Victoria’s state budget records its first operational surplus since Covid-19, but net debt remains a burden Victorian patients will pay for years to come.
Victoria’s treasurer Jaclyn Sims is springing a $600 million forecast operating surplus for 2025/26.
But that’s $1 billion lower than what was forecast in December, and independent economist Saul Eslake said forecasts for net operating surplus for next year’s fiscal year should be met with a “big yawn.”
“Victoria cannot begin to pay off her debts. In fact, unless she operates a cash surplus, she cannot begin to stop adding to her debt,” he told AAP.
“I would have been pleasantly surprised… if she predicts cash surplus in any of the four years that forward estimates are relevant.”
Treasurer Symes said the net debt forecast for the next four years is delighted that by mid-2028, it has estimated that the one-year budget update is $187.3 billion.
But by then, state taxpayers are expected to pay $25 million a day in debt service costs, less due to critical services and infrastructure such as schools, hospitals and roads.
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The more important figure, he said, was cash balance. Because it includes infrastructure spending. This was projected a deficit of $9.4 billion in 2025/26, $7.7 billion in 2026/27, and $6.8 billion in 2027/28.
Infrastructure spending decreased and health spending increased
The final state budget predicted that total infrastructure spending would decrease from $23.5 billion per year this fiscal year to $15.6 billion for 2027/28. Symes has confirmed that it has reached this year as a major project, such as the Metro and the West Gate Tunnel, and as a hospital for Frankston and Footclay.
“The total (net debt) will be revealed tomorrow, but it won’t start with two,” Symes said. Net debt as a percentage of the economy peaked in 2026/27 and is projected to decline over the next few years.
Operating results are a measure of daily government sector running costs minus revenue, and are expected to reach $1.9 billion in 2026/27 and $2.4 billion in 2027/28.
Symes said the government may have been able to post a bigger surplus next year, but instead chose to “retreat” the “Victorians” through policies such as free public transport for children under the age of 18 and public transport across the state over the weekend.
“We know that we are cost-of-living, frontline services. These are priorities that the Victorian era expects labor government to fall behind,” she said.
The government pledged $11.1 billion injecting state public health services, bringing up to $31 billion in total.
She promised that there will be no existing business taxes beyond normal inflation or that existing taxes will not increase.
The government hopes that further savings on the operating budget will come from reviewing public services, with thousands of workers likely to lose their jobs once the work is completed.
