VICTORIA'S FIGHT WITH THE FEDERAL BUDGET
With the release of the Federal budget last month, there has been a lot of discussion about its pros and cons. Even the government officials themselves cannot agree with one another about its merits, as this piece shows with regards to Victoria’s allocation for the East West Railway line.
Sometimes, the numbers thrown around by the official national and global economists can be a tad confusing. Most of the time they’re confusing on the upper side. For instance, could it be really true that the size of Australia’s economy, as per 2014, is 1.5 trillion dollars? That’s 1500 billion dollars. If you’re trying to think of how many zeroes that is, don’t bother. You will forget by next time anyway.
And then sometimes the numbers surprise on the downside. Could it be that the state of Victoria and the Federal government are having a tiff over a mere 1.5 billion dollars? One would think that it is chump change, amounting to about 0.1% of the Australian economy, but no, economists can be as human as the rest of us: able to think in grand surpluses one moment, and descending to scruples the next.
So the story is that Victoria’s allocation for the East West Railway project was $1.5 billion, and if the budget is to be believed, Victoria should return that amount in fourteen months, presumably from the revenue generated from the railway line.
However, there is one tiny problem. Victoria’s Premier, Daniel Andrews, is refusing to play ball. He has even gone to the extent of calling the Federal expectation ‘childish’. He said that he has been receiving mixed signals from the government, with the Prime Minister saying one thing and the Treasurer saying something else.
Speaking purely of numbers, if Victoria has to return the money by force, it would send the state budget $300 million into the red. Opposition leader, Matthew Guy, as expected, pounced on this information and said, ‘Daniel Andrews, in just six months, has blown our financial credibility by banking his surplus on East West Link money that he now has to return to Canberra and that is a financial disaster.’
There is also much to be discussed about Victoria’s general share in the budget, which seems to be only at 9%, much lower than what the other states are getting. But the bigger question is this: how can a country which boasts of being a 1.5-trillion-dollar economy still have a budget that bargains and fights over 1.5 billion dollars? And how is it possible to be still in the red after realising economic potential of such massive amounts?
Let’s call it human nature.