Premier Dan Andrews seeks bailout from federal budget as Victorian debt soars to $115billion

Premier Daniel Andrews is seeking a massive bailout from Anthony Albanese as Victoria’s state debt soars amid the fallout from the world’s longest Covid lockdown.

Victoria’s debt is $115billion and is expected to blow out to around $165billion by 2025-26 if the state does not get a huge handout in the upcoming federal budget to be handed down by Treasurer Jim Chalmers on May 9. 

The dire state of Victoria’s finances is made even worse by the interest on its debt, which is expected to increase to $7.32billion within three years. 

If the state does not get a very large cash injection from the federal government, thousands of jobs and services in Victoria’s public sector could face the chop. 

‘We’ll always lobby, push, pressure and advocate and put a good quality case to the Commonwealth government for more and more support,’ Mr Andrews told the Financial Review. 

He said Victoria had been ‘fundamentally ripped off for almost a decade by the Liberal National Party (federal government)’. 

This view has long been echoed by Victoria’s Treasurer Tim Pallas who said, under Scott Morrison’s former government, the state got ‘less than six per cent of new (infrastructure) funding, despite us having 26 per cent of the nation’s population’. 

Mr Pallas said that under a ‘distorted’ GST distribution decided on by Mr Morrison, Victoria could lose $1billion a year. 

Mr Andrews said Victoria’s budget, which will be handed down on May 23, will be very difficult, with tough choices to be made. 

He said the tens of billions of dollars spent on health and safety measures during the pandemic now has to be paid back. 

But there are also serious ongoing pressures on the government’s finances from public sector unions’ wage demands, the property market slowing and unexpected cost increases to infrastructure projects.

Discussions between the Victorian and Commonwealth governments are reportedly about to take place due to concerns that budget cuts in Victoria could have a knock-on effect on the national economy.

Speaking on Channel 9’s Today show on Tuesday morning, Federal Treasurer Jim Chalmers acknowledged that ‘state budgets around the country are under pressure, so is the Commonwealth budget’. 

He said the national government was talking to all the state and territory governments about funding.  

When it was put to him that Victoria has ‘got a bad credit rating’, Mr Chalmers did not disagree.

‘(Mr Andrews’) budget is under pressure. No doubt about that. But so is mine. So are a number of the other state colleagues and so we try and work with people, rather than against them,’ he said. 

‘We have a lot of agreements coming up in the course of the next year or so. We’ll work with the Victorians and with others to try and land them.’

Victoria’s state debt is $115billion and is expected to blow out to around $165billion by 2025-26 if the state does not get a huge handout in Anthony Albanese’s (pictured with his partner Jodie Haydon) May 9 federal budget

How Victoria’s state budget looks next month will largely depend on how much extra funding it gets from the federal budget two weeks earlier. 

International ratings agencies – which have a huge influence on the terms a state gets when seeking a loan – will keep a close eye on Victoria’s budget. 

It already has the lowest rating of Australia’s states after a double-notch downgrade in December 2020 during the Covid-19 pandemic.

Daily Mail Australia has contacted Mr Andrews seeking comment for this story.