The ministerial brief,obtained under Freedom of Information,shows the department asked Pallas to release the emergency top-up payment because the state’s debt portfolio was projected to be more than $50 million over budget.
The core of the issue was a centralised bank account system that Victorian government departments and agencies use for deposits and that is administered by the Department of Treasury and Finance. Treasury then pays interest to the departments and earns interest itself,at a slightly higher rate,from the bank.
According to the document,the department claimed “volatility in interest rates” had affected its forecasts and the department had identified a “projected shortfall in the appropriation authority” to make interest payments.
A Treasurer’s Advance gives departments or agencies access to cash to meet urgent funding to pay unexpected bills not forecast in the budget.
The Age spoke to two sources who have worked in budgetary oversight roles for the state government. They confirmed that Treasurer’s Advances are traditionally used to cover spending on unexpected events such as natural disasters and that requesting emergency payments to cover interest bills raised questions about Treasury’s forecasting and modelling. They spoke anonymously in order to discuss budget matters.
“It points to bad budgeting and potentially a poor reading to markets,” one senior auditor toldThe Age.