Victorian government spending surges by $7.9 billion

Summarised from 2 outlets · Updated 15 Oct, 08:32 · Archive

Victoria's government spending reached $112.1 billion, exceeding budget by $891 million, driven by public sector wage rises and debt interest.

Victorian government spending reached $112.1 billion in 2025-26, exceeding budget expectations by $891 million and rising $7.9 billion, or 7.6 per cent, year-on-year, according to the state's 2025-26 Annual Financial Report.

The main cost drivers were public sector wages and interest on state debt. Public sector wages totalled $46.1 billion, $405 million higher than budgeted, primarily from additional teaching staff and higher police spending than expected. Interest payments on debt totalled $7.9 billion, up $1.1 billion on the previous year due to additional borrowing and higher interest rates.

Despite the spending increase, the state's net debt of $160.7 billion was $4.7 billion lower than estimated in the May budget. Premier Ben Carroll said the government would cut spending and reduce debt but emphasised the need to do so 'in a sustainable, responsible way' without hurting 'frontline services'. One initiative to streamline spending is the ongoing merger of the Suburban Rail Loop Authority into the Victorian Infrastructure Delivery Authority.

How it is being reported

• Public wages help drive $7.9b state spending surgeSpending by one state government has blown out by $891 million, after recording a $7.9 billion increase on the year before.Perth Now · 15 Oct, 08:02
• Public wages help drive $7.9b state spending surgeSpending by one state government has blown out by $891 million, after recording a $7.9 billion increase on the year before.The West Australian · 15 Oct, 08:02

In this story: Victoria · Ben Carroll · Suburban Rail Loop Authority · Victorian Infrastructure Delivery Authority

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