Victoria careers toward record debt levels, budget update shows

Victoria is hurtling toward record debt levels, with Friday’s budget update showing the Allan government has spent $3.36bn more than anticipated.

The Allan government is continuing to spend more than it takes in with Victoria continuing to hurtle toward record debt levels.

A budget update released on Friday showed the Allan government had spent $3.36bn more than anticipated while it received $1.97bn more than expected.

Net debt grew to $146.8bn, or 22.9 per cent of gross state product, with the update silent on whether forecasts of $155.2bn by June 30 would be exceeded.

“The likely 30 June 2025 outcome cannot be extrapolated from this half-year result due to the timing of receipts and operating and capital payments throughout the year,” it said.

There are fears inside government that the fast rate of spending and lower than expected revenue take would see debt blow out beyond original forecasts.

Some expect the forecast $187.8bn debt level, by 2028, to now blow out by billions of dollars.

The Allan government has spent $3.36bn more than anticipated. Picture: David Crosling

Ratings agencies are also closely watching the state’s rate of spending and have repeatedly warned Victoria could face damaging double downgrade if it can’t curb current trends.

Shadow treasurer, James Newbury, accused the government of being “financially reckless”.

“The Budget update proves again that nothing has changed, Labor is increasingly financially reckless,” he said.

“The update also confirms the May Budget will post a bigger debt than expected, because of increasing blowouts in projects and employee costs – more taxes will follow.

“Labor’s financial vandalism will do nothing to settle credit rating agencies who have already warned that Victoria is not being financially managed competently”.

But treasurer Jaclyn Symes said the update was proof the government was driving economic growth.

New Victorian Liberal Shadow Treasurer James Newbury accused the government of being “financially reckless”. Picture: David Caird

“The Victorian economy is strong – with business investment booming and the largest employment increase of all the states,” she said.

“We’ll always back Victorian businesses – that’s why we’ve lifted the payroll tax-free threshold, are replacing stamp duty on commercial and industrial properties, and are also slashing the number of business regulators.

“While the economy is strong – we know many Victorians are struggling with the cost of living. That’s why we’re focused on providing relief through things like the $400 school savings bonus and our plan to cap fuel price rises.”

There was no change to the full year deficit estimate of $3.6bn.