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Many are beginning to realize that Victoria’s economy is a house of cards built on the foundation of printed money; the question is, how long can this be denied?
CommSec’s October quarterly State of the States report found Victoria to be the second worst performing state in the country, “beating” the unwanted position by New South Wales.
The latest results are a stark contrast to the Commonwealth Bank’s July quarter, which said Victoria’s economy was not the best and the “best performing” in the country.
It made Victoria a “world leader” in terms of economy, was the place to be, had a booming market, and enjoyed “low interest rates… [which] continue to support marketing efforts. “
How can the central government go from being the country that leads the country to the one that is bringing the country back in one sector?
Victoria’s economic needs have not changed. The CommSec method is wrong.
CommSec’s quarterly reports are based on indicators, such as construction activity, retail sales, and housing project starts, which only provide a high-level picture of the economy.
Based on these criteria, the economy of Victoria is sometimes seen as “hot” and “exciting”. However, the light may be short-lived.
Taxpayers Raise a House of Cards
Look down and you will find that Victoria’s economy is not as healthy as it first appeared.
The primary fuel used to heat the Victorian economy is taxpayers’ money.
When a government spends more, defaults on more debt, and faces more project losses, it stands to reason that construction activity is high, that government employees and government contractors have more spending power, and that unemployment is low – right now. here. .
A research report published in October by the Institute of Public Affairs, Victoria on the Edge, shows that the public debt is now more than $101 billion (US $65 billion), almost equal to the debt of all other countries combined. . Credit per winner is now about $15,000 (US$9,600) and is expected to double by 2035 to $30,000.
Although epidemic measures exacerbated the damage to the state’s economy, even before it began, major indicators of fiscal responsibility were already underway.
Debt, spending, and the rise in the number of government employees began to rise even before the pandemic.
When the current government took office in 2014, Victoria had more than any other Australian state as a percentage of Gross State Product (GSP). Since then, it has continued to get worse.
Today, that surplus has become the largest deficit of all governments in the country.
The Public Debt Must Be Resolved Urgently
At the height of the recession from the Cain-Kirner government-led recession in the early 1990s, public debt reached 16 per cent of Victoria’s GSP.
Today, government debt is already in the top four. And it will continue to grow because the government is unable to deal with the State Budget problem.
By 2030, when interest rates rise to 5 per cent, in line with market expectations, the annual interest repayments on the Victorian government debt will rise to $18 billion a year – quintupling the current annual repayments and equivalent to the cost of infrastructure. 18 new hospitals every year.
In the 1990s, the Kennett Government was able to sell off public assets to pay off debt owed to the people in the past and solve a problem that was disrupting the government’s budget.
Selling property is no longer available as an opportunity because most of the people’s wealth has already been sold and their money is gone.
Worse yet, the current Victorian Government has vowed to spend billions of taxpayers’ money on government reform!
One inescapable truth on both sides of Victorian politics is that action is needed to solve the government’s financial crisis. The successful people can’t afford a government that is bogged down by flashy reports from the central bank that don’t focus on what they have to deal with.
Reports such as CommSec’s State of the States cover short-term fluctuations in the market and are not as predictable as Melbourne’s weather. It does not reflect the true nature of Victoria’s cards outside of Aces.
The views expressed in this article are the views of the author and do not necessarily reflect the views of The Epoch Times.
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Kevin You is a research fellow with the Institute of Public Affairs. He has a background in political economy, industrial relations, and organizational studies.
