Debt crisis declared as Wilson decries ‘human cost’ of repayments

3 months ago 17

Jess Wilson has decried the “human cost” of Victoria’s record debt, which she blames for longer waiting times for ambulances, fewer police on the street, more crime and acute financial pressure on public hospitals and schools.

Declaring that Victoria has entered a “debt crisis” requiring an urgent, bipartisan response, the opposition leader said debt and escalating cost of interest repayments was the single greatest challenge facing the state.

Victorian Liberal leader Jess Wilson has ruled out cutting frontline services to manage the state’s finances.

Delivering her first formal speech since wresting the leadership of the Liberal Party from Brad Battin last week in a party room coup, Wilson told the trustees of the Committee for Economic Development of Australia on Tuesday that Victoria’s debt burden was “vastly different” to what the state had carried before.

“We are now at the point where net debt and the associated interest payments are becoming an existential threat to the Victorian economy,” Wilson said. “We cannot assume we will simply bounce back out of this.”

In a separate address to the Property Council of Australia, Wilson also flagged her plans to overhaul how the state taxes property and property transactions, warning that property investors had adopted a worrying shorthand of “ABN” – anywhere but Melbourne – when discussing development and investment opportunities.

She said her plans for tax reform could involve long called-for changes to stamp duty, but conceded this was not an easy fix. A Wilson-led government would prioritise medium-density housing, such as townhouses and small apartment blocks, rather than high-rise apartments in the suburbs, she said.

“This government has drawn some circles on a map and said ‘you’re going to live in this circle in a high-rise and that’s it’,” she said. “When I talk to Victorians, I don’t get the sense that they want to all live in apartments. I actually want to provide a choice.”

In her speech to CEDA, Wilson said the size of Victoria’s accumulated net debt, which according to this year’s budget is forecast to reach $194 billion by 2028-29 and require annual interest payments of $10.56 billion to service, had prompted her to write to Premier Jacinta Allan to propose the creation of a new commission to oversee fiscal repair.

“Victoria urgently needs a plan to tackle debt, and I am willing to put aside party-political differences and work with the government to achieve this,” she said in the letter, which was copied to Treasurer Jaclyn Symes and publicly released.

Wilson said her proposed Victorian Commission for Fiscal Responsibility, which would include former treasurers from both sides of politics, would be given access to Treasury documents, have the power to hold public hearings, and be established with a clear mandate to reduce debt.

Symes rejected Wilson’s proposal, dubbing it a “Liberals’ cuts commission”.

“Liberals want the Labor government on board to make their cuts ideology appear less extreme,” she said. “We will not join their frontline cuts squad.”

Wilson vowed to support the Allan government in “all serious attempts” to repair the budget but, in doing so, ruled out any cuts to education, health and other essential services.

“Today, I provide my essential services guarantee,” she said. “There will be no reductions to frontline services under a Liberal government.”

While the budget is forecast to post an operating surplus at the end of this financial year, Victoria’s auditor-general on Tuesday warned the state was still heavily reliant on debt to fund its massive capital works program.

“Over the last decade, debt growth has consistently outpaced GGS (general government sector) revenue and state economic growth, again a trend expected to continue,” the auditor-general said. “These persistent deficits highlight the state’s reliance on debt to fund its capital infrastructure program.”

One of the biggest transport infrastructure projects funded and built by the Allan government, the Metro Rail Tunnel, will take its first passengers this weekend.