It revealed a budget deficit of $4.2 billion over the six months to December 31. That represented a $5.8 billion improvement on the same six-month period in 2021,when the government recorded a deficit of almost $10 billion.

The report also showed Victoria’s net debt officially climbed above $100 billion for the first time to hit $104.2 billion by December 31. That was equivalent to 18.2 per cent of the state economy.

Victoria has the highest debt in proportional terms of all the states,largely because the government ratcheted up borrowing during the pandemic to help insulate the state economy,but also because it has been running an ambitious big projects agenda since it came to power in late 2014.

As a consequence,the cost of servicing the debt is expected to rise sharply. According to Treasury’s latest predictions,interest charged on Victoria’s debt will rise to about $3.9 billion this financial year,equivalent to about 4.7 per cent of total revenue.

Victoria is expected to shell out $7.4 billion in 2025-26,equivalent to about 8 per cent of the government’s total revenue – the highest since the late 1990s.

Shadow treasurer Brad Rowswell accused the government of being addicted to spending and higher taxes. “The Andrews government has no plan to grow the economic and opportunity pie,” he said. “All they do is create new taxes and increase existing ones.”

The report said the government raked in $39.9 billion in revenue during the final six months of last year,about $1.2 billion more than the same period in 2021. But total spending was about $4.6 billion lower,largely because pandemic-related business and community support measures came to an end.

The government wages bill was about $637 million higher,at $16.7 billion. Treasury said this was due to annual salary growth and increased spending on health and education services.

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