Residents of Victoria are currently experiencing the impacts of global issues, including conflicts in the Middle East, rising inflation, and increasing interest rates. In light of these challenges, the state government has devised a budget for 2026-27 that aims to alleviate some of the financial burdens on families.
As the state approaches an election year, rising crime rates have also come under scrutiny, prompting significant investments in law enforcement and the justice system. Treasurer Jaclyn Symes describes this year’s budget as “disciplined” and characterizes it as one focused on low spending.
While the budget forecasts a surplus of $1 billion for the 2026-27 fiscal year, the government must still address its growing debt, which necessitates cuts to public services.
So, who stands to gain or lose from this budget?
In response to soaring fuel prices linked to the Middle East situation, the state government is introducing a 20% discount on car registration fees this year. Given that the annual cost for light vehicle registration can reach up to $930.70, this discount translates to at least $186 in savings for each Victorian motorist. Eligible vehicle owners can apply for the rebate via Service Victoria starting June 1, with a deadline for claims set for July 31. The government estimates that this reduction in fees and charges will result in approximately $750 million in lost revenue.
Beneficiary: Public Transport Users
The government plans to allocate nearly $100 million to enhance public transportation, which will include extended bus hours, improved weekend services, and new routes to accommodate growing suburbs and university access. In the western region, a new bus network will feature two additional routes for Melton South, along with improved connections to Woodgrove Shopping Centre and a more direct service between Laverton and Aircraft railway stations. Additionally, a new route will link Drysdale and Ocean Grove, and more trips will be added between Castlemaine and Harcourt, as well as services from Cowes and Inverloch to Dandenong. The government has previously announced that public transport will remain free until May 31, with half-price tickets available until the year’s end.
The state’s debt is projected to rise to $175.6 billion in 2026-27, an increase from $165.3 billion this year, with interest payments expected to reach $8.9 billion for 2026-27 and potentially $11.8 billion by 2029-30. This translates to about $24.4 million daily in interest payments, or $1 million every hour.
Neutral: Public Service
The government is continuing its initiative to achieve savings within the public service, aiming for reductions of $607.5 million over the next four years. These savings are expected to come from operational efficiencies, such as shared services and centralizing IT functions. Despite this, there is an ongoing recruitment push for police and corrections personnel.
Healthcare will see a significant investment of nearly $4 billion, which includes $1.6 billion designated for hospital staff, medications, and resources. The budget allocates $284 million for the opening and operation of hospitals and wards, including a new community hospital. Additionally, $145 million will enhance hospital infrastructure and equipment, while $299 million is earmarked to support new families, including maternity care in Melbourne’s western suburbs and IVF assistance.
Beneficiary: Disability Health Supports
A total of $2.5 billion will be designated for disability support services, which includes $2.4 billion over five years in collaboration with the Commonwealth, covering Victoria’s commitments under the National Agreement on Foundational Support. This funding will also include $20 million for in-home and aged care services.
The government is expanding its Free Kinder initiative, investing nearly $500 million to establish 22 kindergartens on school campuses, five early learning centers, and grants to support 27 new and expanded kindergarten programs. According to Labor, since its inception in 2023, the Free Kinder program has benefited 570,000 children, offering up to $5,200 in savings per child.
Additionally, $3.6 million will fund bilingual kindergarten programs through the Early Childhood Language Program, which supports 197 kindergartens teaching 21 languages, including Auslan, Cantonese, Hebrew, Hindi, Italian, and Japanese. The budget allocates $1.6 billion for new schools, renovations, and maintenance, alongside $2.2 billion aimed at assisting students with disabilities. Four new schools are planned, with an investment of $420 million.
Moreover, $222.2 million will be directed towards restoring the Victorian Curriculum and Assessment Authority (VCAA) in the 2026-27 budget, following a series of issues with VCE examinations. The government states that this funding is a direct response to an independent review that highlighted the authority’s unsustainable budget and aims to improve technology for more reliable operations.
Neutral: Social Housing
The government intends to invest $860 million into the Social Housing Growth Fund, which will facilitate the construction of over 7,000 social housing units. This initiative builds upon the more than 12,000 social and affordable homes that are either completed or in progress. Currently, there are over 56,000 households on the waiting list for housing in Victoria, with priority applicants facing average wait times of 17 months, based on the latest public data.
Loser: Small Businesses
Unfortunately, the state budget does not provide substantial relief for small businesses, which are facing similar economic challenges as households. The budget documents indicate that the business sector is expected to contribute approximately $9.6 billion in payroll taxes this year, accounting for nearly a quarter of the state’s total tax revenue.
Beneficiary: Off-the-Plan Homebuyers
Victorians looking to purchase homes priced under $620,000 will benefit from an extension of the off-the-plan stamp duty concession. The government asserts that this concession has saved buyers an average of $30,000 and will be extended for an additional six months for contracts finalized before April.
