‘I am expecting it to be a very, very tight budget,’ Victorian Treasurer Tim Pallas says

Treasurer Tim Pallas has warned of the need to slash spending on government services. These are the sectors set to be affected.

Spending on health and Covid-related expenditure will be slashed in the upcoming May budget, as the state continues to grapple with rising interest rates and spiralling construction costs, the Victorian Treasurer has warned.

Speaking on Tuesday, Tim Pallas revealed that Victorians should not expect to see the spending that occurred during the pandemic as the state moves into a mode of “repair”.

He hinted the renewed focus on cutting expenditure meant a range of government services and programs were on the chopping block.

“I am expecting it to be a very, very tight budget,” Mr Pallas said.

Tim Pallas has hinted that a range of government services and programs are on the chopping block. Picture: Luis Enrique Ascui

“Can I be clear, this government is not shirking its responsibilities in acknowledging the challenges we confront.

“Believe me I am looking very closely at all the expenditures that government is making and we will make choices.”

Covid-related expenditure will be a key area of focus for cost cutting with Mr Pallas saying “we cannot keep Covid-expenditure at those levels”.

He also confirmed that health spending would be impacted along with economic stimulus spending.

The state government will reduce Covid-related expenditure. Picture: Luis Enrique Ascui

When it came to challenges the state was facing, Mr Pallas flagged that rising interest rates was among the key issues having an impact.

In November, Victoria’s latest budget update revealed the state’s debt has blown out by a further $5.5bn — to more than $120bn.

“Since the last budget, we’ve had multiple increases in interest rate,” he said.

“We’ve seen that our construction costs continue to mount as a consequence of an overheating infrastructure delivery pipeline.”

However, Mr Pallas said struggling families would not be overlooked and hinted at some new measures that will help with the cost-of-living crisis.

Opposition leader John Pesutto said the Mr Pallas' comments are cause for concern and that Victorians were in-line for “another horror budget in May”.

“This can mean only one thing, more taxes and more services cut back to fill budget holes that shouldn’t have been there.”

He questioned why the state was “ploughing ahead” with the Suburban Rail Loop.

Community and Public Sector Union, Victorian branch secretary, Karen Batt, said cuts to government services should be a last resort.

“We didn’t hear many ‘the budget is tight’ arguments when MPs put their hands out for their recent pay rise or when applications are made to pay above gazetted PS dollars for favoured big build executives.

“More support for services helps families deal with cost of living pressures not taking the axe to them again.

“Victorians are sick of the double standards and one rule for MPs and another applying for them.”