Victoria’s budget finances are in disarray, with the state carrying the nation’s highest debt and lowest credit rating.
According to the latest state budget, Victoria’s net debt will rise to $194 billion by 2028-29, from $155.5 billion currently.
Victorian net debt per capita is the highest in the nation. In 2023-24, Victoria’s per capita net debt was $22,905, well ahead of the other states.
The Victorian budget projected that net debt per capita would reach $25,500 by 2028-29.
Victoria currently spends $6.8 billion on annual interest charges. By 2028-29, Victoria’s interest bill is expected to be $10.6 billion.
Per capita, Victoria’s annual interest expense is expected to climb from $959 in 2024-25 to $1,391 in 2028-29.
With the state’s debt spiraling out of control and ratings agencies threatening further downgrades, the Victorian government has slugged residents and businesses with taxes.
As illustrated in the ABS table below, Victorian state and local government taxes were $6,348 per capita in 2023-24, $654 (11.5%) higher than the state and territory average.
Source: ABS
The ABS showed that Victoria experienced a 40.5% rise in state and local government taxes since 2020-21, the largest rise in the nation.
Research from the Institute of Public Affairs (IPA) also estimates that Victorian state taxes now comprise 6.08% of gross state product, making Victoria the highest taxing state in Australia.
Source: IPA (via Herald-Sun)
Victoria’s high state taxes are having a detrimental impact on economic activity, with many businesses moving their head offices and operations to other jurisdictions.
Analysis by Victoria’s Parliamentary Budget Office (PBO) has concluded that the state will miss out on $37.6 million over the next four years as a result of cruise line Carnival’s decision to stop operating out of Melbourne.
The decision appears to be the result of the Victorian government’s decision to increase berthing fees by 15% in November 2023, with the government claiming the increase was needed to help pay for maintenance of Station Pier, which is nearly 100 years old.
The foregone $37.6 million is made up of $9.8 million in lost tax to the Victorian government and $27.8 million lost to Melbourne’s tourism sector.
“The passenger cruise industry is a significant contributor to the tourism industry in Victoria. A total of 128 vessel berths were recorded during the 2023-24 cruise season, with the average vessel hosting more than 1500 passengers”, the PBO analysis says.
The Age noted that “the forward schedule for cruise ship berthings at Station Pier, published on the Ports Victoria website, reveals there will be a 66% fall in expected visits to the city in the next four years, dropping from 103 visits in 2024-25 to 75 in 2025-26, 71 in 2026-27 and just 36 in 2027-28”.
Carnival Corporation’s country manager, Peter Little, claimed that Melbourne has become one of the world’s most expensive cities for a cruise line to visit.
“Home-ported ships are incredibly valuable to the Victorian economy because many of our guests will stay in Melbourne before or after their cruise, to explore city attractions or dine in restaurants”, he said. “We also sourced an enormous volume of food and beverages locally, when our ships were based in Melbourne.”
The Victorian government is stifling business and reducing our income while spending exorbitantly on bureaucrats, wasteful projects, and increasing taxes.
