Overview of the Victorian State Budget process

The State Budget is generally released once a year, typically in May. However, the timing of the Budget may vary from year to year, depending on elections, changes of government, and other circumstances that may affect the standard budget cycle.

The State Budget process is how the Victorian Government decides how to use public resources to deliver its policy priorities. Through this process, policy proposals and initiatives are considered for funding.

Each year, government departments prepare budget proposals. These include requests for new funding and variations to existing funding for the Government’s consideration. These proposals are analysed by the Department of Premier and Cabinet (DPC) and the Department of Treasury and Finance (DTF) before they go to a Cabinet Committee for consideration.

Proposals are assessed against the Government’s fiscal strategy, policy priorities and financial impact.

During the planning phase, the Treasurer seeks Cabinet agreement on how the Budget will be developed, including key priorities, timelines and requirements. This phase occurs after the release of the Annual Financial Report for the State of Victoria (typically in September).

The Government’s priorities for the Budget are established, and guidance is issued by the Treasurer to Ministers and by DTF to departments. Departments then develop budget proposals, including requests for new funding and variations to existing funding, for the Government’s consideration.

Economic and fiscal forecasts are updated using the latest available data. These forecasts consider key macroeconomic factors that influence the State’s economic outlook and inform key publications, including the Mid-Year Financial Report and State Budget.

The Mid-Year Financial Report provides an update on the State’s fiscal position and economic outlook since the release of the Budget. It is typically released in March and includes updated forecasts for revenue, expenditure and the forward estimates.

Departments submit proposals and supporting business cases. DTF and DPC assess proposals against agreed criteria, including alignment with the Government’s priorities and fiscal strategy.

Discussions between Ministers and central agencies may occur to refine proposals ahead of formal consideration. These discussions help ensure proposals are evidence-based and aligned with the Government’s priorities.

A Cabinet Committee considers budget proposals and makes decisions on spending and revenue measures, taking into account the Government’s priorities and fiscal strategy.

Departments provide updated financial information to DTF, including revenue and expenditure for the current year, the Budget year and the forward estimates. This information informs the Budget Papers.

Following Cabinet Committee decisions, the Budget is prepared and released on Budget Day (typically in May). The Budget papers are tabled in Parliament, including:

• Budget Paper No. 1: Treasurer’s Speech
• Budget Paper No. 2: Strategy and Outlook
• Budget Paper No. 3: Service Delivery
• Budget Paper No.4: State Capital Program
• Budget Paper No. 5: Statement of Finances
• Department Performance Statement
• Budget Overview
• Gender Equality Budget Statement

At the same time, the Appropriation Bills are tabled in Parliament by the Treasurer.

Once passed by Parliament, the Appropriation Acts provide the legal authority for government expenditure. The Acts typically commence on 1 July, aligning with the start of the financial year. Financial outcomes for the year are later reported in the Annual Financial Report (AFR).

The management of public money is a core government responsibility. It aims to ensure public resources are used efficiently, effectively and for the greatest benefit to the Victorian community.

In Victoria, the Financial Management Act 1994 establishes the framework for the use and management of public money across the public sector.

The Act covers key aspects of financial management, including:

• expenditure from the Consolidated Fund
• financial and annual reporting
• financial delegations
• banking, borrowing and investment arrangements
• payments and the use of public resources.

The Act also requires public sector agencies to maintain effective systems for financial management, risk management and performance reporting. It supports clear governance and accountability across the sector.

Roles and responsibilities

Treasurer

May issue directions on financial management practices and requirements. Agencies must comply with these directions.

Ministers

Are responsible for ensuring public money is spent lawfully and may delegate authority in accordance with legislation.

Accountable authorities

Are responsible for ensuring expenditure is lawful, maintaining financial and risk management systems, and ensuring the integrity of financial and performance information.

Government officers

Must act in accordance with principles of accountability, integrity and transparency, and ensure expenditure is properly authorised.

Victoria is the only jurisdiction that conducts a review of the state’s Estimated Financial Statements for its State Budget.

Annual financial statements are audited to provide an independent opinion on whether they are prepared in accordance with relevant standards, laws and government requirements. In Victoria, this function is undertaken by the Auditor-General, supported by the Victorian Auditor-General’s Office (VAGO).

The Auditor-General also conducts performance audits, which assess the efficiency, effectiveness and economy of government programs and services. The Auditor-General’s annual plan sets out the forward program of audits.

The Audit Act 1994 establishes the Auditor-General as an independent officer of Parliament, responsible for providing audit and assurance services to the Victorian public sector and reporting findings to Parliament.

Victoria receives a significant proportion of its revenue from the Australian Government

GST is collected by businesses at the point of consumption on behalf of the Commonwealth Government, for redistribution to the states and territories (states).

GST is an important revenue source for states as it is untied and not linked to the delivery of any specific services or targets, unlike other Commonwealth grants. As such, it provides budgetary flexibility for states.

The system for distributing GST among the states is complex. The total GST collected, referred to as the ‘GST pool’, is divided between the states by the Commonwealth, based on advice provided by the Commonwealth Grants Commission (CGC), an independent advisory agency.

A Bill introduced into Parliament that seeks authority for the Government to spend public money. Once passed, it becomes an Appropriation Act.

A set of documents released on Budget Day that outline the Government’s financial position, economic outlook and policy measures.

The financial year for which the Budget is being prepared (for example, 2026–27).

The group of Ministers that makes decisions on major policy, administration and legislation for the Victorian Government.

The Government’s planned investment in infrastructure and other non-financial assets over time.

An independent Commonwealth body that recommends how GST revenue is distributed among the states and territories.

An assessment of the State’s ability to repay debt and its capacity to meet its financial obligations, indicating its financial stability, typically provided by independent rating agencies.

The Government’s approach to managing revenue, expenditure, debt and investment over the medium to long term.

Projections of the State’s revenue, expenses and financial position for the three years following the Budget year.

The part of the public sector that provides services mainly funded through taxation and other public revenue, including departments and most government agencies.

Gross State Product (GSP) is the total market value of all final goods and services produced within a specific state or territory over a given period, usually a year. As the state-level equivalent of GDP, it measures the economic size, activity, and growth of a regional economy.

Government investment in non-financial assets, such as land, buildings, transport assets and information and communications technology.

The State’s borrowings minus its financial assets. It is a key measure of the State’s financial position.

The difference between revenue and expenses for a financial year.

A Parliamentary committee that reviews government expenditure and performance and supports accountability across departments and agencies.

An independent office that audits the financial statements and performance of Victorian public sector entities and reports to Parliament.