Victoria will set up a future fund to pay down its rising debt in a push for a post-pandemic surplus.
The 2022/23 Victorian budget, handed down by Treasurer Tim Pallas on Tuesday, projects a return to surplus by mid-2026.
Treasury forecasts a narrow $650 million surplus by 2025/26, after gradually reducing deficits of $7.9 billion, $3.3 billion and $1.1 billion in the proceeding three financial years.
Net debt is $7.8 billion lower than predicted in last year's budget at $101.9 billion but still expected to hit $167.5 billion in June 2026, or 26.5 per cent of gross state product.
The Victorian government has pledged to establish a Victorian Future Fund to begin paying down its borrowing.
It will initially be funded with cash gleaned from the commercialisation of VicRoads through a joint venture model.
Mr Pallas said the fund has a projected medium-term balance of $10 billion, with a proportion of future surpluses and selected land sales to be added to the pool.
The Victorian Funds Management Corporation will invest the money, with returns to go towards helping the state pay down its debt.
Mr Pallas said he expects interest rates to rise over the next 12 to 18 months, increasing payments on its debt.
Following Victoria's population falling 0.7 per cent last financial year, migration is expected to remain low until mid-2022 before international students and tourists slowly pick up throughout 2022.
It is forecast to precipitate a 1.7 per cent rise in the state's population by mid-2026, boosting Gross State Product (GSP) by 2.75 per cent.
Infrastructure spending on major projects such as the Westgate Tunnel will remain high, forecast to be $21.3 billion annually over the next four years.
In his speech to parliament, Mr Pallas will again take aim at the federal government for "short-changing" Victoria on infrastructure spending, the proposed GST carve-up and the end of a 50/50 split on COVID-related health costs.
"We've had to do more to vaccinate Victorians, help business and support workers - because the Commonwealth fades even further from view and increases the burden on Victoria," he said.
"This all means less for our hospitals and schools, for roads and rail."
Mr Pallas told reporters he would "stop banging on" about how much Victoria receives when the proportion of infrastructure spending equals with Victoria's population.
"Of the $3.5 billion in infrastructure investment to the states and territories announced in the March budget, Victoria's been allocated six per cent," he said.
Only a handful of budget measures were announced ahead of Tuesday, including a forecast $30 million a year tax hike on Crown Casino's Melbourne pokies.
