The Victorian government’s attempt to blame the Reserve Bank for the growing state debt has been rebuffed by economists.
It comes before Victoria’s “tough” state budget, which will be unveiled tomorrow and include a hefty charge to pay off the state’s multi-billion dollar COVID-19 lockdown debt, is released.
According to the Nine tabloid The Age, Daniel Andrews’ administration would outline a $31.5 billion “COVID-19 Debt Repayment Plan” as part of the budget to pay back emergency money borrowed at the height of the global crisis.
Today, the government maintained its secrecy, with Treasurer Tim Pallas refusing to give his ninth budget a name or a catchphrase.
Premier Daniel Andrews has argued in the past that Victoria’s debt is so large and expensive because the Reserve Bank has raised the statutory cash rate 11 times in the last 12 months.
Earlier this month, Andrews claimed that state governments were instructed to “go and borrow” at a 2020 national cabinet meeting in order to avert a 25% unemployment rate.
He claimed that if he had been told otherwise, his administration would not have borrowed as much money at the time since “interest rates won’t be going up.”
The RBA cannot be held accountable, according to AMP economist Shane Oliver, as it is already too late.
Given that Victoria does have a larger debt burden than other jurisdictions, he said, “I think it a touch over the top at this moment.
We’re likely to face a challenging budget, in my opinion.To put it another way, there won’t be many handouts. Spending will be reduced if anything.
The Liberals are preparing for “an absolutely brutal budget,” according to Shadow Treasurer Brad Rowswell.
At a time when Victorians can least afford it, he added, “We’re fully expecting Victoria’s tax take to increase.”
“You believe that the current situation for Victorians is difficult? The situation will only worsen.
Jacinta Allan, the minister of transportation and infrastructure, avoided queries about potential tax increases or new levies today.
“The debt that was assumed at the Reserve Bank’s urgency,” she stated.
“Hardworking Victorian families won’t be affected by this, I assure you. They’ve had enough already.
Mary-Anne Thomas, the minister of health for Victoria, vehemently defended the government’s actions when questioned about the impending budget on Sunday.
She told the media, “We borrowed money to keep Victorians employed, to keep small businesses growing, and of course to preserve lives.
However, this is the perfect opportunity to start repaying the borrowed funds.
According to the plan, funding for 372 programs that are about to expire, including ones for road repair, domestic violence, and disability support, will be reduced.
