Wednesday, 10 September 2025

Economy

Gaelle BROAD (Northern Victoria) (18:59): (1956) My adjournment is to the Treasurer. According to the state budget papers, Victoria’s state net debt will soon pass $194 billion, and interest repayments are skyrocketing to $29 million every day. This debt estimate is expected to be far higher because the government signed contracts to build the Suburban Rail Loop project without securing all the funds. S&P Global has warned that if spending and debt continue to grow unchecked, Victoria risks a credit rating downgrade which would escalate borrowing costs further. According to the budget forward estimates, Victoria’s net debt will reach 25 per cent of its gross state product. Analysis by the Parliamentary Budget Office over the last decade to 2023–24 shows that net debt has increased by an average of 22.9 per cent each year. Victoria’s debt is now out of control – last year the daily interest bill was $15 million every single day. I thought that was bad, but over the next three years the interest bill will nearly double that, at $29 million every single day. But when you look at the debt graph, it just looks very steep, like Mount Everest, and I am worried that it is about to get worse.

I understand that the Victorian government borrows predominantly by issuing state government bonds and debt securities via the Treasury Corporation of Victoria. These are bought by institutional international investors such as superannuation funds, banks and bond markets, but when they mature they need to be repaid. TCV estimate that the state will need to refinance $86 billion in debt between 2029 and 2034, which has been called a debt time bomb. According to MacroBusiness the average interest rate on the debt is only 2.4 per cent, reflecting the cheap money available during the pandemic. However, global interest rates have risen sharply and are expected to average between 4.5 and 5 per cent in the future, potentially increasing the interest cost on Victoria’s debt by $2 billion. It is a repeating pattern; we have seen it before. It was mentioned in the Auditor-General’s annual financial report back in 2023–24 – a similar issue. A further credit downgrade will make borrowing money even more expensive. As interest repayments skyrocket, less money is available to fund essential services, like roads, police, schools and hospitals. Every Victorian deserves to know where their tax money is going, and I ask the Treasurer to clearly outline what action the government will take to help Victoria get out of this rapid descent into debt and explain who Victoria owes money to.