Wednesday, 15 May 2024

Economic policy

Brad ROWSWELL (Sandringham) (14:13): My question is to the Treasurer. Yesterday the Treasurer described a debt cap as a ludicrous piece of public policy. Prior to the 2018 election, the Treasurer had a longstanding commitment to a debt cap of 6 per cent of GSP, so why did the Treasurer abandon the budgetary discipline of any debt cap?

Tim PALLAS (Werribee – Treasurer, Minister for Industrial Relations, Minister for Economic Growth) (14:13): I thank the member for his question. I make the point that debt caps as they are commonly understood, and if you look at the US example, are legislated and they are a brick wall beyond which you cannot move, as opposed to targets that the government set for itself prior to the onset of a century-changing pandemic. We had the flexibility because we had not locked ourselves into a debt cap. We had set a debt target, which, as was quite clear and obvious, had to change or would compromise the wellbeing of the Victorian community. We know exactly where those opposite would go. They would rate their debt cap and their budget above the wellbeing and the interests of the Victorian community. We just have a difference of opinion in this respect.

James Newbury: On a point of order, Speaker, the Treasurer is debating the question.

The SPEAKER: The Treasurer was being relevant to the question that was asked.

Tim PALLAS: The one thing that those opposite need to come clean on with the Victorian people, if we are going to have a debate around debt caps, is exactly where they would set that debt cap. It is a bit like a nuclear reactor: where would you put it? Where you put the level on your debt cap basically constrains you and your capacity to service the needs of the Victorian people when events are beyond your control. Those opposite might like to think that they can control the way the international economy operates or the geopolitical circumstances that this state and its people can be subject to. We are not quite so arrogant in this place. We recognise that as a government we have one job and one job alone, and that is to preserve and assert the wellbeing of the Victorian people and to grow the Victorian economy as and when we can and to make sure that debt is managed responsibly.

John Pesutto interjected.

Tim PALLAS: ‘How’s it going?’ says the Leader of the Opposition. I thank him for the interjection. How is our debt position going? It is going quite well because effectively, as a government, we have grown the economy. In growing the economy, in growing jobs, in growing prosperity, we as a community are capable of managing the material challenges that confront Victorians. We are seeing debt as a percentage of the state’s economy reducing.

Those opposite have a very clear view. Their idea of how to manage debt is to be cowed by it and to cut and put calamitous circumstances upon the Victorian people. That is not our approach. We will grow the economy. Our economy at the moment is $600 billion. By the end of the forward estimates, it will be three-quarters of a trillion. Our capacity to service debt will improve.

Members interjecting.

The SPEAKER: Member for Frankston, you can leave the chamber for half an hour.

Member for Frankston withdrew from chamber.

Brad ROWSWELL (Sandringham) (14:17): I am happy to debate the Treasurer any time, any place. In 2019 the Treasurer said that:

… our commitment to the Victorian people that debt will not exceed 12 per cent of GSP will be honoured.

Can the Treasurer confirm that net debt will reach 25.2 per cent of GSP in just two years?

Tim PALLAS (Werribee – Treasurer, Minister for Industrial Relations, Minister for Economic Growth) (14:17): Yes, and I can confirm for the member for Sandringham there was a global pandemic that laid waste to economies around the planet. And might I also confirm to the member for Sandringham that, were they ever to get the inglorious opportunity to govern in this state as they propose to do, they would effectively sacrifice the wellbeing of the Victorian people in the doctrinaire pursuit of a debt cap. Let us ring that loud to every Victorian that their priorities are not Victorians’ priorities and that their intention is to lay waste to the Victorian economy and the Victorian people.

Members interjecting.

The SPEAKER: The member for South-West Coast is warned.

James Newbury: On a point of order, Speaker, the Treasurer is debating the question.

The SPEAKER: The Treasurer has concluded his answer.