Victoria’s net debt will rise to $305.3 billion if the government doesn’t start to pay off its borrowings, the independent budget watchdog has warned.

The Parliamentary Budget Office on Sunday released its projections on the state’s debt following the 2023/24 state budget.

Treasurer Tim Pallas forecast net debt will increase by 10.1 per cent per year on average from 2022/23 to 2026/27.

The budget office found if net debt continued to rise at that rate, it will reach $305.3b in 2032/33 or 31.9 per cent of gross state product.

The office also looked at the government’s forecast that net debt would hit $171.4b and be 24.5 per cent of GSP in 2026/27.

‘Highest taxes in Australia’

It found if the ratio stayed at 24.5 per cent, net debt would grow 5.3 per cent per year to reach $234b in 2032/33.

Mr Pallas has conceded measures are needed to stabilise the state’s debt, with the government introducing new levies on big businesses and property investors.

But shadow treasurer Brad Rowswell said debt would only rise under the current government.

“We are paying the highest taxes in Australia while debt continues to climb because of the financial incompetency of Labor and life just gets harder for Victorians,” he said.

-AAP