Throwing economics out the window - Budget blowouts and energy projects
At some point, we must ask ourselves, why is the Victorian Government not being held to account for their ideological push to blindly build uneconomic energy transmission projects while their levels of debt are spiralling out of control, while they have industry and the communities that will be hit the hardest are screaming for them to stop.
Make no mistake that the Australian government are hanging future generations out to dry by failing to reduce emissions sufficiently, rising energy prices and ruining rural communities with the electricity transmission line mess being created in Victoria.
According to the independent Parliamentary Budget Office, Victoria’s net debt is forecast to surge from $115 billion this year to $165 billion by 2025-26. That is 50 per cent higher than any other state in the country with the Government estimating that Victoria's interest bill will grow to $7.3 billion by the 2025-26 financial year.
The Victorian Premier arrogantly claimed that his Government had been put in a difficult position due to the pandemic, as if no other Government in Australia nor the world was in the same position. The only difference being he locked Victorians in their houses more than anywhere else in the world. And now, crawling on his hands and knees, he is asking for more support from the Albanese Government because of his mistakes. The same Albanese Government that continually blames the previous Government for debt they ‘inherited’ despite them calling for more spending during the pandemic.
Treasurer Chalmers has rightly sent signals that this is not possible and fiscal restraint is needed. However, this economic level headedness needs to be applied to all areas of Government spending – especially the chaotic energy plans that they are cooking up in their mad scientist lab! There are calls for the handbrakes to be pulled in Victoria’s $21 Billion construction pipeline due to the State’s eye-watering debt, despite this the Andrews Government is hellbent on pouring money into its $3.3 billion flagship electricity transmission project, VNI West, which has been deemed uneconomic and will leave consumers picking up the bill according to the EUUA.
These projects have been labelled “a monumental mistake” by academics at the Victorian Energy Policy Centre. However this mistake will only balloon with the Australian Energy Market Operator (AEMO) now estimating that transmission projects could blow out by as much as 40 per cent more than originally estimated. This is all made worse by the Andrews Government implementing legislation that empowers the Victorian minister to direct the building of transmission outside the normal regulatory process, which the AEC has previously expressed concern over. States hiding projects away from transparent regulation by the AER is poor policy that, unchecked, could lead to the demise of the NEM.
One thing we know about the Victorian Government is that they are great at making sweeping statements on energy policy. But then when push comes to shove they end up backtracking, like they did last week with energy minister D’Ambrosio admitting to industry that their uneconomic Frankenstein of an idea to revive the State Electricity Commission (SEC) from the dead wont be enough to reach energy targets needed to properly power the state.
However, you get what you pay for when you have a Premier who has over 90 personal staff and is more focused on outspending Harvey Norman, Amazon, Mcdonalds, the Coles group, Telstra and the big 4 banks when it comes to advertising.
Victoria needs sensible economic spending, especially in the necessary pursuit of decarbonising our economy, make no mistake we are heading headlong into a perilous situation and one in which the damage will be far too great to undo. We owe it to future generations to prevent this from happening.
