Another day, another financial shock for Victoria. The sporting capital is losing its mojo, and for evidence, you just have to look at the state’s major projects, as Ticker’s Ahron Young explains

$28 billion. That’s the latest figure that Victorians are paying more for major projects to be completed.

From the Metro Tunnel to the West Gate Tunnel, the major cost blowouts are hard to ignore.

Victorian Premier Daniel Andrews with his Deputy, Jacinta Allan.

Commonwealth Games

So it was no surprise, and should have been no surprise, that the cost of the Commonwealth Games too would blow out. Especially since it was doing something new – spreading events across the state, in places where world-class facilities do not already exist.

It almost feels like it was designed to fail.

A columnist wrote that Victoria has the worst-performing economy in the country, exacerbated by world-record lockdowns during COVID. He said, “Victoria’s is a pretty weird Australian state government. It combines the ideology of Bernie Sanders and the social policies of San Francisco with the fiscal prudence of Puerto Rico.”

But it’s much more than that. Fiscally, Victoria has been facing a crisis for some time.

There’s no doubt that a city where the population has substantially increased should also need more infrastructure.

The previous Liberal government had no agenda in office. As one senior party official told me after their defeat in 2014 – “It’s not in our DNA” to build infrastructure.

Debt-built state

This means the party paints itself as fiscally responsible is prepared to leave the hard work to the Victorian Labor Party, notorious for its “jobs for mates” reputation.

When Labor lost the election by one seat to the Coalition in 2010, it was because no one had done anything to help with congestion. Melbourne is now a city where you need to live as close to work as possible. Crossing the city is impossible.

So for the Coalition to spend four years doing nothing, and only proposed to build the East West Link at the 11th hour as an election ploy, essentially relieves them of any credibility on this issue. It’s no surprise they lasted one term. Victorians wanted things done.

So when Labor returned to power, they campaigned on traditional Labor issues like more spending on health and education, but they also had a plan (and costings), to remove 50 level crossings and begin work on long-awaited projects.

The axing of the Commonwealth Games tells us in a roundabout way that Victoria can no longer afford to pay for health and education, as well as do anything else. But will this be a rerun of the wreckless Cain/Kirner years in the difficult 1980s and 90s?

Where the joke went something like this: “What’s the capital of Victoria? 20 cents.”

Since then, so much has been done to fix the bottom line, to fix Victoria’s reputation. But Victorians are a funny bunch. Referred to by former (Sydney) Prime Minister John Howard as “like the Massachusetts of Australia.”

Victoria is home to about 30 percent of the nation’s population.

Hard deadlines

One thing Victorians don’t seem to expect, or get, is hard deadlines on major projects. It’s one of the great benefits of hosting the Games – things have to be done on time. Maybe that was the bigger fear.

But all these years after the 2014 election, none of the “city-changing” projects are finished. The airport link looks dead. The city resembles a never-ending sand pit, with roadblocks at every corner, and rarely any sign of any workers. Just fences and reduced speed signs.

And then comes the bill. It was all fine to borrow money when money was cheap, but a pandemic and 12 interest rate rises make balancing the budget and paying for infrastructure through debt rather tricky.

If only they had done it sooner.

Politicians in Victoria waited too long to build much-needed projects because of their aversion to debt. The trouble is, that was at a time when debt was cheap.

By the time they jumped in, the cycle had changed, and the cost of debt had risen dramatically.

So now it’s going to cost Victoria big time.

Here’s a how at the overspending on major projects.

North East Link

Promised: $5 billion 

22/23 Budget: $15.4 billion (budget details potential future increases)

West Gate Tunnel

Promised: $500 million

Revised project cost: $5.5 billion

22/23 Budget: $10.2 billion

Metro Tunnel

Promised: $9 billion

22/23 Budget: $12.36 billion

CURRENT BUDGET BLOWOUT: $3.36 billion

Note: Legal disputes pending

Level Crossing Removals (initial commitment)

Promised: $5 billion

Victorian Auditor-General: $8.3 billion

CURRENT BUDGET BLOWOUT: $3.3 billion

 East West Link

Promised: $0 to cancel

Cost: $1.3 billion to cancel it

LAST REPORTED BLOWOUT: $1.3 billion