Currently, Victoria faces $6.8 billion in annual interest payments, a figure expected to climb to $10.6 billion by the end of this decade. On an individual basis, this translates to a rise in annual interest costs per Victoria resident from $959 in 2024-25 to approximately $1,391 by 2028-29.
One significant factor contributing to this financial strain is the considerable uptick in public service wages. Despite already representing the state's largest expenditure, public servant numbers have increased by 59% over the past fifteen years, a rate far exceeding the 29% population growth. Consequently, the public sector wage bill has surged by 152% over the same period, with forecasts indicating a rise from $19.5 billion in 2014-15 to about $44 billion in 2028-29.
Even with a vast public workforce, Victoria's reliance on private consultants remains substantial. The state's auditor-general, Andrew Greaves, highlighted the government's expenditure of $130 million on contractors and consultants in 2023-24. His findings raised concerns about whether these expenses offered good value for taxpayer money, citing issues with oversight and management of these third-party engagements.
Greaves pointed out a worrying dependency on external consultants leading to skill erosion within the public service. He noted difficulties in validating that contractors and labour-hire workers delivered intended outcomes, reflecting gaps in value accountability and project management.
These findings underscore the urgent need for streamlined operational strategies and fiscal prudence in managing Victoria's public sector expenses.
Looking forward, the Victorian government faces the challenge of balancing its budget while ensuring efficient public service delivery. With debt and interest obligations mounting, strategic reforms in workforce management and cost-effective resource allocation may be critical in steering the state back towards financial stability.
