Australian State Debt to Double Annual Income by 2024-25

Victoria’s bank balances appear to be heading further into the red, and total debt levels are projected to at least double the state’s consolidated revenues in three years, Victoria’s chief auditor found.

However, Tim Pallas of the State Treasury argues that “providing responsible financial management” by prioritizing employment, business and consumer confidence in the short term is “appropriate” given the nature of the pandemic. To do.

“This approach has short-term costs to the state’s financial position, but in the long run it provides a faster and stronger economic recovery,” said Pallas.

Currently, the state government’s debt repayment capacity is only 128% of revenue, compared to 60% before the pandemic.

“”[T]His measurements of government debt repayment capacity are now well above the equivalent, “Victory Auditor Andrew Gleeves said in the state. Annual financial report, Submitted to Parliament on 17 November.

“The government predicts total debt will exceed 200% of consolidated revenues by 2024-25, which is more than three times the pre-pandemic level.

“Revenues were lower than pre-pandemic expectations and spending remained above, but debt increased.”

Victoria’s total debt is projected to be well below $ 178 billion (US $ 129 billion) by 2024.

The report also found that the General Government Sector (GGS), a group of government agencies that provide state public services, was operating in a net deficit of $ 14.6 billion in fiscal 2020-21. However, this amount of $ 11.7 billion is related to the pandemic response and $ 2.9 billion is not directly related to the pandemic.

“This shortfall increases the risk that underlying revenue and expenditure policymaking is not financially sustainable over the medium to long term,” Greaves wrote.

But the $ 14.6 billion deficit is the budget (pdf) Was released in May.

The report also found that income from casino gambling tax revenues, hospital and patient fee revenues, and traffic fines declined during the pandemic. This indirectly affected income.

Gleeve’s identifies financial risks in three areas: general government sector operating costs, WorkCover claims, and construction work, with current policies setting a government goal of $ 4.3 billion ($ 3.1 billion) in cost savings over four years. He said it would be difficult to achieve. Configuration.

“Without structural reforms, more than one-third of the state’s operating costs are spent on employees, making it difficult to achieve target reductions and maintain current service levels. These costs are typically enterprises. It is subject to the annual increase included in the collective bargaining agreement, “Greeves wrote. ..

In response to the Chief Auditor’s report, Shadow Treasury Secretary David Davis said the Andrews government’s $ 14.7 billion “stunning” deficit was mismanaged by a “explosion of project costs” in much of its spending. “It shows that.

“Despite the COVID hit, the Victoria State Government has taken $ 473 million more in salary, read employment, and stamp duty,” Davis said. Media statement..

The news of the budget explosion continues before report Victoria’s Directorate General of Audit has made “extraordinary efforts” by the government sector to address COVID-19, but “not all.” [Victorian government] The department managed spending effectively and wasted in some cases. “

Henry Jom