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Bankrupt Victoria may need a federal bailout

Victoria, Australia’s most indebted state, is projected to have $247.2 billion of debt by 2027, up from $55.2 billion in 2019:

Rising state government debt

The state’s poor budget position is blamed on wasteful “big build” infrastructure projects like the North-East Link and the Suburban Rail Loop, along with excessive spending on bureaucrats.

Victoria’s public sector has grown 59% in the last 15 years, easily outpacing population growth:

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Growth in the public sector

Source: AFR

Victoria’s public service wage bill rose 152% over the same 15-year period, the largest increase in the country:

Growth of the public sector wage bill

Source: AFR

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The state government also spent $589 million on the canceled Commonwealth Games without any benefit.

Former federal Treasury official Stephen Anthony warned that heavily indebted Victoria could need a federal “bailout.”

“Victoria is on a suicide mission to record debt, just as global interest rates are about to hit 5%”Antonio said.

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“Potholes can’t be filled, emergency departments can’t afford clean clothes, elementary schools can’t fix heaters.”

“Things are about to get very ugly,” he said.

Victorians are bracing for higher taxes, levies and charges in the next state budget to pay off state government debt, as well as cuts to key services.

The rest of Australia has already been called upon to bail out Victoria, whose incompetence has been rewarded with a huge increase in its 2024-25 GST allocation:

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GST Allocation

Soon the rest of Australia will be forced to shell out more funds to pay for the waste and inefficiency of the Victorian government.