New tax hit on Victorians amid $1.4bn budget blowout

Unveiling a grim mid-year budget report card, Treasurer Tim Pallas revealed the state’s fire services levy will be almost doubled amid a sharp deterioration in the budget.

Victorian Treasurer Tim Pallas. Picture: Getty Images

Victorian homeowners will be whacked with another property tax hit as the Allan government’s budget deficit blows out by $1.4bn.

Unveiling a grim mid-year budget report card on Friday, Treasurer Tim Pallas revealed the state’s fire services levy will be almost doubled amid a sharp deterioration in the budget.

The fire services levy — which funds various emergency services including the CFA, Fire Rescue Victoria, the State Control Centre and Emergency Management Victoria — will jump next year taking the government’s revenue from this tax from about $1bn to $1.8bn annually.

“We need to have a greater capacity to ... protect the Victorian people,” Mr Pallas said.

The mid-year budget update revealed Victoria’s financial crisis will deepen over the next six months as the deficit spirals from a projected $2.2bn to $3.6bn amid rising government costs.

Victoria’s crippling state debt will slightly improve by the middle of 2025, now projected to come in at $155.2bn, about $1bn better than expected. By 2028, the budget updates estimates, state debt will be $500m less than the expected $188bn.

“As a proportion of (gross state product) net debt is projected to increase to 24.2 per cent in June 2025, before reaching 25.2 per cent by June 2027 and reducing to 25.0 per cent by June 2028,” the budget update states.

“Net debt to GSP is forecast to be lower in the budget year and each year of the forward

estimates when compared with the 2024-25 Budget.”

Opposition leader John Pesutto said the budget update confirmed Victoria’s budget crisis was deepening. “Our economic situation here in Victoria continues to deteriorate,” he said.

“There is a massive tax grab, the fire services levy will be increased to obtain more than $2bn households ... the Allan government can’t manage money.

“All that we know for sure is that there are budget blowouts, that there are higher taxes that are going to hit people throughout the Victorian economy.”

Mr Pallas defended the government’s budget performance, saying Victoria’s economy was strong and experiencing economic growth, business investment and record job numbers.

Mr Pallas said net debt as a proportion of the economy is forecast to fall to 25 per cent by June 2028, lower than the forecast in the May budget.

And Mr Pallas said the budget update projected an operating surplus of $1.6bn in 2025-26 and $2bn in 2027-28. “The economy is strong and this will continue to create more opportunities for families, businesses and workers,” he said.

“Our sensible and disciplined approach is working, and our Economic Growth Statement sets out our plan for an even stronger economy.”

The budget update warned that there were “risks” to Victoria’s economic outlook and the forecasts are subject to uncertainty.

“The outlook for consumer spending remains a key source of uncertainty for the Victorian

economy. Consumption has been subdued over the past year, reflecting the impact of

high inflation and elevated interest rates on household budgets,” the budget update states.

“Household disposable income is expected to increase in 2024-25, which should support a rebound in spending. However, there is uncertainty around how strong this rebound will be, which has implications for economic activity and employment growth.”

Opposition leader John Pesutto said.

Victoria homeowners are already buckling under the nation’s highest land taxes which are projected to reap almost $8bn in 2024-25 for the government.