Victoria’s deficit balloons to $19.5bn

VICTORIA’S budget deficit has blown out to $19.5bn, rising by a whopping $7.9bn more than expected in 2021-22 because of Covid lockdowns.

But Treasurer Tim Pallas has tipped the state is starting a major economic recovery.

In an update to the state budget, released on Friday, Treasury expected a major increase to Victoria’s net debt because of Covid restrictions and the cost of financial support.

In 2025, net debt will also increase to $162.7bn, which is $6.4bn higher than predicted.

With Victoria’s current population of 6.648 million, the debt is $15,719 per man, woman and child.

Mr Pallas defended the deficit because support for businesses and Victorians was needed during lockdowns triggered by the Delta variant.

“We’ve had to make those investments quite obviously to keep the community safe and resource our pandemic response,” he said.

“If we hadn’t done that, then the resilience and enduring nature of the recovery would have been compromised.”

The amount of money collected from stamp duty is expected to surge by nearly a fifth in 2021-22, taking it to $7.7bn.

Land tax will rise by nearly a third to $4.3bn while rego and other car taxes are set to increase moderately to $1.8bn.

The unemployment rate is expected to average 4.5 per cent this financial year, lower than forecast.

Shadow treasurer David Davis said the state’s position was “catastrophic”.

“Of course, with Covid, there (has) to be proper spending and increased spending and some debt related to Covid is entirely proper,” he said.

“But the Victorian AuditorGeneral made clear that the money that was spent on Covid did not have adequate cost controls.”