Dave Richardson
Senior Research Fellow

Both leaders are in Melbourne today, and whenever that happens there is generally commentary about how bad Victoria’s budgetary situation is. But is it really?

If you were to follow the press, you would be under the impression that Victoria is a basket case. People can point to the cash deficit of $12.2 billion in 2022-231 and total debt (liabilities) of $177.5 billion.

But that leaves out a rather large aspect.

There is very rarely any mention of the $412.9 billion worth of assets owned by the Victorian Government.

Taking liabilities away from the assets gives net worth of $235.4 billion.

Just like a household may take out a mortgage to purchase a home, so the Victorian Government has been borrowing to purchase the assets that provide critical facilities for the people of Victoria. The movement in Victoria’s net worth is illustrated in Figure 1. Victoria is like the prudent household whose home, super, and other investments are increasing relative to their debts.

Figure 1 clearly shows that Victoria’s net worth has been growing steadily. It has been compounding at 6.8% per annum. Victoria does not necessarily set itself commercial criteria, but if an investment fund demonstrated such a record it would be proud of its performance and would brag to its members.