Libs slam Labor’s ‘debt bomb’

VICTORIA’S debt could soar past $48 billion under Labor as it borrows big over the next decade to build the North East Link, airport rail and level crossing removals.

Treasurer Tim Pallas has laid bare his plan to fund the projects, as his party promised to start work on the North East Link on Monday if re-elected.

The Andrews Government would borrow up to $25.6 billion extra over the next decade, doubling debt to 12 per cent of Gross State Product.

It could reduce its borrowings if the Federal Government decided to boost its contribution to the projects.

But the Coalition said it would build the North East Link, East West Link and airport rail without hiking debt “through the roof”.

Shadow treasurer Michael O’Brien said the Coalition’s $17.5 billion in promises were fully funded, in part through a $5 billion plan to lease Melbourne’s sewerage system and by redirecting $200 million from Labor projects.

He batted away criticism that the Coalition had failed to explain how it would pay for costly infrastructure, saying yesterday’s costings only detailed spending over the next four years and did not include private sector contributions.

“These are projects that are not going to be completed in one term,” he said. “There is more than enough money to get this show under way.”

Mr O’Brien then took aim at Labor’s “debt bomb”, which he warned could amass $2 billion in interest annually and mean less money for health, police and education.

“Labor is completely reckless, they are prepared to mortgage not only our kids’ future but our grandkids’ future,” Mr O’Brien said.

But Mr Pallas said Victoria would pay the price for failing to build key infrastructure.

He said net debt would rise by about 1 per cent of GSP annually over the next four years, before increasing when construction on the projects was under way.

“We have to borrow to build,” Mr Pallas said.

“By spreading the cost over more than a decade it means we share the cost of the infrastructure across generations.

“We will pay some, our kids will be the principal beneficiaries of these investments.”

Labor’s costings showed Victoria would retain its AAA rating and did not include any new or increased taxes.

Deloitte Access Economics economist Chris Richardson and Infrastructure Partnerships Australia chief executive Adrian Dwyer yesterday said the borrowings could be considered good debt.