Victoria’s net debt will double over the next decade if the Andrews government does not start to significantly pay off its borrowings, the independent Parliamentary Budget Office has found.
Economists say the debt burden could rise even further if the government sticks to its current policy of stabilising the state’s debt ratio, especially if Victoria is hit with an economic downturn or infrastructure blowouts, forcing the government to further cut services or raise taxes.
While the government does not provide information on its debt ratio beyond 2027, Pallas’ past four budgets have included a target of stabilising net debt as a percentage of GSP over the next 10 years. Presenting his budget last month, Pallas told parliament the Andrews government wasas a way of bringing down the relative level of debt.
A separate report released yesterday by the budget office also contradicted claims by Pallas that Victoria was the “lowest-taxing state”, revealing the state’s tax burden was now 5.8 per cent of GSP – higher than all other states.for businesses and property investors, outlined cuts to the public service and delayed major infrastructure projects in an effort to keep up with its debt repayments.
The budget office analysis found Victoria’s net debt would begin to fall from 2027 if the state government adopted the debt-to-GSP ratio predicted by Labor governments in New South Wales and Queensland. To reach that level of debt, Victoria would need to dramatically cut spending, run budget surpluses of more than $10 billion a year and further raise taxes, Oliver said.