Economists Call for Cash Surplus and Debt Cap to Stabilise Victoria's Finances
Select a version of the text written from a presumed ideological perspective. This is not the original text, but a hypothetical version — how someone with that viewpoint might have phrased it. Tapping the current version again will return to the original or select cleaned version.
Four leading Australian economists say Victoria must return to a cash surplus, set a medium-term debt limit and commission an independent spending review to repair its fiscal position ahead of the state election.
Four prominent Australian economists – independent analyst Saul Eslake, former Reserve Bank board member Ian Harper, Australian National University professor Bob Breunig and UNSW chief societal economist Richard Holden – have urged the next Victorian government to restore a cash surplus, impose a medium-term debt cap and order an independent audit of public spending. Their joint statement, released at the start of the 28 November state election campaign, warns that the state’s fiscal position is “dire” and requires decisive action.
"Setting in place a medium-term strategy for managing public debt secures the future of public services needed to meet the demands of a growing population," Harper said.
"Returning the budget to cash surplus is the first leg of this journey," he added.
The economists note that Victoria has not posted a cash surplus since the 2008-09 financial crisis and is projected to borrow $870 million and pay $610 million in interest during the 25-day campaign period, according to analysis by advocacy group AMPLIFY.
Eslake argues that spending cuts, rather than tax hikes or asset sales, are the realistic path to a surplus. He points to data from the Commonwealth Grants Commission showing Victoria spends about 7 % more per capita on services and 10 % more on infrastructure than other states, suggesting that reductions of roughly $5.5 billion in operating costs and $1.75 billion in capital spending could balance the budget.
Holden emphasizes the need for an independent audit, recalling the 1992 review that led to extensive privatisations and public-sector cuts under former Premier Jeff Kennett. Breunig adds that legislating clear fiscal rules would provide transparency and help contain debt.
Opposition leader Jess Wilson has pledged a cash surplus by 2032, relying on a decade-long hiring freeze and tax cuts that could reduce revenue by about $5 billion in the first term. Premier Ben Carroll has highlighted past savings but has not detailed a specific surplus plan. The economists caution that without a comprehensive strategy, political parties risk maintaining “business-as-usual” approaches that could delay fiscal repair.