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Victoria’s public corporations are up to $1 billion in the red year after year as schemes like WorkCover battle increased insurance claims and higher interest rates.
The state’s financial report for 2024-25, which assesses how the economy and budget performed in the financial year compared with expectations, shows there was a $1.4 billion deficit from transactions across all of Victoria’s public financial corporations.
Victorian budget papers.Credit: Joe Armao
These are government entities that provide financial services such as insurance, in the case of WorkCover and the Transport Accident Commission, or handling government bonds like the Treasury Corporation of Victoria.
Despite the heavy loss, it was actually a $500 million improvement on the year before, where the sector recorded a $1.9 billion deficit. In 2022-23, the deficit was $3.2 billion.
The 2024-25 figure was affected by $2.2 billion in expenses across the sector, driven by higher interest costs for the Treasury Corporation and more money spent on insurance claims.
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These figures are operating results and do not reflect the broader balance sheets of these organisations which are influenced by investments and the bond market.
However, they paint a picture of whether corporations are bringing in enough revenue to cover their expenses, with poor results for insurers potentially leading to cash injections or increased charges.
WorkCover’s funding ratio was in such dire straits in 2023 that the state government declared it “fundamentally broken” and warned of annual deficits of $1 billion that would need bailouts unless they wound back eligibility for some types of mental health claims.
Since then, workers’ claims for mental health compensation are being rejected at double the rate they were before eligibility was tightened.
The Victorian Managed Insurance Authority has also started a “capital management plan” to improve its finances, which included a new charge on its customers.
Opposition finance spokesman Bridget Vallence said these “stubborn deficits” across Victoria’s public sector highlighted the pressure on the state budget and mismanagement by the government.
“Every extra dollar spent on debt and interest is one less available for better health, education, community safety and transport services – and one more that future generations will have to repay.”
The Allan government said the operating result was just one measure among several that determined the financial health of these corporations.
“The Victorian economy is strong and well-supported by our economic plan, with an operating cash surplus of $3.2 billion and net debt $4.7 billion lower than the revised estimate in the 2025-26 budget,” a spokesperson said.
Treasurer Jaclyn Symes has accused the opposition of a funding black hole.Credit: Joe Armao
“We monitor and support the financial sustainability of all agencies in the public financial corporation sector, and have implemented important reforms to support the financial sustainability of the WorkCover scheme.”
Treasurer Jaclyn Symes has ramped up her attack on how Coalition tax policies will impact the state’s bottom line, pointing to analysis by her office that estimated their proposed changes would cost almost $11 billion.
“This is a desperate opposition that will say anything to anyone to try and appeal to a popular idea,” Symes said. “There is a multibillion-dollar black hole, regardless of how you cost it.”
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The Coalition has rejected the sums, pointing to a total cost of $5 billion for their policies.
Shadow treasurer Jess Wilson said increasing taxes was “like a reflex” for Labor.
“Labor knows their highest-in-the-nation tax regime is hurting Victorians and our economy, but with net debt growing by $2 million an hour, they have no choice but continue squeezing money out of hardworking Victorians.”
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