Exemption of state debts to cost every Victorian $1400

April 30, 2026

Victoria issued tens of billions of long-dated bonds at very low interest rates (ie 1.25–1.5%) during 2020–21.

These bonds mature from 2026 to 2031, forcing the state to refinance at today’s 5-6% rates.

Important upcoming maturities include the following:

$10.7 billion at 1.25% → mature November 2027
$14.4 billion at 1.5% → mature 2030
$19.7 billion 1.5% → mature September 2031

Releasing these bonds at current rates would increase interest costs by $1.8 billion annually.

Victoria’s budget forecasts show an interest bill of $7.5–7.6 billion in 2025–26, rising to $10.5–10.6 billion by 2028–29.

Exemption of state debts to cost every Victorian 00

Further increases are likely as more affordable loans mature after 2030.

The federal budget predicts Victoria’s population will grow to 7.54 million by 2028-29.

As a result, Victoria’s per capita interest bill is forecast to rise to $1,400 by 2028-29.

Michael Brennan, former head of the Productivity Commission, notes that much of this increase is already included in forward projections, but the recent increase in bond yields from the end of 2025 will add further pressure.

Internal Treasury documents show the government is using its narrow operating surplus as justification for additional spending, even as net debt is projected to reach $200 billion by 2030:

“By carefully managing our state’s finances – and addressing government spending on inefficient and non-priority programs – we’ve been able to use our budget to invest more in ‘things that really matter to Victorian families’,” “Key messages and questions and answers” guide for ministers ahead of the 2025-26 Budget.

Overseas investors now hold at least 23% of Victoria’s debt, and overseas trading of Victorian bonds doubled in the last financial year.

The opposition Liberal Party argues that refinancing at higher rates will worsen Victoria’s financial situation. It highlights that interest payments now exceed the operating budgets of Victoria Police, Ambulance Victoria and family violence services combined.

“As Victoria’s alternate premier, restoring sound financial management is my top priority,” he said. Opposition Leader Jess Wilson.

The reality is that Victoria is facing structural increases in interest costs as more than $25 billion of ultra-cheap pandemic-era debt matures and is refinanced at much higher rates.

Interest costs are set to climb above $10 billion a year, net debt is heading for $200 billion, and yet, incredibly, internal documents show the government is using its operating surplus to justify more spending ahead of state elections in November.

Victorians will pay the price for Labour’s fiscal negligence for decades to come.