About a year and a half ago, Jaclyn Symes replaced Tim Pallas as Victorian treasurer, ending Pallas’ record-breaking ten years in the role.

A lot was expected of Symes in not much time. She needed to find cash for an election less than two years away, but the state’s finances were already badly stretched by high net debt and elevated pandemic-related spending.

To add to the challenge, the main Victorian public sector union was primed for a fight following a change of leadership elected to protect pay and jobs.

The Victorian budget released today shows Symes has delivered the goods. That’s partly through good management and partly because of good luck.

Back in black

Symes has managed to announce that this financial year the budget will have an operating surplus (which excludes infrastructure spending) for the first time since the pandemic.

Not only that, at A$700 million, it’s roughly $100 million higher than had initially been forecast in last year’s budget.

For the next financial year (2026-27), the operating surplus is budgeted to be almost $1 billion ($900 million less than was budgeted for).

The budget is back in the black despite $2 billion of new “output” initiatives (spending on day-to-day activities of government) for the remainder of this financial year, and – remarkably – $4 billion in 2026–27.

That is a lot of cash, to which can be added an additional $1.8 billion for new infrastructure spending next year.

The big winners

The big winners (in a budget where there were mostly winners) were health, transport and education.

Health gets an additional $1 billion next year, with around 40% allocated for treating more patients.

Transport will benefit from an extra $1 billion in 2025-26 and a further $851 million the following year.

The big ticket items here are a 20% rebate for car registration ($800 million) and free public transport ($430 million).

Education gets an extra $720 million next year, with the biggest beneficiary being additional supports for children with disabilities – $265 million next year, rising to over $700 million in four years’ time.

And all this is to happen while Symes has projected a $600 million fall in stamp duty revenues next year, with higher interest rates cooling the housing market.

The surplus secret

So, how did she manage to do all this?

First, through good management. One of the first things Symes did last year was announce a budget review to be done by well-respected former senior public servant Helen Silver.

That review is already delivering several billion dollars in savings over four years, mainly as a result of cleverly crafted departmental restructures.

This has included replacing highly paid senior public servants with junior ones.

But more than anything else, Symes has benefited from the good fortune of having a Labor government in Canberra, which next year will chip in $4.4 billion more to the state’s coffers than the government had expected this time last year.

Victoria has done very well from the latest GST carve-up, and now expects to receive almost $2 billion more in 2026–7 than was expected last December.

The new federal health agreement includes new disability programs to be delivered at the state level. And the federal government is also providing capital grants to help pay for the Suburban Rail Loop and other projects.

The elephant in the room

The elephant in the budget papers is the state’s level of net debt, which is set to hit $165 billion next year. If you add in all public sector entities and not just those covered by the budget (such as water boards, Homes Victoria and Victorian Rail Track Corporation), that figure is $212 billion.

In four years’ time, debt is projected to rise to $199.3 billion ($248 billion for the entire public sector).

This raises the question: why not make use of all that extra cash to shore up the budget?

Symes points to an electorate doing it tough thanks to the cost of living and to state assets exceeding $440 billion.

Polling day looms

But top of mind will be the election, scheduled for November 28, with Labor’s popularity in the doldrums and its leader on the nose.

For the opposition, which is also struggling in the polls, this budget is not good news. Labor has spent the chocolates.

It is hard to see how the Liberal party will be able to achieve its stated goals of reducing debt while cutting taxes at the same time, without a radical program of cuts. Such cuts would not go down well in an electorate primed for spending.

Symes has tucked away $5 billion in contingencies in case things turn unexpectedly sour, and also to partly fund an election war chest.

Is this budget enough to win votes?

The one bright spot for the opposition is that the budget does not crank up spending on law and order to the degree that might have been expected.

There’s a little for additional jail services, police and crime prevention, but with over 1,000 unfilled positions in the police service at a time of soaring crime, that looks like a problem still in need of a fix.

The Victorian treasurer has crafted a clever budget for an election year. But with only six months until election day, it may be a bit late to ensure an unpopular Labor government secures the additional and record fourth term it desperately craves.

David Hayward does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.