As Victoria chases its AAA credit rating, with little or no success, having sold virtually every government-owned asset through privatisation, it is now scraping the barrel by selling off public housing assets. What has emerged from recent research is that this desperate financial manoeuvre is being orchestrated with the assistance of major international real estate consultancies, most notably Savills Australia, raising serious questions about who truly benefits from this fire sale of public assets.
The Victorian government’s financial woes have reached a critical juncture, pushing the state to what many are calling a desperate measure: the sale and demolition of public housing assets. This move, framed by the government as urban renewal, is seen by critics as a desperate attempt to shore up finances and appease credit rating agencies, after years of ballooning debt and fiscal mismanagement.
Victoria’s financial health has been steadily deteriorating. From a net debt of $22.3 billion in 2015, when the Labor government first took office, the state’s debt has skyrocketed to $155.5 billion and is projected to hit an alarming $194 billion by 2028-29. This massive increase translates to a per capita debt that has climbed from under $3,600 to an expected $25,500 by 2028-29. The interest bill alone is staggering, currently at $6.8 billion annually and forecast to reach $10.6 billion by 2028-29.
A significant contributor to this fiscal crisis is the unchecked growth in public servant wage expenses. In the 15 years leading up to 2022-23, Victoria’s public sector headcount expanded by a staggering 59%, far outstripping the state’s population growth of 29%. This has led to a 152% increase in the state’s public servant wage bill over the same period, exceeding all other Australian states. Furthermore, major infrastructure projects have consistently blown out their budgets and timelines, with 113 significant projects seeing an $11 billion cost increase in just the last year.
With Victoria already holding the lowest credit rating among Australian states (AA), major agencies like S&P, Moody’s, and Fitch have threatened further downgrades if the debt situation isn’t brought under control. A mere 0.25 basis point rise in interest rates could add $26.4 million to interest payments by 2029, highlighting the precariousness of the state’s financial position. Alarmingly, the Victorian Treasury has not even modeled the full impact of a credit rating downgrade on the state’s interest expenses and economy.
The Advisors Behind the Asset Sales
It is against this backdrop of fiscal desperation that the role of international real estate consultancies becomes particularly significant. Research reveals that Savills Australia, a major international real estate agency, is confirmed as a key advisor to the Victorian Government on housing matters. Specifically, Savills is working with the Victorian Government on “The Inclusionary Housing Pilot,” providing comprehensive services including Property Advisory, Development Feasibility, Finance and Funding, Development Management, and Transaction Management and Structuring.
Savills’ involvement extends beyond this single project. The company has “assisted with the development of a portfolio of social housing projects in Victoria with many large community housing providers” and provides “strategic commercial advisory services to both State and Local government clients.” Their expertise, according to their own marketing materials, includes portfolio and single asset strategies, property due-diligence, investment and business cases, transaction structuring and management, and procurement and implementation strategies.
The engagement of such high-profile international consultancies raises uncomfortable questions about the true nature of Victoria’s public housing “renewal” program. While the government frames the demolition of 44 public housing towers, including the iconic 33 Alfred Street in North Melbourne, as creating “updated, efficient and socially cohesive social housing,” critics argue it’s a thinly veiled land grab that primarily benefits private developers and their advisors.
The Human Cost of Financial Desperation
The “scraping the barrel” argument resonates deeply when viewed through this lens. Having privatised numerous government-owned assets in the past, the state is now turning to its public housing stock as a last resort for generating revenue and reducing liabilities. This strategy, however, comes at an immense human cost, facilitated by advisors whose primary expertise lies in maximising property values and transaction efficiency rather than social outcomes.
The lack of consultation, the human rights violations during the pandemic lockdowns, and the subsequent dismissal of a class action lawsuit brought by residents underscore the government’s disregard for its most vulnerable citizens. The decision to tear down these towers, rather than investing in their maintenance and upgrading, is seen by many as a deliberate act to “erase from public consciousness the disastrous snap lockdowns” and the government’s mismanagement during that period.
The conditions within these towers, deemed unsafe for workers during the lockdown, were considered acceptable for residents to live in, highlighting a profound disconnect and neglect. The Saturday Paper’s investigation revealed the shocking reality of residents being subjected to an “enforced lockdown with immediate effect” that the Victorian ombudsman described as “appearing to be contrary to law.”
A Profitable Partnership
The involvement of international real estate consultancies like Savills in this process represents more than just professional service provision—it symbolises the commodification of public housing and the prioritisation of financial engineering over social responsibility. These firms, with their expertise in “transaction structuring and management” and “highest and best use analysis,” are perfectly positioned to help the government extract maximum value from public assets, regardless of the social consequences.
Recent tender processes, including one for “Principal Consultants Homes Victoria Metro Projects” covering four housing projects across the metro area, suggest that the government’s reliance on external advisors for its housing program is extensive and ongoing. While the specific winners of these tenders are not always publicly disclosed, the pattern of engagement with major consultancies is clear.
In essence, the sale and demolition of public housing assets in Victoria represent a tragic confluence of fiscal irresponsibility and social injustice, facilitated by international consultancies whose business model depends on maximising property values and transaction efficiency. It’s a desperate gamble to improve the state’s credit rating, but one that sacrifices the homes and communities of thousands, disproportionately affecting the poor and vulnerable. This short-term financial fix, advised and managed by global real estate experts, risks long-term social fragmentation and further erodes public trust, leaving a legacy of displacement and a stark reminder of the human cost of treating housing as a commodity rather than a human right.
Editors Note. I thought the government had sold every public asset and the only remaining asset left to sell was a Sale and Leaseback of Parliament House.