The debts run-up by profligate governments are about to cost us dearly

The Kennett Government had put Victoria back on its feet following an era of reckless spending under previous Cain and Kirner administrations.  The Bracks' Labor Government had also been relatively disciplined but Victoria has plunged into heavy debt under "Lockdown Dan" (Andrews).

Victoria is forecast to have the highest per capita state debt ($175.5 billion or $23,984 per capita by 2023-24).  It is forecast to havean operating deficit of $23.3bn this financial year, falling to $5.9 billion by 2024.  In 2018-19, public debt was $25 billion.  This climbed to $44 billion in 2019-20.  Debt will quickly triple, rising to $86bn in 2020-21, and $154.8bn in 2023-24 (a much faster rate than any other state).  In December, S&P Global Ratings lowered Victoria’s credit rating two notches from AAA to AA.

Victoria’s lockdowns have eroded the state’s finances and weakened its economy.  Repeated lockdowns have seriously affected the viability of many businesses.  Payments for JobSeeker and JobKeeper (by their end) are set to transfer an average $7000 of Commonwealth money to each Victorian, which is 45 per cent more (on a per capita basis) than dispersed to other jurisdictions.  Victorians will receive almost $11,000 per capita in total Covid assistance from the Commonwealth.

Overall, history seems to be repeating itself in Victoria.  The only thing that might stave-off a Cain-Kirner style economic crisis is the persistence of lower interest rates into the medium term.

Queensland arguably is another stark example of a Labor state government being fiscally undisciplined.

While the Bjelke-Petersen National Party government of the 1970s and 1980s was guilty of cronyism and was very conservative socially, it did run a tight budget.  The Goss Labor government (1989 to 1996) also largely kept the budget balanced.  It increased taxes rather than raised debts.

According to economist Judith Sloan, the fiscal rot for Queensland set in under the Beattie (1998 to 2007) and Bligh (2007 to 2012) governments, when general government borrowing went from $2.7 billion in 2003-04 to $45.5 billion 10 years later.  Under Anna Bligh, in 2009 the state lost its AAA credit rating, with the main driver being additional borrowing, especially for capital outlays.

The Newman government (2012 to 2015) attempted to turn things around but budget cutbacks, big cuts to the public service (14,000), and Newman's style proved too much for Queensland voters.

When the Palaszczuk government came to power in 2015 total government debt approached $80bn (including government-owned corporations).  Despite promises to control the Budget, the Queensland public service continued to grow at an unsustainable rate.  There are now 238,604 full-time public servants in Queensland and the state's wage bill is expected to come in at $26.5 billion for 2020-21.  While other states sought pay freezes, the Queensland Government negotiated a pay rise of more than 3 per cent for its state public servants.  At the same time border restrictions were being imposed that were sending many Queensland businesses broke.

According to the latest Queensland budget, Queensland’s total debt is expected to reach $129.72 billion over the next three years, equating to $25,141 per Queenslander.  The forecast deficit is $8.63 billion for 2020-2021, and is expected to drop to $1.29 billion by 2023-24.  The only consolation for Queensland is that it has kept its state assets largely in public hands.

I won't go through all the other states other than to say that, overall, State government debts are expectedto more than double to nearly $500bn in total within four years (averaging about $18,000 per capita).  NSW state debt is expected to rise to $137bn, or $15,600 per capita, though it must be remembered that the figure would have been much higher but for substantial asset sales.  WA has achieved a $1.2 billion budget surplusthis year on the back of strong iron ore prices.  Net debt for WA is nevertheless forecast to climb by $18 billion over four years to $43 billion.

The Commonwealth Budget has experienced deficits and rising debts more or less continuously since the time of the Rudd Government.  The Rudd Government's stimulus packages across 2008-10 were worth about $67 billion.  In the final months of the Rudd Government in mid-2013, Australia's net debt position was $159.6 billion, and the net debt-to-GDP ratio was 10.4 per cent.