Victoria’s inaugural budget under Treasurer Jaclyn Symes has delivered a slim $600 million surplus, but it comes at the cost of record debt levels and deep cuts to the public service.
Symes revealed net debt will climb from $167.6 billion in 2024-25 to $194 billion by 2028-29—its highest-ever level. Interest payments will soar from $7.6 billion this year (about $20.7 million every day) to $10.6 billion in three years (almost $29 million daily).
“Reducing net debt as a proportion of gross state product is a measure we’re focused on,”
Symes told parliament.
To rein in spending, the government has earmarked $3.3 billion in “efficiency dividends” from the public sector, primarily via job cuts. While the budget papers incorporate 1,200 full-time equivalent (FTE) roles being eliminated—some through natural attrition—Symes confirmed up to 3,000 jobs could go once a review by public service commissioner Helen Silver is complete.
“Victoria had 500 entities and 3,400 public boards,” Symes said.
“You can’t tell me there’s not some fat in there.”
Opposition Leader Brad Battin condemned the process as “lost control,” accusing the government of taxing Victorians rather than living within its means.
“You can’t fix a cost-of-living crisis by continuing to increase taxes across every single property in Victoria,”
he said, targeting the controversial Emergency Services and Volunteers Fund that will raise $1.6 billion next year.
The budget’s $600 million surplus relies on a $2.5 billion rise in tax revenue to $41 billion—driven by payroll tax, stamp duties and the new emergency services levy—and a $1.6 billion GST windfall. Yet debt as a share of the economy remains stubbornly high at about 25 per cent of gross state product.
Major project cost blowouts have already added $3.3 billion to Victoria’s liabilities, including an $827 million overrun on the Metro Tunnel. Across 518 government-funded projects, average cost increases of 1.9 per cent were recorded since last year’s budget.
Social and economic trade-offs
Despite fiscal strains, the government has lifted spending on health ($11.1 billion, including $634 million for nine new or redeveloped hospitals), mental health ($497 million), and crime prevention ($1.6 billion). Funding for ambulance wait-time improvements ($167 million) and police recruitment ($92 million) also rose.
But some stakeholders warn that the budget lacks vision. The Community and Public Sector Union labelled the public service cuts “a disgrace,” arguing the $3.3 billion savings target is unrealistic without undermining frontline services.
Conversely, the Victorian Council of Social Service and Foodbank Victoria praised cost-of-living relief measures such as free transport for children and increased food relief funding. “Demand has been something like we haven’t seen in 17 years,” Foodbank CEO Dave McNamara said.
A cautious outlook
The RBA’s recent rate cuts and moderating inflation have eased some pressure on households, but Symes warned that global volatility—including trade tensions and geopolitical risk—poses an ongoing threat to growth.
“This move will make monetary policy somewhat less restrictive,”
she said.
With debt service already consuming 6.5 per cent of expenditure and expected to rise to 9 per cent by 2028-29, Victoria faces the challenge of balancing infrastructure needs, frontline services and fiscal sustainability—all while navigating an uncertain economic landscape.
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