Victoria’s bottom line improves, but state still dipping into the credit card

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Unexpected windfalls and a recovering property market have contributed to a $4.7 billion improvement to Victoria’s bottom line, but Treasurer Jaclyn Symes is still dipping into a discretionary fund she has promised to review.

The Allan government on Wednesday released its report into the 2024-25 financial year, assessing how the economy and budget performed compared to expectations.

Treasurer Jaclyn Symes said Victoria was on track to deliver a budget surplus from 2025-26.

That document shows the state’s net debt for 2024-25 was $150.9 billion, $4.7 billion lower than what treasury forecast it would be in May.

This was largely driven by better-than-expected cash result, the amount the government is spending compared to how much it is receiving from normal operations, and windfalls from the Victorian Future Fund and Victorian Homebuyer Scheme. The government also benefited on paper from some of its financial assets being valued more positively.

Victoria brought in an extra $2.1 billion from taxes compared to 2023-24, underpinned by an extra $827 million in stamp duty revenue coming from a higher volume of residential home sales.

“The Victorian economy is strong and well-supported by our strong economic plan that is on track to deliver a budget surplus from 2025-26 and reduce net debt as a proportion of the economy over the forward estimates,” Symes said.

The Allan government has spruiked the net debt figure to argue its budget strategy is working. The plan relies on growing the economy to make government debt a much smaller share of the total monetary pie.

A $4.7 billion improvement means net debt was 23.7 per cent of gross state product in 2024-25, 0.8 per cent better than expected.

The report does not forecast net debt into the future. The May budget assumed net debt in Victoria would be $194 billion by 2029.

Final demand, a measure of economic activity across the state, rose by 1.8 per cent last financial year while business investment grew by 1.2 per cent, the report said.

It also showed that over 2024-25, the Allan government spent $10.9 billion through treasurer’s advances, a pool of cash set aside for “urgent” and “unforeseen” contingencies not listed in the budget, which has been likened to a giant credit card.

Of this, $8.2 billion was spent on contingency releases, covering existing programs, and $2.6 billion was spent on new decisions made after the budget.

Victoria’s use of this fund has grown over the past decade, from $365 million in 2012-13 to $12.2 billion in 2022-23, and has been criticised by integrity experts as a “slush fund” that avoids scrutiny of government spending.

After being named as treasurer, Symes admitted the government’s approach was out of step with other states and sought advice on their use.

The $10.9 billion spend is less than the $12.1 billion Victoria had budgeted, but shows the challenge the government has in changing its approach to using the advances.

Advances of $1.38 million were used to “wind up” COVID-19 Quarantine Victoria, $32 million to deliver the grand prix, $123 million for the state’s tutor program and $344 million for the State Electricity Commission.

The largest payment was a $1.5 billion package for Victoria’s hospitals, a commitment made in August 2024 after months of backlash from health services, which warned they would have to cut jobs and services under their original budgets.

Shadow treasurer Jess Wilson accused Labor of using the fund to avoid financial accountability.

“There is nothing ‘urgent and unforeseen’ about funding social housing, public transport, healthcare or delivering the grand prix, yet Labor continues to rely on this opaque funding mechanism to meet core government expenditure,” she said.

“Treasurer Jaclyn Symes, must explain why she has backflipped on her commitment to reduce the use of secretive treasurer’s advances.”

Another $3.2 billion in advances was used to fund Big Build projects such as the level crossing removal program and early works of the Suburban Rail Loop.

A government spokesperson said: “Treasurer’s advances are routinely used by governments across Australia for urgent or unforeseen events, such as natural disasters or emergencies, to departments as projects meet milestones, or to respond to external events such as Commonwealth government decisions.”

Department of Treasury and Finance secretary Chris Barrett has previously defended the use of this system for large infrastructure projects.

In November 2024, he told parliamentary estimates that doing so allows the government to exert tighter control over public funds by holding them in a central contingency, rather than by multiple government departments or agencies.

In January, the Centre of Public Integrity released an issues paper that sounded the alarm about the increasing use of the advances after the COVID-19 crisis had eased.

“The practice that is developing in Victoria sees the parliament appropriating amounts of money for no stated purpose, available to government to use as it sees fit and increasingly with no evidence that the expenditure was unforeseen and urgent, as should be the strict conditions for its use,” the paper warned.