Why critics are calling the Victorian budget’s operating surplus ‘fake’

This year’s budget projected a surplus of $727 million in 2025-26 and an estimated $1 billion in 2026-27, with an average surplus of $1.7 billion above the previous estimate.

“I am proud to confirm Victoria’s first operating surplus in seven years,” Symes said in her budget speech.

But behind the polished veil of an operating surplus, budget documents show that when project expenditure is included, Victoria’s expenditure exceeds the revenue it generates by about $7 billion a year.

Figures in the Budget show record tax revenues and a $2 billion Commonwealth GST windfall comes from this year’s operating surplus.

This allowed the state to provide a range of sweeteners, including free public transport until the end of May and a 20 percent discount on vehicle registration.

“We can afford it because our budget is in surplus,” Allan wrote in a press release about the budget.

Shadow Treasurer James Newbury was quick to brand Labour’s budget strategy a ‘fake surplus’ during Question Time, while Nationals leader Danny O’Brien also criticized the budget.

“The only thing we see in this budget that has a surplus… is a surplus of spin,” O’Brien said.

Net debt in Victoria is rushing towards $200 billion and is expected to take up a 24.4 per cent share of the state’s economy by 2030.

“We have seen net debt in Victoria rise to $200 billion. When the Coalition left office in 2014 it was $20 billion,” Opposition Leader Jess Wilson said.

“Victorians will now pay an interest bill that could fund police, paramedics and kindergartens and leave a billion dollars in change.”

Victoria’s interest costs are expected to almost double by 2029/30, from $6.774 billion in 2024/25 to $11.82 billion in 2029/30 – the equivalent of $32.38 million per day.

But Symes argued that the state’s rising interest bill “helped the economy grow.”

“The reason you’re mainly paying interest is because you borrowed to build productive infrastructure… the alternative is you don’t build infrastructure, you stop building it. And all those jobs I just talked about go away,” she said.

‘You may have less debt, you may have less interest, but you don’t have a productive society.

“Borrowing for infrastructure is what a strong economy needs.”

Today’s Budget also failed to capture the impact of Labour’s pledge to spend an additional $11.5 billion on the Suburban Rail Loop.

The $34 billion project would be funded equally by the state, the Commonwealth and value capture.

But in January the government pledged to finance that final third through “advance payments”, which will be repaid through local taxes over 40 years, raising major concerns about the potential impact on interest rates.

In a bid to raise additional revenue, the Allan government will end its motor tax concession for luxury vehicles, which is expected to bring an extra $12.6 million into public coffers by 2027/2028.

Victoria will also collect more revenue from fines, which is expected to increase by more than 15 per cent from $886 million in 2026/27 to $997 million in 2029/30.

Some of those additional resources will flow to rising public sector wages, which are expected to exceed $41 billion in the coming year – $1.3 billion more than forecast.

By 2030, these figures will rise to $45 billion, which Symes says is evidence of the government’s drive to recruit more teachers and health workers.

“We support our teachers, our nurses, our police. We want more of these people to work, that’s why the numbers are going up,” Symes said.

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