Hope springs eternal as Victorian Budget promises ongoing infrastructure projects

Australia Broadcast Center

20-05-2025

For a document that pours billions of dollars into concrete infrastructure, the Victorian budget figures feel very shaky.
No new taxes, a $611 million surplus, lots of cost-of-living relief like free kinder, public transport for children and seniors: all good right?
Yeah … maybe. But the numbers get scary, fast.
An eye-watering amount of debt (hey, what's $194 billion between friendly lenders?) means that by 2028-29 more than 9 per cent of what the state spends will be on interest payments.
For the coming three years, the state is borrowing between $1.7 billion and $5 billion a year to keep the infrastructure projects going. On cash flow, the Education State is going backwards at a rate of $7 billion to $10 billion a year.
The old joke goes: a billion here, a billion there, pretty soon you're talking about real money.
The current reality is nowhere near jesting about.
In the past decade Victoria had problems other states would dream about — cash pouring in the door, people flooding in to live here and spend, and a healthy economy growing like spring grass.
Then bang: the COVID pandemic.
Immense spending.
A spike in the price of construction materials and the labour cost of mega-projects.
More demands on health and education.
So here we are.
The economic vision of new Treasurer Jaclyn Symes and Premier Jacinta Allan continues the mantra of their predecessors, Tim Pallas and Daniel Andrews, which would be summarised as:
That's before immense amounts of spending on social programs — everything from dental vans at schools and $859 million for free kinder for three and four year olds to rebates on power bills and $18 million to help pharmacies deliver more medicines without the need to see a doctor for a script.
You can buy or decry the vision, but there's no shifting the government from it.
Potentially, the vision is edging towards being made real.
Government infrastructure investment is said to have peaked at $24.2 billion in 2023-24, part of an immense $213 billion in projects underway.
That cost will "moderate", the papers suggest, to $15.6 billion by 2028/29.
Similarly, the debt position is set to improve.
The ratio of net debt to gross state product — the value of all the goods and services created in Victoria in a given year — is set to fall from 25.2 per cent in the 2026/27 financial year to 24.9 per cent two years later.
If ratings agencies change their mind about the state's 'rating' (which affects the costs of borrowing money) maybe even faster.
The calculations and detail of how the budget will be trimmed in are similarly fingers-crossed and difficult to divine.
The promise is $3.3 billion in savings over the coming four years, which is called the "forward estimates" period.
But how? You tell me.
This is what is listed — a theoretical $3.3 billion list that boils down to seven dot points.
To save a lot of words: cuts. But here they are.
To make it clear: cuts.
Cuts to programs aren't necessarily a bad thing, nor is reducing expenditure growth.
But the detail — what they'll cut, who will go — has been kicked into the future.
Much of it is in the hands of the ongoing Silver Review that won't land until June.
Around 1,200 employees will go, although many of them are "not necessarily real people" the Treasurer noted, but roles that aren't being filled when they end.
Previously the figure discussed has been 3,000 roles. So that means a lot more when the review lands.
"Entities" like government agencies will be cut or absorbed, but again it's difficult to define and kicked into the future.
One of the most surprising numbers is that the Victorian government is projecting population growth to fall — for the longer term.
(Don't worry, Melbourne will soon be larger than Sydney due largely to our access to land for housing and the lower cost of it.)
The Education State has roared by putting the richest and most mobile young international students into universities and education institutions, luring many to stay permanently.
Federal government changes put a hammer through that mirror.
What is currently a 2.4 per cent population growth rate for 2023/24 is projected to fall to 1.7 per cent for the forward period the budget looks at.
That's a problem for the fairly simple finances of the Victorian government.
Money comes in through grants from the federal government, which is largely the result of the goods and services tax (GST) and income tax.
The rest of the cash comes from state taxes on employment (largely payroll tax), land transfer fees — better known as "stamp duty" — and land tax.
All of these elements are based on population.
That's people coming to Victoria, buying a house, keeping it, being employed here.
Victoria doesn't get royalties from resources. ("Unlike WA where they can literally dig money out of the ground," Jaclyn Symes noted dryly.)
So Victorians have to make their own way.
The vision is of connected suburbs, a thriving capital city and healthy regional centres all bustling with happy new arrivals.
There's just a lot of hope involved in getting there.
Close your eyes, put down the pedal and drive over the unfinished bridge.