“This government is up for the challenge, but these are very difficult and trying times.”
The Victorian government has not reported a deficit since the 1990s when Jeff Kennett was premier.
Mr Pallas refused to “confirm or deny the existence” of a surplus in this year’s budget, but added “don’t read anything into it”.
His comments are in sharp contrast to his earlier rhetoric that the budget would be in the black.
Last Thursday, even as Premier Daniel Andrews said he was preparing for the coronavirus outbreak to reach pandemic levels, Mr Pallas insisted the Victorian economy was strong and promised he would deliver a surplus.
“I think it’s counterproductive for people to speculate about [a recession] because there’s certainly no indication that that’s where we’re heading … because nobody knows exactly how long the impact of coronavirus will be,” the Treasurer said last week.
“What we can say is the state of Victoria is the strongest economy in the nation, well prepared to deal with these issues and we will be delivering a surplus.”
Coronavirus has wreaked economic havoc across Australia, coming just weeks after the nation’s economy took a nosedive because of the summer’s deadly bushfires.
The Australian sharemarket plunged 19.5 per cent this week after reaching a high of 7162.4 points a few weeks ago.
Mr Pallas said while it was too early to predict the outbreak’s impact on Victoria’s health system, the economy or budget, the latest modelling from Treasury and Finance predicted economic growth would slow by about 0.5 per cent – equivalent to $7 billion – by the middle of next year.
“I’m not chasing surpluses and I’m not courting deficits,” Mr Pallas said.
The Treasurer had previously indicated he would need to find $4 billion in budget savings over the next four years. On Wednesday, he did not say whether that figure would needed to be higher or lower in the face of a difficult economy.
He also backed the Australian Council of Trade Unions’ calls for “special leave” payments for casual workers, saying it was “vitally important” vulnerable workers were looked after.
“The worst thing we can do from a public health point of view is put them in a position where they have to continue to front work because they need sustenance of their job in circumstances where they should be doing the right thing by quarantining themselves,” Mr Pallas said.
Opposition treasury spokeswoman Louise Staley said the government was using “the cover” of coronavirus to hide its economic mismanagement.
“Labor had buggered the budget long before the devastating bushfires and coronavirus,” Ms Staley said.
“What we know about Labor is when it runs out of money it comes after yours.”
Sumeyya is a state political reporter for The Age.
Noel Towell is State Political Editor for The Age