The property market downturn on the back of the federal government’s tax changes and rising interest rates has punched a $5.1 billion hole in the Victorian budget, while government spending has blown out by $7 billion, heaping further pressure on the state’s deteriorating finances.
The operating surplus, which does not take into account expenditure on capital projects, has been slashed to just $1.4 billion over the next four years – down from $6 billion it had forecast in the May budget, according to an economic and fiscal update released on Friday. The updated cash deficit, which in May was projected to be $30 billion, was not included in the report.
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