Victoria’s pre-election budget update should trigger alarm bells for anyone concerned about the State’s economic future. The figures show the state’s cash deficit will persist over the forward estimates period.
The Victorian Chamber of Commerce and Industry (VCCI) says the data is a sobering reminder of the enormous challenges Victoria is facing.
Victoria cannot keep accumulating debt at this pace. The way forward is disciplined, targeted policy that strengthens the economy for the long term, without adding unnecessarily to the State’s growing debt burden.
VCCI believes there are several ways in which Victoria’s public finances can be brought under control and acknowledge it will take time.
- Bring government spending under control. Run a cash budget surplus over the economic cycle. Dipping into the emergency fund should not become the norm.
- Wind back spending on infrastructure projects that do not pass the future growth test.
- Examine the state’s revenue base to ensure that taxes do not impose a heavy economic cost. Stamp duties, for example, are known to be among the most destructive taxes in the federation. Taxes on land and consumption are much less of a drag on economic activity.
- Ensure that tax rates and tax bases are comparable to other states, and conducive to attracting investment and people which will bring the skills needed to sustain growth in the economy.
- The government should adopt a set of sensible fiscal rules that help keep the budget on track. This would provide a framework for decision making and project selection, to get debt under control.
To be attributed to Victorian Chamber of Commerce and Industry Chief Executive Sally Curtain:
‘It’s time to put the mojo back into Victorian business and discipline back into Victoria’s finances. The business community is ready to lead the way, but Government must provide the right operating conditions.”
“If Victorians want the economy to take off again, we first need to repair the runway. Getting spending and debt under control will create the launchpad for investment, business growth, jobs and a stronger future.”
“This election is a chance to reset Victoria’s economic compass, putting disciplined decisions and sustainable finances at the heart of everything we do. Victoria’s road to prosperity must start with tough decisions today.”
“Serious action is needed to restore the state’s finances to a sustainable footing. We cannot continue living beyond our means today and expect future generations to pick up the bill for the debt we leave behind.”
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