Allan and Treasurer Tim Pallas were rightly asked on Friday if we could afford to embark on one mega-project while ramping up another that is significantly over expectations. Pallas said the state could afford both because the risks were too great to not invest in the Victorian community.
However,in the same breath he acknowledged that the state’s infrastructure program was limiting private sector efforts to create housing,at a time when Victoria wants to build 80,000 homes a year and rents are soaring.
Pallas has previously suggested there needed to be a rethink on the timing of infrastructure,and on Friday said he’d like to see the average $21.3 billion spent each year come down because of “the crowding out effect that it’s having on the private sector”.
It is jarring to admit this is a problem the same week your government signs construction contracts worth $13.8 billion.
There is probably no better environment to suggest major projects should be delayed and take pressure out of the market,as the Commonwealth has done. Despite this,the government will never back down on the rail loop. It has previously argued that delaying the project will only make it more expensive.
“Things cost what they cost,” Andrews would often say when asked about previous blowouts.
But costs aren’t just numbers in a budget,they correspond with real people and real policies,and if Victoria is going to keep spending on these projects,it is important to note what else is at stake.
The allowances paid to foster and kinship carers are among the lowest in the country,despite significant pressure on the child protection system and internal reports recommending the government address this.
Ten community hospitals promised at the 2018 election are having their scope reviewed as they are well over budget. Damaging floods have contributed to a regional road network in a state of disrepair.
There are massive staff shortages in essential services such as teaching,health and child protection despite genuine government efforts to recruit in this space. Consultancy use is on the rise even as the government tries to cut parts of the public service.
Whatever your position is on the SRL,even the former secretary of the Department of Economic Development,Jobs,Transport and Resources (DEDJTR) acknowledged the project had not always been considered in the context of alternative uses for those funds.
“A project of this scale and complexity necessarily competes with many other claims on public funds – in all portfolios,not only transport,” he told the Victorian Ombudsman in a recent report.
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“That the opportunity costs of the SRL were not able to be tested by DEDJTR and Department of Treasury and Finance creates a high risk that better uses of funds have been crowded out.”
The Allan government is steadfast in the idea that the rail loop will reshape the way Victoria functions,and thinking big with reform is something to be encouraged. Voters have tended to agree.
But that is not a blank cheque,and the public is right to question the timing,scope and which resources are being diverted away to maintain the state’s Big Build,particularly when the treasurer wants more money from the Commonwealth and accuses his federal counterparts of treating Victoria with contempt.
It might also be time to reassess how we justify government spending. Funding predictions contained in two separate business cases,for theCommonwealth Games and the North East Link,have been wildly off the mark. This should be a concern when politicians take these figures to an election.