“With Donald Trump’s war driving up costs at home, Labor is doing every we can do to help right now.”
Hon Jacinta Allan, Premier of Victoria
“This budget fails the basic test. It spends big, plans little, and leaves the next generation to pick up the bill.”
Jess Wilson, Leader of the Opposition
Today Premier Jacinta Allan and Treasurer Jaclyn Symes unveiled Victorian Labor’s election year budget, framed as making life in Victoria with the slogan ‘Easier. Safer. More Affordable.’
The Government’s rollout of announcements in the lead-up to the budget, such as free and half price public transport and 20% off vehicle registrations – two initiatives that have cost over $1.2 billion – has resulted in few new initiatives on budget day itself.
Throughout the Premier’s rhetoric and official budget documents, the Government is at pains to put the blame for the surging cost of living being experienced by Victorians on US President Donald Trump and the conflict with Iran rather than Victoria’s ever-increasing tax take.
Closer to home, Treasurer Symes noted that Victoria is “delivering the only operating surplus on the east coast.” The operating surplus is forecast to be $700 million in 2025/26 and increase over the forecast period to 2029/30. Net debt is still expected to grow to $199.3 billion by 2029/30.
The Government was also eager to highlight that business investment has grown 44% since 2020, faster than the rest of Australia.
Despite persistent negative business and media sentiment about the economic pressures of Victoria’s growing debt, the Government says it is making good progress in achieving its five-step fiscal strategy announced in 2020 and expanded in 2024:
Step 1: creating jobs, reducing unemployment and restoring economic growth
Step 2: returning to an operating cash surplus
Step 3: returning to operating surpluses
Step 4: stabilising net debt levels as a proportion of Gross State Product (GSP)
Step 5: reducing net debt as a proportion of GSP.
The forecast $700 million operating surplus in 2025/26 delivers on step 3 of the strategy, with steps 4 and 5 forecast to be achieved by 2027/28.
Net debt as a proportion of Gross State Product is expected to peak at 24.9% in 2026/27, before continuing to decline to 24.4% in 2029/30. The Government expects the unemployment rate to remain at 4.75% over the forecast period.
These forecasts will hinge on volatile economic conditions, with the Reserve Bank of Australia lifting interest rates for the third time to 4.35% only minutes after the Victorian Budget was delivered.
Further, in an announcement to the Australian Stock Exchange this morning, The Lottery Corporation (TLC) confirmed it had reached an agreement with the Victorian Government for a 40-year extension of the Public Lottery Licence, rather than the usual 10 years. In return, TLC will pay an upfront premium of $1.145 billion to the State in the 2026/27 financial year, which has allowed the Government to deliver its operating surplus in that year.
The mood in the briefing room, known as the Budget ‘lock-up’, was surprisingly relaxed as staffers spoke to key stakeholders who had largely seen their announcements drop through the pre-budget roll out.
In her speech to community and business stakeholders, Premier Allan sought to pivot away from debt, declaring that budgets were about choices. Her goal was clearly to position this budget as the kind only Labor could deliver; one that ‘invests in the help that families need’, whilst drawing clear election battlelines over potential Liberal Party cuts.
The focus areas of today’s budget closely align with Labor’s 2026 Victorian State election priorities of education, health, cost of living and community safety. Education and health have long been considered core issues for Labor, while community safety is typically considered safe territory for the Liberals. Labor will be seeking to neutralise crime as an issue given persistent media reporting and negative community sentiment. Cost of living is the key issue to watch, with neither party holding this territory.
Reach out to our team in Melbourne if you would like to discuss how the Victorian Government’s election year budget may affect you.
Feyi Akindoyeni, Founding Partner and Melbourne Office Head, SEC Newgate Communications – [email protected]
Nick Maher, Partner, SEC Newgate Communications – [email protected]
Rebecca Johnson, Account Director, SEC Newgate Communications – [email protected]
Mitch Keast, Account Director, SEC Newgate Communications – [email protected]
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