Labor’s profligacy in Victoria is a problem for all of us
Ratings agencies assume the federal government stands behind the states’ debts, so if Victoria is downgraded because of its ballooning debt that has national implications.
The clear message from the 2025-26 Victorian budget is that the government has no intention of putting the state’s finances onto a sustainable trajectory.
Victoria’s version of the “table of truth” – on page 49 of the principal budget paper showing how the forward estimates of the government’s preferred measure of the budget “bottom line”, the “net operating surplus”, have changed since the mid-year review presented late last year by out-going treasurer Tim Pallas – shows that “parameter variations” (developments over which the state government has no direct influence or control) would have improved the net operating surplus by $4.2 billion over the three years to 2027-28, compared with what had been foreshadowed last December.
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Saul Eslake is former chief economist of ANZ Bank and of Bank of America Merrill Lynch in Australia, and is now principal of Corinna Economic Advisory based in Hobart.
