Victorian budget: treasurer keeps eye on election in balancing act between spending and reining in debt

The Guardian

20-05-2025

Eighteen months out from a state election, Victoria's new treasurer, Jaclyn Symes, has handed down a budget that feels more like a campaign launch than a serious plan to repair the state's battered finances.
There's an understanding among Labor MPs that winning a fourth consecutive term in 2026 won't be easy. This budget appears designed to give the government a long runway toward that goal.
It also bets Victorians will remember what got built, not the debt incurred to build it.
As the first female treasurer in Victoria's history – and the first person other than Tim Pallas to deliver a budget in a decade – expectations were always going to be high. But even so, Symes's first outing felt underwhelming, perhaps because most of the new spending was announced before Tuesday's media lock-up – or simply because there is so much of it.
Sign up for Guardian Australia's breaking news email
Despite warnings from ratings agencies and economists that the state must rein in spending and address its ballooning debt, the 2024-25 budget instead splashes billions – including $11.1bn in additional health funding, $5bn for public transport, $1bn for roads and a $2.3bn cost-of-living package that includes a $100 power saving bonus for concession card holders, free public transport for children, and free weekend travel for seniors.
It's clearly geared towards families (Symes mentions them eight times in her budget speech) and much like last year's there's little on offer for young adults, couples without children and those hoping to buy their first home – despite Jacinta Allan's pledge last year to be the premier 'who gets millennials into homes'.
For the business sector, which has often criticised the government in recent years, the budget offers an olive branch: no new or increased taxes and a $627m support package. There's also an admission in the budget papers that Victorians already pay more tax per person than any other state or territory. The Victorian Chamber of Commerce and Industry described the budget as a 'positive sign'.
Symes on Tuesday told reporters the budget was 'responsible' and insisted the government can invest in services and infrastructure while managing debt. She pointed to the $600m operating surplus forecast for 2025-26 – the first since the Covid pandemic as evidence of this. But when infrastructure and capital spending are included, the cash bottom line is $12.2bn in the red in the next financial year, with deficits as far as the eye can see.
Even the modest surplus is $1bn lower than predicted in December, despite a windfall in GST and $3.3bn in cuts across the public sector – with more to come. Symes said it was a deliberate decision to forgo a larger surplus and put that money into 'the priorities of Victorians'.
'Budgets are all about balance,' she said. 'Yes, it [the surplus] could have been higher. We chose the priorities of Victoria that hopefully you can get a sense of in the budget and what we've announced today.'
Symes described the state's net debt as 'declining as a proportion of the economy' – a claim that is technically accurate, but only just. While net debt as share of the economy is forecast to dip from a peak of 25.2% in 2026-27 to 24.9% by 2028-29, that 0.3 percentage point fall is marginal. In reality, the state's net debt shows no sign of peaking. It is set to grow from $167.6bn in 2025-26 to $177.4bn in 2026-27, $185.2bn in 2027-28 and then $194bn in 2028-29.
Employee expenses are projected to remain flat, growing at just 2.9% annually across the forward estimates. It's an optimistic assumption, alongside other rosy forecasts contained within the budget.
Victoria remains in the weakest financial position of any state, reflected in its 'AA' credit rating – the lowest in the country.
Rebecca Hrvatin, an analyst at S&P Global Ratings, said there were no big surprises in Tuesday's budget and the state was progressing its 'protracted fiscal recovery'. But that's about as positive as it gets.
Hrvatin emphasised that Victoria must remain committed to its slow-motion budget repair if it wants to maintain its credit rating, but questioned the government's commitment – especially with an election looming in November 2026.
'Reining in growth in public spending, including the government's wage bill, and achieving promised operating savings are key to strengthening its financial outcomes,' she said.
'However, these goals have proven to be difficult to achieve in recent years. Fiscal discipline is important, especially in the lead-up to the 2026 state election because we have seen many Australian state governments lose control of their budgets in the lead-up to an election.'
The budget highlights infrastructure projects due to come online by the end of this year: the Metro Tunnel, West Gate Tunnel, Footscray hospital and the redeveloped Frankston hospital. Three more community hospitals are also slated for completion in 2026. They are all likely to feature prominently in the election campaign, part of Labor's narrative that it 'gets things done'.
Reflecting on her visit to Parkville station – one of the flagship Metro Tunnel stations – the day before budget, Symes was already leaning into that message.
'It's pretty amazing, people are going to say for years 'the Labor government did things, they built things, Liberals didn't',' she said.
'I'm confident that that is what people will remember from this period of time.'
Not the state of the books. Not the size of the debt. And maybe not even the history made as Victoria's first female treasurer.