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AAP
AAP
Callum Godde

Victorian budget a family affair, but details scant

Victorian Treasurer Tim Pallas will focus on helping families in his 10th state budget. (Diego Fedele/AAP PHOTOS)

Struggling Victorian families will be at the centre of the state budget, with the premier suggesting inflationary and interest rate pressures are taking a toll on its finances.

Treasurer Tim Pallas will deliver his 10th state budget on Tuesday, in what shapes as another no-frills affair.

No pre-budget announcements have been unveiled for a second consecutive year and the state government is remaining tight-lipped on details.

Overseeing her first budget since succeeding Daniel Andrews in September, Premier Jacinta Allan said it would focus on Victorian families and demonstrate "sensible and disciplined" decisions.

"It's been a budget that's been challenging to put together ... in a domestic and global environment that faces many, many pressures," she told reporters on Monday.

"Whether it's the inflationary and interest rate pressures, the pressures of workforce shortages and what that means for project and service delivery, also too the global unrest, the ongoing impact of the pandemic.

"We simply can't put our heads in the sand and ignore these circumstances as we have putting this budget together."

The premier said construction sector costs had jumped 22 per cent since 2021, making it difficult to deliver projects on time and on budget in combination with workforce shortages.

Ms Allan said she hoped the Reserve Bank would consider inflationary pressures when making future interest rate decisions.

"These are pressures that are having a real impact - they're having a real impact on families at their kitchen table, on businesses and on governments around the cabinet table," she said.

Tim Pallas budget
He's got his hands on the state's finances. Tim Pallas is set to deliver his 10th Victorian budget. (Diego Fedele/AAP PHOTOS)

Opposition Leader John Pesutto said the budget was a chance for Victoria to turn things around and took a dim view of the premier blaming inflation and interest rates for burdening the state's finances.

"Victoria's share of collective state debt nationally is so great it's making it harder for people to borrow," he said.

The Victorian opposition want the budget to contain a cost-of-living relief package for families and businesses, a plan to stop cost blowouts on major projects and more debt combating measures.

"Enough stuffing around with this," shadow treasurer Brad Rowswell said.

"Stop blaming COVID, start taking responsibility."

Economist Saul Eslake said Mr Pallas' ninth budget was a "missed opportunity" to put Victoria's finances on a more sustainable footing.

He expects this budget to include tough decisions on spending after the previous edition featured a COVID-19 debt levy on large businesses and landlords.

"They hadn't been willing - and this is why I think Daniel Andrews' influence was important - to wind back any of there hyper-ambitious infrastructure spending," Mr Eslake told AAP.

"Which together with the self-inflicted wounds of how they handled COVID, has been the major driver of the enormous increases in Victoria's debt."

Jacinta Allan
Victorian Premier Jacinta Allan says there's a range of pressures on the state's finances. (Diego Fedele/AAP PHOTOS)

A budget update in December forecast Victoria's net debt would rise to $177.8 billion by mid-2027, $6.4 billion higher than the estimate in May.

By that point, taxpayers are on track to be paying $24 million each day in interest.

Mr Eslake noted net debt as a percentage of gross state product was higher than during the dark days of the Cain/Kirner government in the 1990s, and there were no longer a slew of assets to be sold to pay it down.

"They really do need to get a handle on recurrent and capital expenditure," he said.

Mr Pallas has previously said government infrastructure spending will be moderated to give the private sector breathing room to build more housing.

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