Victoria’s COVID-19 Debt Recovery Taxes a Drain on Economy: Libertarian MP

David Limbrick, Victorian Upper House Liberal MP speaking at the “Standing against Daniel Andrews Belt & Road Signing” rally held at the steps of Victoria Parliament on Dec. 15, 2019. Grace You/Epoch Times

The Victorian Labor government’s plan to pay off its substantial pandemic-era debt has been described as a “drain” on the state’s economy.

The state government has introduced new land taxes—as well as a payroll tax—that will compel property owners to fork out thousands per year to pay off the estimated $31.5 billion (US$20.7 billion) debt incurred under former Premier Daniel Andrews.

“Victoria is the biggest taxing state,” Libertarian MP David Limbrick told The Epoch Times on Jan. 19. “So it doesn’t have a revenue problem; it has a spending problem.”

According to the state government, the COVID debt levy will be used to pay down the state’s pandemic measures, or what the state describes as “one-off investments” that were “designed to protect Victorians and Victorian businesses throughout the pandemic.”

“This is the start of a new era, the post-COVID era, for the state and for its finances,” Treasurer Tim Pallas said during the Budget Estimates inquiry (pdf) in June 2023.

Victorian Treasurer Tim Pallas (L) and Victorian Premier Daniel Andrews (R) arrive to speak during a press conference in Melbourne, Australia on Aug. 19, 2023. AAP Image/Joel Carrett

“We are paying off our COVID emergency debt, the credit card that we used to save lives and livelihoods; we are ensuring that while our kids might have memories of COVID, that they will not be paying for it,” Mr. Pallas said, while adding that the COVID debt levy is “temporary, targeted, and, above all, responsible.”

But Mr. Limbrick has criticised the COVID debt levy, saying that the state government’s response to the pandemic was “costly in every sense of the word.”

“We had the longest lockdowns and the most deaths—and we still don’t know the real cost to our children from disrupting their social development,” he said.

“But apparently we haven’t suffered enough, and now we’re going to be taxed for our troubles.

“The Victorian government spends millions every day on the interest from our debt. This is an unconscionable waste of money and a burden on our future generations.”

COVID Tax ‘Completely Miscalculated’: Opposition Leader

Opposition Liberal Leader John Pesutto has criticised the tax as “completely miscalculated,” claiming that Victorians were being punished for the government’s “incompetence.”

“A nurse, a paramedic, a tradesperson who’s on a very modest income—as most property investors are—let’s say they invest in a very modest property for their future and the future their kids, this government is saying they will take a piece of that as well,” Mr. Pesutto told Sky News on Jan. 4.

“So this is off the back of many of Victoria’s most vulnerable people.”

However, Victorian Health Minister Mary-Anne Thomas said the COVID debt levy was part of the government’s promise to pay down the COVID debt.

“We used our credit card during COVID so that Victorians didn’t have to use theirs,” Ms. Thomas said on Jan. 4.

Under the COVID debt levy, a land tax levy will be applied to those owning two or more properties, affecting around 860,000 property owners, while businesses with payrolls over $10 million will be slugged an extra 0.5 percent under payroll tax changes.

Businesses with payrolls under $10 million per year will not be subject to the levy. Meanwhile, employers have also been slugged with a 42 percent increase to Workcover premiums.

Mr. Pallas has argued that the COVID tax targeted businesses and landlords who have been profitable.

“We think big business has the capacity to make a modest additional contribution that over the next 10 years to assist in repaying the COVID debt,” Mr. Pallas said at the May 2023 budget.

According to state budget figures, the Victorian government, led by former Premier Andrews, spent approximately $40.1 billion keeping its economy afloat through various stimulus packages for individuals and businesses.

Moreover, the state’s net debt is forecast to grow to $171.4 billion by 2027 despite the implementation of the COVID tax, reported the Australian Broadcasting Corporation (ABC)

State Government Urged to ‘Stop Unnecessary Spending’

The state is expected to save $2.1 billion over four years by implementing savings across government expenditure, including reductions in corporate and back-office functions, reductions in labour hire and consultancy expenditure, and hopefully achieving efficiencies across public non-financial corporations and public financial corporations.

It is also expected to raise $3.9 billion from businesses over four years, and $4.7 billion from landowners during the same period.

Yet cost blowouts to infrastructure projects have been a concern, with the North East link increasing by $26 billion after being budgeted at $10 billion previously, while the Suburban Rail Loop costings have increased from $50 billion to $200 billion.

Former Premier of Victoria Daniel Andrews (Left) with Victorian Premier Jacinta Allan (right), who was previously Minister for Transport Infrastructure and Minister for Suburban Rail Loop, inspecting the Metro Tunnel on Nov. 6, 2020 in Melbourne, Australia. Asanka Ratnayake/Getty Images

“The government can bring the budget back to balance by stopping unnecessary spending,” Mr. Limbrick said.

“If they cancelled the Suburban Rail Loop—which has no business case—it would save $125 billion at a bare minimum. This is enough to pay off the COVID spending several times over.

“There are countless other examples of wasted government spending, such as on a Commonwealth Games that never happened.

“We should all be worried that a future government will make this [tax] permanent,” he added.