A senior Liberal frontbencher has urged the Albanese government to reject a potential request for a massive Commonwealth bailout for Victoria.
The state’s May budget is set to reveal the eye-watering costs of the world’s longest lockdowns and continued COVID-19 aftershocks crippling the state.
Victoria’s debt is currently sitting at $115.6 billion but is expected to balloon out to a mammoth $165.4 billion by 2025-26, representing almost a quarter of its gross state product.
But ahead of the Federal Budget on May 9, the Andrews government is petitioning its Commonwealth counterpart for additional financial assistance, according to the Australian Financial Review.
Manager of Opposition Business Paul Fletcher however strongly rubbished the potential move declaring the federal government’s finances could not afford a bail out of the country’s second largest economy.
“The Victorian government in terrible financial trouble and approaching the commonwealth government for a bailout,” Mr Fletcher told Sky News Australia’s Peter Stefanovic on Tuesday.
“We’ll certainly I’d encourage them not to be responding to that.
“Let’s see some discipline on the spending side.”
The Victorian government is expected to fork out more than $7.3 billion in interest repayments on its debt in 2025-26 adding to concerns of the state’s ability to rebound from COVID-19.
Premier Daniel Andrews has already confirmed the budget will include a sweeping 10 per cent cut of public service staff.
The largest employer in the state will cut an expected 5,000 jobs in a bid to put downward pressure on the burgeoning $33 billion public sector wages bill.
Amid concerns Victoria could face another credit rating downgrade after agencies cut back the rating from AAA to AA, the state is desperately trying to recover its worsening debt position.
It also faces growing pressure from public sector unions to join the recently-elected NSW Labor government and scrap the three per cent wage cap for nurses, police, teachers, firefighters and other public servants.
Victoria’s massive infrastructure bill is also set to balloon with the independent parliamentary budget office last year estimating the cost of the government’s flagship Suburban Rail Loop will blow out to $125 billion.
Speaking to the AFR, the Premier revealed discussions were underway with the Commonwealth over potential assistance but refused to accept the characterisation of a “bailout”.
“I wouldn’t put it in those terms, but we’ll always lobby, push, pressure and advocate and put a good quality case to the Commonwealth government for more and more support,” Mr Andrews said.
“You would expect nothing less. That’s what I’ve done regardless of the political make-up of the federal government. And beyond that … lobbying, that standing up for Victoria comes in the context of having been fundamentally ripped off for almost a decade by the Liberal National Party.”
Victoria’s $166 billion debt obligation by 2025-26 will trump NSW, Queensland and Tasmania’s respective bills combined.