Tomorrow Victoria goes to the polls. Neither side deserves to win. They are both woeful.

Beyond Victoria, who cares? But a better question is, within Victoria, who cares?

Since 1982, 36 years ago, the Labor Party has run Victoria for 25 years, including the rotten Cain and Kirner governments which left the state broke – financially and spiritually.

The seven years of Kennett between 1992 and 1999 fixed the finances but created an environment where Labor could play Robin Hood. Did Kennett go too far? Maybe, but there was a crisis and it needed fixing. Like Churchill after World War II, the job was done but there was no gratitude.

History shows that Liberals in Victoria are only elected when the catastrophe is so big there’s no justification for re-electing Labor. Although there are major problems in Victoria with crime and terrorism at the moment, the terminal stage has not yet been reached. Maybe in four years?

If nothing else, Andrews deserves a whack from the electorate to keep him in check, a job the opposition has been unable to fulfill.

Cracks are emerging but not soon enough and not enough.

And the there’s the red shirt scandal, which was not that Labor used taxpayers’ money to pay for ‘volunteers’, but that they then spent more than $1 million of taxpayers’ money to keep it quiet.

On these two bases alone, Andrews should lose.

Lucky for him, the Liberals are woeful.

Money doesn’t grow on trees

Barring a miracle, the Liberals will lose tomorrow. That’s fine. But if you’re going to lose, at least do it with dignity.

The Liberals aren’t. They have as many stupid policies as Labor but at least theirs won’t be implemented.

Last week Opposition Leader Matthew Guy announced “discounted TVs and fridges would be available for low-income households in a $40 million plan to upgrade energy-sapping electrical goods if the opposition wins the state election”.

Shockingly, there is actually a good policy argument for this: old fridges cost a fortune to run because efficiency standards are constantly increasing. This has benefits for the consumer by costing less and for the grid by using less power.

But it should not be the government’s job to pay for it. This mentality is how states – states like Victoria and Venezuela – go broke.

The silver lining

About the only good thing about the policy is that it is targeted towards lower incomes Victorians, unlike Bill Shorten’s battery policy which will be paid to upper-middle Australians who can afford solar panels and battery storage.

(Labor will offer a rebate of up to $2,000 for households earning less than $180,000 to install residential battery systems as part of its revamped energy policy if it wins the next federal election. The first consequence will be that battery storage goes up by about $2000, in much the same way childcare increases swallow any rebate rises. Funny about that.)

Dan Andrews is even worse.

Fantasyland

Andrews’ re-election strategy is to give everyone everything they want. Here are just a few:

  • New mothers will get a bundle of presents (Andrews’ wife has suggested a book about diversity).
  • Public school children will get free dental.
  • Teenage girls in public schools will get free sanitary products.
  • TAFE will be free.
  • Solar panels will be half price.
  • An underground rail link will be built at a cost of $50 billion.
  • 10 community hospitals will be built and the government will fund an extra 500,000 regional specialist appointments … And much, much more.

Heaven forbid when the bill falls due. But Andrews won’t be there. Nor may the revenue.

Stamp duty receipts fall with housing prices. It may be that forecasts of a housing decline are unfounded, but if correct they will rip a hole through the state’s budget. Meh … maybe the Libs will be able to fix it another time.

The debt bomb

Based on current forecasts, Victoria Government net debt will double in the next 10 years.

Is this bad, though? Not necessarily.

There is a good argument that governments should borrow at low interest rates for capital assets where the return is better than the cost of borrowing. If the private sector borrowed and undertook the work, with their highest cost of capital, they could not produce the same economically beneficial result. This is the argument against public-private partnerships and one that economists should be favourable to.

But there are a few catches, one of which is that the infrastructure is required. With politicians love of hard hats and hi-vis vests, can we guarantee the opportunity cost has been accurately assessed? In other words, is project A better than project B? That depends where your seats are located. So probably not.

There’s another catch.

The other catch

The cost of borrowing assessment makes an enormous assumption – and economic assumption that the economic modellers (ie, the government!) are not fudging the figures. The NSW Government’s stadium cost-benefit analysis should raise alarm bells with everyone south of the border thinking government estimates are rock solid when it comes to massive, headline-grabbing projects. They’re not.

When economic modelling and cost-benefit analysis meets political imperatives, truth is the first casualty.

The other concern should be the speed of the growth of debt in Victoria. Doubling the debt in 10 years makes it hard to put the brakes on spending if required. The economic shock is too great.

As the Australian Government has shown since Rudd-Gillard-Rudd, it is very hard to change national finances from a deficit to a surplus – it needs to be done gently. And the politics can be very painful.

If the brown stuff hits the whirly thing, Victorians will know who to blame.

Themselves.