It Is Hard to See a Way Through

My eldest son has recently dipped his toe into the waters of adult life. With a university degree almost complete, I’ve enjoyed watching his thorough and independent progress through the murky contemplations of ‘what comes next?’ The first steps in planning one’s working life can be overwhelming, as notions of uncertainty creep in. 45 years of work sounds like a life sentence to me, let alone the kids who, to this point, have enjoyed mostly carefree times.

“The first steps in planning one’s working life can be overwhelming, as notions of uncertainty creep in.”

With the 21st birthday circuit a fading memory and his friends adjusting to their maturing expectations in a similar way, a ‘real’ job has become his steadfast priority. I am keen for my four sons to engage in life beyond the family business, to find experience and success through other professional endeavours. Thankfully, my first born is of the same mind and has contemplated several options prior to making his selection.

“I am keen for my four sons to engage in life beyond the family business, to find experience and success through other professional endeavours.”

With this as background, I found myself eavesdropping on a recent conversation he had with a few of his good mates. A couple of his crew were in suits, another in his ‘sparky outfit’ and a fourth in the young man’s uniform of 2024, an odd combination of oversized pants and a much too large hoody. Their discussion was full of overheard wisdom and wild, distorted theories, but was illustrative, nonetheless. It went something like this: “Did you know a lot of people are leaving Victoria to live interstate … Victoria is stuffed … No one wants to be here … yeah, everyone’s going to Queensland …” I didn’t interrupt; I wish I had.

As none of them read newspapers or watch TV, where are their ideas coming from? Parents? Work colleagues? University lecturers? Whatever the source, they have a view, a very unhelpful one as far as the Victorian anchored writer of this editorial is concerned.

The financial malaise Victoria’s State Government revealed in its 2024-25 budget is not a surprise and is confirmation a recovery is a distant notion. Simply put, the numbers are horrific. That my mostly uninformed son and his mates are discussing it would suggest the challenges have leaked beyond the contemplations of my muddled writings.

“The financial malaise Victoria’s State Government revealed in its 2024-25 budget is not a surprise and is confirmation a recovery is a distant notion.”

As long-time readers of my editorials hopefully attest, I have been a staunch advocate for Victoria and the opportunities our State has afforded the housing industry. Following Mr Kennett’s innovative resuscitation of an economy fumbling through a depression-likeperiod in the early 1990s, to Mr Brumby as an immigration positive Treasurer and Premier, to even the early years of the Andrews Government when budget surpluses and low debt were the norm, there have been many good reasons to be a Vic-promoter. In present times, however, it is desperately hard to find even a fraction of good news.

On ‘Budget day’, without a hint of irony, our State Treasurer, Mr Pallas, confidently pronounced: “We are on track with our fiscal strategy.” Seriously? Maybe it was a comedic avatar performing to the media scrum. Even those who sit on his side of parliament cannot honestly believe such nonsense? If you have a moment, I encourage you to flick through the official budget papers. The spin is something to behold. https://www.dtf.vic. gov.au/2024-25-state-budget/2024-25-statement-finances.

“On ‘Budget day’, without a hint of irony, our State Treasurer, Mr Pallas, confidently pronounced: “We are on track with our fiscal strategy.””

In 2017 net debt was $15.8 billion. In 2019, $25.5 billion. With state debt now at $156 billion and forecast to rise beyond $180 billion, the well-publicised commitment of $26 million a day in interest payments is our new reality. And what are we doing to fix it? Victoria’s Treasury revealed wages for public servants have doubled over the past decade, on track to reach $40 billion annually, with $600 million leaking beyond the current year’s planned spend. In 2014 the comparable wages bill was $18.8 billion. If our government was a business, action would have been taken months/years ago. And there is no chance the leaders responsible for such a disaster would have survived.

“In 2017 net debt was $15.8 billion. In 2019, $25.5 billion.”

And what about our housing sector? With investors looking beyond Victoria there has been a more than billion-dollar plunge in the state’s stamp duty revenues. For existing dwellings, the Australian Bureau of Statistics housing finance data confirms the value of lending for investment properties in the 12 months to March had risen 12.6 per cent. For the rest of the country that figure was 31 per cent, and almost 64 per cent in nation-leading Western Australia. (Herald-Sun, 12 May 2024).

Despite the much publicised rental crisis, Victoria’s new housing approvals have retracted sharply. As reported by the ABS, detached home approvals in the 12 months to March were 32,324, the lowest rolling annual total for a decade and more than ten thousand fewer than the same period across 2022-23. Meanwhile, the 8,572 apartment approvals over the same timeline are the lowest rolling annual end-March number since 2009. By way of comparison, less than a decade ago, the yearly volume of new apartments regularly exceeded twenty thousand. (Source: HIA)

“Despite the much publicised rental crisis, Victoria’s new housing approvals have retracted sharply.”

None of the above is fresh news, our newspapers have been dominated with similar for much of the past year, as developers have progressively disappeared and builders forced into carrying the growing risks. To support the point, Bowens’ framing numbers are well down, despite more customers on our books. Depressed commencements remain in line with the weak sales data.

“None of the above is fresh news, our newspapers have been dominated with similar for much of the past year, as developers have progressively disappeared and builders forced into carrying the growing risks.”

Rather than complain, what can we do? How about voting in parliamentarians on both sides of the floor who have empathy and don’t pass the buck, make inaccurate assessments or focus our attention on petty issues and irrelevant statistics. Again, for our elected leaders we need to enforce the same standards businesses face every reporting period. If you get it wrong, really wrong, serious consequences follow.

“Rather than complain, what can we do? How about voting in parliamentarians on both sides of the floor who have empathy and don’t pass the buck?”

To avoid calamity, businesses cut back, delete or get on the front foot and grow within their means. Yes, governments are exceedingly more complex organisms, yet a better way is necessary. Some obligations are absolute: errors should be admitted and the objective truth appropriately communicated. This was not the script followed in recent Budget announcements.

My wide-eyed son and his generation are facing a mountainous challenge. Notwithstanding their anti-Vic commentary, I’d like to think they remain protected by their naivety. I was the same age in the early 1990s and, thankfully, didn’t comprehend Victoria’s precarious truth of those times; maybe they will be same? While today’s debt is 16 times greater than it was in 1992, a miracle is always possible, isn’t it? We can only hope.