State budget 2025-26: Victoria returns to surplus but $900m has vanished
Victorian Treasurer Jaclyn Symes’ first budget, to be handed down on Tuesday, will deliver a surplus but it will be significantly less than what had been promised.
Victoria
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Victoria’s first surplus since before the pandemic will be $900m less than what the Allan government forecast just a year ago, as Jaclyn Symes fights to claw back the state’s monstrous debt.
The Treasurer will on Monday announce that her first budget will deliver an operating surplus of $600m in the next financial year – significantly less than what had been promised.
In his final budget last year, Tim Pallas said Victoria was on track to return to an operating surplus of $1.5bn by 2025-26.
And as recently as December, the government predicted it would increase to $1.6bn.
Tuesday’s state budget will also confirm that net debt as a share of the economy will peak in 2026-27 before it is expected to fall over the following years.
The government on Sunday night did not provide the hotly anticipated debt figures to be outlined in Tuesday’s budget.
However, official forecasts show Victoria’s debt is on track to hit an eye-watering $188bn by 2028, but blowouts on major projects and the government’s wages bill are expected to significantly impact that figure.
The government has been frantically working to avoid a debt blowout that sources warned could see net debt exceed $200bn for the first time in the state’s history.
Shadow Treasurer James Newbury said every Victorian should be scared by that prospect. “Families and businesses are being squeezed harder every year, while Labor continues to blow the budget with no accountability,” he said.
While this year’s surplus is lower than what had initially been forecast, Ms Symes said the predicted operating surpluses of $1.9bn in 2026-27 and $2.4bn in 2027-28 were an improvement from the 2024-25 budget update.
In that update, the government had anticipated a return to an operating surplus in 2025-26 of $1.6bn, increasing to $1.7bn in 2026-27 and then $2bn by 2027-28.
Returning to an operating surplus is the third step of the government’s five-step fiscal strategy, which was established in response to the massive levels of spending undertaken during the Covid pandemic.
The next step of the plan is to stabilise net debt levels as a proportion of gross state product.
“From here, net debt will continue to fall as a share of the economy, and we will see continued surpluses in the years to come – allowing us to continue to provide services and infrastructure that Victorians need,” Ms Symes said.
Premier Jacinta Allan – who on Sunday unveiled that public transport would become free for every child across the state – said Victorians had demanded a “responsible budget”.
The $318m policy which is the government’s key cost-of-living sweetener is expected to save families up to $755 a year per child.
“Victorians want a responsible budget that sets up our state for the future, and they want real help to ease the cost of living right now,” Ms Allan said.
The Herald Sun can also reveal the budget will include a $9.3m boost to provide free training to TAFE teachers.
Originally published as State budget 2025-26: Victoria returns to surplus but $900m has vanished
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