Economist Saul Eslake contends that Victoria has become overly reliant on population growth and housing as a source of economic growth, resulting in it becoming by many metrics a poor state.
“Victoria has disproportionately relied on population growth and housing as a source of economic growth”, Mr Eslake told The AFR on Monday. “As a result, Victoria has become by many metrics a poor state”.
“If you ranked states by per capita gross product, or even per capita household disposable income, Victoria is in the bottom four with Queensland, South Australia and Tasmania, rather than in the top two”.
Saul Eslake is correct.
Victoria’s real GSP per capita is near the bottom of the league tables at just $79,768 in 2022-23, versus $91,439 nationally:
Victoria has also experienced the second weakest growth in GSP per capita since the Global Financial Crisis (GFC):
Victoria’s real gross state income per capita is among the lowest in the nation at just $79,679 in 2022-23, well below the national average of $91,333:
The growth in Victoria’s real gross state income per capita since the GFC in 2008 has also been the lowest in the nation:
Finally, Victoria’s household disposable income per capita is among the lowest in the nation at $52,209 in 2022-23, well below the national average of $56,824:
Victoria already has the highest state debt and the lowest credit rating.
Ratings agency S&P projects that Victoria’s debt will balloon to $247.2 billion by 2027, up from $55.2 billion in 2019:
The rest of Australia has already been called upon to effectively bail out Victoria, which received a large $3.8 billion in extra GST allocation for 2024-25 at the expense of New South Wales:
Former Australian Treasury official Stephen Anthony warned last week that Victoria could require a federal “bailout”.
“Victoria is on a suicide mission to record borrowing, just as global interest rates are about to hit 5%”, Anthony said.
“Potholes can’t get filled, emergency departments can’t afford clean linen, primary schools can’t fix heaters”.
“Things are about to get very ugly”, he said.
Thus, the rest of Australia may soon be required to fully bail out Victoria, cementing its place as Australia’s pauper state.
