Last month, the Australian published the following chart showing that Victoria’s per capita gross and net debt were the highest in the nation.
Source: The Australian
On Friday, the state government released its quarterly financial report for the three months ending 30 September, revealing that net debt had risen to $140.6 billion.
This compares to the $133.2 billion amount recorded on 1 July, with the government claiming that the net debt increase was “primarily driven by an increase in borrowings”.
Victoria’s debt has ballooned by over $20 billion in the past year.
Government expenses totalled $24.9 billion in the quarter, $1.8 billion more than the same period last year.
“This increase primarily reflects the increased spending on service delivery in the health sector, an increase in interest expense associated with additional borrowings and an increase in interest rates on borrowings, and increases in remuneration and associated costs in line with enterprise agreement outcomes”, the report stated.
“Total expenses were $335 million above pro-rata at 25.3 per cent of the budget estimate”.
The report also revealed that the government spent more than $1.5 billion just on interest, with the state’s interest bill surging 28.1% over the year.
The largest area of spending is public servant wages, which cost $9.5 billion last quarter, up 8.8% over the year.
Meanwhile, S&P Global Ratings analyst Anthony Walker projected that Victoria’s debt would balloon to $196 billion by June 2026.
Victoria has the lowest credit rating in the nation and the highest debt load.
S&P and Moody’s recently warned that Victoria faces further credit rating downgrades if it doesn’t bring its debt under control. A rating downgrade would increase the cost of debt and the state’s interest payments.
Sadly, the Labor state government ignored these warnings and signed the second major contract to build the $200 billion Suburban Rail Loop.
Nearly every infrastructure expert, the Victorian Auditor-General, the Parliamentary Budget Office, and the Australian National Audit Office have criticized this project for being wasteful and providing the state with negative net benefits.
The Suburban Rail Loop will plunge Victorians further into debt and starve the rest of the state of funding for infrastructure and services.
