VIC:Preserving AAA rating tough: Baillieu

AAP General News (Australia)
04-27-2011
VIC:Preserving AAA rating tough: Baillieu

By Melissa Jenkins

MELBOURNE, April 27 AAP - Preserving Victoria's triple-A credit rating will be a major
challenge, Premier Ted Baillieu has warned less than a week before the state budget.

Mr Baillieu also refused again to rule out a reduction in public-sector jobs by attrition.

Maintaining the state's credit rating, as well as delivering a minimum $100 million
surplus, were among key commitments the coalition made before winning office last November.

But an expert panel commissioned by the government to examine the state's finances
has now called for a more flexible approach.

The Independent Review of State Finances said in its interim report released on Wednesday
that achieving a triple-A rating should not be a medium-term goal.

Instead, it recommends zero net debt and superannuation liabilities among its medium-term
targets.

Treasurer Kim Wells, who commissioned the report, was missing in action on Wednesday.

His spokeswoman said he was unavailable to answer questions about the report and the
government would respond in coming months.

Mr Baillieu told reporters he wanted to retain the state's triple-A credit rating but
it would be tough.

"We are keen to keep a triple-A rating and we'll be endeavouring to do that," he said
as he announced an extra $100 million over four years for school maintenance.

"But this is going to be a significant challenge for the government and for all Victorians."

Shadow treasurer Tim Holding described the report as a disgrace and defended the previous
government's record as sound economic managers.

"Victoria's finances are in a very strong position, they're in a sustainable position,"

he told reporters.

"We've gone through this charade, through this absurd exercise ... to try and butter
Victorians up to what we all know is coming, and that is a budget where they will seek
to wriggle out of the solemn undertakings they made to Victorians."

Mr Holding warned that walking away from the state's triple-A credit rating could lead
to a higher interest burden for the state as it serviced its debt.

Before the election, the coalition identified $1.6 billion of savings through measures
such as cutting government advertising, travel and spin doctors.

"Where there are other opportunities for savings we'll look at those," Mr Baillieu
said on Wednesday.

He refused to clarify his position on whether further savings could include not replacing
public-sector workers like teachers and child protection workers when they leave their
jobs.

"I'm simply saying what I have said before is we're not looking to reduce any frontline
services," the premier said.

"I'm saying when the state grows, employment grows.

"I am sure there will be changes, but I'm not going to pre-empt the budget," Mr Baillieu said.

The Independent Review of State Finances, headed by Dr Michael Vertigan, warned that
if the state continued down the path of spending outstripping revenue, the government
would have to borrow just to pay ongoing expenses, like public servants' wages, by 2015/16.

Community and Public Sector Union (CPSU) state secretary Karen Batt said the review's
findings were completely at odds with Treasury's recent mid-year report showing a $482
million surplus.

The CPSU is one of several unions set to do battle with the government over pay rises
for its members.

AAP mj/pmu/jl

KEYWORD: FINANCES VIC WRAP

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