The Public Accounts and Estimates Committee (PAEC) made its report into the Victorian budget estimates public after the document was tabled in parliament today.
The Victorian premier, treasurer and a long list of other ministers appeared before the committee for the inquiry into the budget estimates. The result is the committee’s 396-page report off the back of a round of hearings that kicked-off last November.
PAEC said the state 2020-21 budget was delivered at a time of “substantial widespread disruption to public finances”, meaning that the package involved a “substantial increase in government spending, a significant write-down in revenue and a large-scale borrowing program”.
In 2020-21 the Victorian state government delivered emergency responses to bushfires, as well as the health and the economic hardship caused by COVID-19. That cost money – approximately $90 billion in output initiatives (a 20.8% increase on what was budgeted for 2019-20) and $19.8 billion in capital investment (touted to be the largest capital program in Victoria’s history).
The $31 billion that flowed to the Department of Health and Human Services accounted for 39% of all departmental output funding. The department’s program of initiatives to respond to COVID-19 (approximately $3.4 billion) accounted for 37% of its total output expenditure across 2020-21.
“Net debt is forecast to rise to $154.8 billion, or 28.9% of GSP, in 2023–24 — up approximately two and a half times previous forecasts,” the committee’s report said.
“The changes in revenue, expenditure and debt in response to COVID‑19 are largely sustainable and will not compromise the state’s fiscal position over the long‑term.”
The report gives some hope against a backdrop of stagnating wages in Victoria since the onset of COVID-19, and almost all industries statewide experiencing slower wage growth compared to the September quarter in 2019. For example, the committee found both the participation rate and underemployment in Victoria recovered sooner than expected by the time the November budget was handed down.
What’s more, the committee notes that a total of $134 billion in projects are commencing or currently underway in 2020–21. Transport and infrastructure projects take the largest chunk of this investment, followed by housing, education and health projects.
“The changes in revenue, expenditure and debt in response to COVID‑19 are largely sustainable and will not compromise the state’s fiscal position over the long‑term,” the report said.
PAEC is a joint parliamentary committee, which comprises 10 Victorian parliamentarians. It made 154 findings and 51 recommendations in its budget estimates inquiry on issues ranging from COVID-19 related expenditure to a tax on electric vehicles. Scrutiny of service delivery and financial management were forefront.
PAEC Chair Lizzie Blandthorn said that the annual examination of government spending plans promoted the integrity of the public sector.
“This process promotes the effective and efficient delivery of public services and assets such as hospitals, schools, prisons and road infrastructure,” Ms Blandthorn said.
“At a time of substantially increased government spending, the committee’s role to ensure sufficient transparency and accountability of public sector finances is more important than ever.”