Victoria predicts an eye-popping debt of $116.7 billion – more than NSW, Queensland and South Australia combined – but can still buy a fishing rod for every primary school student in the state.
Prime Minister Daniel Andrews has announced the $96 million “go-fishing policy” with the slogan, “Do what matters.” This included a $1.5 million pledge to provide 60,000 “Little Angler Kits” to “elementary school age kids in every corner of the state.”
Still, Victorians are right to question whether this is the proper use of public money as landlords and big businesses are saddled with new so-called ‘Covid taxes’ to pay for mounting national debt.
Victoria’s net debt of $116.7 billion for this fiscal year is more than the combined net debt of New South Wales ($78.4 billion), Queensland ($14.5 billion), South Australia ($19 billion) and Tasmania ($2.994 billion).
Western Australia’s net debt has fallen by $16 billion over the past six years to $27.9 billion as rising iron ore royalties helped pay for the Covid disruption.
But despite the clear failure of economic management, Labor in Victoria continues to be re-elected by landslide majorities thanks to weak opposition compared to other states.
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Victoria hands a fishing rod to every primary school student as Daniel Andrews slams landlords and businesses to pay Melbourne’s mounting Covid debt (the Prime Minister and his wife Catherine are pictured campaigning in 2018)
Mr Andrews won a third term last November with a lavish grab bag of policies – such as those on fisheries – that saw former Liberal leader Matthew Guy lose his second consecutive election.
The budget newspapers announced that the Go Fishing Victoria program would consist of ‘providing Little Anglers kits to increase primary school age participation in fishing’.
But the big catch is that it does nothing to recoup Victoria’s $31.5 billion in debt accrued as a result of Melbourne overtaking Argentina’s Buenos Aires as the world’s most locked-down city in September 2021 – with 267 days of restrictions .
New Covid taxes for landlords and businesses will be in effect until 2033, with the levies designed to raise $8.6 billion over the first four years.
Treasurer Tim Pallas said the plan to repay the lockdown debt was nottemporary, focused and, above all, responsible’ – despite the decade of tax pain.
Din handing in his ninth budget, he announced bCompanies with sales of more than $10 million will pay more payroll taxes while the tax-free threshold is raised from $700,000 to $900,000.
Treasurer Tim Pallas said the plan to repay the lockdown debt was “temporary, focused and, above all, responsible.”
There will be a new levy for 860,000 landlords, owners of recreational homes and business premises.
An average landlord with $650,000 in land holdings would pay $1,300 a year.
The announcement was made Tuesday after the Reserve Bank of Australia this month hiked interest rates for the 11th time in a year, hitting those with mortgages, including many investors.
Inflation is already at 7 percent — more than double the RBA target of 2 to 3 percent — meaning interest rates could still rise above the current 11-year high of 3.85 percent.
Melbourne also has an ultra-low rental vacancy rate of 1.2 percent, according to SQM Research data, following the return of international students.
Despite the difficulties landlords face, Emma King, CEO of the Victorian Council of Social Service, who sits on several state government boards, suggested that property investors could simply sell their homes.
“If there are conditions for a tax increase for landlords, under no circumstances should it be passed on to tenants,” she told reporters on Tuesday.
“To be honest, when that happens people should be screaming it loud and loud because we’d want to know and really we should be giving name and shame.
“If you are good enough to own a house and you are poor, if life is so hard, why don’t you go and sell it?”
Never mind that 400,000 new overseas migrants are expected to arrive in Australia in 2022-2023, followed by 315,000 more in 2023-24, meaning many of them will be more likely to buy than rent – meaning that there is less supply for tenants.
Veteran 3AW announcer Neil Mitchell said many landlords battling higher mortgage payments would have little choice but to raise their rent.
“They’re not all filthy rich, of course, if costs go up, rents go up,” he said.
Just sell your house? It’s sheer stupidity. It will undoubtedly have consequences for the rents.’
Veteran 3AW announcer Neil Mitchell said many landlords battling higher mortgage payments have little choice but to raise their rents (pictured is a Melbourne rent row)
Mitchell also predicted that the rise in corporate payroll taxes would cause businesses to flee Victoria, as they did during the recession of the early 1990s, following the collapse of the state-owned bank that required Canberra’s intervention.
“I think, lock the borders – we can go back to the Covid days where nobody crossed the border,” he said.
“We will have to do that to keep the company going in this state.
“We are by far the highest taxed state in this country.
“Why pay more tax here when you can take your business to New South Wales or Queensland?”
Despite the Covid taxes, Victoria’s net debt was projected to rise to $171.4 billion by 2026-2027.
Mitchell also predicted that the rise in corporate payroll taxes would cause businesses to flee Victoria, as they did during the recession of the early 1990s, following the collapse of the state-owned bank that required Canberra’s intervention (pictured is an empty shop window in Melbourne)
A budget deficit of $4 billion is forecast for 2023-24, even as resource-rich states such as Western Australia and Queensland have announced budget surpluses.
The last time Victoria was in such a dire economic state Joan Kirner was Labor Prime Minister and like Mr Andrews she belonged to the socialist left faction.
When she replaced John Cain in 1990, Labor had also been in power for more than eight years and was in its third term.
Victoria was considered a rust bucket state and in early 1992 Nissan announced it would stop making cars in Melbourne, hitting an economy already battered by the national recession of the previous year.
Ms Kirner’s solution to the projected unemployment rate of 11 per cent – almost triple the current level of 3.75 per cent – was to allow poker machines in hotels and clubs and introduce laws for a new casino in Melbourne, now known as Crown.
She then lost the next election in October 1992, making Jeff Kennett the first Liberal Prime Minister in a decade.
It is a good bet that Labor – with or without Mr Andrews – will win a fourth term in 2026, despite poor finances with the Liberal Party’s current course.