Victoria Public Sector Racks up $50.6 Billion in Deficits Over 6 Years

Victoria’s public sector has amassed $50.6 billion (US$32.7 billion) in deficits over the past six years, according to the auditor-general.

The Allan Labor government’s income increased by $8.3 billion from higher taxes and federal grants, but still recorded an operating loss in the 2025 financial year.

“This year, the general government sector (GGS) reported a net operating loss of $2.6 billion. This is an improvement on last year’s $4.2 billion loss but still exceeds the operating loss forecast in the 2024–25 state budget by $400 million,” the report said.

“This result brings total combined losses over the last six years to $50.6 billion.”

Some of the increased operating expenses, which rose by $6.7 billion overall, include $2.5 billion more in staffing costs and an additional $1.1 billion in interest.

The auditor-general noted gross debt increased from $168.8 billion last year to $187.9 billion and is projected to reach $236.6 billion by June 30, 2029.

The report also noted that in the last decade, debt growth had consistently outpaced government sector revenue and state economic growth.

“Again a trend expected to continue,” the report noted.

The auditor general also highlighted net debt as a percentage reached 23.7 percent at June 30 this year, with forecasts predicting it to reach 24.9 percent by the same time in 2029.

In addition, the state government has not provided an update on its COVID debt recovery plan, the auditor general said.

“Since the government’s launch of the COVID Debt Repayment Plan in 2023–24, which aimed to offset the cost of servicing $31.5 billion in pandemic-related debt, the plan has raised $4.3 billion through COVID debt levies and generated $1.8 billion from land sales and investment returns,” the report said.

The auditor general reports directly to parliament, operating independently of the government of the day.

Debt Growing Faster than the Economy in Victoria

The report highlighted that debt was growing faster than the economy and revenue was.

The auditor general urged the Labor government to find billions of dollars worth of savings over the next few years.

“Based on current forecasts, planned cost savings of $6.3 billion will need to be realised over the next four years to achieve GGS projected outcomes,” the report noted.

New Victorian Liberal leader Jess Wilson said the report proved Labor had lost control of the books.

“Under Premier Jacinta Allan, Victoria’s financial position is rapidly deteriorating with persistent operating losses driving our state deeper and deeper into the red,” Wilson said.

“Labor’s waste, reckless spending and ever-increasing debt means higher taxes and less money for frontline health, housing and community safety services.”

Wilson said repairing the state’s financial situation was her main concern.

“As leader, my first priority is to get the budget back under control so we can lower cost-of-living pressures on Victorians and begin to restore economic opportunity to our state,” she said.

Shadow Minister for Finance Bridget Vallence said Victorians were paying the price for Labor’s inability to manage the economy.

“Only a Wilson Liberal and Nationals Government will end Labor’s era of waste and reckless spending and sustainability invest in the frontline services Victorians need and deserve,” she said.

Wilson was chosen as the leader of the Victorian Liberal Party one week ago, replacing Brad Battin. In response, Labor warned that the Liberals would make budget cuts worth billions if elected.

Labor called on Wilson to outline how she plans to cut more than $11.1 billion from the budget without wiping out services relied on by Victorians.

“The impact of Liberal cuts to the bottom line is more than $11.1 billion and comes just days after independent economists urged Jess Wilson to ditch her reckless economic plan,” Allan said.

“They’ll make up the difference by cutting more than $11.1 billion from health, education, transport, housing, jobs and more.”