and in, by one measure, an extraordinary step, rating agencies were firing some warning signals at the government to say: here is your opportunity to get your house in order, here is your opportunity to double check and to triple check what you are doing, what you are saying, what your debt profile could be, where your daily interest repayments might be and where your net debt might be, because if you do not get those things in check, if you do not get your spending in check, if you do not get your economic drivers in front of your fiscal strategy in check, then we are going to downgrade you further. There is going to be pressure on you to be downgraded further. And why does that matter? What does a drop, a further drop, under this government in a rating from one of these agencies mean? It means that it costs us more to borrow money. It means that we are subjected to a higher interest rate than other jurisdictions around the place that might have a better credit rating than we do. That means that Victorians are paying more because of a drop in rating, because we are paying more interest, and we are getting less for it, because we have not got as much cash to spend on things.

Again I would like to give the government credit for bringing this legislation forward, effectively establishing a state offset account – the state of Victoria offset account – to help balance the net position of the state and to help pay off debt, which is a good principle and a principle we agree with. But I cannot say that for certain because of the pressure placed upon this government to bring this legislation for consideration here, because I suspect that without doing that the state of Victoria could have been subjected to further pressure on their current rating.

I flagged at the start that I would not be taking my full 30 minutes to contribute to this debate, and with 15 minutes to go – that is an invitation to interject at this point, by the way, so I have got some talking points to go on! No, it is all right.

A member: Crack on, Brad! Keep going, mate.

Brad ROWSWELL: Thank you. Where have you been?

A member: You can do it.

Brad ROWSWELL: I will take this opportunity, actually, to just outline a couple of other things which are impacting on our state’s ability to – well, let us borrow the government’s phrase – do what matters. One of those things of course is the close to 50 new taxes that this government has introduced during –

Will Fowles: On a point of order, Acting Speaker, the member for Sandringham is having a pretty good go at diverting the topic of this debate from the Victorian Future Fund into matters that might suit his political narrative. I would ask you to bring him back to the bill.

The ACTING SPEAKER (Michaela Settle): What is your point of order?

Will Fowles: Relevance. Please bring him back to the bill.

The ACTING SPEAKER (Michaela Settle): Could I bring you back to the bill, please, member for Sandringham.

Brad ROWSWELL: I am delighted to do so, Acting Speaker. We are considering the Victorian Future Fund Bill 2023, and I have just asserted, as the lead speaker for the opposition, that there are particular economic circumstances which have driven the government to bring this legislation forward. One of the economic considerations I am proposing, as is my right to do, I believe, is the fact that the Labor government have introduced close to 50 new taxes since they came to office nine years ago: a new stamp duty on property tax transfers between spouses, an increased stamp duty on new cars –

The ACTING SPEAKER (Michaela Settle): Member for Sandringham, I did ask if you could return to the debate, please.

Brad ROWSWELL: Acting Speaker, on the point of order, which I thought you had ruled on, I believe – and please guide me – I am within my right to outline the broader economic circumstances through which the government has brought forward this bill.

The ACTING SPEAKER (Michaela Settle): I ask the member to continue.

Brad ROWSWELL: Thank you, Acting Speaker. Some of those taxes include a new stamp duty on off-the-plan purchases, a new so-called vacant home tax, a widening of vacant residential land tax to uninhabitable properties, a retrospective increase in insurance duty for overseas-based insurers, a new annual property valuation to increase land tax, a cladding rectification tax, an environment mitigation levy, an increased luxury car tax, an increased land tax for homes with contiguous blocks on a separate title, increased fire services property levies in 2015–16 and 2019–20, a new point-of-consumption gambling tax, a tripling of brown coal royalties, gold mining royalties – I am only up to 17. I know I should not be using props and I know that is not within the standing orders, but there are a lot here. And just in this budget that was handed down last Tuesday there are a new tax on jobs, a new tax on schools, a new tax on rent and Labor’s debt tax – all taxes on aspiration, all taxes on a fair go. These are the economic circumstances which I think it is important to acknowledge in the context of this Victorian Future Fund Bill, which the government is bringing forward in order to deal with some of the outcomes of the taxes that they have unleashed on some of our most vulnerable in this state.

I indicate to the house that the opposition will not be opposing this bill, and I look forward to the contributions of government members and opposition members from here on in.

Will FOWLES (Ringwood) (15:29): It is my pleasure to follow my friend the member for Sandringham. He has had a very big week, a very big week indeed. I cannot imagine how difficult it must be to try and address all of these bills, all of these very important matters, with all the noise going on. We have had leadership speculation, we have had the resignation of the member for Warrandyte, we have had the Leader of the Opposition only receiving that by way of press release, we have had –

James Newbury: On a point of order, Acting Speaker, 30 seconds into the contribution all we are getting is verbal diarrhoea.

The ACTING SPEAKER (Michaela Settle): What is your point of order?

James Newbury: On relevance. I would ask you to bring the member back to the bill at hand.

The ACTING SPEAKER (Michaela Settle): It has been a very broad ranging debate, down to 2015 taxes, so I will allow the member for Ringwood to continue.

Members interjecting.

Will FOWLES: No, you are defying the Chair. Thank you, Acting Speaker –

James Newbury: On a further point of order, Acting Speaker, internal Liberal Party matters by no definition fall under the broad-ranging definition of relevance, and I would say to you, Acting Speaker –

A member: That’s not a further point of order.

James Newbury: It is a further point of order. Acting Speaker, I would ask you, on a further point of order on relevance, to bring the member back to the question.

The ACTING SPEAKER (Michaela Settle): I ask the member to continue. There is no further point of order.

James Newbury interjected.

Will FOWLES: Thank you very much, Acting Speaker. Oh, well, Captain Snarky Pants has had a little swing at the Chair on the way out the door – terrific. There you go. I mean, the member for Brighton has been throwing the toys out of the cot all week –

Kim O’Keeffe: On a point of order, Acting Speaker, we do not have name-calling in the chamber, thank you very much.

The ACTING SPEAKER (Michaela Settle): I ask the member to refer to members by their correct titles.

Will FOWLES: And I shall, Acting Speaker. I was empathising with the member for Sandringham, who has had a challenging week, not just because the member for Brighton has had his third or fourth tantrum of the week but because with all of this leadership speculation, with the stepping down of the member for Warrandyte, with the – how many times are we going to litigate this?

Richard Riordan: On a point of order, Acting Speaker, I again refer to previous members of the chamber who have drawn your attention to the relevance of the member for Ringwood –

Will Fowles interjected.

Richard Riordan: Well, it is a further issue, member for Ringwood. And under no circumstances does a sort of a Ringwood view of the coalition’s inner machinations have anything whatsoever to do with the –

The ACTING SPEAKER (Michaela Settle): What is your point of order?

Richard Riordan: Relevance.

The ACTING SPEAKER (Michaela Settle): I ask the member for Ringwood to return to the bill.

Will FOWLES: Thank you very much, Acting Speaker. Ringwood of course is immediately to the south of Warrandyte. I live about 200 metres from the electorate of Warrandyte, and I am sure many of the matters affecting my community in Ringwood would also affect those good electors of Warrandyte, who are now being subjected to a by-election as part of a vanity exercise by the departing member – an outrageous misuse of public funds simply because he had a tantrum.

Richard Riordan: On a point of order, on relevance, Acting Speaker, I think there needs to be a point drawn. The member has been talking now for 4-odd minutes and he has –

Members interjecting.

Richard Riordan: Well, he has wasted 4-odd minutes of the chamber’s time, and he has not yet mentioned the words ‘Victorian Future Fund’ or ‘state taxation’ or ‘budget’ or ‘appropriation’. He has not touched on any of the topics of the week.

The ACTING SPEAKER (Michaela Settle): Order! I ask the member for Ringwood to return to the bill.

Will FOWLES: Thank you very much, Acting Speaker. There have been so many tantrums from those opposite today. So let us talk about the Victorian Future Fund – you are insufferable, Jimbo!

James Newbury: On a point of order, Acting Speaker, the behaviour of the member is appalling. In terms of your capacity to keep order in this chamber, I would ask you to counsel the member in terms of his behaviour in this chamber.

The ACTING SPEAKER (Michaela Settle): I ask the member to return to the bill.

Will FOWLES: Thank you very much, Acting Speaker. It is interesting that the member for Brighton, who sledged you on his way out of the chamber, thinks that others ought to be counselled for their behaviour, but there you go.

The Victorian Future Fund, as I was busy saying before being interrupted yet again by those opposite, is part of the government’s important fiscal strategy to make sure that over time we see net debt levels stabilise and that we are able to repay the COVID debt. What you have is a growing asset pool under the Victorian Future Fund, a growing asset pool that by deed of this legislation will be able to be used by ratings agencies in making their assessments of the state of the Victorian government’s balance sheet and budget. It will be able to be treated by those agencies as a debt offsetting fund. That is not a particularly novel idea. It has been used in other jurisdictions, particularly Queensland and I think New South Wales. It is an entirely valid strategy and we say a very good use of the VicRoads modernisation project.

I do want to raise a small point of difference with the member for Sandringham on his characterisation of the seed funds for the Victorian Future Fund. He referred to that as a privatisation and proceeded to wax lyrical about what he says are our contributions around privatisation generally. I just make the very clear point that to privatise something is to take it into private ownership. The VicRoads modernisation program is not a transfer of ownership; ownership is retained by the state. It is best described as a joint venture. It is not a privatisation even though it might suit the political narrative of those opposite to characterise it in that way.

Richard Riordan interjected.

Will FOWLES: Well, it is not. The ownership is retained by the Victorian government. That is the naked reality. No amount of huffing and puffing from the member for Sandringham or the member Prahran is going to change the fact that ownership is retained by the state of Victoria. That is the reality. That is the structure of it. It is not sort of an arbitrary semantic point, it is actually quite important that ownership is retained in that way.

I want to talk a little bit about the four-step fiscal strategy, because it is important and it underpins the entirety of the reason that we are bringing this bill to the house. With the strategy as part of our COVID debt repayment plan, the first step is creating jobs, reducing unemployment and restoring economic growth. That has been achieved with great aplomb. We have created a great many jobs – 440,000, in fact, against a target of 400,000, so we are well advanced in the post-COVID environment in returning Victoria to economic growth and jobs growth, and that has been a terrific achievement.

The second thing is getting to an operating cash surplus. That is effectively the surplus you get, what in the corporate world you would call the EBITDA line – the earnings before interest, taxes, depreciation and amortisation. We get to an operating cash surplus next financial year, and then ultimately we get to operating surpluses – what would be the NPAT line in corporate speak, the net profit after tax, that sort of equivalent – once all the depreciation has been taken into account. That too will arrive over the course of the forward estimates.

At the same time we will be stabilising debt levels. Stabilising debt levels is a function of many things, but importantly it is about economic growth, so debt level as a percentage of gross state product is the stabilisation measure we are examining here. It is a function of economic growth, it is a function of government revenues and it is a function at least in part of the growth of the Victorian Future Fund. It is an important part of the government’s plan and it is an important part of all governments’ plans to have growth assets on the balance sheet, particularly in circumstances where we have been able to write down a pretty comprehensive chunk of state debt at what would be considered to be historically low interest rates. It is terrific that we have got the ability out of this modernisation project, this joint venture – most definitely not a privatisation – that we can release the capital to be able to have this growth asset sitting on the balance sheet of the state, managed expertly by the Victorian Funds Management Corporation. They do a terrific job, and they manage funds expertly to pretty strict ethical investment criteria, which is a very, very good thing.

So that is where the money comes from, and it will be managed in this growth way to make sure that over time we achieve our COVID debt elimination. That is the $31.5 billion that was taken on to save household budgets, to save jobs, to save the economy and ultimately in fact to save lives. All of that effort, all of that work, though it was so poorly supported by the federal government, was a fantastic collective effort on behalf of Victorians to make sure that we were in the best possible position coming out of COVID. I regret that the opposition has wasted so much of my time. I have more to say, but no time in which to do it.

James Newbury: On a point of order, Acting Speaker, without reflecting on an earlier ruling, there was a ruling that it was relevant to debate an internal party matter as part of a bill debate. I would ask that that ruling be referred to the Speaker, because I am concerned about the impact on the rule of relevance in this place of that ruling. I would ask you, if you would not mind, to refer that matter to the Speaker for further review.

The ACTING SPEAKER (Michaela Settle): I will refer that to the Speaker.

Martin CAMERON (Morwell) (15:40): I rise to talk on the Victorian Future Fund Bill 2023, and I note that we will not be opposing this bill. The Victorian Future Fund was announced in the 2022–23 budget as part of the government’s debt stabilisation strategy. The main part of it is to have an offset account to pay for the COVID moneys that were borrowed and to have that future fund there so it can serve the purpose of driving down the debt from the COVID-19 pandemic. As I said, the purpose of the fund is to help manage the fiscal impact of the COVID-19 pandemic and deliver positive outcomes for Victorians by reducing the debt burden on future generations. I know as I stand here I do not want my children to be inheriting the debts incurred by me and then passing them on to their children also. So to have this offset account so that we can drive down the debt from the COVID-19 pandemic seems to be a reasonable idea.

Contributions to the fund from the up-front proceeds received from the VicRoads modernisation, as we call it – not privatisation but a modernisation joint venture – are some $8 billion, and any additional contributions made to the fund in the future will be invested to receive a financial return over the long term. This investment return is expected to exceed the state’s cost of borrowing, meaning it will improve the state’s fiscal position more than simply paying down the debt would.

This bill seeks to establish the Victorian Future Fund as a trust account and clearly defines its purpose so it is only used for this particular reason, which is to provide funding to reduce the state’s debt. The establishment of the fund in legislation is an important step towards providing certainty regarding the governance and purpose of the fund, which will support the state’s credit rating agencies with assessing the impact of the fund for credit rating purposes. As we have alluded to, this is all being done on a very short turnaround to be able to delve deep into this, and I thank the other members that have also spoken on this issue this afternoon.

Down in the Latrobe Valley, in the seat of Morwell, where I come from, with the budget that has been released, the cost of living is obviously a huge burden, so alleviating the issues of having to pay back the cost of COVID-19 with this future fund will obviously be a great benefit to the people living down there. At the moment we are struggling with the cost of living with food, paying for school fees and putting fuel in cars to drive our children to school and get ourselves to work so we can earn a good day’s pay and pay for the cost of living.

There are couple of other things with the delivery of the budget. A couple of our CFA brigades that I have spoken to in the last few days were also a little bit disappointed. Funding for the CFA shed at Tyers was not there when they went and had a look. With the Tyers CFA – I have spoken about this before – at the moment they have a bridge there that is shut. The CFA are the first responders to any issues in and around Tyers and up into Walhalla. If anyone has been to Walhalla, you know how treacherous the conditions can sometimes be up there. They need to leave as they cannot even house their first responder four-wheel drive truck there – it is housed some 20 minutes away. So it was very unfortunate that we did not have that funding.

Roads maintenance funding was slashed by $260 million. We know that one of the most important things – especially from speaking to the people of Morwell – is to be able to have road funding and have our roads at a fantastic level, which they are not at the moment. We are going to go into winter, and unfortunately our roads are just going to be a little bit worse off every day now we do have winter setting in and it is starting to rain.

It was touched on by the member for East Gippsland, but I just want to touch on the unexpected announcement during the budget about the timber industry and how the timber industry was expecting to go to 2030 but unfortunately will wind up this year. Today there was a great segment on the Today show where they interviewed mums and dads and kids up in Orbost and spoke with them about their trials and tribulations – how they had actually put money into their businesses to get to 2030, when the timber industry was meant to close. They spent millions of dollars gearing up for those seven years. Unfortunately, with the closure of the timber industry at the end of the year, they are going to be stuck with these assets that they cannot sell, because there will no longer be any use for them. So our hearts go out to the people in the timber industry, the ones that are in the forest harvesting the timber and putting it on the trucks and also the ones that are in the mills, because it is an absolute disgrace that their livelihood is actually being cut by seven years. Our hearts go out to them, and we will be standing with the timber industry going into the future.

On the timber industry, the mental health assets that we have down in the Latrobe Valley and into far East Gippsland were also not covered by the budget. We were very disappointed that we did not get funding for Lifeline, which is a great service in the Latrobe Valley. Now with the pressures on our timber industry workers we just hope that when they need to ring someone for help, they actually get through and the services are there up in far East Gippsland so they are not having to travel down to Melbourne to access them – that when they need these services they are there for them to access.

The purpose of the bill is to establish the Victorian Future Fund as a statutory trust account within the trust fund under the Financial Management Act 1994. The bill also amends the Duties Act 2000 so that the fund manager is a qualified investor, and that is great to see – that it is a qualified investor. The bill provides parameters for money to be credited to and applied from the Victorian Future Fund; sets out the framework for the administration of the Victorian Future Fund, including the appointment of a fund manager; and outlines auditing and reporting requirements that apply to the Victorian Future Fund. The general public likes to see these things. It gives them some security that the $8 billion that will be put into the fund will be used for the correct reasons – to crush the debt that we now face in Victoria. As I said at the start, we are not opposing this bill.

Bronwyn HALFPENNY (Thomastown) (15:48): I also rise to speak in support of the Victorian Future Fund Bill 2023. This bill was announced in the budget as part of a debt stabilisation strategy for the Andrews Labor government to manage the impact of the COVID debt, because the Andrews Labor government provided all sorts of support for those that needed it during the pandemic, without which we would have seen people face even worse things. In particular the state government had to do some of the lifting for the federal government when they refused, for example, to even provide food for international students. Basically, I think the Prime Minister’s words at the time were why don’t you go back home, so the state government had to fund support not only for businesses in Victoria but also for those that really ought to have come under the responsibility of the federal government.

After its creation the Victorian Future Fund will act as an investment fund, and over the long term the investment return that is expected should exceed the cost of borrowing. In order to set up such a fund, of course there are all sorts of governance arrangements and regulations around that, so this legislation creates the fund and also then looks at how it will be administered. The bill talks about how the fund will be set up, what the funds can be used for and what they cannot be used for and also what the purpose of the fund is. The legislation establishes the administration structure and it also provides for reporting mechanisms. Those reporting mechanisms are in line with recent recommendations from the Public Accounts and Estimates Committee in terms of having some sort of accountability and transparency on what the fund is doing and what it is used for.

As a future fund, this is a long-term strategy, and of course one of the reasons that our Andrews Labor government set it up is that we do not want our children, our grandchildren and our great-grandchildren having to pay and bear the burden of the debt that was created through the COVID period. This basically separates the debt from borrowings that we used to invest in the state, because they are investments that will provide great things not just for us today but also for those in the future. We have to invest, and as a result we do create debt when we invest in education, in roads, in schools and in public transport. These things not only make our lives better, they also increase productivity and have a long-term economic benefit. Just on a very basic level, I guess, consider a truck driver getting paid $50 an hour to deliver goods somewhere. If the roads are built better and if it is easier to get across town and there is not so much congestion, then it might cost $50 for one delivery rather than $100 because that driver is not in traffic for 2 hours. These are real benefits in terms of productivity that will go well into the future. So that is the reason why the two different types of debt are being separated, and the future fund will look at those things with the pandemic.

I also just want to make a few comments around what previous speakers have said about the government spending money and this and that. I mean, the fact is what is it that the opposition would not want to spend on? We had the last speaker talking about the timber industry, and yes, it is terrible what has had to happen in that area. Is the opposition saying that we should not be providing the $800 million – $200 million extra in this budget – to support the timber industry workers and those that rely on those industries to get access to training and job support? Is it that we should not have good schools for our kids? What is it that we should not be paying for? These are the things, as I said, that create debt but are a long-term investment, and we reap the benefits back in well-educated young people that can contribute great things for our society – better transport to get through congestion and those sorts of things. So the future fund is about separating the two, making sure that we are going to be setting ourselves up into the future and over time bringing down that debt that was around COVID. Then of course we can balance the books a little bit further down the track and also be responsible in terms of making sure that we continue to provide the investment in all the important things that Labor values and Victorians value around education, health and roads. Every time I do a list I think, ‘Oh no, hopefully I’m not missing something out,’ because all these things are really important not just for today but also for tomorrow.

On this legislation there have been discussions, and advice was sought from organisations such as credit ratings agencies, and as we understand it they understand the future fund. There are no problems that anybody is raising there in terms of any concerns around the way the government is going to be managing this fund. There has been consultation to ensure that we get the best regulation around this fund and make sure that it is set up in such a way that we can get the best possible outcomes.

I think most speakers previously have really gone into a lot of the details about how the fund will operate. I guess I have just wanted to talk a bit about the purpose of it and the things that it is needed for, because we hear a lot of talk about what we are doing about managing money, and I think this is a very responsible and well-organised approach.

We know that federally such funds have been established as well as in other states, such as New South Wales and Queensland. It is important to make sure that we are looking after the future. I know that, for example, the first contribution into the fund will be what has been received for the partnership work with VicRoads – what is called the VicRoads modernisation scheme. So that will go to the fund, and there may be other government assets into the future that are topping up that fund, and then of course it is about the investment returns.

This is an important piece of legislation that really sets us up for the future. It gives a strategy and a path forward in order to repay or bring back the finances within the state, because of course it was so important to make sure that we did spend as we did during the pandemic era, because it was an uncertain time. It was really one where we had to just sort of throw everything at it to make sure that we protected people as best as we could and that the long-term economic effects would not be that people would continue to experience hardship for years into the future. On that note, I support the Victorian Future Fund. I will finish there.

Michael O’BRIEN (Malvern) (15:57): I am pleased to rise to speak on the Victorian Future Fund Bill 2023. I recall when the federal government set up its Future Fund. There were some very unique financial circumstances that allowed the Australian government to set up a future fund, and that was they had paid off every single dollar of the Australian government’s net debt – every single dollar. The Australian government was debt free, probably for the first time in its history, and that was under the excellent financial stewardship of Peter Costello. So having decided that financial competence is a good thing and paying off all of the Australian government’s net debt, they decided that future surpluses should be directed into a positive fund that could be used to invest, to deliver returns and to support Australia’s future, hence the Future Fund. And I notice that Peter Costello is currently the chairman of the Future Fund, and it has done extremely well in its financial performances.

We look at this Victorian Future Fund in a very different set of financial circumstances. Far from being debt free, the Victorian government is in debt up to its eyeballs. I remind the house again of figures I put to it yesterday, because they are worth bearing in mind. When this government took hold of the Treasury bench in December 2014 Victoria’s net debt was $21 billion – $21.8 billion to be precise. It is now forecast to be $171.4 billion in 2026–27, so $21.8 billion compared to $171.4 billion. Round it up and that is a $150 billion increase in Victoria’s net debt over that period. That is dangerous. That is a dangerous level of debt. It is dangerous because it means our interest charges are going up massively. We were paying interest of about $2 billion a year when this government took office. We are now paying interest of $5.6 billion a year. We will be paying interest of $8 billion a year – that is $22 million a day. So massive debt is dangerous because you have to service it, and we are servicing it in a rising interest rate environment.

As somebody who had a fair bit to do with the Victorian Funds Management Corporation when I was Treasurer, I know that you cannot lock in all of your bonds, all of your borrowings, on long-term low-interest facilities. There is always a mix: one year, three year, five year, 10 year. But you cannot lock in low rates forever, so it means that when those bonds that you had issued previously for one, three or five years mature and you have got to go back to the market to get your money back again, you need to pay higher interest rates, prevailing rates of interest. This is the danger for this government. They have set Victoria on a high-debt path – a debt bigger than New South Wales, Queensland and Tasmania combined.

Far from the Treasurer coming into this place and trying to present this bill as some sort of example of fiscal rectitude or good economic management, this bill is actually a sign of panic, a sign that this government has lost control of the finances, has lost control of its debt, has lost control of its spending. This is a desperate sop to the ratings agencies to say, ‘Please, we promise you we won’t fritter away every dollar we get, and we’ll set up a Victorian Future Fund to try and give you some sense of confidence that we’re going to start maybe taking debt seriously at some time in the future.’

This government has a great record when it comes to privatisation. This government has been the biggest bunch of privatisers since Kennett and Stockdale. They sold off the land titles office, they sold off the Port of Melbourne, they sold off Victoria’s share of Snowy Hydro and now they are selling off the registration and licensing functions of VicRoads – so big privatisers over here, the comrades. But of course we know that with all those other privatisations they have frittered the money away. With this one they say, ‘This one will be different. With this one we’ll take the $8 billion or $9 billion and we’ll put it into a Victorian Future Fund.’

The Treasurer is not going to personally manage the fund. Maybe he could give it to the Assistant Treasurer. The Assistant Treasurer is pretty good at managing money. He likes playing the share market. He likes a bit of day trading, Day Trade Danny, so maybe he could look after it. But it looks like, according to this bill, they are going to appoint an agent to manage the contents of the Victorian Future Fund, and according to the bill it seems this will be the Victorian Funds Management Corporation. You may as well get the Assistant Treasurer to do it, because there are plenty of Labor mates on the VFMC as well. It is chaired by James MacKenzie, a famous Labor mate. He is also the chair of Slater and Gordon lawyers. He is chair of the Suburban Rail Loop Authority. He is chair of the Melbourne Arts Precinct Corporation board and Fed Square Pty Ltd. He is a trustee of the MCG Trust. I hope he is doing a better job at VFMC than with Slater and Gordon’s financial performance, because we all know Slater and Gordon spent a lot of money, shareholders money, investing in buying Quindell, a UK law firm which sank and cost Slater and Gordon shareholders a billion dollars – a billion dollars lost for Slater and Gordon shareholders. So I hope that some lessons have been learned with this public money. We could also look at Tom Considine, who was appointed in June 2021 to the board. Amongst his numerous roles he is currently a partner of Sayers Group. He was interim CEO of the Suburban Rail Loop Authority, where no doubt he met James MacKenzie. He was also, funnily enough, former chief of staff to the Treasurer of Victoria. What a coincidence – Deidre, what a coincidence. Tim Pallas was looking around for the very best and brightest he could appoint to the board of the VFMC. He just happened to find his former chief of staff. What a coincidence that is.

We are going to be giving $8 billion or $9 billion of public money, it looks like, through the Victorian Future Fund to the VFMC to manage, so how has the VFMC’s financial performance gone? I went to their website and I looked at a statement from 20 January this year, ‘VFMC Presents 2021–2022 Annual Report’. It says:

Market volatility was reflected in performance, with VFMC producing its first negative one-year return –

most of us would just call it a loss; we would not actually try and use sophistry to call it a negative one-year return –

(–2.1% net of fees) in almost 15 years.

So for every hundred dollars VFMC invested on behalf of Victorians, it lost two of them – more than two – for the 2021–22 year. I have got a lot of time for the VFMC as an institution, but clearly recent financial performance has not been what Victorian taxpayers would want or expect. You should not be making losses with Victorian taxpayers money. So maybe fewer Labor mates on the board and maybe more people who actually know what they are doing – that is just a suggestion if you want to actually do something about this.

What we see is that having inherited the best set of finances of any state government in the country back in 2014 – the only state with a budget in surplus, the only state with a stable AAA rating from both Standard and Poor’s and Moody’s – of course the government has gone and blown that. They have blown the debt, they have blown the surplus and they have blown the AAA credit ratings, and now we know that Standard and Poor’s and Moody’s are breathing down the Treasurer’s neck, saying, ‘We don’t trust you. We’ve believed your claims for years. You always promise, you never deliver.’ So now the Treasurer has said, ‘Look, let’s set up a Victorian Future Fund to try and give you ratings agencies some sense of confidence that we won’t just fritter this money away the way we have everything else.’

We are not opposing the bill. Anything which slightly puts the government’s hands away from the cookie jar is to be welcomed, but let us face it: you cannot have a lot of confidence that this government is suddenly going to have a Damascene conversion to fiscal responsibility. They will be giving it to the VFMC, which lost money last year. It lost two dollars for every hundred dollars it had to invest, with a board with plenty of Labor mates on it. Victorians deserve far better than that. They deserve a credible government, and they deserve a credible path back to getting debt under control, because our kids and our grandkids do not deserve to carry the burden of excessive debt for generations to come because this Labor government cannot manage money.

Nathan LAMBERT (Preston) (16:07): I am very pleased to rise to speak on the Victorian Future Fund Bill 2023, which of course implements a further important aspect of this Labor government’s 2023–24 state budget. I am very pleased to be on my feet. I thought we might not get here with all the procedural shenanigans that have been going on, but here we are. As you know, this is the third bill related to the budget that we have discussed this week, so previous speakers have covered a great deal of the context – or at least the government speakers have I think covered a great deal of the context; we have seen a little less engagement from non-government members. But just to restate it briefly, we are clearly still living in an era heavily affected by the aftershocks of COVID-19. That affects us in many areas of public policy, and it does affect us in the state of the economy. It affects what we are doing with the state budget, and it certainly leads directly to the bill that we have here before us.

It was very necessary back in 2020 for the government to act decisively, and from a budget point of view the Labor government did so through three mechanisms. We spent money directly on testing centres, vaccines, intensive care facilities and so forth. We also supported important payments that effectively shouldered some of the costs for households and businesses affected by the pandemic. And then, as we have touched on in previous debates, we expanded our infrastructure program to support confidence and support activity in the economy. As the Treasurer explained, today’s bill effectively addresses the $30.5 billion or so of liabilities that arose due to those first two decisions, and it forms part of the government’s broader financial response to the pandemic.

He has left now, but I enjoyed the member for Ringwood’s explanation of that broader plan, explaining to the house ‘earnings before interest, taxes, depreciation and amortisation’ and other financial terms. I will not repeat his description, but this particular bill relates to the specific COVID repayment plan, and that plan has three key components to it. The first is a rebalancing of the public service. Those of us who, like me, worked in the Victorian public service during 2020 and the COVID period know that it was a time of very significant expansion. We needed to recruit more people, and we did. We needed to promote people, and we did. Those that have continued working in the public service know that since then there has been a reduction in the number of positions. We saw some of that in the previous state budget. We see it further here. That is very tough of course for the people that it affects. My own sense amongst those I know is that it is tough for people, but people understand it, given the circumstances. But that is an important part of what we are doing.

The second part is the payroll tax and land tax changes that we spoke about in the previous bill, and the third is this future fund, which brings us to the bill in front of us now. Touching briefly on the mechanics, it establishes the Victorian Future Fund as a trust fund under the Financial Management Act 1994. We use all sorts of different funds in government. Some of them are sort of just hypothetical funds that do not really exist. Others, like the breakthrough fund, are entirely separate from government. But this one is within government but under the trust fund framework of the FM act. The bill also sets out the mechanics through which money can be paid into and out of the trust fund, and it provides for the Victorian Funds Management Corporation to be the fund manager, as the member for Malvern was alluding to. On my reading of the bill it does not quite guarantee that they will be the manager, but certainly allows them to do so. I think an important consequence of this that may be of interest to the member for Prahran is that if you do look at the so-called ESG framework with which these funds would be invested – the environmental, social and governance framework – it is good to note that the VFMC has an established framework and that it will apply to the Victorian Future Fund. That does mean there are existing inclusions in place for tobacco manufacturers, cluster munitions and thermal coal, but more importantly it allows that framework as it develops over time to apply to the Victorian Future Fund – of course there is a very strong climate change focus in the VFMC’s investment work.

So in effect those mechanisms, if you like, allow the future fund to achieve three purposes. First, I think importantly, it allows the fund to count against net debt, not in a strict accounting sense, which it does anyway, but in the eyes of the rating agencies. We do not just do that because the rating agencies ask us to, but we do it because it is sound financial management, and we agree with them on that front. I notice, member for Nepean, that the agencies reacted very positively. There were some very positive quotes from them after the budget was released, perhaps contrary to the member for Malvern’s contribution. Having cleared that hurdle of allowing the funds to count against net debt in the eyes of the rating agencies, then the general idea, I suppose, is that the fund is going to make more money than the cost of your debt and so the government will be ahead, and of course the dividends then pay down the debt – and there is a great little chart in the budget papers that explains all that.

I am a little disappointed that yet again the Shadow Treasurer is not in the chamber so I will not have a chance to directly speak to his contribution, but I believe the member for Brighton did tweet that government members had boycotted the Shadow Treasurer’s speech. I just want to reassure the house I certainly listened to it very carefully – all 15 minutes of it – and I have listened carefully to his subsequent contributions, none of which has quite made the mark. But I have listened carefully. He spent some time today talking about the difference between the Victorian and Commonwealth models of future funds. I am not sure, to be fair, that the things he said were strictly relevant. I think most of the criticisms he picked up on would actually be addressed through the existing VFMC framework, but no doubt he will do his research and find out. I do suspect he was slightly padding out his contribution. I did notice he mentioned a certain Highett chicken shop not once but twice, as it turned out, and I am sure they –

Members interjecting.

Nathan LAMBERT: Yes, I trust that they make very good chicken.

Members interjecting.

Nathan LAMBERT: No, I am not padding out my contribution. Certainly next time I am down Moorabbin way I will drop into the Highett chicken shop.

The Shadow Treasurer did say that the existence of this bill is the government recognising that they have managed the economy in the wrong way, and I just want to pick up on that. It is completely the contrary. This bill recognises – it demonstrates – that the government have been very clear about our plan to handle the economic effects and budget effects of the pandemic. We have been clear right from the start, and this bill is a continuation of that clear plan. So if the Shadow Treasurer has indicated that he supports this bill, I do think the question back to the Shadow Treasurer and his team is: why are they not supporting the budget more generally? I think the member for Thomastown in her contribution spoke eloquently about the benefits of this Labor budget. I will not recap that, but the member for Mordialloc did draw our attention earlier to the Shadow Treasurer having been asked by a journalist, I understand, ‘Well, what would you do differently?’ I think the member for Thomastown in her contribution reiterated this point: what do the opposition intend to do differently? We have heard about the difference of opinion on non-government schools, but outside of that we have heard very little detail. We have a reasoned amendment asking us to provide a fiscal strategy to pay down debt, but we have no indication from the opposition how they would go about doing so. In fact the Shadow Treasurer has flagged in his contributions some very significant tax cuts. He said, and I quote, ‘millions of families would be thousands of dollars ahead under the Liberals’.

Steve Dimopoulos: Which means a $30 million black hole.

Nathan LAMBERT: Exactly. It certainly indicates a very significant structural deficit that the Shadow Treasurer would then have to deal with. Again as I state, having listened carefully to his contribution in this particular debate, we are none the wiser for how, if they are cutting all those taxes, they are then going to balance the budget. The one clue the Shadow Treasurer attempted to give us was that they would curtail the growth of the public service. I thought that was wrong and unfortunate. This government has already taken –

Members interjecting.

Nathan LAMBERT: To the interjection from the members: yes, having not had the opportunity to hear any response from the Shadow Treasurer in his contribution –

The DEPUTY SPEAKER: Through the Chair.

Nathan LAMBERT: I am reiterating that we look forward to hearing some detail from the Shadow Treasurer about his actual financial plans. Our Treasurer, the Treasurer, has made the case for this bill very well. He has made the case for the budget very well. It is a fine budget. It is a strong Labor budget that is, I think, well suited for the times and sets Victoria up for the future. There has been very little substantial disagreement from non-government members on the compelling case for both this bill and the budget. I thank the Treasurer, his team and his department for their fine work pulling it all together, and I commend this bill to the house.

Kim O’KEEFFE (Shepparton) (16:17): I rise to speak on the Victorian Future Fund Bill 2023. As we know, the purpose of the bill is to establish the Victorian Future Fund as a trust account under the Financial Management Act 1994. We do not oppose this bill. This bill is about financial management and responsibility, and the framework and structure that is put in place and how that will operate. I take note and emphasise in part 2 of the bill clause 5(2), which provides that:

The purpose of the Victorian Future Fund is to provide funding for reducing the State’s debt …

and we know that aligns with COVID. We do know that communities did appreciate the support and funding; however, the people of Victoria are very, very concerned about our current debt. Victoria is broke, with state debt projected to climb to $171.4 billion by 2026–27 and interest payments to more than double to $22 million a day. Victorians are going to be paying more and getting less.

The Andrews Labor government have wasted $30.7 billion on cost blowouts and financial mismanagement, and when our government borrows money, it means 6.8 million Victorians are left with that bill to pay back the borrowings. That is currently over $10 million per day of interest, which we know will continue to grow. We could do a lot with $10 million a day. Victorians are already paying the highest taxes in Australia: $5638 per person. Since Labor was elected nine years ago, Victoria’s tax debt is set to double. The consequence of this debt is that life is getting harder for regional Victorians under this government and its financial mismanagement of this state. We were told that there would be no new taxes. We have 50 new taxes – more taxes, more charges and yet more debt – Labor’s school tax, rent tax, job tax and Labor debt tax. If you are looking at buying a new home and land package, you will be paying more because developers will be paying more tax.

What have Victorians got out of this government’s debt-fuelled spending? We have a health system with more than 79,000 Victorians who are waiting for elective surgery and ambulance systems that cannot cope with demand levels, hospitals like GV Health that are not fully funded to complete the final stage of redevelopment, a housing crisis and a record high of 70,000 Victorians who are waiting to put a roof over their head, costs of living where it is a daily struggle just to put food on the table and infrastructure projects that are not funded, like the Shepparton bypass, a project that was acknowledged as a significant project to progress the region.

Why should we be left behind because of the financial mismanagement of this government? The financial mismanagement of this government means the roads will continue to be unsafe and decay further, with maintenance funding slashed by 45 per cent since 2020, down from $702.2 million to just $441.6 million in the last year alone. Why doesn’t the government see the consequences the state is experiencing from the lack of investment in roads? Every single day we are putting people’s lives at risk, yet what we get is a reduction in funding. We have had flood-affected roads during the floods and we have had so much impact from COVID, so once again this future fund bill will be well supported within our communities. But what we want instead of more waste, higher debt and new taxes is a real plan to ease the cost-of-living pressures, and that starts with responsible economic management from the government. This is public money, and we are going backwards. Victorians deserve better and expect better.

Dylan WIGHT (Tarneit) (16:20): It is a pleasure to rise this evening to speak on the Victorian Future Fund Bill 2023. The purpose of this bill, as previous speakers have so eloquently said, is to build on the existing framework of the Victorian Future Fund. This fund is designed to manage the fiscal impact of the COVID-19 pandemic. When COVID hit Victoria, the Andrews Labor government was faced with an incredibly important decision. It chose to take the advice of the Reserve Bank and borrow money both to keep Victorians safe and also to keep Victoria’s economy sustainable. There was $31.5 billion in borrowings to get us through the COVID pandemic. $14 billion of that was used to help businesses in this state continue to be sustainable and find their way through the pandemic. As part of my role as the member for Tarneit I have spoken to many, many businesses throughout the community in both Tarneit and Hoppers Crossing, and the owners of the vast majority of those businesses overwhelmingly supported the measures that we took to provide financial support to those businesses in the toughest conditions that they had ever faced and perhaps the toughest conditions that they will ever face.

The VFF was introduced in the 2022–23 budget, but this bill establishes the Victorian Future Fund as a statutory trust account under the Financial Management Act 1994. The current allocation of funds comes from the proceeds of the VicRoads modernisation joint venture, initially as a notional allocation within the Consolidated Fund. Labor is planning for the future and is introducing this, as I said, as part of the fiscal response to the COVID-19 pandemic.

This week we have heard a lot from those opposite in respect to debt and in respect to economic management by this government, but I think it is incredibly important to point out and to not forget that during last year’s election campaign those opposite were the big spenders. There was $30 billion of proposed new spending leading into last year’s election – $30 billion – with no plan for how to account for that apart from privatising poo. I think we had the plan to privatise poo at one point.

Sam Groth: ‘Modernise,’ as you would put it.

Dylan WIGHT: That is right. But that was the only additional revenue measure or saving proposed by those opposite. That $30 billion of new spending was unaccounted for, not that the Shadow Treasurer at the time actually knew – he had to go check his notes after journalists asked him. $30 billion of new spending, and they want to come in here and talk to us about debt – I mean, my God.

At the start of the pandemic the government set out a responsible and clear four-step strategy to restore the state’s finances over the medium term, and what we are doing right now is getting on with that plan. This strategy not only improves the state’s financial position but also helps guard against future financial shocks. Step one of that plan is obviously jobs and economic growth. The Andrews Labor government since it was elected in 2014 has had jobs and economic growth at the forefront of everything that it has done – the largest infrastructure program anywhere in this country. If we remember, between 2010 and 2014 we did not see undertaken by the previous Liberal government one significant infrastructure project in Victoria – not one. So when we won in 2014 we got to work, because what we know is that significant infrastructure projects increase productivity, create good, well-paid jobs and create economic growth. That is what they do, and that is exactly what the Andrews Labor government has done since winning office in 2014 and will continue to do. I know that my constituents in the electorate of Tarneit cannot wait for the West Gate Tunnel to be opened. That is not just a project that creates economic growth but also a project really aimed at those people in the outer west that are travelling into the city. It is absolutely fantastic.

Step two is an operating cash surplus. The second step in the government’s fiscal strategy is returning to an operating cash surplus. This means the state generating sufficient cash inflows to exceed its cash outputs and operating activities. It is a key pillar in fiscal sustainability. The government continues to forecast an operating cash surplus from 2022–23 onwards, an improvement on the cash surpluses when compared to the 2022 Victorian pre-election budget update.

Step three is then operating surpluses. This is where the government generates sufficient revenues not just to cover the cash expenditure but also to support the ongoing replacement of existing assets. The government is forecasting an operating surplus of $1 billion in 2025–26. The operating surplus is then forecast to increase to $1.2 billion in 2026–27.

Step four is to stabilise debt levels, which is a pretty significant design of the VFF. This fourth step is the one which, as I said, is the focus of today’s bill. So far the 2023–24 plan also shows progress in the fourth step in the fiscal strategy, stabilising net debt. That is what the COVID debt repayment plan is all about.

There are many reasons why this is incredibly important, but the reason that we are doing this is so we can continue to provide the services and the infrastructure that our communities need. An incredibly good example, or a couple of really good examples, of that would be the three level crossings removals in and around my electorate of Tarneit – absolutely – and the upgrade of the Hoppers Crossing train station, making sure that my constituents in Tarneit and Hoppers Crossing can move around the roads and our rail network efficiently and freely. Another really good example of that, which was in last Tuesday’s budget, which was absolutely fantastic, is the new train station coming at Tarneit West. It is a $126 million investment into Tarneit, into Tarneit West, meaning that people can get on the train at Tarneit, at the second train station, go to work and enjoy everything that Victoria has to offer. This is incredibly important legislation, and I commend it to the house.

Cindy McLEISH (Eildon) (16:30): I will tell you what Victoria has to offer. The Victorian government has got not much to offer Victorians at the minute. They have got to offer debt for their children, debt for their grandchildren, probably debt for their great-grandchildren. So now we have got this bill, the Victorian Future Fund Bill 2023, that is subject to debate. When you think about future funds, what do you think about? You think about setting yourself up for the future. Families put money together for a rainy day. They want to save for the future for their children, for something else, for something unexpected, but here it is the opposite. This is not putting money aside in case something unexpected happens or to build something particularly significant, this is to get in control of our debt, which this government has let spiral and spiral and spiral.

The purpose of this new fund is to manage – and this I find quite amusing – the fiscal impact of the COVID-19 pandemic and deliver positive outcomes for Victorians by reducing the debt burden on future generations. They need legislation to do it because they cannot manage that debt burden themselves. They have to have something to really channel them in the right direction, because otherwise it will go in every other direction. The impact on Victorians is going to be absolutely felt for years and years to come – on families, on people as they age, on children and certainly on our children’s children. Put this in contrast to the federal government when they set up their Future Fund, because that is what a future fund should look like. Australia was debt free at that time, and this was to put aside that money for the rainy day or that big project. The surpluses would go to work on our future. It is absolutely the opposite to having a debt-laden state that we need legislation to help us get in control of.

This fund was initially established as a notional allocation with the Consolidated Fund, so there is a little bit down the side of the book to say, ‘Okay, this is what this is being used for’. And there are the proceeds of the VicRoads modernisation joint venture. It is quite amusing to see the proceeds of what is called a modernisation joint venture. What do we mean by ‘modernisation’? Well, they have put a figure here, $7.9 billion. ‘Modernisation’ is the Andrews Labor government’s word to spin their privatisation. They are addicted to privatisation. They cannot help themselves. They do not want to call it ‘privatisation’ because that worries them a little bit, so they have got to find a new word, and the word that they have found is ‘modernisation’. I do not think that really cuts the mustard, but it is the word that they want to use. Just as reminders, there was $10 billion for privatising the Port of Melbourne, $3 billion for the sale of the land titles office and $2 billion for the sale of the Snowy Hydro Victoria share.

Jess Wilson: The big renewable energy.

Cindy McLEISH: The big renewable energy! Despite this, there was an increase in revenue from the GST as well. They have sold off lots of other little things – you know, the rats and mice I like to call them – $265 million over the last couple of financial years. Now we have got this term that is ‘modernisation’. This bill is needed so they can actually have somewhere to lock this money away so that they are not going to spend it on all of their project mismanagement and blowouts. There is $30 billion worth of those.

The other thing I find amusing is that we are talking about the COVID-related debt. Well, the figures for the COVID-related debt are $31.5 billion, and we are expecting the forecast of the debt to be $171.4 billion. So this $31.5 billion is a fraction of the debt that they have racked up. They have racked up an equal amount, as I just mentioned, with some of the waste and blowouts on infrastructure projects. So they have racked up debt because they cannot manage money and they cannot manage large projects. This is despite, as I said, having increased revenues – and they have flogged off every single thing that they can try to flog off. It is really quite astonishing.

We have to look a little bit behind this, because we know the government has record debt. We know that this debt is greater than that of the Cain–Kirner government, and at that time Victoria was absolutely going down the gurgler at a rate of knots. But what is also behind this is pressure from the ratings agencies over budget debt. I want to quote from an article from the Australian Financial Review of 20 May this year, and I rate this newspaper, I rate these journalists. Here we go:

Daniel Andrews has shrugged off concerns from major rating agencies that Victoria’s growing debt and project cost blowouts could imperil the state’s credit rating.

So let us have a look at where we have already gone with the two ratings agencies – Standard & Poor’s and Moody’s:

S&P gives Victoria a AA rating, the lowest rating of the states after a double-notch downgrade during the pandemic in December 2020 …

They were reporting at the time that the state’s net debt was due to grow from $115 billion to $165 billion. Well, we know there is even another $6 billion on top of that now. All the other states have AA-plus ratings. Moody’s have also gone down two notches below the top rating, from AAA to Aa2. With pressure on the finances and pressure from the ratings agencies, every time we go down a notch we have to pay back more. The interest that we are paying, which is $10 million a day at the moment, is likely to go up in four years time, forecast to $22 million a day. I am not talking about a month, I am not talking about a year – I am talking about a day. This is what is going to happen if we lose our rating and if we go down another notch: interest is going to have to be bumped up again. It is amusing that the government really have to put in legislation to help them get on top of their budget blowouts because they cannot manage money. They have had to cave in to external pressure.

One of the other things we have got here is how this is going to be managed. It is going to be managed by an agency. In the first instance we know that the VFMC – the Victorian Funds Management Corporation – is the one that will be doing this, and what does concern me is the performance of the VFMC over the last period of time. In the past we have had some quite good outcomes through that corporation, but at the minute things are not going so well. I do note that managing this is a bit like the foxes being in charge of the henhouse. We have got James MacKenzie, who is well known in Labor circles, and it is well known in our circles that he is well known in Labor circles. Yes, he might be experienced as a company director. He has had many, many board and government appointments to the Suburban Rail Loop Authority, the Melbourne Arts Precinct Corporation, Fed Square and now he is also the chair of Slater & Gordon Lawyers.

Nick Staikos: Stop copying Michael’s work.

Cindy McLEISH: I’m not copying Michael’s work. I am reading, and I am happy to table this because we know –

The DEPUTY SPEAKER: Order! The member for Bentleigh will cease interjections.

Cindy McLEISH: He is out of order, isn’t he?

We will continue. We have concerns because the state Treasurer’s former chief of staff Tom Considine is also on the VFMC, so we have got people who are integrally related to the Victorian government managing this. I would like to see that that moves a step further away, because what we all know and what we agree on is that the state of Victoria is broke. The Andrews Labor government have absolutely managed this to within an inch of our financial lives. It would perhaps be good to have a debt ceiling in place rather than continue to borrow and increase the amount that we are borrowing, because what is happening in Victoria is really staggering.

We have got the forecast of $171 billion, as I have said. Everybody in Victoria thought when the Cain–Kirner governments were in place that things could never get worse, but in fact they are worse, and Victorians are starting to wake up to that. So although we are not opposing this, because we know that the government need all the assistance they can get to try and manage the debt and try and get on top of what is going on here because they cannot do it themselves – they do need that help; there is that pressure from the ratings agencies – we do not want to slip another notch, and they need to look really carefully to help fix this situation.

Nina TAYLOR (Albert Park) (16:41): I am very happy to speak on this particular bill, and I am a little bit confused by the previous speaker because there seemed to be some querying from the previous speaker with regard to why we are using legislation to set up the Victorian Future Fund. Does the opposition have a problem with governance and creating a framework, transparency and democracy and giving an opportunity to be able to debate the elements of the Victorian Future Fund? That appears to be so. Based on what I just heard I am a little bit confused – I mean, just putting it out there. We are being very up-front and transparent, telling you what it is going to do. There is a problem with that? I do not know.

So anyway, on that note, because we do believe in democracy and transparency I am going to proceed, just as other members of the government have, to transact the bill at hand and to validate why we are setting up the framework here – up-front, openly – for the Victorian public to see. I am just putting that out there because I am not sure if it was perfectly understood by the previous speaker either as to the purpose of this bill. The purpose of this bill is to establish the Victorian Future Fund. The purpose of the fund is to manage the fiscal impact of the COVID-19 pandemic and deliver positive outcomes for Victorians by reducing the debt burden on future generations.

I am not sure what the opposition expect us to do. Do we just sit on our hands and let the debt keep going up and up and up? Is that what they want us to do? That parallels their approach to COVID-19, which was to put their heads in the sand and trash the medical profession, which is pretty much what they did all throughout COVID-19. I saw debate after debate after debate, and it was absolutely disgraceful. They were just pretending ‘There’s no pandemic, there’s no pandemic. Just carry on. Don’t wear masks, don’t do anything to protect yourselves,’ and it seems similar –

Nick Staikos: They were little Trumps.

Nina TAYLOR: Well, they were. And it seems a similar approach here when we are just trying to take a very sensible approach in terms of stabilising net debt and paying down COVID debt.

A member interjected.

Nina TAYLOR: No, because guess what, you have to have a plan in place in order to be able to pay it down. That is what we are transacting here today. Sorry you do not want to pay down the debt. I am very sorry about this.

Sam Groth interjected.

The DEPUTY SPEAKER: Member for Nepean, I do not believe you are in your chair.

Nina TAYLOR: Just on a further note, I should say, in terms of the ambit of the fund, the investment returns from the fund will be quarantined and returned to the fund so that its balance will grow over time. Further investments will be allocated to the fund in the future through proceeds from designated government land sales and a proportion of future budget surpluses. Once net debt stabilises, the fund is projected to have a balance of around $12 billion by the end of the forward estimates. This is just to have absolute clarity, because that is what we do on this side of the house; we are very up-front and transparent when we are transacting elements as significant as this in terms of supporting the Victorian economy. So I hope the opposition will not continue to oppose such transparency in the house. But I will give it to them: they have given it their best shot.

Talking about the pandemic and pre pandemic, where was Victoria at? Economic growth and employment growth were particularly strong, averaging 3.3 per cent and 2.9 per cent a year respectively over the five years to 2018–19, and the highest of all the states. I just want to have a little bit of perspective here. I think in addition to a bit of amnesia about the pandemic there is also replicated amnesia about the state of the Victorian economy and the impact of a pandemic which was felt right across the globe, let alone across Australia. The unemployment rate had fallen to a 10-year low of 4.6 per cent in 2018–19, and the Victorian economy was experiencing an extended period of strong jobs growth, with over 468,000 new jobs created between November 2014 and March 2020, more than any other state or territory. On that note I do think it is a little bit curious that some – not on the government side – have tried to allege that somehow COVID had no impact on the economy and we are not allowed to speak about that impact. We have to ignore it and just pretend that the debt came out of the air. So I just put some clarity on that issue.

Also I would like to say that it is important to look at COVID debt versus other investment in major infrastructure in this state and what it delivers for the state, because there is an important nuance there and I have heard a consistent blurring of the line. Much like a home loan, we borrowed to fund a range of infrastructure projects that create significant long-term economic and social benefits, such as major road and rail projects, which have already been spoken to rather eloquently in the house, and new and upgraded hospitals and schools. I do not know if those opposite care about such things, but certainly on this side of the house this is very much part of our core Labor values. This is productive capacity infrastructure that creates jobs, helps our state function and makes the economy bigger. This increases budget revenues, which in turn provides the capacity to make interest payments and repay the debt over time.

So those opposite can bemoan our major infrastructure projects, but actually we are happy to talk about them any day of the week, because we know the Victorian public love these infrastructure projects because they deliver so much for the local communities. We have all seen it ourselves, and I have to honestly say I have not had one member of the public come to me and complain about our level crossing removals to date – not one. In fact even in the seat of Albert Park when I was doorknocking through the election campaign I had constituents raise the fact that they were very happy with the level crossing removals because – it was actually a couple of tradies who mentioned it – it helped them with transiting across the city, because they were no longer getting held up at the rail crossings. Fancy that – they were observant of this. They could see the return on investment for them and that we are looking after them and helping with the flow of our suburbs but also making those spaces around the rail tracks much safer. So I think that the Victorian community actually get it; it is just those opposite that do not.

But we do have this opportunity here today to be able to transact these important matters, so I am glad to see some are choosing to take that opportunity. I mean, it is provided here today. It is being availed of by those opposite in order to transact these important matters, including legislation for the Victorian Future Fund, and I hope there will be no more opposition to using legislation for such important matters as the Victorian Future Fund, because as I was saying before, governance is certainly very important to our government.

Further to the issue of debt in Victoria versus other states, I think it is very important to explore the very distinct nuance on that issue, and I am going to explore that right now. We are not the only government in Australia that built up debt during the pandemic to support households or businesses. I do not think anyone should be shocked by that point. I think it makes absolute common sense, but it is important to transact it here because according to some of the speeches that I have heard from those not on the side of the government you would think that Victoria was the only state that had to manage the pandemic. But, lo and behold, it was the whole country and in fact across the globe. A really important point: we are the only government with a plan to manage it. So whereas we are not the only government in Australia that built up debt during the pandemic to support households and businesses – and I am going to reiterate this very important point – we are the only government with a plan to manage it. We could sit on our hands and just hope. That is a possibility. I mean, I have not heard any real solutions from those opposite. I heard a little bit of cherrypicking. I think there was one element that was supported: introducing a land tax exemption for land with a conservation covenant, and of course I fully endorse this. Forgive me – cherrypicking; anyway, that is a little joke for the day. They neglected to point out all the other fair tax concessions that are helpful for the Victorian community, such as expanding tax concessions for families providing a home for a relative with a disability. Funny how they avoided that. I am just putting it out there that when we are talking about taxation et cetera it is important to have a balanced and holistic perspective within context and not to just pluck out little bits and pieces that suit a particular argument that may not hold, and I believe it certainly does not. On that note, I commend the bill to the house.

Sam HIBBINS (Prahran) (16:50): I rise to speak to the Victorian Future Fund Bill 2023 on behalf of the Greens. This is a bill that essentially formalises the Victorian Future Fund in legislation, meaning the funds that are put into it and the revenue raised from the future fund cannot be used for any other purpose. The fund itself is essentially an offset account for the state’s debt, with the initial funds coming from the privatisation of the licensing and registration functions of VicRoads and then further funds from government land sales, funds from government surpluses and then anything really that the Treasurer determines. And this essentially is to give to the ratings agency to ring fence these funds used to offset the debt.

I had some significant concerns with the future fund when it was announced last year. The Greens had significant concerns. At the time I called it a neoliberal economic policy using the sale of public assets and public land to service debt. Even more concerning was that the government had not ruled out excluding fossil fuel investments within the future fund itself, and that stands true today. The government should not be privatising public assets. Make no mistake, the sale of VicRoads or whatever they are calling it, the modernisation, is privatisation. I mean, $7.9 billion for a consortium to operate the licensing and registration function of VicRoads for 40 years means downward pressure on services and jobs and upward pressure on fees and costs. When you have got members on the government side saying, ‘It’s not privatisation because we haven’t given up the asset,’ I mean really, you have got to wonder: are you mixing the Kool Aid or are you drinking the Kool Aid when it comes to that? The consortium, who are a private consortium who are operating and receiving revenue from the licensing and registration from VicRoads, are not doing it out of the goodness of their heart. They are not doing it because they want to be really good public citizens. They are doing it to make a profit, and that profit will come at the expense of services. That means, when it comes to public services, jobs and wages for public services. We have seen it in the privatisation of the port and the land titles office and public housing land being handed over to private interests for decades.

The other significant concern that I have around this bill is the land sales, particularly land sales targets used in government. I raised this at the Public Accounts and Estimates Committee in the last term, and it has been raised by the Auditor-General – I would urge government members to actually look at that Auditor-General’s report – that the government is prioritising profiteering off land sales rather than using surplus land for community benefit. I will just read from the Auditor-General’s report itself where it refers to land sale targets:

Land sales targets for individual agencies encourage the sale of surplus land as a means of generating revenue, rather than as part of a strategic whole-of-government approach to achieving best value from surplus land.

There are further issues with the actual process in terms of land sales and other government agencies being able to access surplus public land. It states that the first right-of-refusal process:

… does not maximise the opportunity to retain surplus land within government. Few agencies or local councils purchase sites through the …

first right-of-refusal process. So it is a system that does not work within government. Surplus land has been used to generate revenue and is now going to be used to offset debt, and this is concerning. I think it is going to put even more pressure on government agencies to sell off land that should be used for the community benefit, particularly for housing.

If you just look at the examples in the previous term of government, with the houses that were surplus following the cancellation of the east–west link you had the Premier on the record saying, ‘Wouldn’t it be great if this was used for public housing or social housing.’ And when push came to shove they ended up not using them for that purpose but actually selling the vast majority of them. It was very similar with the properties acquired as part of the Level Crossing Removal Project in the south-east, with sky rail down around the Murrumbeena–Carnegie area with these fantastic properties – and I am sure the government is probably making a nice little profit on them, to be honest, given the way land sales have gone up. Why couldn’t they have been used for public housing? We have some really serious concerns around the pressure that is going to be placed on government departments now to be further profiteering from land sales.

We have concerns as well around just where these funds are going to be invested. Again, there is no blanket divestment of fossil fuels from investments by the government already within their investment funds. It is incredible that at this point in history public money could be invested in fossil fuels. That is another one of our significant concerns.

Of course by putting this in legislation we are now limiting it. The Treasurer now might decide that these funds are best used to offset debt. The Treasurer or the government might also decide that they want to privatise more public assets, they want to get more revenue from privatising essential public services, and that is a great concern. That would limit a future Treasurer or a future government from deciding that that money should actually be used for another purpose. There could be a better purpose. It could be going towards solving some of the massive social issues that we are facing here in Victoria, particularly around housing.

So we have some significant concerns with this bill. We are not supporting this bill. There are concerns around the government’s privatisation agenda. There are concerns around land sales, lack of divestment from fossil fuels, potential to invest in fossil fuels and restricting the decisions of future governments in terms of where money within the fund may be best spent.

Luba GRIGOROVITCH (Kororoit) (16:57): I rise to speak to the Victorian Future Fund Bill 2023. However, before I do I would like to reflect on what the member for Eildon had to say a few moments ago, and I just want to put on record that if we are going to take a walk down history lane then we really should reflect on the Kennett era. This was the ultimate fire sale ever. He closed schools and sold the properties. He closed hospitals and sold the properties. It was the biggest –

Members interjecting.

The SPEAKER: Order! Member for Nepean!

Luba GRIGOROVITCH: Thank you, Speaker. As I was saying, it was the biggest privatisation program of any region in the world, selling public assets for more than $30 billion and redirecting services valued at a further $10 billion into private hands – and this was in the 1990s.

James Newbury: On a point of order, Speaker, with respect, the house is now debating the future fund bill. The member appears not to be debating the future fund bill. On relevance, I would ask you to bring the member back to the bill before the house.

The SPEAKER: Order! The member was making a comparison, and I think that is allowed.

Luba GRIGOROVITCH: Thank you, Speaker. As I was saying, he closed schools, hospitals, public transport, electricity – you name it. I could keep going – prisons, banks; the list is endless. But, as I have been asked, I will reflect back on the Victorian Future Fund, which was announced in the 2022–23 state budget as part of the Andrews government’s debt stabilisation strategy, a strategy that our government is very proud of. I want to congratulate the Treasurer on his ninth budget – that is right, his ninth budget, and my first budget as an elected member of Parliament. This debt stabilisation strategy followed borrowing to save lives, to save jobs and to get Victoria through a pandemic – a once-in-a-lifetime pandemic, once in 100 years.

Members interjecting.

The SPEAKER: Order! Member for Nepean!

Luba GRIGOROVITCH: I do know what I am talking about, because I lived through the pandemic. It was once in 100 years, and it is the use of the government’s strong balance sheet –

The SPEAKER: The time set down for consideration of items on the government business program has arrived, and I am required to interrupt business.

Motion agreed to.

Read second time.

Third reading

Assembly divided on motion:

Ayes (73): Juliana Addison, Jacinta Allan, Daniel Andrews, Brad Battin, Jade Benham, Roma Britnell, Colin Brooks, Josh Bull, Tim Bull, Martin Cameron, Anthony Carbines, Ben Carroll, Darren Cheeseman, Anthony Cianflone, Annabelle Cleeland, Sarah Connolly, Chris Couzens, Chris Crewther, Jordan Crugnale, Lily D’Ambrosio, Daniela De Martino, Steve Dimopoulos, Paul Edbrooke, Wayne Farnham, Will Fowles, Matt Fregon, Ella George, Luba Grigorovitch, Sam Groth, Matthew Guy, Bronwyn Halfpenny, Paul Hamer, Martha Haylett, Mathew Hilakari, David Hodgett, Melissa Horne, Natalie Hutchins, Lauren Kathage, Emma Kealy, Nathan Lambert, Alison Marchant, Kathleen Matthews-Ward, Tim McCurdy, Steve McGhie, Cindy McLeish, Paul Mercurio, John Mullahy, James Newbury, Danny O’Brien, Michael O’Brien, Tim Pallas, Danny Pearson, John Pesutto, Pauline Richards, Tim Richardson, Brad Rowswell, Michaela Settle, David Southwick, Ros Spence, Nick Staikos, Natalie Suleyman, Meng Heang Tak, Jackson Taylor, Nina Taylor, Mary-Anne Thomas, Emma Vulin, Peter Walsh, Iwan Walters, Vicki Ward, Kim Wells, Dylan Wight, Belinda Wilson, Jess Wilson

Noes (4): Gabrielle de Vietri, Sam Hibbins, Tim Read, Ellen Sandell

Motion agreed to.

Read third time.

The SPEAKER: The bill will now be sent to the Legislative Council and their agreement requested.