State Treasurer puts hand on heart: no poll war chest

VICTORIAN Treasurer John Lenders has pledged "hand on heart" that the state government will not use its $4.4 billion of forecast budget surpluses as a war chest to fund new spending in the coming election campaign.

In an interview with The Age, Mr Lenders insisted that the government would stick to its commitment to fund all infrastructure spending within the budget sector out of the surplus by 2013-14 — reversing the increase in state debt.

"I will put my hand on my heart and say, categorically, that these surpluses are to fund the infrastructure program," he said. "We're not going to put our debt levels up further."
He said the government had increased its borrowing to finance more infrastructure projects and keep the construction industry going during the slump in commercial building.

While the budget adds a further $3.8 billion in infrastructure projects, these are all paid for by stronger-than-expected state revenues.

Mr Lenders defended the proposed 40 per cent cut in infrastructure spending over the next four years as returning asset investment from its current record level down to "historically high levels", adding: "We said that the increase in borrowing would be a temporary thing."

He ridiculed the Coalition's criticisms of the increase in state debt, which on the widest measure will rise from $10.7 billion last June to $32 billion in 2014, or 8 per cent of gross state product.

"In 1958, the year I was born, state debt was 58 per cent of our economy — and that was under Sir Henry Bolte," he said. "This year it went up to 5 per cent."

At a business breakfast earlier, Mr Lenders defended the government's decision to scrap its $2000 top-up grant to first home buyers purchasing existing homes.

He said grants helping people build or buy new homes would also help relieve the housing shortage and hence pressure on rents.

In his interview with The Age, he also hinted strongly that the state's controversial $536 million fire service levy on insurance premiums would be scrapped, to be replaced by some form of property charge.

While reiterating the state's willingness to work with the Commonwealth for tax reform, Mr Lenders said the real issue was to find acceptable alternatives. "Everyone would identify the fire services levy as an inefficient tax, but for us, the question is: what would replace it?"
Earlier at the business breakfast, he appeared to undercut the case for the 1900 extra police the government has pledged to hire, ruefully highlighting the fact that crime rates had fallen by 25 per cent.

But he told The Age the community wanted more police so they could feel safe.
"If it's late at night, and there's a number of people around with a bit of grog in them, the fact that crime rates are down 25 per cent doesn't remove the anxiety you or I feel in walking past them," he said.