‘Slap in the face’: Pallas accuses Canberra of treating Victorians with contempt

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Victorian Treasurer Tim Pallas has accused the Albanese government of treating the state with contempt by allocating just 1 per cent of its $11 billion priority infrastructure spending to projects in Victoria.

The federal government on Wednesday reported a $40 billion improvement to its bottom line over the next four years, partly driven by rising tax revenue. But the update prompted a late-afternoon response from the state Labor government, accusing its Commonwealth counterpart of providing less money for their projects.

Victorian Treasurer Tim Pallas. Credit: Eddie Jim

Pallas said Victorians had been burnt by the Albanese government in “a summer shocker released under the guise of a run-of-the-mill budget update”.

He said the Mid-Year Economic and Fiscal Outlook (MYEFO) showed that the state’s share of infrastructure funding had fallen to 19.2 per cent, compared with the 23.5 per cent outlined in the May budget.

Pallas has argued Victoria should receive funding in line with its population, which is 26 per cent of the nation. Along with premiers Daniel Andrews and Jacinta Allan, he was a vocal critic of project spending when the Coalition was in power.

The Victorian government accused the Commonwealth of allocating just $101.8 million to the state for priority infrastructure projects – out of a total $11 billion – over the next decade.

Pallas also said the federal government had cut payments for healthcare by $1.5 billion in the 2023-24 financial year, revising its budget prediction of $19.9 billion down to $18.4 billion.

“Victoria has been a stand-up national citizen and helped out the Commonwealth in very substantial ways – and this budget update is a total slap in the face,” Pallas said in a media release.

“The Commonwealth is treating Victoria with contempt, and we won’t take it lying down. We’ll fight for what’s fair because that’s what Victorians expect.”

The Allan government argued it had negotiated in good faith about the federal review of infrastructure projects and over improvements to the National Disability Insurance Scheme. But in return, the Commonwealth had put less money towards projects despite reporting an improvement in its budget outlook, it said.

Federal Treasurer Jim Chalmers and Finance Minister Katy Gallagher.Credit: Alex Ellinghausen

“The fine print of MYEFO reveals the partnership is a one-way street,” the government said in the release.

“The Commonwealth has consistently said Victorians would not be left worse off, but we have, and it’s plain to see.”

“Effectively, federal Treasurer Jim Chalmers has found almost what Victoria spends in a year down the back of the couch, and rather than sharing some of his good fortune, he’s perversely making Victorians pay for it.”

Chalmers has been contacted for comment.

Victoria’s net debt is forecast to reach $171.4 billion by 2027. Higher rates meant in the last financial year the state paid $4 billion in interest, or about $600 per person.

The Victorian Auditor-General’s Office warned last month that the state’s interest bill could surge to $12 billion as it raised concerns about whether there was a clear plan to pay down its debt and manage the risk of further cost blowouts.

However, the Allan government has insisted its economic plan is working. CommSec’s State of the States report in October said Victoria had the nation’s best-performing economy driven by positive results for retail spending and business investment.

The Age revealed last week that rising interest rates and inflation had smashed real household incomes to levels not seen since 2014.

Shadow treasurer Brad Rowswell said Pallas needed to “stop blaming everyone else for his own financial mismanagement”.

“These are the comments of a tired, incompetent government that simply cannot manage money,” he said.

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