Victorian Premier Jacinta Allan has announced plans for substantial cost-of-living relief for workers and families in the upcoming state budget, set to be revealed on Tuesday.

This announcement comes in the context of an estimated $140 billion budget shortfall, and while the government aims to deliver a modest operating surplus of $600 million, business leaders have expressed concerns about potential increases in taxes aimed at addressing what CSL chair Brian McNamee terms 'spending profligacy.'

Treasurer Jaclyn Symes is preparing to unveil the state budget, which marks her first since taking over the role from Tim Pallas less than six months ago.

The financial plan is expected to include a projected operating surplus of $600 million for the next fiscal year, with improved forecast surpluses of $1.9 billion for 2026-27 and $2.4 billion for 2027-28. Reports from the government indicate that net debt as a share of the economy is expected to peak in 2026-27 before beginning to decline.

The budget will reflect Victoria's increasing debt profile, which Symes has suggested will be presented with 'surprises' aimed at alleviating some concerns.

Importantly, the preliminary budget figures reveal a $1 billion reduction in the projected operating surplus for the upcoming year but no new taxes are anticipated.

Over the next four years, net debt is forecast to remain below $200 billion, though specifics regarding growth will only be disclosed during the treasurer's address.

Symes stated, 'We’ve got the balance right,' highlighting the difficulty of satisfying diverse expectations.

The budget includes significant commitments to infrastructure, with $727 million allocated for the operationalization of the Metro Tunnel, and a further $976 million designated for a 'Better Roads Blitz.' Additionally, the government plans to invest $318 million over four years to provide free public transport for children under 18, potentially saving families up to $755 per child annually.

Despite these expenditures, the budget may face backlash, particularly from farmers and volunteer firefighters, who are planning demonstrations against a recently passed emergency services levy.

This expanded levy is expected to raise an additional $2.14 billion over three years for disaster services, though complaints from stakeholder groups led to government concessions on rebates for volunteers and reduced rates for farmers.

In an attempt to manage its wages bill, the Victorian government anticipates job losses among public servants as part of its fiscal strategy.

Infrastructure funding is projected to wane following the completion of major projects such as the Metro and West Gate tunnels and hospitals in Frankston and Footscray by 2025.

However, some economists remain skeptical of the government's claims of tapering infrastructure spending, particularly with the early stages of the $34.5 billion Suburban Rail Loop set to commence construction soon.

The budget faces scrutiny, especially following a $1 billion deterioration in Victoria's fiscal outlook even after receiving a $3.7 billion GST windfall.

Critics warn that handouts aimed at families and other groups may contribute to inflationary pressures and could jeopardize the state's credit rating.

Significant portions of the budget appear to lack funding, including over $20 billion required to complete the first stage of the Suburban Rail Loop, with public sector wages projected to increase towards $50 billion by the end of the 2029 financial year.

The property sector has urged the Allan government to reconsider its 'punitive' tax policies, which stakeholders argue stifle housing supply in Victoria.

The state already has the highest property taxes in the nation, with plans to further increase its total tax take from land and building owners to 47% over the next four years.

Developers have voiced increasing concern over the government’s continued revenue-raising strategies, calling for comprehensive reform.