“The Allan government has produced a surplus in name only, seemingly to hoodwink Victorians ahead of this year’s election. The lived reality is that twelve years of reckless and irresponsible economic management is finally reaching its natural conclusion, and we are all poorer for it,” said Saxon Davidson, Research Fellow at the Institute of Public Affairs.
Analysis by the IPA of the 2026-27 State Budget handed down by the Victorian government today has found:
- Despite the projected $1 billion general government operating surplus for the upcoming financial year, general government debt is set to rise by $10.2 billion next financial year and reach just under $200 billion by the end of the decade.
- Non-financial public sector debt will reach $248 billion in 2030, a 27.5 per cent increase from what is projected for 2025-26.
- It is projected that there will be a general government cash deficit of $7.7 billion in 2026-27, and a non-financial public sector cash deficit of $16.8 billion.
- Interest payments on non-financial public sector debt are set to reach $13.6 billion over the forward estimates, a 65 per cent increase from 2025-26.
- Victorians will continue to be the most tax burdened people in the country, with total taxes expected to increase by 20.8 per cent from now to the end of the decade.
“The Allan government is hoping Victorians are mugs. A surplus which sees debt rise is no surplus at all, and it will be the next generation of Victorians who pay the price.
“Today’s state budget reaffirms Victoria’s role as the nation’s economic ball and chain. Unless dramatic corrective action is taken, it risks dragging down the entire nation,” said Mr Davidson.
IPA analysis from 2022 predicted that Victorian general government net debt would increase at a rate very similar to that in the forward estimates, with the research predicting general government net debt will reach $259 billion at 2035.
“Victoria’s spending and debt levels represent an economic disaster, one that has already dwarfed that of the early 1990s. Through deliberate policy decisions the Victorian government has taken a wrecking ball to the state’s economy, with taxes and debt at record highs, and with no plan to pay it back.”
“With every passing day it is becoming more and more likely that the federal government will have to bail out this failed state, potentially making Victoria’s predicament a cost to be borne by all taxpayers around the nation,” said Mr Davidson.
“Nothing will change Victoria’s financial situation unless drastic action is taken to reverse the structural budgetary decline the state is in, such as cutting total government spending by one per cent every year until the budget is in structural surplus.”
