Victoria is due to record a $19.5 billion operating deficit this financial year – $7.9 billion more than it forecast in the 2021-22 budget.
Treasurer Tim Pallas presented a budget update on Friday that showed total revenue was expected to be $77.9 billion and expenditure $97.5 billion.
The government’s expenditure this financial year is $10.3 billion more than it budgeted to spend, which Pallas’ report ties to additional support during the COVID-19 pandemic.
“Prior to the COVID-19 pandemic, the government demonstrated its strong financial management by adhering to a robust fiscal framework, including consistent operating surpluses and maintaining debt at a sustainable level,” Pallas’ update said.
“In 2020, the COVID-19 pandemic severely impacted the state’s financial position and outlook.”
The update predicts the government’s deficit situation will change in the following years, resulting in a $5.2 billion operating deficit in 2022-23, and a $2.1 billion operating deficit in 2024-25.
“The operating position is forecast to improve with operating deficits estimated to decrease over the forward estimates,” the report said.
Employee expenses will be the state’s biggest cost, and are predicted to reach about $32.7 billion.
The employee expenses, including superannuation, are forecast to grow by 9.2 per cent in 2021-22, the budget update says.
Earlier this year, the government announced changes to the Victorian Public Sector Wages Policy that will limit wage rises to 1.5% from January 1 next year, down from a previous 3%.