Key Takeaways
- The Growth Areas Public Transport Fund has grown from $431.1 million to $637.6 million between June 30, 2023, and June 30, 2025.
- The Victorian government has been criticized for not spending funds promptly for their intended purpose, leaving community expectations unmet.
- The state’s net debt is forecast to hit $194 billion by 2029, while gross debt is forecast to reach $236.6 billion.
- The government has been accused of hoarding funds from Growth Area Infrastructure Contributions (GAIC) to prop up its budget instead of investing in critical infrastructure.
- The Victorian Auditor-General’s Office has raised concerns about the government’s financial management and transparency.
Introduction to the Growth Areas Public Transport Fund
The Growth Areas Public Transport Fund, which collects funds from developers building homes on the city’s fringe, has experienced significant growth over the past two years. The fund has increased from $431.1 million on June 30, 2023, to $637.6 million on June 30, 2025. This growth is a result of the funds collected through levies and other dedicated revenue and income sources not being spent promptly for their intended purpose. The Victorian Auditor-General’s Office has expressed concerns that the growing funds could hide underlying problems with Victoria’s finances.
Concerns about Financial Management
The Auditor-General, Andrew Greaves, has warned that the growing funds could be risky because they could mask underlying financial issues. The unspent trust funds have already reduced the state’s reported amount of net debt and improved the reported operating result, which the government uses as key indicators of its financial management. The opposition has criticized the government for hoarding funds from Growth Area Infrastructure Contributions (GAIC) to prop up its budget instead of investing in critical infrastructure for growing communities. The government has defended its financial management, citing its strong economic management and fiscal discipline.
Government Response to Criticism
A government spokesperson has stated that the Victorian economy is strong, and the government is focused on helping with the cost of living and supporting families, jobs, and businesses. The spokesperson also mentioned that the government is opening up major projects like the Metro Tunnel and West Gate Tunnel. However, the opposition has accused the government of sitting on a report that canvasses a new statewide infrastructure charge, which it wants to use to keep up with demand as it encourages more housing development around developed areas. The government has also been seeking changes to infrastructure contributions that would allow the money to be spent outside the areas they are collected, if the money is for infrastructure that services the growth area but cannot reasonably be located in it.
COVID Debt Repayment Plan
The Auditor-General’s office has also raised concerns about the government’s COVID Debt Repayment Plan, which includes taxes that will run for 10 years and offset the $31.5 billion in debt accumulated during the pandemic and $12.7 billion in associated interest expenses. So far, these new tax measures have raised $4.3 billion since 2023, split between the government’s additional levy on payroll tax and an expansion of land taxes. The plan also includes a Victorian Future Fund set up to act as a giant offset account, which has $9.9 billion. However, the government has been criticized for not publicly reporting progress on the COVID Debt Repayment Plan, prompting the Auditor-General’s office to recommend that it do so.
Forecasted Debt and Interest Expenses
Victoria’s net debt is forecast to hit $194 billion by 2029, while gross debt is forecast to reach $236.6 billion. By this time, interest expenses are forecast to be $9.2 billion a year. The government has been accused of not being transparent about its financial management, and the opposition has warned that the growing debt will lead to cuts in services such as schools and hospitals. The government has defended its financial management, citing its strong economic management and fiscal discipline.
Bailout of Domestic Building Insurance Program
The government has also been criticized for bailing out its domestic building insurance program, which was running at a $490 million loss. The bailout was required to stop the new Building and Plumbing Commission from having to report a $490 million debt on its balance sheet. The remaining $100 million was used to support the rest of the transfer of responsibilities. The domestic building insurance program has been experiencing high levels of claims, increasing from 680 claims in 2015-16 to peak at 4459 claims in 2022-23. The average claim has also risen from $46,000 to $77,500 over the past decade.