Both the Labor and Liberal parties are promising to deliver budget surpluses exceeding $1 billion by 2025-2026 if they win government, according to pre-election costings.
The figures were revealed as both major parties provided details of the costings behind their election promises as polling day looms.
The Labor costings were assessed by the Treasury while the Coalition's have been assessed by the independent Parliamentary Budget Office.
Economists have criticised both sides of politics for failing to engage in any budget repair or attempt to create a sustainable budget, describing the costings as reliant on "optimistic assumptions and accounting tricks".
Both parties have revealed that projected surpluses for 2025-2026 would be delivered in part by raiding contingency funds that already exist in the budget. The Coalition is also planning on taking $10 billion from the state's future fund to pay down debt — saving the state $775 million in interest payments.
The contingency funds are designed to protect the budget from any future economic shocks, but Treasurer Tim Pallas said it was appropriate to use the funds.
"We put aside a contingency for future expected costs and we draw down on that contingency, which happens regularly and is part of the normal process of day to day government," he said.
Mr Pallas said Labor was "on track" to reach a surplus of more than $1 billion by 2025-2026.
The government has pledged $8.4 billion worth of new projects — including more than $4 billion for health and new hospitals.
Costings for the Coalition show that it is able to spend $10.5 billion from shelving the Suburban Rail Loop.
Shadow Treasurer David Davis heavily criticised Labor's costings while revealing his party's projections, which would deliver a larger surplus by the next state election.
He said under the Coalition plan, the surplus by 2025-2026 would be $11.3 billion, with a smaller surplus achieved the year before.
Mr Davis said if elected, a Coalition government would "start the task of budget repair, and start the task of cutting debt" right away.
Its debt reduction will in part rely on taking billions out of the state's future fund over the next four years, as well as by privatising the state's sewerage services.
Lack of 'genuine savings' criticised
Danielle Wood, economist and CEO of public policy think tank the Grattan Institute, was disappointed by the offering from both parties.
"The costings confirm what we had already seen through this campaign," she said.
"Both parties have announced significant programs of spending. There is very little in the way of genuine savings outlined in these documents, certainly no proposals around tax.
"So any budget repair we're seeing is largely off the back of optimistic assumptions and accounting tricks."
She said the way the parties had relied on contingency funding was not usual practice.
"We do see parties draw on contingencies in funding promises but I think the heavy reliance on that as the primary mechanism by which they are repairing the budget is unusual, and points to the fact that really they haven't looked for genuine savings or opportunities to repair the budget elsewhere," Ms Wood said.
She said Victorians should be concerned by the state's "quite large" debt coming out of COVID.
"That is expected to increase over the next four years and neither side have come into this election with a genuine plan to bring that debt down," Ms Wood said.
"In fact, quite the opposite, we're seeing very large spending commitments on both sides."
Labor says no debt increase or new taxes
Mr Pallas said Labor was making more than a billion dollars in savings by cutting the use of consultants and labour hire firms as well as winding back some programs that were being superseded by Commonwealth programs.
Figures released by the Department of Treasury and Finance in late October predicted a more modest figure, with a surplus of almost $900 million by 2025-2026. In the state budget handed down in May, that figure was $650 million.
"We've fully costed, fully funded a plan that will keep delivering for all Victorians," Mr Pallas said.
"It also confirms that we'll deliver our election commitments with no new increases, no new or increased taxes, no increase to net debt."
The treasury documents show no timelines for more than $5 billion worth of capital expenditure for new hospitals, schools and trains but Mr Pallas insists the programs would begin to be delivered in the next term of government.
The government will also delay payments to a public service defined benefits scheme, which will save it $3 billion, but will not affect benefits to recipients.
Coalition plan underpinned by scrapping rail loop
Mr Davis accused Labor of not providing an "accurate" projection of the state's debt in its figures.
"A state facing huge debt, climbing debt, suffocating debt, and the Treasurer releases a set of figures without confronting the impact of that shocking debt," he said.
He said the government should have released "transparent" debt projections.
Mr Davis said scrapping Labor's Suburban Rail Loop project was a major part of its plan to reduce Victoria's debt and invest in health.
The rail loop project, which will connect Melbourne's rail lines and its airport, is estimated to cost between $30-50 billion.
In its analysis, the budget office found that shelving the project would free up $10.5 billion.
"The state needs the budget to be run properly," Mr Davis said.
"The state needs proper focus on the things that matter for Victorians and that is our health system, the crumbling health system, funding ambulance ... and funding all the steps that we have indicated in our election policies and elsewhere."
The costings also revealed a Liberal plan to sell-off the management of the state's sewerage services on a 50-year lease, which would reap $6.6 billion.
Mr Pallas criticised the plan, saying the privatisation of power under the opposition in the 1990s had not worked.
"Now they've announced they'll sell off our precious water and sewerage, meaning you'll pay more every time you flush," he said.
As part of its election promises, Labor has said it would reinstate the State Electricity Commission, returning some of state's energy infrastructure to public ownership.
