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Victorian State Budget 2023/24

COVID Debt Repayment Plan

We’re laying down a full and comprehensive plan to pay down COVID debt.

We are not the only government in Australia that built up debt during the pandemic to support households and businesses. But we are the only government with a plan to manage it.

Acting decisively for Victorians

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When the pandemic hit Victoria, we acted quickly and decisively to safeguard the economy – and to prevent economic scarring that would have left a generation out of work.

Acting on the advice of the Reserve Bank of Australia – just like every other state and territory across the country – we borrowed to support our economy. And governments across the world did the same.

We used the state budget to protect household budgets and businesses. We directly invested almost $40.1 billion to keep Victorians safe from the virus, keep workers in jobs and businesses afloat, and support households.

We provided rent relief so Victorians could keep a roof over their heads, helped people test and isolate, added extra mental health services and relieved the stress on businesses with direct financial support.

Out of a total $21.2 billion spent on economic‑related measures, more than $14 billion in support was provided to help businesses and the economy survive and recover. Crucially, these measures ensured the Victorian economy could bounce back once the worst of the pandemic was over.

Different borrowings for different purposes

Victorians use different types of debt in their household budgets as well.

People often borrow to invest in assets like the family home, which then accumulates wealth as the value of the asset grows over time. In contrast, the credit card is used for emergencies that require significant and time critical action with less long-term wealth creation benefit.

Much like a home loan, we borrowed to fund a range of infrastructure projects that create significant long-term economic and social benefits such as major road and rail projects, and new and upgraded hospitals and schools.

This is productive capacity infrastructure that creates jobs, helps our state function, and makes the economy bigger. This increases budget revenues which in turn provides the capacity to make interest payments and repay the debt over time.

Before the pandemic, we were borrowing to build – within our means.

Then the pandemic came along posing a global emergency, requiring significant spending on largely operational activities in a short time frame. We had to access emergency borrowings to save jobs and save lives.

There’s now a $31.5 billion balance from those emergency borrowings.

We have to get that balance back down to zero. Unlike our productive infrastructure investments, COVID debt does not accumulate wealth for Victoria in the form of long-term economic benefits – or by providing the services Victorians will need into the future.

Paying down COVID debt

We've got a bold infrastructure agenda, designed to support thousands of jobs across Victoria while delivering the everyday services Victorians rely on – especially as our state continues to grow.

Importantly, our significant infrastructure program also contributes to the long-term productive capacity of our economy.

On the other hand, our COVID debt relates to one-off investments designed to protect Victorians and Victorian businesses throughout the pandemic, and set the state up for recovery on the other side.

Our strong action to protect the health and livelihood of all Victorians helped shield our state from the very worst of this one in one hundred year event.

As the state’s economic position is now sound, now is the time to pay off the debt and the accumulating interest incurred as a direct result of the pandemic.

That’s why with this Budget, we've laid down a full and comprehensive COVID Debt Repayment Plan.

We’ll make sure the repayment plan is structured in a way that’s reasonable and proportionate to everyone’s ability to pay – and the Government will also do its bit.

We know some did better out of the pandemic than others – and it is only fair that those that did well contribute to the repayment effort.

This will ensure we manage our finances responsibly – so we can keep investing in the health, education, cost of living relief, transport and infrastructure that matters to Victorians.

Reviewed 22 May 2023

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