State budget return to surplus slides $1b in six months

Perth Now

18-05-2025

A state's long-awaited return to surplus has taken a $1 billion hit as it walks a tightrope between cost-of-living relief and paying down mounting debt.
Treasurer Jaclyn Symes will reveal a forecast $600 million operating surplus in 2025/26 in Tuesday's Victorian budget.
That is $1 billion smaller than was predicted less than six months ago.
Victoria has not posted a positive net operating result - which is day-to-day government sector running costs minus revenue and excludes spending on infrastructure projects - since the COVID-19 pandemic.
Its operating surpluses are then expected to be $1.9 billion in 2026/27 and $2.4 billion in 2027/28, higher than forecast in the state's mid-year budget update.
Returning to an operating surplus was one of the steps laid out in the government's fiscal strategy following successive lockdowns and cost blowouts on projects such as the North East Link and West Gate Tunnel.
Ms Symes said the surplus was "just the beginning".
"From here, net debt will continue to fall as a share of the economy, and we will see continued surpluses in the years to come," she said.
Victoria's net debt is expected to hit $187.3 billion by mid-2028, based on the mid-year budget update.
By that point, Victorians are predicted to be paying $25 million a day in interest on borrowings, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools.
Net debt as a share of the economy is projected to peak in 2026/27 and fall after that, with the government confident it can continue to roll out more cost-of-living measures and reduce borrowings.
"Victorians want a responsible budget that sets up our state for the future, and they want real help to ease the cost of living right now," Premier Jacinta Allan said.
Free public transport for children under 18 and statewide free public transport for seniors on weekends are among the budget sweeteners unveiled so far.