Letter to the Editor | September 24, 2026

Victoria’s Fiscal Debt
(The Editor, “The Times”)
Dear Editor.– Since the gold rush of the 1850s and throughout the bulk of the 20th century, Victoria has been the economic and cultural centre of Australia. Victoria’s vast wealth was generated by an abundance of natural resources, agriculture and the ability for manufacturers to access affordable and reliable energy from the Latrobe Valley and gas fields, not to mention public infrastructure once considered as some of the best in Australia. Now here in 2026, Victoria is a basket case, financially and economically; we have the highest debt over all states and territories in Australia a debt of which future generations will pay for many years to come.

Victoria’s net state debt stands at approximately $165 billion, making it the highest among Australian states and territories and one of the most indebted subnational governments globally. Victoria’s net debt is around $165 billion, with a per capita debt of approximately $23,900 and a debt-to-GSP ratio of 31.7%. Victoria pays an average interest rate of 5.2%, interpreting to roughly $8.58 billion in interest payments each year. The Non-Financial Public Sector net debt, which includes general government and public trading enterprises, was estimated at $163.7 billion at the end of 2025-26, up from $49.7 billion in 2019-20, reflecting a 230% increase driven by COVID-19 stimulus measures, major infrastructure projects and government waste. $215.49 per second. $12,929 per minute. $775,764 per hour.

$18,618,336 per day. $23,900 debt per Victorian. $163.7B NFPS net debt (2025-26) $6.8B annual interest cost. 31.5% of Gross State Product. $18.6M interest cost per day. $177B projected peak (2028-29).

Money earmarked by the state government for annual interest repayment is money that buys, amongst other things, nothing. No new schools, no new hospitals, no new train lines, a dilapidated road network, law and order and the list goes on and on. It simply services past borrowing. For context, the entire annual budget for Victoria Police is roughly $4.5 billion. The state spends more servicing its debt than it spends on law enforcement. Victoria also has the highest level of taxation as a share of the economy, the fastest growing state government spending rate as a share of the economy in our nation, the fastest growing public sector wages in the nation, as well as the fastest growing public sector workforce in Australia.

Victoria’s spending and debt levels are a recipe for economic disaster, which will likely dwarf the economic disaster of the early 1990s. Through deliberate policy decisions the Victorian government has taken a wrecking ball to the state’s economy, with taxes, spending, and debt all at record highs, with no visible plan to pay it back; probably beyond paying back.

Debt per Victorian is now approximately $23,900 and is expected to increase to at least $30,000 by the year 2035, up from $3,500 in 2014.

The Suburban Rail Loop is one of the primary reasons looked upon as being a critical tipping point, which is making Victoria’s debt unsustainable. Without the rail loop, debt by the middle of next decade – while far too high – is expected to plateau at approximately $209 billion in year 2035. But even just stage one of the three-staged loop will push debt to at least $259 billion by 2035, instead of $209 billion without the loop, and with an unsustainable upward trajectory.

And this is just for stage one. Modelling prepared by the Victorian Parliamentary Budget Office estimated the total cost of the first two stages of the Suburban Rail Loop to be $200.2 billion.

Metro Tunnel $12.6B total cost; connects the City Loop to St Kilda Rd; 5 new underground stations; 65% complete as at 2026. North East Link; $26.1B total cost; Victoria’s largest-ever transport project; connecting the Eastern Freeway to the Ring Road; tunnelling under way.

COVID-19 Pandemic Response-Record 262 cumulative days of lockdown (world’s longest). Over $44B in emergency economic support, job keeper top-ups, business grants, healthcare surge and social services. Debt jumped $39.4B (NFPS) between 2019-20 and 2021-22.

The above examples are some of the many big-ticket projects, which for reasons not privy to us, have led to massive fiscal blow outs.

Victoria’s debt exposure is particularly concerning at a time when rising interest rates will lead to significant increases in the costs of servicing this debt. Every extra dollar needed for debt servicing will be at the expense of alternative and productive uses. Conversely, if the Victorian Government does not address the budget deficit and the rising debt levels, Victoria could face a debt trap in which even more drastic action is required. And what will this action require? One thing is certain the Victorian population will pay dearly through austerity budgets, Victoria’s 33 taxes, levies and duties increases, the sale of more public assets to pay down the debt and reduce the deficit; bear in mind many major public assets have already been sold and their proceeds spent. Debt for equity swaps, cuts to government services and infrastructure, businesses relocated to other states, and the list goes on; either way we will be the ones picking up the tab.

Mr Editor, common sense, a sound economic vision and good leadership is required to address the challenges of reducing this debt. Over the years we have experienced a gradual shift in the role of governments past and present, a shift of bloated, corruption and clandestine agendas. Unless drastic action is taken, Victorians face a permanently bigger government with more and higher-paid public servants, higher taxes, higher spending, and significantly higher debt.

Frankly, good economic management and leadership maybe out the window, some would say much of this could be our own fault simply because we have been too trusting of our politicians and taken for granted they will do the right thing by us; I tend to agree. Complacency is not a virtue in this case. So, what do we do? A change of government in November may help a little, but could be a classic example of rearranging the chairs on the titanic, a different tack same result, perhaps purge the fat cats in Spring Street could be a start. Make politicians accountable again to those who elected them.

Perhaps we need to revert back to the Biblical Jubilee as our holy Bible tells us.

The question is: What have we done to deserve this mess? The answers are many.

Sincerely yours,
Kenneth King,
Birchip