Victorian Treasurer Tim Pallas preparing to hand down the state budget in May.Credit:AAP
The opposition has seized on the Parliamentary Budget Office (PBO) analysis to accuse Labor of attempting to improve the short-term image of Victoria’s books at the expense of future taxpayers.
Treasurer Tim Pallas revealed before last November’s election the government would defer $3 billion worth of top-up payments to the closed defined benefits superannuation scheme for more than four years until June 2027.
But the decision means the government,which has committed to fully funding superannuation liabilities for public service employees in the closed scheme by 2035,will need to borrow more money later.
The PBO analysed the long-term impact of the policy at the request of Opposition Leader John Pesutto,estimating it would worsen net debt by $882.8 million by 2035 when the scheme should be fully funded.
“This change is driven by the increased borrowings that will be required by future Victorian governments to fund additional superannuation contributions from 1 July 2027 to 30 June 2035,” the analysis said.
“The higher investment is required to replace the lower returns resulting from lower superannuation asset balances over the life of the policy.”
Lost returns from the scheme were partially offset by a lower cumulative interest expense on government borrowings,the PBO said.