2021–22 budget update snapshot from the PBO

iStock budget 903735920

The Parliamentary Budget Office (PBO) has released its independent analysis of the 2021–22 Budget Update, comparing it to the 2021–22 Budget. You can find the full analysis at pbo.vic.gov.au.

The budget update reports actual results which have become available since the previous budget, showing that during 2020-21:

  • the recession was smaller, with real gross state product (GSP) contracting by only 0.4% rather than the previously forecast 2.0%
  • the budget impact was smaller, with net debt at 30 June 2021 6.2% lower than previously forecast.


Despite these better-than-expected performances in 2020-21, the Victorian Government now forecasts:

  • a further delayed economic recovery from the COVID-19 recession
  • a slower and weaker budget recovery from the COVID-19 pandemic.


The PBO found that when compared to the 2021–22 Budget, the government’s forecasts in the 2021–22 Budget Update show:

  • $13.0 billion higher operating expenses forecasts, reflecting pandemic response and support payments
  • $7.7 billion higher net asset investment forecasts
  • $2.3 billion higher revenue forecasts, reflecting an increase in Australian Government grants in 2021-22 and higher than previously expected land transfer duty receipts.


The PBO assessed fiscal sustainability indicators against the revised government forecasts and found:

  • net borrowing as share of revenue will increase, making the budget more reliant on debt
  • debt servicing costs will continue to increase substantially, meaning the government is unlikely to meet its own target of ‘general government interest expense as a percentage of revenue to stabilise in the medium term’
  • employee expenses as a share of government revenue will remain above the 10-year average.


To keep up to date on the PBO’s work visit the PBO website at pbo.vic.gov.au or follow the PBO on Twitter at @pbovic.


CONTACT: Anthony Close, Parliamentary Budget Officer, +61 3 7035 2301


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