Endless waste drives Victoria deeper into debt


Victoria is easily the nation’s most indebted state and also has the lowest credit rating.

Its prognosis is also the poorest of Australia’s states, with Victoria’s debt projected to balloon to $247.2 billion by 2027, compared with just $55.2 billion in 2019:

Soaring state government debt

Victoria’s ballooning budget deficit is built on waste.


Victoria’s “Big Build” infrastructure projects continue to be delivered over-time and over-budget.

For example, Victoria’s North-East Link was estimated to cost $15.8 billion but is now expected to cost $26 billion.

Victorian Premier Jacinta Allan’s silly decision to sign the first major contract for the $200 billion Suburban Rail Loop (SRL), against the explicit advice of infrastructure experts, will only exacerbate Victoria’s debt problem.

Then their is Victoria’s wasteful spending on bureaucrats, especially at the executive level.


Victoria’s public service ballooned by 59% in terms of numbers in the past 15 years, well in excess of the state’s population, which grew by 29% over the same period:

Growth in the public sector

Source: AFR

Victoria’s public service wage bill also ballooned by 152% over the same period, which was by far the largest increase in the nation:

Growth in public sector wage bill

Source: AFR

A new report from the Victorian Auditor-General reveals that the state government blew $589 million on the Commonwealth Games “with no discernible benefit”, which was cancelled last year.

“The government relied on DJSIR’s (the Department of Jobs, Skills, Industry and Regions’) business case when it decided to host the Games and determined the budget”, the Auditor-General report said.


“The business case raised the risks associated with hosting the Games. But it underestimated the costs and overstated the benefits”.

Auditor-General Andrew Greaves found DPC and DTF had “consistently raised” the issue of cost and other risks during 2022 and early 2023.

“But they did not advise government that hosting the Games might be unfeasible until June 2023”, he said.

The upside is that Victorians are going to have to pay more taxes, fees, and charges to pay off the state government’s debt, while the government also cuts back on essential services.


The rest of Australia should also be upset with Victoria, given it has been rewarded with a huge lift in its GST allocation for 2024-25:

GST allocation

The rest of Australia is also paying for the Victorian government’s waste and incompetence.

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.