Public services face $3b cut, 1200 jobs to go, but state's debt just keeps climbing

The Age

21-05-2025

The budget also outlines $3.3 billion in savings to come over the forward estimates as the state government reduces duplication and 'back of house' functions.
Loading
Some of this comes from early work implementing a review by Helen Silver, whose full findings will be unveiled in June and include plans to streamline Victoria's more than 500 entities and 3400 public boards and committees.
The treasurer said she was expecting about 1200 full-time positions to go as part of this effort. However, this could include vacant roles.
'Government had been put on notice, particularly when I announced the Silver review about reduction across the Victorian public service,' Symes said.
'When people have been leaving, positions haven't been filled, people have moved around, and the like.'
The budget papers show that taxation revenue in 2025-26 will hit $41.7 billion, and increase $6.2 billion over the next four years.
Jaclyn Symes has released her first budget. Credit: Aresna Villanueva
Payroll taxes such as the COVID debt levy and the mental health and wellbeing levy will reach $11.9 billion this financial year, growing at an average of 5.1 per cent per year over the next four years.
Land taxes are forecast to hit $7.6 billion, growing by an average of 5.7 per cent, and stamp duty is expected to reach $9.6 billion this financial year, forecast to grow at an annual rate of 5 per cent.
Urban Development Institute of Australia chief executive Linda Allison said the budget was a missed opportunity to seriously tackle the housing crisis with tax relief large enough to spur more supply.
Loading
'The industry was looking for some courage from the government, instead it has received crumbs,' she said.
'Victoria is now the highest-taxed state in Australia when it comes to property. The government's overreliance on property taxes is making projects unfeasible to proceed and keeping first home buyers from making the first step on the property ladder.'
Total spending is set to grow from $107.7 billion in 2025-26 to $115.4 billion in 2028-29, increasing by an average of 2.4 per cent.
Treasury expects a rare increase in Victoria's share of GST funding to wind down, meaning the state's surpluses will rely on the increased state revenue.
A slim operating surplus of $600 million is forecast to rise to $1.9 billion in the 2026-27 financial year, then $2.4 billion in 2027-28, then $1.5 billion in 2028-29.
However, net debt is expected to continue to rise from $167.7 billion this year to $194 billion in 2028-29, sitting at 24.9 per cent of gross state product.
Symes said the government was meeting its target of stabilising debt and reducing its share of the total economy.
'If you've got more money, it's easier to pay your mortgage,' she said. 'Reducing net debt as a proportion of [gross state product] is the measure that we're focused on. It's a measure that a lot of the world focuses on as well. By the end of the forwards, the total interest that we pay is 1.35 per cent of GSP.'
S&P Global's Melbourne-based analyst, Rebecca Hrvatin, said reining in Victoria's growth of public spending was strengthening its finances, but these goals had proven difficult.
'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,' she said.
Unemployment is expected to rise to 4.75 per cent next financial year and wages are forecast to grow at 3.25 per cent, which is above inflation.
The consolidation of public services is projected to save $544.6 million over the next year as it is phased in, rising to more than $1 billion in 2027-28.
The diminished public service will also need less space, allowing for the 'consolidating of accommodation' of physical workspaces within the Treasury Place precinct.
The number of business regulators will also be halved, from 37 to 18 or fewer, by 2030.
Loading
In addition to trimming its own workforce, the government expects that regulator mergers will save businesses $500 million over the next four years by eliminating duplication, accelerating processes and reducing the number of permits needed to do business.
Victoria will add $9.3 billion to hospitals' operating budgets as part of an $11.1 billion increase in health funding.
A $100 power-saving bonus will be available to people on concession cards.
Shadow treasurer James Newbury said Labor had failed to live up to promises to rein in expenditure.
'This is a government that borrows more, spends more and achieves less. Labor's addiction to reckless spending is driving down our services and driving up the cost of living,' he said.
Newbury said Victoria was approaching 'dangerous' levels of debt as it moved towards $200 billion.
'The amount we pay in interest will soon be 10 per cent of the total budget spend,' he said.
Funding for decisions not yet announced, typically used for election war chests, will be $591 million this financial year, rising to $2.37 billion, $3.98 billion and $5.7 billion each year thereafter.
However, the budget papers state this pool has also been set aside for additional demand and price pressure in areas such as health and education.
State employee expenses will rise from $38.8 billion in the 2025-26 financial year to $42.4 billion over the next four years.
Get alerts on significant breaking news as it happens. Sign up for our Breaking News Alert.