‘Borrowing to build’: Daniel Andrews fires up over Victoria’s growing debt

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Premier Daniel Andrews has defended the state’s growing debt, arguing his government is investing in the infrastructure Melbourne needs as it prepares to cement its title as Australia’s largest city.

Net debt will grow from $135.4 billion next year to $171.4 billion by 2027, according to Treasury’s predictions. That’s despite Tuesday’s state budget imposing billions of dollars in new taxes, delays to major infrastructure projects and cuts to the public service.

Victorian Premier Daniel Andrews.Credit: Joe Armao

Victoria’s debt burden is higher than any other local state or territory, as well as 10 sub-sovereign states in Canada and Germany, the two countries economists say are most similar to Australia.

But Andrews hit back at his critics on Thursday, accusing them of arguing that the state’s economy should shrink instead of grow.

“Do you think building the infrastructure that we need for the future is a burden? No, it’s what we must do,” he told reporters during an at-times-testy press conference.

“If you don’t build a world-class public transport system as we hurtle along to become Australia’s biggest city, then our quality of life will be fundamentally compromised.

“Productive borrowing to build the infrastructure that we need, borrowing to build to underpin jobs and quality of life … the Victorian economy is getting bigger over the next four years. That’s no accident.”

Opposition Leader John Pesutto on Wednesday suggested the first thing he would do to reduce government spending would be to tackle infrastructure cost blowouts.

“There are no cost controls,” he told ABC radio. “Our auditor general in Victoria, an independent officer of the Victorian parliament, has identified at least $30 billion in project blowouts.

“That is 30 to 40 per cent of the revenue we raise in any one year. So it’s a huge, gaping hole in the Victorian budget.”

Among the tax measures in Tuesday’s budget was a change that will lead to almost 400,000 Victorians paying land tax for the first time. The new charges will come into effect from January next year and target people with an investment property or beach house.

Earlier this week, Andrews said increasing taxes for landlords would not lead to higher rents. But leading housing economists have questioned that claim.

Victoria’s Big Build program includes the Suburban Rail Loop, Melbourne Airport Rail, the Metro Tunnel and various level crossing removal projects. The airport rail construction has been officially paused as part of a major federal review of the country’s infrastructure pipeline.

Victoria lost its AAA credit rating in 2020. Treasurer Tim Pallas has conceded it will “take quite some time” to get that rating back.

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