VIC State Budget 2025/26

22/05/2025

State Government focuses on balancing the operating budget and providing cost of living relief for families, but questions remain over how the States ballooning debt burden will be significantly reduced by this Budget.

Our experts explore the key takeaways from the 2025/26 Victorian State Budget and answer what's on the table for businesses, industries and communities across Victoria- uncovering opportunities of resilience and growth for your financial landscape.

Relevant observations of the Victorian Budget 2025-26 include the following:

While the Budget focuses on providing cost of living relief to Victorians, it does little to tackle the State's debt which is forecast to reach a record $194 billion within four years. Notably, the Budget's operating surplus of $600 million is $1 billion less than was forecast in December. While Victoria will spend $6.5 billion in new initiatives in 2025-26 only half of that will be offset through savings. This will result in a net increase of $3.1 billion in new spending compared to last year's budget.
While no new taxes have been introduced in the Budget, taxation revenue is forecast to be $41.7 billion in 2025-26 and grow by an average of 4.7% per year over the forward estimates.
Despite the ongoing fierce debate around the fire services levy and emergency services and volunteers fund levy (ESVFL) (which will come into effect from 1 July 2025), the Budget forecasts that the ESVFL will generate $1.6 billion in 2025-26. This indicates that it is unlikely that the Government will remove or amend the ESVFL, which would create a substantial shortfall in the Victorian Government's revenue that would cause its thin operating surplus to go into deficit.