The latest budget proposal boasts a projected surplus of $727 million for the fiscal year 2025-26, with an anticipated increase to $1 billion by 2026-27. Over the forecast period, the average surplus is expected to be $1.7 billion.
“I am proud to confirm Victoria’s first operating surplus in seven years,” remarked Symes during the budget announcement.
However, a closer inspection of the budget documents reveals that despite the appearance of a surplus, Victoria’s expenditures exceed its revenue by approximately $7 billion annually when project costs are included.
The budget attributes this year’s operating surplus to a record-breaking tax collection and a $2 billion boost from the Commonwealth in GST revenue.
This financial position has enabled the state to introduce a series of benefits, such as complimentary public transportation until the end of May and a 20% discount on vehicle registration fees.
“We can afford it because our budget is in surplus,” Allan stated in a press release accompanying the budget announcement.
Shadow Treasurer James Newbury was quick to label Labor’s fiscal strategy a “fake surplus” during question time, while Nationals leader Danny O’Brien also criticised the budget.
“The only thing we see in this budget that’s in surplus … is a surplus of spin,” O’Brien said.
Net debt in Victoria is hurtling towards $200 billion and is projected to take up a 24.4 per cent share of the state’s economy by 2030.
“We have seen net debt soar towards $200 billion in Victoria. When the Coalition left office in 2014, it was $20 billion,” Opposition Leader Jess Wilson said.
“Victorians now will be paying an interest bill that could fund police, ambos and kindergartens and leave a billion dollars in change.”
Victoria’s interest bill is expected to almost double by 2029/30, rising from $6.774 billion in 2024/25 to $11.82 billion in 2029/30 – the equivalent of $32.38 million per day.
But Symes argued the state’s rising interest bill was “helping to grow the economy”.
“The reason you pay interest predominantly is because you’ve borrowed to build productive infrastructure … the alternative is you don’t build infrastructure, you stop. And all of those jobs I just talked about go,” she said.
“You might have less debt, you might have less interest, but you don’t have a productive society.
“Borrowing for infrastructure is what a strong economy needs.”
Today’s budget also failed to reveal the impact of Labor’s promise to spend an extra $11.5 billion on the Suburban Rail Loop.
The $34 billion project is supposed to be equally funded by the state, the Commonwealth and “value capture”.
But in January the government committed to funding that final third through “up-front debt” which will be recouped over 40 years via localised taxes, raising major concerns over potential interest implications.
In an effort to rake in additional revenue, the Allan government will end its motor vehicle duty concession for luxury vehicles, which is expected to bring an extra $12.6 million into the state’s coffers in 2027/28.
Victoria will also collect more revenue from fines, which is expected to rise more than 15 per cent from $886 million in 2026/27 to $997 million in 2029/30.
Some of those extra funds will flow to rising public sector wages, which are tipped to pass $41 billion in the next year – $1.3 billion higher than forecast.
By 2030, those figures will hit $45 billion, which Symes said was evidence of the government’s endeavour to recruit more teachers and healthcare workers.
“We back our teachers, our nurses, our police. We want more of those people employed, that’s why the figures go up,” Symes said.
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