Overview

Premier Jacinta Allan and Treasurer Jaclyn Symes have dubbed the 2025-26 Victorian State Budget: ‘Focused on what matters most’.

This phrase has been used consistently across the Government’s media releases and during press conferences over the past week, from announcing free public transport for Victorians under 18, to investment in regional roads.

In her first State Budget, Treasurer Jaclyn Symes has elected to continue spending and to not bank the $4.3 billion GST windfall its received from the Commonwealth, rather than choosing to reduce debt. The $1.6 billion surplus that was forecast only in December is now a $600 million surplus.

Only $11 million has been found in savings this financial year, and $3.5 billion over the forward estimates.

Cost of living and health are front and centre of the Budget, with an additional $11.1 billion investment in health spending over the next four years and $318 million for free public transport for everyone under the age of 18 every day.

Cuts to the public service are expected to save $3.3 billion over the forward estimates, pending a review, however, this will not be enough to prevent net debt rising to $194 billion by 2028-29. The interest on this debt will be $10.6 billion; $28.9 million a day. On the same trajectory, Victoria will owe a staggering $200 billion by 2029-2030.

While there are no new taxes – nor changes or reductions to existing taxes or levies – revenue collected through taxes will increase from$31 billion in 2022-2023 to $41 billion in 2025-26, a $10 billion or 30 percent increase.

Despite this, Treasurer Symes said: “I am very proud to present a Budget that returns us to surplus, has no new taxes, and delivers for Victorians”.

The next Victorian State Election will be held on 28 November 2026, which means there is one more Budget to be handed down before then, so this was never going to be a big spending budget.

‘Decisions made but not yet announced’ is often where the Government reserves funding for election commitments – it rises rapidly from $591 million this year, to $5.7 billion in 2028-29.

The Budget relies on wages and the economy continuing to grow whilst banking on major savings through cuts to the public service. Many governments promise to cut waste and duplication in the public service, and credit ratings agencies which determine the cost of borrowing will hope this time it can work.

Treasurer Symes has revealed she will travel to New York to brief the credit ratings agencies on the Victorian Government’s fiscal plans.

Economic Outlook

In December 2025, the Mid-Year Financial Report estimated an operating surplus of $1.6 billion in 2025-26, an improvement from the $1.5 billion forecast in the 2024-25 Victorian State Budget. This, however, has significantly reduced to a $600 million surplus in 2025-26, with a surplus of $1.9 billion in 2026-27 and $2.4 billion in 2027-28.

Net debt is forecast to be $167.6 billion in 2025-26 and will continue rising over the forward years to $194 billion in 2028-29. Despite this, net debt as a percentage of Gross State Product will stabilise, at 25.1 per cent this year, then peaking at 25.2 per cent in 2026-27 before coming down to 25 per cent and then 24.9 per cent in the subsequent years.

The Victorian economy is forecast to grow by 2.5 per cent in 2025-26, following estimated growth of 2 per cent in 2024-25. It will then remain steady at 2.75 per cent over the forward years from 2026-27.

Unemployment is expected to remain constant at 4.75 per cent this year and over the forward estimates. Population growth is also forecast to grow at a constant 1.7 per cent.

Attention is given to the global economic outlook, with the Budget papers referencing the impact of the US’ trade policies and a slowdown in global growth in the near term. It notes that whilst Victoria’s direct exposure to higher US tariffs is low, economic growth of Victoria’s major trading partners may be significantly affected.

Major Announcements

Cost of living

• $318 million for free public transport for everyone under the age of 18 every day, whilst Senior Card holders get free public transport holders on weekends.
• $50 million to deliver a new $100 Power Saving Bonus for concession card holders.

Tax

• Extension of the stamp duty tax cut for off-the-plan apartments, units and townhouses for another 12 months, at a cost of $61 million.
• Although the Government declared it was not introducing any new taxes, a new emergency services levy passed through Parliament last week which is expected to bring in $600 million.
• A congestion levy – a parking tax in inner-city Melbourne – is expected to raise $924 million over four years and push the price of a city car park to over $20 a day.

Health

• A $11.1 billion investment in health, with $9.3 billion for hospitals including $634 million to open and operationalise nine recently completed hospital projects, including the new Footscray Hospital.
• $497 million to support Victoria’s mental health and wellbeing system.
• $18 million to expand the number of conditions pharmacists are able to treat without Victorians needing to see a doctor.
• $230 million to boost performance in Emergency Departments and ambulance response times.

Education and Training

• Investment of $9.3 million into the TAFE and Learn Local Teacher Scholarship Program, which provides free training to TAFE teachers.
• $133 million committed for improved reading, writing and maths, including $16.3 million for a new grade on numeracy check.
• $859 million to continue delivery of free Kinder for three and four-year-olds.
• $152 million to increase support for families to pay for camps, sports and excursions.

Business and the Economy

The Economic Growth Statement released last year has $240 million of funding to deliver its 12 initiatives. This includes:

• $150 million to establish the Victorian Investment Fund.
• $34.9 million to support small and medium-sized businesses to identify new markets.
• $18.8 million to maintain Victoria’s international network of trade and investment offices.

Energy and Manufacturing

• $30 million to support an extra 27,000 households to install electric heat pumps and solar hot water systems.
• $26 million to assess and advance more renewable energy projects.
• $12 million to support the rollout of insulation upgrades under our Victorian Energy Upgrades (VEU) Program.

Infrastructure and Transport

• $4 billion allocated to the Sunshine Station redevelopment, bringing forward $2 billion of the investment in Airport Rail.
• $976 million to fix potholes and upgrade road surfaces.
• $727 million to operationalise the Metro Tunnel which is due to open this year.
• $98.7 million to deliver more frequent services for passengers on the Werribee, Sandringham, Craigieburn, Upfield and Gippsland trainlines.
• $52 million to deliver services every 40 minutes along the Traralgon line, plus additional peak services for the Seymour line and longer trains on more weekend services on the Bendigo line.

Housing

• $50 million to develop a Future of Housing Construction Centre of Excellence.
• $249 million to enable infrastructure works – such as roads, sewerage and water – that increase housing supply across the state.

Crime and Safety

• $727 million to increase capacity in Victoria’s prisons and youth justice centres.
• $176 million to expand rehabilitation and support services to reduce reoffending.
• $92 million investment in police recruitment.

Reactions

“The Allan Labor Government has handed down a deceitful, reckless and irresponsible budget that will leave Victorian families worse off, services underfunded and our state drowning in debt. Despite receiving a $3.7 billion GST windfall, Labor has delivered a $1 billion worse final result than forecast. This is not are sponsible budget. It is an admission of failure. This is a budget built on lies, fantasy forecasts and spiralling debt.” - Leader of the Opposition, Brad Battin MP

“The State Budget is generous with cost-of-living support and, while we welcome no new taxes and the operating surplus, the incentives to grow and propel the private sector are modest. While addressing cost of living is important, the State Government must now prioritise stimulating business growth. If we get the next steps right, we have the opportunity to unlock private capital, create new jobs and grow the economy. Let’s make sure this budget is the turning point – not just a talking point.” - Victorian Chamber of Commerce and Industry CEO, Paul Guerra

“The budget preserves a raft of critical social programs, such as family violence, homelessness services, women’s health, disability advocacy, and energy assistance. These measures are welcome, although they don’t do much more than keep existing programs ticking over.” - Victorian Council of Social Services CEO, Juanita Pope

“I want to recognise Premier Jacinta Allan and Health Minister Mary-Anne Thomas for their leadership and their recognition of the skills and medicines expertise of pharmacists.” - Pharmaceuticals Society of Australia Victorian President, Dr Amy Page

“The industry was hoping for progress – instead, we’ve hit a stop sign. Since last year’s budget, we have been loudly advocating for an easing of the tax burden to promote investment, greater support for first home buyers and feasibility solutions to increase supply. None of this was addressed in the budget. The industry is ready to grow, but it can’t grow under the current arrangements.”- Property Council of Victoria Executive Director, Cath Evans

“The ‘education state’ might be the tagline on our car number plates but this budget puts Victorian students, their families, teachers, principals and education support staff at the bottom of the pile.” - Australian Education Union Victorian Branch President, Justin Mullaly