Victorians face generations of debt slavery


The population ponzi is set to come crashing down on Victorians.

Ever since the federal government ramped up Australia’s immigration intake in the mid-2000s, Victoria has led the nation’s population growth:

Victorian population growth

Victoria’s population has ballooned by 2.1 million people (46%) this century to 6.8 million people.


Official projections have Victoria’s population rising to 11.2 million people by 2056, with Melbourne’s population projected to swell to 9.0 million people:

Victorian population projection

The bulk of this population increase will come from net overseas migration:

Components of population change

The massive population expansion in Victoria has driven the state government to embark on expensive infrastructure projects, which have already driven the state deeply into debt.

Last year, Victoria carried the highest debt load in the nation alongside the worst credit rating:

State budgets

Victoria has the nation’s largest state debt (Source: Alex Joiner).

December’s state budget update revealed that Victoria’s debt is projected to surge to nearly $180 billion dollars by 2027.

Victorian state debt

In turn, Victoria’s debt is projected to cost taxpayers $24 million a day in interest, with Victorians facing the prospect of even higher taxes:

Victorian budget interest costs

Ratings agency Moody’s is even more negative, forecasting recently that Victoria’s debt will increase by 85% in five years, from $122 billion in 2022 to $226 billion in 2026.


The Victorian Auditor-General likewise warned that the state’s debt could reach $256 billion by June 2027, and questioned why no real plan was in place to handle the burden.

Independent economist, Saul Eslake, noted last year that Victoria’s mounting debt is attributable to the state government’s decision to “embark on very big, largely debt-funded infrastructure spending programs”.

“All of those projects have suffered from cost overruns, as big projects almost inevitably do”, Eslake said.


Victorians are facing potentially generations of debt slavery following Premier Jacinta Allan’s reckless decision last month to sign first major contract relating to former Premier Daniel Andrews’ $200 billion Suburban Rail Loop (SRL).

The decision to sign the SRL contract was against the explicit advice of infrastructure experts and has locked Victorian taxpayers into the most expensive infrastructure project in the state’s history.

“This is really taking a generation’s worth of infrastructure funding and investing it all in one project”, the Grattan Institute’s Transport and Cities program director, Marion Terrill, warned following the contract signing.


To make matters worse, the 10-kilometer North-East Link motorway is now projected to cost taxpayers about $26 billion, an increase of nearly $16 billion over the initial price estimate.

That represents another $16 billion that will be hosed down the drain, adding to the many billions already squandered by the Victorian Labor government on other major projects.

For example, the Metro Tunnel’s construction cost has risen from $10.9 billion to $14 billion, while the West Gate Tunnel is now estimated to cost $10.8 billion, up from its initial $6.7 billion estimate.


Amid the massive cost blowouts, transport experts and the state opposition have called for an overhaul of the way the government prices major infrastructure projects, alongside the business cases that underpin them.

“The real problem is that these projects are committed to by politicians before the business cases are done”, said Melbourne transport economist William McDougall, who has worked for decades on transport planning internally and externally from government.

“The amount of optimism bias that’s embedded in these business cases means that they’re not worth the paper they’re written on”.


“The important difference with North East Link, and increasingly the Suburban Rail Loop, is that the cost overruns we’re now seeing are before any construction has actually started”, he said.

“So unless the contracts for North East link put all the risk of that onto the builder, the contractor, which I doubt that they do, the chances are we’re in for even more cost overruns”.

McDougall warned that business cases tend to “wildly” overstate the benefits of projects and understate the negative environmental impacts (including the embedded emissions from its construction) and the likelihood of cost blowouts.

“If there had been more allowance for the project cost blowing out, the benefit ratio would have come down significantly”, McDougall said.

The massive sums squandered on Labor’s pet infrastructure projects risk burying Victorians in crushing debt for generations to come as the state’s population balloons due to never-ending mass immigration.


The ballooning debt will also leave the state short of funding for other vital economic and social infrastructure, including health spending:


And for what purpose? To meet former Premier Daniel Andrews’ egotistical infrastructure ambitions and the federal government’s ‘Big Australia’ obsession?

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.